BILL NUMBER: AB 889 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Frazier
FEBRUARY 22, 2013
An act to amend Sections 1342.7 and 1374.30 of the Health and
Safety Code, and to amend Section 10169 of, and to add Section
10123.193 to, the Insurance Code, relating to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
AB 889, as introduced, Frazier. Health care coverage.
Existing law, the Knox-Keene Health Care Service Plan Act of 1975,
provides for the licensure and regulation of health care service
plans by the Department of Managed Health Care. Existing law requires
health care service plan contracts to provide specified coverage to
enrollees and subscribers, including specified benefits regarding
prescription drugs. Existing law requires the department to develop a
regulation outlining standards to be used in reviewing a plan's
request for approval of its proposed copayment, deductible,
limitation, or exclusion on its prescription drug benefits, and to
consider alternative benefit designs in developing those standards.
Existing law makes a willful violation of that act a crime. Existing
law also provides for the regulation of health insurers by the
Department of Insurance.
This bill would delete those provisions regarding development of a
regulation outlining the standards to be used in reviewing a plan's
request for approval. The bill instead would codify the department's
regulation and require every health care service plan or health
insurance policy that provides coverage for outpatient prescription
drug benefits, as defined, to provide coverage for all medically
necessary outpatient prescription drugs, except as specified. The
bill would set forth additional standards regarding outpatient
prescription drug benefits, including requiring a plan or insurer
seeking to establish limitations or exclusions on outpatient
prescription drug benefits to establish those limitations or
exclusions consistent with up-to-date evidence-based outcomes and
current published, peer-reviewed medical and pharmaceutical
literature. The bill would also place restrictions on copayments,
coinsurance and deductibles, including, among other things,
prohibiting a copayment or percentage coinsurance from exceeding 50%
of the cost to the plan or insurer.
Existing law establishes the Independent Medical Review System in
the Department of Managed Health Care and the Department of
Insurance. Existing law authorizes an enrollee or an insured to apply
to the department for an independent medical review of a decision to
deny, modify, or delay health care services, based in whole or in
part on a finding that the disputed health care services are not
medically necessary, within 6 months of any specified qualifying
periods or events. Existing law requires all necessary information
and documents to be delivered to an independent medical review
organization within 24 hours of approval of the request for review if
there is an imminent and serious threat to the health of the
enrollee, as specified.
This bill would authorize an enrollee or an insured or an enrollee'
s or insured's provider or the respective departments to request an
expeditious medical review of denied, modified, or delayed health
care services if there is an imminent and serious threat to the
health of the enrollee or insured, as specified.
Because a willful violation of these requirements with respect to
health care service plans would be a crime, the bill would impose a
state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1342.7 of the Health and Safety Code is amended
to read:
1342.7. (a) The Legislature finds that in enacting Sections
1367.215, 1367.25, 1367.45, 1367.51, and 1374.72, it did not intend
to limit the department's authority to regulate the provision of
medically necessary prescription drug benefits by a health care
service plan to the extent that the plan provides coverage for those
benefits.
(b) (1) Nothing in this chapter shall preclude a plan from filing
relevant information with the department pursuant to Section 1352 to
seek the approval of a copayment, deductible, limitation, or
exclusion to a plan's prescription drug benefits. If the department
approves an exclusion to a plan's prescription drug benefits, the
exclusion shall not be subject to review through the independent
medical review process pursuant to Section 1374.30 on the grounds of
medical necessity. The department shall retain its role in assessing
whether issues are related to coverage or medical necessity pursuant
to paragraph (2) of subdivision (d) of Section 1374.30.
(2) A plan seeking approval of a copayment or deductible may file
an amendment pursuant to Section 1352.1. A plan seeking approval of a
limitation or exclusion shall file a material modification pursuant
to subdivision (b) of Section 1352.
(c) Nothing in this chapter shall prohibit a plan from charging a
subscriber or enrollee a copayment or deductible for a prescription
drug benefit or from setting forth by contract, a limitation or an
exclusion from, coverage of prescription drug benefits, if the
copayment, deductible, limitation, or exclusion is reported to, and
found unobjectionable by, the director and disclosed to the
subscriber or enrollee pursuant to the provisions of Section 1363.
(d) Every health care service plan that provides coverage for
outpatient prescription drug benefits shall provide coverage for all
medically necessary outpatient prescription drugs, except as
described in this section.
(1) "Outpatient prescription drugs" are self-administered drugs
approved by the federal Food and Drug Administration for sale to the
public through retail or mail order pharmacies that require
prescriptions and are not provided for use on an inpatient basis.
(2) Coverage for outpatient prescription drugs shall include
coverage for disposable devices that are medically necessary for the
administration of a covered outpatient prescription drug, such as
spacers and inhalers for the administration of aerosol outpatient
prescription drugs, and syringes for self-injectible outpatient
prescription drugs that are not dispensed in prefilled syringes. For
purposes of this paragraph, the term "disposable" includes devices
that may be used more than once before disposal. This section does
not create an obligation for a plan to provide coverage for a durable
medical equipment benefit.
(e) Standards for an outpatient prescription drug benefit shall be
as follows:
(1) An outpatient prescription drug benefit offered by a plan
shall comply with the requirements of this chapter and the
regulations promulgated by the director, including, but not limited
to, Sections 1342, 1343.5, 1342.7, 1363, 1363.01, 1363.03, 1363.5,
1367.01, 1367.06, 1367.20, 1367.21, 1367.22, 1367.24, and
subdivisions (e), (g), and (h) of Section 1367, of this chapter, and
subparagraph (A) of paragraph (3) of subdivision (a) of Section
1300.67.4 of Title 28 of the California Code of Regulations.
(2) All clinical aspects of a plan's outpatient prescription drug
benefit shall be developed by qualified medical and pharmacy
professionals in accordance with good professional practice. The plan
shall establish and document an internal process for ongoing review
by qualified medical and pharmacy professionals of the clinical
aspects of the outpatient prescription drug benefit, including review
of limitations and exclusions, and the safety, efficacy, and
utilization of an outpatient prescription drugs, including step
therapy, if any.
(3) Plans seeking to establish limitations or exclusions on an
outpatient prescription drug benefit shall do so consistent with
up-to-date evidence-based outcomes and current published,
peer-reviewed medical and pharmaceutical literature.
(4) A plan that provides coverage for outpatient prescription
drugs through a mail order pharmacy shall have written policies and
procedures documenting that the plan's mail order arrangements are in
compliance with the requirements of this chapter, and applicable
California and federal laws regarding pharmacists and pharmacy
services. The mail order pharmacy process shall conform effectively
and efficiently with a plan's processes for prior authorization for
coverage of medically necessary drugs as required by this chapter,
and shall include standards for timely delivery and a contingency
mechanism for providing the drug if a mail order provider fails to
meet the delivery standards.
(5) In reviewing copayments, coinsurance, deductibles,
limitations, or exclusions for compliance with subdivisions (e) and
(h) of Section 1367 and subparagraph (A) of paragraph (3) of
subdivision (a) of Section 1300.67.4 of Title 28 of the California
Code of Regulations, the department's approval or disapproval may be
based upon all relevant factors, including, but not limited to, the
following:
(A) The type and number of enrollees affected.
(B) The clinical efficacy of the drug or drugs proposed to be
limited or excluded.
(C) The availability of therapeutic equivalents or other drugs
medically necessary for treatment of health conditions.
(D) The specific health plan products to which the copayment,
coinsurance, deductible, limitation, or exclusion will apply.
(E) The duration of the limitation or exclusion.
(F) The rationale for the copayment, coinsurance, deductible,
limitation, or exclusion.
(G) The projected effect of the copayment, coinsurance,
deductible, limitation, or exclusion on the affordability and
accessibility of coverage.
(H) The projected comparative clinical effect, including any
potential risk of adverse health outcomes, based upon utilization
data and review of peer-reviewed professional literature.
(I) The overall copayment structure of the product, including
whether the copayment, coinsurance, or deductible contributes to the
overall out-of-pocket maximum for the product.
(J) Information regarding similar copayments, coinsurance levels,
deductibles, limitations, or exclusions previously approved by the
department.
(K) Evidence-based clinical studies and professional literature.
(L) The description of the copayment, coinsurance, deductible,
limitation, or exclusion as compared to other benefits and products
in the marketplace.
(M) Any other historical, statistical, or other information that
the submitting plan considers pertinent to the request for approval
of the copayments, coinsurance level, deductibles, limitation, or
exclusion.
(f) Copayments, coinsurance, and deductibles shall be consistent
with Sections 1367.006, 1367.007, 1367.009, and 1366.6.
(1) A plan's outpatient prescription drug benefit shall provide
that if the pharmacy's retail price for a prescription drug is less
than the applicable copayment amount, the enrollee shall not be
required to pay any more than the retail price.
(2) Proposed copayment structures or ranges, coinsurance, or
deductibles submitted to the director for approval shall be based
upon a methodology that is fully described and documented, and that
complies with the standards set forth in this section. A plan may use
actual cost data on prescription drugs or, for contracted services
or products, nationally recognized data sources used by the plan in
developing the contract rates.
(3) A copayment or percentage coinsurance shall not exceed 50
percent of the cost to the plan. A percentage coinsurance shall meet
each of the following additional requirements:
(A) Have a maximum dollar amount cap on the percentage coinsurance
that will be charged for an individual prescription.
(B) Apply towards an annual out-of-pocket maximum for the product.
(C) Apply towards an annual out-of-pocket maximum for the
outpatient prescription drug benefit, if any.
(4) In addition to compliance with this subdivision, copayments
and coinsurances shall comply with the standards identified at
subdivision (e), including that they shall be reasonable so as to
allow access to medically necessary outpatient prescription drugs,
and the department's determination may be based on all relevant
factors as provided in paragraph (5) of subdivision (e).
(5) As used in paragraph (3), the "cost to the plan" means the
actual cost incurred by the plan or its contracting provider to
acquire and dispense a covered outpatient prescription drug, without
subtracting or otherwise considering any copayment or coinsurance
amount to be paid by enrollees. The cost to the plan may include
average cost calculations as described in this section, and shall
include all discounts and other prospective cost and pricing
arrangements, as applicable. Plans shall account for any rebates and
other retrospective cost and pricing arrangements for outpatient
prescription drugs by verifying that the rebates and other
retrospective cost and pricing arrangements for outpatient
prescription drugs are applied by the plan to reduce costs for the
plan's subscribers.
(g) Plans that provide coverage for outpatient prescription drug
benefits may apply the following limitations:
(1) A plan may impose prior authorization requirements on
outpatient prescription drug benefits, consistent with the
requirements of this chapter and corresponding regulations.
(2) When there is more than one drug that is appropriate for the
treatment of a medical condition, a plan may require step therapy. A
plan that requires step therapy shall have an expeditious process in
place to authorize exceptions to step therapy when medically
necessary and to conform effectively and efficiently with continuity
of care requirements of this chapter and regulations. In
circumstances where an enrollee is changing plans, the new plan may
not require the enrollee to repeat step therapy when that enrollee is
already being treated for a medical condition by an outpatient
prescription drug, provided that the drug is appropriately prescribed
and is considered safe and effective for the enrollee's condition.
Nothing in this section shall preclude the new plan from imposing a
prior authorization requirement pursuant to Section 1367.24 for the
continued coverage of an outpatient prescription drug prescribed
pursuant to step therapy imposed by the former plan, or preclude the
prescribing provider from prescribing another drug covered by the new
plan that is medically appropriate for the enrollee. Step therapy,
including the expeditious process for exception and the instances
when an enrollee is changing plans, shall be subject to subdivision
(e). For purposes of this section, "step therapy" means a protocol
that specifies the sequence in which different prescription drugs for
a given medical condition that are medically appropriate for a
particular patient are to be prescribed.
(3) A plan shall provide coverage for the medically necessary
dosage and quantity of the drug prescribed for the treatment of a
medical condition consistent with professionally recognized standards
of practice.
(A) A plan may limit the amount of the drug dispensed at any one
time to a 30-day supply or, if the treatment is for less than 30
days, for the medically necessary amount of the drug.
(B) A plan may impose a requirement that maintenance drugs be
dispensed in a two-month or greater supply.
(C) A plan may establish a mandatory mail order process for
maintenance drugs when dispensed in a three-month supply or greater
quantities, but shall not impose any fees or costs for mandatory mail
order prescriptions other than the applicable copayment or
coinsurance. A plan shall not require an enrollee to fill a
prescription by mail if the prescribed drug is not available to be
filled in that manner.
(D) For purposes of this section, "maintenance drugs" means those
outpatient prescription drugs that are prescribed for the enrollee on
a continual basis to treat a chronic condition.
(4) Plans may require enrollees who are prescribed drugs for
smoking cessation to be enrolled in or to have completed a smoking
cessation program, if covered by the plan prior to or concurrent with
receiving the prescription drug.
(5) Other limitations that the department may approve pursuant to
this section.
(h) Plans that provide coverage for outpatient prescription drug
benefits are not required to provide coverage for prescription drugs
that meet any of the following conditions:
(1) When prescribed for cosmetic purposes. For purposes of this
section "cosmetic purposes" means solely for the purpose of altering
or affecting normal structures of the body to improve appearance
rather than function.
(2) When prescribed solely for the treatment of hair loss, sexual
dysfunction, athletic performance, anti-aging for cosmetic purposes,
and mental performance. Drugs for mental performance shall not be
excluded from coverage when they are used to treat diagnosed mental
illness or medical conditions affecting memory, including, but not
limited to, treatment of the conditions or symptoms of dementia or
Alzheimer's disease.
(3) When prescribed solely for the purposes of losing weight,
except when medically necessary for the treatment of morbid obesity.
Plans may require enrollees who are prescribed drugs for morbid
obesity to be enrolled in a comprehensive weight loss program, if
covered by the plan, for a reasonable period of time prior to or
concurrent with receiving the prescription drug.
(4) When prescribed solely for the purpose of shortening the
duration of the common cold.
(5) Drugs that are available over the counter. A plan shall not
exclude coverage of an entire class of prescription drugs when one
drug within that class becomes available over the counter. A plan
that seeks to exclude coverage for an entire class of drugs when more
than one drug within that class become available over the counter
shall first file a notice of material modification and obtain the
department's prior approval in accordance with this section.
(6) Replacement of lost or stolen drugs.
(7) When prescribed by noncontracting providers for noncovered
procedures that are not authorized by a plan or a plan provider
except when coverage is otherwise required in the context of
emergency services.
(8) Other categories of prescription drugs approved by the
department pursuant to this section.
(i) A plan shall have written policies and procedures for its
outpatient prescription drug benefits, and quality assurance systems
in place for the early identification and swift correction of
problems in the accessibility and availability of outpatient
prescription drug benefits. A contract between a health care service
plan and a prescription drug benefit provider shall include
provisions, terms, and conditions sufficient to ensure that the
standards and requirements of this section are met.
(j) (1) Any exclusion or limitation on an outpatient prescription
drug benefit that is not described in subdivision (g) or (h) shall
not be applied to a plan's outpatient prescription drug benefit
unless a plan has filed a notice of material modification with the
department and received approval by order to apply the exclusion or
limitation. The order of approval may be issued subject to specified
terms and conditions, or for specified periods, as the department may
determine are necessary and appropriate. Following issuance of an
order approving an exclusion or limitation, any other health care
service plan may apply the same exclusion or limitation to its
outpatient prescription drug benefit if it files an amendment with
the department not less than 30 days prior to implementation of the
exclusion or limitation, and represents that it is exactly the same
as that previously approved by order, provides specific reference to
the order number and date issued, and addresses any specified terms
and conditions upon that order, as applicable.
(2) A plan may meet the material modification filing requirements
of paragraph (1) with respect to exclusions and limitations contained
in contracts issued, renewed, or amended on or before January 1,
2007, by filing within six months of the effective date of Section
1300.67.4 of Title 28 of the California Code of Regulations a report
disclosing and describing all such exclusions and limitations on
prescription drug benefits covered under all subscriber contracts
subject to the requirements of this section. The department will
provide an expeditious review of the exclusions and limitations
disclosed in the report.
(d) The department in developing standards for the approval of a
copayment, deductible, limitation, or exclusion to a plan's
prescription drug benefits, shall consider alternative benefit
designs, including, but not limited to, the following:
(1) Different out-of-pocket costs for consumers, including
copayments and deductibles.
(2) Different limitations, including caps on benefits.
(3) Use of exclusions from coverage of prescription drugs to treat
various conditions, including the effect of the exclusions on the
plan's ability to provide basic health care services, the amount of
subscriber or enrollee premiums, and the amount of out-of-pocket
costs for an enrollee.
(4) Different packages negotiated between purchasers and plans.
(5) Different tiered pharmacy benefits, including the use of
generic prescription drugs.
(6) Current and past practices.
(e) The department shall develop a regulation outlining the
standards to be used in reviewing a plan's request for approval of
its proposed copayment, deductible, limitation, or exclusion on its
prescription drug benefits.
(f)
(k) Nothing in subdivision (b) or (c) shall permit a
plan to limit prescription drug benefits provided in a manner that is
inconsistent with Sections 1367.215, 1367.25, 1367.45, 1367.51, and
1374.72.
(g)
(l) Nothing in this section shall be construed to
require or authorize a plan that contracts with the State Department
of Health Services to provide services to Medi-Cal beneficiaries or
with the Managed Risk Medical Insurance Board to provide services to
enrollees of the Healthy Families Program to provide coverage for
prescription drugs that are not required pursuant to those programs
or contracts, or to limit or exclude any prescription drugs that are
required by those programs or contracts.
(h)
(m) Nothing in this section shall be construed as
prohibiting or otherwise affecting a plan contract that does not
cover outpatient prescription drugs , as defined in subdivision
(d), except for coverage for limited classes of prescription
drugs because they are integral to treatments covered as basic health
care services, including, but not limited to, immunosuppressives, in
order to allow for transplants of bodily organs.
(i)
(n) The department shall periodically review its
regulations developed pursuant to this section.
(j) This section shall become operative on January 2, 2003, and
shall only apply to contracts issued, amended, or renewed on or after
that date.
SEC. 2. Section 1374.30 of the Health and Safety Code, as amended
by Section 1 of Chapter 872 of the Statutes of 2012, is amended to
read:
1374.30. (a) Commencing January 1, 2001, there is hereby
established in the department the Independent Medical Review System.
(b) For the purposes of this chapter, "disputed health care
service" means any health care service eligible for coverage and
payment under a health care service plan contract that has been
denied, modified, or delayed by a decision of the plan, or by one of
its contracting providers, in whole or in part due to a finding that
the service is not medically necessary. A decision regarding a
disputed health care service relates to the practice of medicine and
is not a coverage decision. A disputed health care service does not
include services provided by a specialized health care service plan,
except to the extent that the service (1) involves the practice of
medicine, or (2) is provided pursuant to a contract with a health
care service plan that covers hospital, medical, or surgical
benefits. If a plan, or one of its contracting providers, issues a
decision denying, modifying, or delaying health care services, based
in whole or in part on a finding that the proposed health care
services are not a covered benefit under the contract that applies to
the enrollee, the statement of decision shall clearly specify the
provision in the contract that excludes that coverage.
(c) For the purposes of this chapter, "coverage decision" means
the approval or denial of health care services by a plan, or by one
of its contracting entities, substantially based on a finding that
the provision of a particular service is included or excluded as a
covered benefit under the terms and conditions of the health care
service plan contract. A "coverage decision" does not encompass a
plan or contracting provider decision regarding a disputed health
care service.
(d) (1) All enrollee grievances involving a disputed health care
service are eligible for review under the Independent Medical Review
System if the requirements of this article are met. If the department
finds that an enrollee grievance involving a disputed health care
service does not meet the requirements of this article for review
under the Independent Medical Review System, the enrollee request for
review shall be treated as a request for the department to review
the grievance pursuant to subdivision (b) of Section 1368. All other
enrollee grievances, including grievances involving coverage
decisions, remain eligible for review by the department pursuant to
subdivision (b) of Section 1368.
(2) In any case in which an enrollee or provider asserts that a
decision to deny, modify, or delay health care services was based, in
whole or in part, on consideration of medical necessity, the
department shall have the final authority to determine whether the
grievance is more properly resolved pursuant to an independent
medical review as provided under this article or pursuant to
subdivision (b) of Section 1368.
(3) The department shall be the final arbiter when there is a
question as to whether an enrollee grievance is a disputed health
care service or a coverage decision. The department shall establish a
process to complete an initial screening of an enrollee grievance.
If there appears to be any medical necessity issue, the grievance
shall be resolved pursuant to an independent medical review as
provided under this article or pursuant to subdivision (b) of Section
1368.
(e) Every health care service plan contract that is issued,
amended, renewed, or delivered in this state on or after January 1,
2000, shall, effective January 1, 2001, provide an enrollee with the
opportunity to seek an independent medical review whenever health
care services have been denied, modified, or delayed by the plan, or
by one of its contracting providers, if the decision was based in
whole or in part on a finding that the proposed health care services
are not medically necessary. For purposes of this article, an
enrollee may designate an agent to act on his or her behalf, as
described in paragraph (2) of subdivision (b) of Section 1368. The
provider may join with or otherwise assist the enrollee in seeking an
independent medical review, and may advocate on behalf of the
enrollee.
(f) Medi-Cal beneficiaries enrolled in a health care service plan
shall not be excluded from participation. Medicare beneficiaries
enrolled in a health care service plan shall not be excluded unless
expressly preempted by federal law. Reviews of cases for Medi-Cal
enrollees shall be conducted in accordance with statutes and
regulations for the Medi-Cal program.
(g) The department may
seek to integrate the quality of care and consumer protection
provisions, including remedies, of the Independent Medical Review
System with related dispute resolution procedures of other health
care agency programs, including the Medicare and Medi-Cal programs,
in a way that minimizes the potential for duplication, conflict, and
added costs. Nothing in this subdivision shall be construed to limit
any rights conferred upon enrollees under this chapter.
(h) The independent medical review process authorized by this
article is in addition to any other procedures or remedies that may
be available.
(i) No later than January 1, 2001, every health care service plan
shall prominently display in every plan member handbook or relevant
informational brochure, in every plan contract, on enrollee evidence
of coverage forms, on copies of plan procedures for resolving
grievances, on letters of denials issued by either the plan or its
contracting organization, on the grievance forms required under
Section 1368, and on all written responses to grievances, information
concerning the right of an enrollee to request an independent
medical review in cases where the enrollee believes that health care
services have been improperly denied, modified, or delayed by the
plan, or by one of its contracting providers.
(j) An enrollee may apply to the department for an independent
medical review when all of the following conditions are met:
(1) (A) The enrollee's provider has recommended a health care
service as medically necessary, or
(B) The enrollee has received urgent care or emergency services
that a provider determined was medically necessary, or
(C) The enrollee, in the absence of a provider recommendation
under subparagraph (A) or the receipt of urgent care or emergency
services by a provider under subparagraph (B), has been seen by an
in-plan provider for the diagnosis or treatment of the medical
condition for which the enrollee seeks independent review. The plan
shall expedite access to an in-plan provider upon request of an
enrollee. The in-plan provider need not recommend the disputed health
care service as a condition for the enrollee to be eligible for an
independent review.
For purposes of this article, the enrollee's provider may be an
out-of-plan provider. However, the plan shall have no liability for
payment of services provided by an out-of-plan provider, except as
provided pursuant to subdivision (c) of Section 1374.34.
(2) The disputed health care service has been denied, modified, or
delayed by the plan, or by one of its contracting providers, based
in whole or in part on a decision that the health care service is not
medically necessary.
(3) The enrollee has filed a grievance with the plan or its
contracting provider pursuant to Section 1368, and the disputed
decision is upheld or the grievance remains unresolved after 30 days.
The enrollee shall not be required to participate in the plan's
grievance process for more than 30 days. In the case of a grievance
that requires expedited review pursuant to Section 1368.01, the
enrollee shall not be required to participate in the plan's grievance
process for more than three days.
(k) (1) An enrollee may apply to the
department for an independent medical review of a decision to deny,
modify, or delay health care services, based in whole or in part on a
finding that the disputed health care services are not medically
necessary, within six months of any of the qualifying periods or
events under subdivision (j). The director may extend the application
deadline beyond six months if the circumstances of a case warrant
the extension.
(2) An enrollee or an enrollee's provider may request an
expeditious medical review pursuant to Section 1374.31 if there is an
imminent and serious threat to the health of the enrollee,
including, but not limited to, serious pain, the potential loss of
life, limb, or major bodily function, or the immediate and serious
deterioration of the health of the enrollee. Whether or not the
enrollee or the enrollee's provider requests an expeditious medical
review, if the department determines that there is an imminent and
serious threat to the health of the enrollee, the department shall
refer the decision for an expeditious medical review consistent with
Section 1374.31 without completing the requirements of subdivision
(m).
( l ) The enrollee shall pay no application or
processing fees of any kind.
(m) As part of its notification to the enrollee regarding a
disposition of the enrollee's grievance that denies, modifies, or
delays health care services, the plan shall provide the enrollee with
a one-page application form approved by the department, and an
addressed envelope, which the enrollee may return to initiate an
independent medical review. The plan shall include on the form any
information required by the department to facilitate the completion
of the independent medical review, such as the enrollee's diagnosis
or condition, the nature of the disputed health care service sought
by the enrollee, a means to identify the enrollee's case, and any
other material information. The form shall also include the
following:
(1) Notice that a decision not to participate in the independent
medical review process may cause the enrollee to forfeit any
statutory right to pursue legal action against the plan regarding the
disputed health care service.
(2) A statement indicating the enrollee's consent to obtain any
necessary medical records from the plan, any of its contracting
providers, and any out-of-plan provider the enrollee may have
consulted on the matter, to be signed by the enrollee.
(3) Notice of the enrollee's right to provide information or
documentation, either directly or through the enrollee's provider,
regarding any of the following:
(A) A provider recommendation indicating that the disputed health
care service is medically necessary for the enrollee's medical
condition.
(B) Medical information or justification that a disputed health
care service, on an urgent care or emergency basis, was medically
necessary for the enrollee's medical condition.
(C) Reasonable information supporting the enrollee's position that
the disputed health care service is or was medically necessary for
the enrollee's medical condition, including all information provided
to the enrollee by the plan or any of its contracting providers,
still in the possession of the enrollee, concerning a plan or
provider decision regarding disputed health care services, and a copy
of any materials the enrollee submitted to the plan, still in the
possession of the enrollee, in support of the grievance, as well as
any additional material that the enrollee believes is relevant.
(n) Upon notice from the department that the health care service
plan's enrollee has applied for an independent medical review, the
plan or its contracting providers shall provide to the independent
medical review organization designated by the department a copy of
all of the following documents within three business days of the plan'
s receipt of the department's notice of a request by an enrollee for
an independent review:
(1) (A) A copy of all of the enrollee's medical records in the
possession of the plan or its contracting providers relevant to each
of the following:
(i) The enrollee's medical condition.
(ii) The health care services being provided by the plan and its
contracting providers for the condition.
(iii) The disputed health care services requested by the enrollee
for the condition.
(B) Any newly developed or discovered relevant medical records in
the possession of the plan or its contracting providers after the
initial documents are provided to the independent medical review
organization shall be forwarded immediately to the independent
medical review organization. The plan shall concurrently provide a
copy of medical records required by this subparagraph to the enrollee
or the enrollee's provider, if authorized by the enrollee, unless
the offer of medical records is declined or otherwise prohibited by
law. The confidentiality of all medical record information shall be
maintained pursuant to applicable state and federal laws.
(2) A copy of all information provided to the enrollee by the plan
and any of its contracting providers concerning plan and provider
decisions regarding the enrollee's condition and care, and a copy of
any materials the enrollee or the enrollee's provider submitted to
the plan and to the plan's contracting providers in support of the
enrollee's request for disputed health care services. This
documentation shall include the written response to the enrollee's
grievance, required by paragraph (4) of subdivision (a) of Section
1368. The confidentiality of any enrollee medical information shall
be maintained pursuant to applicable state and federal laws.
(3) A copy of any other relevant documents or information used by
the plan or its contracting providers in determining whether disputed
health care services should have been provided, and any statements
by the plan and its contracting providers explaining the reasons for
the decision to deny, modify, or delay disputed health care services
on the basis of medical necessity. The plan shall concurrently
provide a copy of documents required by this paragraph, except for
any information found by the director to be legally privileged
information, to the enrollee and the enrollee's provider. The
department and the independent medical review organization shall
maintain the confidentiality of any information found by the director
to be the proprietary information of the plan.
(o) This section shall become inoperative on July 1, 2015, and, as
of January 1, 2016, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2016, deletes or
extends the dates on which it becomes inoperative and is repealed.
SEC. 3. Section 1374.30 of the Health and Safety Code, as added by
Section 2 of Chapter 872 of the Statutes of 2012, is amended to
read:
1374.30. (a) Commencing January 1, 2001, there is hereby
established in the department the Independent Medical Review System.
(b) For the purposes of this chapter, "disputed health care
service" means any health care service eligible for coverage and
payment under a health care service plan contract that has been
denied, modified, or delayed by a decision of the plan, or by one of
its contracting providers, in whole or in part due to a finding that
the service is not medically necessary. A decision regarding a
disputed health care service relates to the practice of medicine and
is not a coverage decision. A disputed health care service does not
include services provided by a specialized health care service plan,
except to the extent that the service (1) involves the practice of
medicine, or (2) is provided pursuant to a contract with a health
care service plan that covers hospital, medical, or surgical
benefits. If a plan, or one of its contracting providers, issues a
decision denying, modifying, or delaying health care services, based
in whole or in part on a finding that the proposed health care
services are not a covered benefit under the contract that applies to
the enrollee, the statement of decision shall clearly specify the
provision in the contract that excludes that coverage.
(c) For the purposes of this chapter, "coverage decision" means
the approval or denial of health care services by a plan, or by one
of its contracting entities, substantially based on a finding that
the provision of a particular service is included or excluded as a
covered benefit under the terms and conditions of the health care
service plan contract. A "coverage decision" does not encompass a
plan or contracting provider decision regarding a disputed health
care service.
(d) (1) All enrollee grievances involving a disputed health care
service are eligible for review under the Independent Medical Review
System if the requirements of this article are met. If the department
finds that an enrollee grievance involving a disputed health care
service does not meet the requirements of this article for review
under the Independent Medical Review System, the enrollee request for
review shall be treated as a request for the department to review
the grievance pursuant to subdivision (b) of Section 1368. All other
enrollee grievances, including grievances involving coverage
decisions, remain eligible for review by the department pursuant to
subdivision (b) of Section 1368.
(2) In any case in which an enrollee or provider asserts that a
decision to deny, modify, or delay health care services was based, in
whole or in part, on consideration of medical necessity, the
department shall have the final authority to determine whether the
grievance is more properly resolved pursuant to an independent
medical review as provided under this article or pursuant to
subdivision (b) of Section 1368.
(3) The department shall be the final arbiter when there is a
question as to whether an enrollee grievance is a disputed health
care service or a coverage decision. The department shall establish a
process to complete an initial screening of an enrollee grievance.
If there appears to be any medical necessity issue, the grievance
shall be resolved pursuant to an independent medical review as
provided under this article or pursuant to subdivision (b) of Section
1368.
(e) Every health care service plan contract that is issued,
amended, renewed, or delivered in this state on or after January 1,
2000, shall provide an enrollee with the opportunity to seek an
independent medical review whenever health care services have been
denied, modified, or delayed by the plan, or by one of its
contracting providers, if the decision was based in whole or in part
on a finding that the proposed health care services are not medically
necessary. For purposes of this article, an enrollee may designate
an agent to act on his or her behalf, as described in paragraph (2)
of subdivision (b) of Section 1368. The provider may join with or
otherwise assist the enrollee in seeking an independent medical
review, and may advocate on behalf of the enrollee.
(f) Medi-Cal beneficiaries enrolled in a health care service plan
shall not be excluded from participation. Medicare beneficiaries
enrolled in a health care service plan shall not be excluded unless
expressly preempted by federal law. Reviews of cases for Medi-Cal
enrollees shall be conducted in accordance with statutes and
regulations for the Medi-Cal program.
(g) The department may seek to integrate the quality of care and
consumer protection provisions, including remedies, of the
Independent Medical Review System with related dispute resolution
procedures of other health care agency programs, including the
Medicare and Medi-Cal programs, in a way that minimizes the potential
for duplication, conflict, and added costs. Nothing in this
subdivision shall be construed to limit any rights conferred upon
enrollees under this chapter.
(h) The independent medical review process authorized by this
article is in addition to any other procedures or remedies that may
be available.
(i) Every health care service plan shall prominently display in
every plan member handbook or relevant informational brochure, in
every plan contract, on enrollee evidence of coverage forms, on
copies of plan procedures for resolving grievances, on letters of
denials issued by either the plan or its contracting organization, on
the grievance forms required under Section 1368, and on all written
responses to grievances, information concerning the right of an
enrollee to request an independent medical review in cases where the
enrollee believes that health care services have been improperly
denied, modified, or delayed by the plan, or by one of its
contracting providers.
(j) An enrollee may apply to the department for an independent
medical review when all of the following conditions are met:
(1) (A) The enrollee's provider has recommended a health care
service as medically necessary, or
(B) The enrollee has received urgent care or emergency services
that a provider determined was medically necessary, or
(C) The enrollee, in the absence of a provider recommendation
under subparagraph (A) or the receipt of urgent care or emergency
services by a provider under subparagraph (B), has been seen by an
in-plan provider for the diagnosis or treatment of the medical
condition for which the enrollee seeks independent review. The plan
shall expedite access to an in-plan provider upon request of an
enrollee. The in-plan provider need not recommend the disputed health
care service as a condition for the enrollee to be eligible for an
independent review.
For purposes of this article, the enrollee's provider may be an
out-of-plan provider. However, the plan shall have no liability for
payment of services provided by an out-of-plan provider, except as
provided pursuant to subdivision (c) of Section 1374.34.
(2) The disputed health care service has been denied, modified, or
delayed by the plan, or by one of its contracting providers, based
in whole or in part on a decision that the health care service is not
medically necessary.
(3) The enrollee has filed a grievance with the plan or its
contracting provider pursuant to Section 1368, and the disputed
decision is upheld or the grievance remains unresolved after 30 days.
The enrollee shall not be required to participate in the plan's
grievance process for more than 30 days. In the case of a grievance
that requires expedited review pursuant to Section 1368.01, the
enrollee shall not be required to participate in the plan's grievance
process for more than three days.
(k) (1) An enrollee may apply to the
department for an independent medical review of a decision to deny,
modify, or delay health care services, based in whole or in part on a
finding that the disputed health care services are not medically
necessary, within six months of any of the qualifying periods or
events under subdivision (j). The director may extend the application
deadline beyond six months if the circumstances of a case warrant
the extension.
(2) An enrollee or an enrollee's provider may request an
expeditious medical review pursuant to Section 1374.31 if there is an
imminent and serious threat to the health of the enrollee,
including, but not limited to, serious pain, the potential loss of
life, limb, or major bodily function, or the immediate and serious
deterioration of the health of the enrollee. Whether or not the
enrollee or the enrollee's provider requests an expeditious medical
review, if the department determines that there is an imminent and
serious threat to the health of the enrollee, the department shall
refer the decision for an expeditious medical review consistent with
Section 1374.31 without completing the requirements of subdivision
(m).
(l) The enrollee shall pay no application or processing fees of
any kind.
(m) As part of its notification to the enrollee regarding a
disposition of the enrollee's grievance that denies, modifies, or
delays health care services, the plan shall provide the enrollee with
a one- or two-page application form approved by the department, and
an addressed envelope, which the enrollee may return to initiate an
independent medical review. The plan shall include on the form any
information required by the department to facilitate the completion
of the independent medical review, such as the enrollee's diagnosis
or condition, the nature of the disputed health care service sought
by the enrollee, a means to identify the enrollee's case, and any
other material information. The form shall also include the
following:
(1) Notice that a decision not to participate in the independent
medical review process may cause the enrollee to forfeit any
statutory right to pursue legal action against the plan regarding the
disputed health care service.
(2) A statement indicating the enrollee's consent to obtain any
necessary medical records from the plan, any of its contracting
providers, and any out-of-plan provider the enrollee may have
consulted on the matter, to be signed by the enrollee.
(3) Notice of the enrollee's right to provide information or
documentation, either directly or through the enrollee's provider,
regarding any of the following:
(A) A provider recommendation indicating that the disputed health
care service is medically necessary for the enrollee's medical
condition.
(B) Medical information or justification that a disputed health
care service, on an urgent care or emergency basis, was medically
necessary for the enrollee's medical condition.
(C) Reasonable information supporting the enrollee's position that
the disputed health care service is or was medically necessary for
the enrollee's medical condition, including all information provided
to the enrollee by the plan or any of its contracting providers,
still in the possession of the enrollee, concerning a plan or
provider decision regarding disputed health care services, and a copy
of any materials the enrollee submitted to the plan, still in the
possession of the enrollee, in support of the grievance, as well as
any additional material that the enrollee believes is relevant.
(4) A section designed to collect information on the enrollee's
ethnicity, race, and primary language spoken that includes both of
the following:
(A) A statement of intent indicating that the information is used
for statistics only, in order to ensure that all enrollees get the
best care possible.
(B) A statement indicating that providing this information is
optional and will not affect the independent medical review process
in any way.
(n) Upon notice from the department that the health care service
plan's enrollee has applied for an independent medical review, the
plan or its contracting providers shall provide to the independent
medical review organization designated by the department a copy of
all of the following documents within three business days of the plan'
s receipt of the department's notice of a request by an enrollee for
an independent review:
(1) (A) A copy of all of the enrollee's medical records in the
possession of the plan or its contracting providers relevant to each
of the following:
(i) The enrollee's medical condition.
(ii) The health care services being provided by the plan and its
contracting providers for the condition.
(iii) The disputed health care services requested by the enrollee
for the condition.
(B) Any newly developed or discovered relevant medical records in
the possession of the plan or its contracting providers after the
initial documents are provided to the independent medical review
organization shall be forwarded immediately to the independent
medical review organization. The plan shall concurrently provide a
copy of medical records required by this subparagraph to the enrollee
or the enrollee's provider, if authorized by the enrollee, unless
the offer of medical records is declined or otherwise prohibited by
law. The confidentiality of all medical record information shall be
maintained pursuant to applicable state and federal laws.
(2) A copy of all information provided to the enrollee by the plan
and any of its contracting providers concerning plan and provider
decisions regarding the enrollee's condition and care, and a copy of
any materials the enrollee or the enrollee's provider submitted to
the plan and to the plan's contracting providers in support of the
enrollee's request for disputed health care services. This
documentation shall include the written response to the enrollee's
grievance, required by paragraph (4) of subdivision (a) of Section
1368. The confidentiality of any enrollee medical information shall
be maintained pursuant to applicable state and federal laws.
(3) A copy of any other relevant documents or information used by
the plan or its contracting providers in determining whether disputed
health care services should have been provided, and any statements
by the plan and its contracting providers explaining the reasons for
the decision to deny, modify, or delay disputed health care services
on the basis of medical necessity. The plan shall concurrently
provide a copy of documents required by this paragraph, except for
any information found by the director to be legally privileged
information, to the enrollee and the enrollee's provider. The
department and the independent medical review organization shall
maintain the confidentiality of any information found by the director
to be the proprietary information of the plan.
(o) This section shall become operative on July 1, 2015.
SEC. 4. Section 10123.193 is added to the Insurance Code, to read:
10123.193. (a) Every health insurer that provides coverage for
outpatient prescription drug benefits shall provide coverage for all
medically necessary outpatient prescription drugs, except as
described in this section.
(1) "Outpatient prescription drugs" are self-administered drugs
approved by the federal Food and Drug Administration for sale to the
public through retail or mail order pharmacies that require
prescriptions and are not provided for use on an inpatient basis.
(2) Coverage for outpatient prescription drugs shall include
coverage for disposable devices that are medically necessary for the
administration of a covered outpatient prescription drug, including
spacers and inhalers for the administration of aerosol outpatient
prescription drugs, and syringes for self-injectible outpatient
prescription drugs that are not dispensed in prefilled syringes. For
purposes of this paragraph, the term "disposable" includes devices
that may be used more than once before disposal. This section does
not create an obligation for a plan to provide coverage for a durable
medical equipment benefit.
(b) Standards for an outpatient prescription drug benefit shall be
as follows:
(1) An outpatient prescription drug benefit offered by a health
insurer policy shall comply with the requirements of this part and
the regulations promulgated by the commissioner.
(2) All clinical aspects of a policy's outpatient prescription
drug benefit shall be developed by qualified medical and pharmacy
professionals in accordance with good professional practice. The
insurer shall establish and document an internal process for ongoing
review by qualified medical and pharmacy professionals of the
clinical aspects of the outpatient
prescription drug benefit, including review of
limitations and exclusions, and the safety, efficacy, and utilization
of outpatient prescription drugs, including step therapy, if any.
(3) Insurers seeking to establish limitations or exclusions on an
outpatient prescription drug benefit shall do so consistent with
up-to-date evidence-based outcomes and current published,
peer-reviewed medical and pharmaceutical literature.
(4) A health insurance policy that provides coverage for
outpatient prescription drugs through a mail order pharmacy shall
have written policies and procedures documenting that the health
insurance policy's mail order arrangements are in compliance with the
requirements of this part, and applicable California and federal
laws regarding pharmacists and pharmacy services. The mail order
pharmacy process shall conform effectively and efficiently with an
insurer's processes for prior authorization for coverage of medically
necessary drugs as required by this part, and shall include
standards for timely delivery and a contingency mechanism for
providing the drug if a mail order provider fails to meet the
delivery standards.
(5) In reviewing copayments, coinsurance, deductibles,
limitations, or exclusions, the department's approval or disapproval
may be based upon all relevant factors, including, but not limited
to, the following:
(A) The type and number of insureds affected.
(B) The clinical efficacy of the drug or drugs proposed to be
limited or excluded.
(C) The availability of therapeutic equivalents or other drugs
medically necessary for treatment of health conditions.
(D) The specific health insurance products to which the copayment,
coinsurance, deductible, limitation, or exclusion will apply.
(E) The duration of the limitation or exclusion.
(F) The rationale for the copayment, coinsurance, deductible,
limitation or exclusion.
(G) The projected effect of the copayment, coinsurance,
deductible, limitation, or exclusion on the affordability and
accessibility of coverage.
(H) The projected comparative clinical effect, including any
potential risk of adverse health outcomes, based upon utilization
data and review of peer-reviewed professional literature.
(I) The overall copayment structure of the product, including
whether the copayment, coinsurance, or deductible contributes to the
overall out-of-pocket maximum for the product.
(J) Information regarding similar copayments, coinsurance levels,
deductibles, limitations, or exclusions previously approved by the
department.
(K) Evidence-based clinical studies and professional literature.
(L) The description of the copayment, coinsurance, deductible,
limitation, or exclusion as compared to other benefits and products
in the marketplace.
(M) Any other historical, statistical, or other information that
the submitting insurer considers pertinent to the request for
approval of the copayments, coinsurance level, deductibles,
limitation, or exclusion.
(c) Copayments, coinsurance and deductibles shall be consistent
with Sections 10112.28, 10112.29, and 10112.3.
(1) A policy's outpatient prescription drug benefit shall provide
that if the pharmacy's retail price for a prescription drug is less
than the applicable copayment amount, the insured shall not be
required to pay any more than the retail price.
(2) Proposed copayment structures or ranges, coinsurance, or
deductibles submitted to the commissioner for approval shall be based
upon a methodology that is fully described and documented, and that
complies with the standards set forth in this section. A health
insurer may use actual cost data on prescription drugs or, for
contracted services or products, nationally recognized data sources
used by the health insurer in developing the policy rates.
(3) A copayment or percentage coinsurance shall not exceed 50
percent of the cost to the insurer. A percentage coinsurance shall
meet each of the following additional requirements:
(A) Have a maximum dollar amount cap on the percentage coinsurance
that will be charged for an individual prescription.
(B) Apply towards an annual out-of-pocket maximum for the product.
(C) Apply towards an annual out-of-pocket maximum for the
outpatient prescription drug benefit, if any.
(4) In addition to compliance with this subdivision, copayments
and coinsurances shall comply with the standards identified in
subdivision (b), including that they shall be reasonable so as to
allow access to medically necessary outpatient prescription drugs,
and the department's determination may be based on all relevant
factors as provided in paragraph (5) of subdivision (b).
(5) As used in paragraph (3), the "cost to the insurer" means the
actual cost incurred by the insurer or its contracting provider to
acquire and dispense a covered outpatient prescription drug, without
subtracting or otherwise considering any copayment or coinsurance
amount to be paid by insureds. The cost to the insurer may include
average cost calculations as described in this section, and shall
include all discounts and other prospective cost and pricing
arrangements, as applicable. Insurers shall account for any rebates
and other retrospective cost and pricing arrangements for outpatient
prescription drugs by verifying that the rebates and other
retrospective cost and pricing arrangements for outpatient
prescription drugs are applied by the insurer to reduce costs for the
policyholders.
(d) Policies that provide coverage for outpatient prescription
drug benefits may apply the following limitations:
(1) A policy may impose prior authorization requirements on
outpatient prescription drug benefits, consistent with the
requirements of this part and corresponding regulations.
(2) When there is more than one drug that is appropriate for the
treatment of a medical condition, a policy may require step therapy.
A policy that requires step therapy shall have an expeditious process
in place to authorize exceptions to step therapy when medically
necessary and to conform effectively and efficiently with continuity
of care requirements of this part and regulations. In circumstances
where an insured is changing policies, the new policy may not require
the insured to repeat step therapy when that insured is already
being treated for a medical condition by an outpatient prescription
drug, provided that the drug is appropriately prescribed and is
considered safe and effective for the insured's condition. Nothing in
this section shall preclude the new policy from imposing a prior
authorization requirement pursuant for the continued coverage of an
outpatient prescription drug prescribed pursuant to step therapy
imposed by the former policy, or preclude the prescribing provider
from prescribing another drug covered by the new policy that is
medically appropriate for the insured. Step therapy, including the
expeditious process for exception and the instances when an insured
is changing policies, shall be subject to subdivision (b). For
purposes of this section, "step therapy" means a protocol that
specifies the sequence in which different prescription drugs for a
given medical condition that are medically appropriate for a
particular patient are to be prescribed.
(3) A policy shall provide coverage for the medically necessary
dosage and quantity of the drug prescribed for the treatment of a
medical condition consistent with professionally recognized standards
of practice.
(A) A policy may limit the amount of the drug dispensed at any one
time to a 30-day supply or, if the treatment is for less than 30
days, for the medically necessary amount of the drug.
(B) A policy may impose a requirement that maintenance drugs be
dispensed in a two-month or greater supply.
(C) A policy may establish a mandatory mail order process for
maintenance drugs when dispensed in a three-month supply or greater
quantities, but shall not impose any fees or costs for mandatory mail
order prescriptions other than the applicable copayment or
coinsurance. A policy shall not require an insured to fill a
prescription by mail if the prescribed drug is not available to be
filled in that manner.
(D) For purposes of this section, "maintenance drugs" means those
outpatient prescription drugs that are prescribed for the insured on
a continual basis to treat a chronic condition.
(4) Policies may require an insured who is prescribed drugs for
smoking cessation to be enrolled in or to have completed a smoking
cessation program, if covered by the policy prior to or concurrent
with receiving the prescription drug.
(5) Other limitations that the department may approve pursuant to
this section.
(e) Policies that provide coverage for outpatient prescription
drug benefits are not required to provide coverage for prescription
drugs that meet the following conditions:
(1) When prescribed for cosmetic purposes. For purposes of this
section "cosmetic purposes" means solely for the purpose of altering
or affecting normal structures of the body to improve appearance
rather than function.
(2) When prescribed solely for the treatment of hair loss, sexual
dysfunction, athletic performance, anti-aging for cosmetic purposes,
and mental performance. Drugs for mental performance shall not be
excluded from coverage when they are used to treat diagnosed mental
illness or medical conditions affecting memory, including, but not
limited to, treatment of the conditions or symptoms of dementia or
Alzheimer's disease.
(3) When prescribed solely for the purposes of losing weight,
except when medically necessary for the treatment of morbid obesity.
Policies may require insureds who are prescribed drugs for morbid
obesity to be enrolled in a comprehensive weight loss program, if
covered by the policy, for a reasonable period of time prior to or
concurrent with receiving the prescription drug.
(4) When prescribed solely for the purpose of shortening the
duration of the common cold.
(5) Drugs that are available over the counter. A policy shall not
exclude coverage of an entire class of prescription drugs when one
drug within that class becomes available over the counter. A policy
that seeks to exclude coverage for an entire class of drugs when more
than one drug within that class become available over the counter
shall first file a notice of material modification and obtain the
department's prior approval in accordance with subdivision (g).
(6) Replacement of lost or stolen drugs.
(7) Drugs when prescribed by noncontracting providers for
noncovered procedures that are not authorized by an insurer or a
provider except when coverage is otherwise required in the context of
emergency services.
(8) Other categories of prescription drugs approved by the
department pursuant to this section.
(f) A health insurer policy shall have written policies and
procedures for its outpatient prescription drug benefits and quality
assurance systems in place for the early identification and swift
correction of problems in the accessibility and availability of
outpatient prescription drug benefits. A contract between a health
insurer and a prescription drug benefit provider shall include
provisions, terms, and conditions sufficient to ensure that the
standards and requirements of this section are met.
(g) Any exclusion or limitation on an outpatient prescription drug
benefit that is not described in subdivision (d) or (e) shall not be
applied to a policy's outpatient prescription drug benefit unless an
insurer has filed a notice of material modification with the
department and received approval by order to apply the exclusion or
limitation. The order of approval may be issued subject to specified
terms and conditions, or for specified periods, as the department may
determine are necessary and appropriate. Following issuance of an
order approving an exclusion or limitation, any other insurer may
apply the same exclusion or limitation to its outpatient prescription
drug benefit if it files an amendment with the department not less
than 30 days prior to implementation of the exclusion or limitation,
represents that it is exactly the same as that previously approved by
order, provides specific reference to the order number and date
issued, and addresses any specified terms and conditions upon that
order, as applicable.
SEC. 5. Section 10169 of the Insurance Code, as amended by Section
7 of Chapter 872 of the Statutes of 2012, is amended to read:
10169. (a) Commencing January 1, 2001, there is hereby
established in the department the Independent Medical Review System.
(b) For the purposes of this chapter, "disputed health care
service" means any health care service eligible for coverage and
payment under a disability insurance contract that has been denied,
modified, or delayed by a decision of the insurer, or by one of its
contracting providers, in whole or in part due to a finding that the
service is not medically necessary. A decision regarding a disputed
health care service relates to the practice of medicine and is not a
coverage decision. A disputed health care service does not include
services provided by a group or individual policy of vision-only or
dental-only coverage, except to the extent that (1) the service
involves the practice of medicine, or (2) is provided pursuant to a
contract with a disability insurer that covers hospital, medical, or
surgical benefits. If an insurer, or one of its contracting
providers, issues a decision denying, modifying, or delaying health
care services, based in whole or in part on a finding that the
proposed health care services are not a covered benefit under the
contract that applies to the insured, the statement of decision shall
clearly specify the provision in the contract that excludes that
coverage.
(c) For the purposes of this chapter, "coverage decision" means
the approval or denial of health care services by a disability
insurer, or by one of its contracting entities, substantially based
on a finding that the provision of a particular service is included
or excluded as a covered benefit under the terms and conditions of
the disability insurance contract. A coverage decision does not
encompass a disability insurer or contracting provider decision
regarding a disputed health care service.
(d) (1) All insured grievances involving a disputed health care
service are eligible for review under the Independent Medical Review
System if the requirements of this article are met. If the department
finds that an insured grievance involving a disputed health care
service does not meet the requirements of this article for review
under the Independent Medical Review System, the insured request for
review shall be treated as a request for the department to review the
grievance. All other insured grievances, including grievances
involving coverage decisions, remain eligible for review by the
department.
(2) In any case in which an insured or provider asserts that a
decision to deny, modify, or delay health care services was based, in
whole or in part, on consideration of medical necessity, the
department shall have the final authority to determine whether the
grievance is more properly resolved pursuant to an independent
medical review as provided under this article.
(3) The department shall be the final arbiter when there is a
question as to whether an insured grievance is a disputed health care
service or a coverage decision. The department shall establish a
process to complete an initial screening of an insured grievance. If
there appears to be any medical necessity issue, the grievance shall
be resolved pursuant to an independent medical review as provided
under this article.
(e) Every disability insurance contract that is issued, amended,
renewed, or delivered in this state on or after January 1, 2000,
shall, effective, January 1, 2001, provide an insured with the
opportunity to seek an independent medical review whenever health
care services have been denied, modified, or delayed by the insurer,
or by one of its contracting providers, if the decision was based in
whole or in part on a finding that the proposed health care services
are not medically necessary. For purposes of this article, an insured
may designate an agent to act on his or her behalf. The provider may
join with or otherwise assist the insured in seeking an independent
medical review, and may advocate on behalf of the insured.
(f) Medicare beneficiaries enrolled in Medicare + Choice products
shall not be excluded unless expressly preempted by federal law.
(g) The department may seek to integrate the quality of care and
consumer protection provisions, including remedies, of the
Independent Medical Review System with related dispute resolution
procedures of other health care agency programs, including the
Medicare program, in a way that minimizes the potential for
duplication, conflict, and added costs. Nothing in this subdivision
shall be construed to limit any rights conferred upon insureds under
this chapter.
(h) The independent medical review process authorized by this
article is in addition to any other procedures or remedies that may
be available.
(i) No later than January 1, 2001, every disability insurer shall
prominently display in every insurer member handbook or relevant
informational brochure, in every insurance contract, on insured
evidence of coverage forms, on copies of insurer procedures for
resolving grievances, on letters of denials issued by either the
insurer or its contracting organization, and on all written responses
to grievances, information concerning the right of an insured to
request an independent medical review in cases where the insured
believes that health care services have been improperly denied,
modified, or delayed by the insurer, or by one of its contracting
providers.
(j) An insured may apply to the department for an independent
medical review when all of the following conditions are met:
(1) (A) The insured's provider has recommended a health care
service as medically necessary, or
(B) The insured has received urgent care or emergency services
that a provider determined was medically necessary, or
(C) The insured, in the absence of a provider recommendation under
subparagraph (A) or the receipt of urgent care or emergency services
by a provider under subparagraph (B), has been seen by a contracting
provider for the diagnosis or treatment of the medical condition for
which the insured seeks independent review. The insurer shall
expedite access to a contracting provider upon request of an insured.
The contracting provider need not recommend the disputed health care
service as a condition for the insured to be eligible for an
independent review.
For purposes of this article, the insured's provider may be a
noncontracting provider. However, the insurer shall have no liability
for payment of services provided by a noncontracting provider,
except as provided pursuant to Section 10169.3.
(2) The disputed health care service has been denied, modified, or
delayed by the insurer, or by one of its contracting providers,
based in whole or in part on a decision that the health care service
is not medically necessary.
(3) The insured has filed a grievance with the insurer or its
contracting provider, and the disputed decision is upheld or the
grievance remains unresolved after 30 days. The insured shall not be
required to participate in the insurer's grievance process for more
than 30 days. In the case of a grievance that requires expedited
review, the insured shall not be required to participate in the
insurer's grievance process for more than three days.
(k) (1) An insured may apply to the
department for an independent medical review of a decision to deny,
modify, or delay health care services, based in whole or in part on a
finding that the disputed health care services are not medically
necessary, within six months of any of the qualifying periods or
events under subdivision (j). The commissioner may extend the
application deadline beyond six months if the circumstances of a case
warrant the extension.
(2) An insured or an insured's provider may request an expeditious
medical review pursuant to Section 10169.1 if there is an imminent
and serious threat to the health of the insured, including, but not
limited to, serious pain, the potential loss of life, limb, or major
bodily function, or the immediate and serious deterioration of the
health of the insured. Whether or not the insured or the insured's
provider requests an expeditious medical review, if the department
determines that there is an imminent and serious threat to the health
of the insured, then the department shall refer the decision for an
expeditious medical review consistent with Section 10169.1 without
completing the requirements of subdivision (m).
( l ) The insured shall pay no application or
processing fees of any kind.
(m) As part of its notification to the insured regarding a
disposition of the insured's grievance that denies, modifies, or
delays health care services, the insurer shall provide the insured
with a one-page application form approved by the department, and an
addressed envelope, which the insured may return to initiate an
independent medical review. The insurer shall include on the form any
information required by the department to facilitate the completion
of the independent medical review, such as the insured's diagnosis or
condition, the nature of the disputed health care service sought by
the insured, a means to identify the insured's case, and any other
material information. The form shall also include the following:
(1) Notice that a decision not to participate in the independent
review process may cause the insured to forfeit any statutory right
to pursue legal action against the insurer regarding the disputed
health care service.
(2) A statement indicating the insured's consent to obtain any
necessary medical records from the insurer, any of its contracting
providers, and any noncontracting provider the insured may have
consulted on the matter, to be signed by the insured.
(3) Notice of the insured's right to provide information or
documentation, either directly or through the insured's provider,
regarding any of the following:
(A) A provider recommendation indicating that the disputed health
care service is medically necessary for the insured's medical
condition.
(B) Medical information or justification that a disputed health
care service, on an urgent care or emergency basis, was medically
necessary for the insured's medical condition.
(C) Reasonable information supporting the insured's position that
the disputed health care service is or was medically necessary for
the insured's medical condition, including all information provided
to the insured by the insurer or any of its contracting providers,
still in the possession of the insured, concerning an insurer or
provider decision regarding disputed health care services, and a copy
of any materials the insured submitted to the insurer, still in the
possession of the insured, in support of the grievance, as well as
any additional material that the insured believes is relevant.
(n) Upon notice from the department that the insured has applied
for an independent medical review, the insurer or its contracting
providers, shall provide to the independent medical review
organization designated by the department a copy of all of the
following documents within three business days of the insurer's
receipt of the department's notice of a request by an insured for an
independent review:
(1) (A) A copy of all of the insured's medical records in the
possession of the insurer or its contracting providers relevant to
each of the following:
(i) The insured's medical condition.
(ii) The health care services being provided by the insurer and
its contracting providers for the condition.
(iii) The disputed health care services requested by the insured
for the condition.
(B) Any newly developed or discovered relevant medical records in
the possession of the insurer or its contracting providers after the
initial documents are provided to the independent medical review
organization shall be forwarded immediately to the independent
medical review organization. The insurer shall concurrently provide a
copy of medical records required by this subparagraph to the insured
or the insured's provider, if authorized by the insured, unless the
offer of medical records is declined or otherwise prohibited by law.
The confidentiality of all medical record information shall be
maintained pursuant to applicable state and federal laws.
(2) A copy of all information provided to the insured by the
insurer and any of its contracting providers concerning insurer and
provider decisions regarding the insured's condition and care, and a
copy of any materials the insured or the insured's provider submitted
to the insurer and to the insurer's contracting providers in support
of the insured's request for disputed health care services. This
documentation shall include the written response to the insured's
grievance. The confidentiality of any insured medical information
shall be maintained pursuant to applicable state and federal laws.
(3) A copy of any other relevant documents or information used by
the insurer or its contracting providers in determining whether
disputed health care services should have been provided, and any
statements by the insurer and its contracting providers explaining
the reasons for the decision to deny, modify, or delay disputed
health care services on the basis of medical necessity. The insurer
shall concurrently provide a copy of documents required by this
paragraph, except for any information found by the commissioner to be
legally privileged information, to the insured and the insured's
provider. The department and the independent medical review
organization shall maintain the confidentiality of any information
found by the commissioner to be the proprietary information of the
insurer.
(o) This section shall become inoperative on July 1, 2015, and, as
of January 1, 2016, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2016, deletes or
extends the dates on which it becomes inoperative and is repealed.
SEC. 6. Section 10169 of the Insurance Code, as added by Section 8
of Chapter 872 of the Statutes of 2012, is amended to read:
10169. (a) Commencing January 1, 2001, there is hereby
established in the department the Independent Medical Review System.
(b) For the purposes of this chapter, "disputed
health care service" means any health care service eligible for
coverage and payment under a disability insurance contract that has
been denied, modified, or delayed by a decision of the insurer, or by
one of its contracting providers, in whole or in part due to a
finding that the service is not medically necessary. A decision
regarding a disputed health care service relates to the practice of
medicine and is not a coverage decision. A disputed health care
service does not include services provided by a group or individual
policy of vision-only or dental-only coverage, except to the extent
that (1) the service involves the practice of medicine, or (2) is
provided pursuant to a contract with a disability insurer that covers
hospital, medical, or surgical benefits. If an insurer, or one of
its contracting providers, issues a decision denying, modifying, or
delaying health care services, based in whole or in part on a finding
that the proposed health care services are not a covered benefit
under the contract that applies to the insured, the statement of
decision shall clearly specify the provision in the contract that
excludes that coverage.
(c) For the purposes of this chapter, "coverage decision" means
the approval or denial of health care services by a disability
insurer, or by one of its contracting entities, substantially based
on a finding that the provision of a particular service is included
or excluded as a covered benefit under the terms and conditions of
the disability insurance contract. A coverage decision does not
encompass a disability insurer or contracting provider decision
regarding a disputed health care service.
(d) (1) All insured grievances involving a disputed health care
service are eligible for review under the Independent Medical Review
System if the requirements of this article are met. If the department
finds that an insured grievance involving a disputed health care
service does not meet the requirements of this article for review
under the Independent Medical Review System, the insured request for
review shall be treated as a request for the department to review the
grievance. All other insured grievances, including grievances
involving coverage decisions, remain eligible for review by the
department.
(2) In any case in which an insured or provider asserts that a
decision to deny, modify, or delay health care services was based, in
whole or in part, on consideration of medical necessity, the
department shall have the final authority to determine whether the
grievance is more properly resolved pursuant to an independent
medical review as provided under this article.
(3) The department shall be the final arbiter when there is a
question as to whether an insured grievance is a disputed health care
service or a coverage decision. The department shall establish a
process to complete an initial screening of an insured grievance. If
there appears to be any medical necessity issue, the grievance shall
be resolved pursuant to an independent medical review as provided
under this article.
(e) Every disability insurance contract that is issued, amended,
renewed, or delivered in this state on or after January 1, 2000,
shall provide an insured with the opportunity to seek an independent
medical review whenever health care services have been denied,
modified, or delayed by the insurer, or by one of its contracting
providers, if the decision was based in whole or in part on a finding
that the proposed health care services are not medically necessary.
For purposes of this article, an insured may designate an agent to
act on his or her behalf. The provider may join with or otherwise
assist the insured in seeking an independent medical review, and may
advocate on behalf of the insured.
(f) Medicare beneficiaries enrolled in Medicare + Choice products
shall not be excluded unless expressly preempted by federal law.
(g) The department may seek to integrate the quality of care and
consumer protection provisions, including remedies, of the
Independent Medical Review System with related dispute resolution
procedures of other health care agency programs, including the
Medicare program, in a way that minimizes the potential for
duplication, conflict, and added costs. Nothing in this subdivision
shall be construed to limit any rights conferred upon insureds under
this chapter.
(h) The independent medical review process authorized by this
article is in addition to any other procedures or remedies that may
be available.
(i) Every disability insurer shall prominently display in every
insurer member handbook or relevant informational brochure, in every
insurance contract, on insured evidence of coverage forms, on copies
of insurer procedures for resolving grievances, on letters of denials
issued by either the insurer or its contracting organization, and on
all written responses to grievances, information concerning the
right of an insured to request an independent medical review in cases
where the insured believes that health care services have been
improperly denied, modified, or delayed by the insurer, or by one of
its contracting providers.
(j) An insured may apply to the department for an independent
medical review when all of the following conditions are met:
(1) (A) The insured's provider has recommended a health care
service as medically necessary, or
(B) The insured has received urgent care or emergency services
that a provider determined was medically necessary, or
(C) The insured, in the absence of a provider recommendation under
subparagraph (A) or the receipt of urgent care or emergency services
by a provider under subparagraph (B), has been seen by a contracting
provider for the diagnosis or treatment of the medical condition for
which the insured seeks independent review. The insurer shall
expedite access to a contracting provider upon request of an insured.
The contracting provider need not recommend the disputed health care
service as a condition for the insured to be eligible for an
independent review.
For purposes of this article, the insured's provider may be a
noncontracting provider. However, the insurer shall have no liability
for payment of services provided by a noncontracting provider,
except as provided pursuant to Section 10169.3.
(2) The disputed health care service has been denied, modified, or
delayed by the insurer, or by one of its contracting providers,
based in whole or in part on a decision that the health care service
is not medically necessary.
(3) The insured has filed a grievance with the insurer or its
contracting provider, and the disputed decision is upheld or the
grievance remains unresolved after 30 days. The insured shall not be
required to participate in the insurer's grievance process for more
than 30 days. In the case of a grievance that requires expedited
review, the insured shall not be required to participate in the
insurer's grievance process for more than three days.
(k) (1) An insured may apply to the
department for an independent medical review of a decision to deny,
modify, or delay health care services, based in whole or in part on a
finding that the disputed health care services are not medically
necessary, within six months of any of the qualifying periods or
events under subdivision (j). The commissioner may extend the
application deadline beyond six months if the circumstances of a case
warrant the extension.
(2) An insured or an insured's provider may request an expeditious
medical review pursuant to Section 10169.1 if there is an imminent
and serious threat to the health of the insured, including, but not
limited to, serious pain, the potential loss of life, limb, or major
bodily function, or the immediate and serious deterioration of the
health of the insured. Whether or not the insured or the insured's
provider requests an expeditious medical review, if the department
determines that there is an imminent and serious threat to the health
of the insured, then the department shall refer the decision for an
expeditious medical review consistent with Section 10169.1 without
completing the requirements of subdivision (m).
( l ) The insured shall pay no application or
processing fees of any kind.
(m) As part of its notification to the insured regarding a
disposition of the insured's grievance that denies, modifies, or
delays health care services, the insurer shall provide the insured
with a one- or two-page application form approved by the department,
and an addressed envelope, which the insured may return to initiate
an independent medical review. The insurer shall include on the form
any information required by the department to facilitate the
completion of the independent medical review, such as the insured's
diagnosis or condition, the nature of the disputed health care
service sought by the insured, a means to identify the insured's
case, and any other material information. The form shall also include
the following:
(1) Notice that a decision not to participate in the independent
review process may cause the insured to forfeit any statutory right
to pursue legal action against the insurer regarding the disputed
health care service.
(2) A statement indicating the insured's consent to obtain any
necessary medical records from the insurer, any of its contracting
providers, and any noncontracting provider the insured may have
consulted on the matter, to be signed by the insured.
(3) Notice of the insured's right to provide information or
documentation, either directly or through the insured's provider,
regarding any of the following:
(A) A provider recommendation indicating that the disputed health
care service is medically necessary for the insured's medical
condition.
(B) Medical information or justification that a disputed health
care service, on an urgent care or emergency basis, was medically
necessary for the insured's medical condition.
(C) Reasonable information supporting the insured's position that
the disputed health care service is or was medically necessary for
the insured's medical condition, including all information provided
to the insured by the insurer or any of its contracting providers,
still in the possession of the insured, concerning an insurer or
provider decision regarding disputed health care services, and a copy
of any materials the insured submitted to the insurer, still in the
possession of the insured, in support of the grievance, as well as
any additional material that the insured believes is relevant.
(4) A section designed to collect information on the insured's
ethnicity, race, and primary language spoken that includes both of
the following:
(A) A statement of intent indicating that the information is used
for statistics only, in order to ensure that all insureds get the
best care possible.
(B) A statement indicating that providing this information is
optional and will not affect the independent medical review process
in any way.
(n) Upon notice from the department that the insured has applied
for an independent medical review, the insurer or its contracting
providers, shall provide to the independent medical review
organization designated by the department a copy of all of the
following documents within three business days of the insurer's
receipt of the department's notice of a request by an insured for an
independent review:
(1) (A) A copy of all of the insured's medical records in the
possession of the insurer or its contracting providers relevant to
each of the following:
(i) The insured's medical condition.
(ii) The health care services being provided by the insurer and
its contracting providers for the condition.
(iii) The disputed health care services requested by the insured
for the condition.
(B) Any newly developed or discovered relevant medical records in
the possession of the insurer or its contracting providers after the
initial documents are provided to the independent medical review
organization shall be forwarded immediately to the independent
medical review organization. The insurer shall concurrently provide a
copy of medical records required by this subparagraph to the insured
or the insured's provider, if authorized by the insured, unless the
offer of medical records is declined or otherwise prohibited by law.
The confidentiality of all medical record information shall be
maintained pursuant to applicable state and federal laws.
(2) A copy of all information provided to the insured by the
insurer and any of its contracting providers concerning insurer and
provider decisions regarding the insured's condition and care, and a
copy of any materials the insured or the insured's provider submitted
to the insurer and to the insurer's contracting providers in support
of the insured's request for disputed health care services. This
documentation shall include the written response to the insured's
grievance. The confidentiality of any insured medical information
shall be maintained pursuant to applicable state and federal laws.
(3) A copy of any other relevant documents or information used by
the insurer or its contracting providers in determining whether
disputed health care services should have been provided, and any
statements by the insurer and its contracting providers explaining
the reasons for the decision to deny, modify, or delay disputed
health care services on the basis of medical necessity. The insurer
shall concurrently provide a copy of documents required by this
paragraph, except for any information found by the commissioner to be
legally privileged information, to the insured and the insured's
provider. The department and the independent medical review
organization shall maintain the confidentiality of any information
found by the commissioner to be the proprietary information of the
insurer.
(o) This section shall become operative on July 1, 2015.
SEC. 7. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.