Amended in Assembly June 30, 2014

Amended in Senate May 27, 2014

Amended in Senate April 29, 2014

Amended in Senate March 28, 2014

Senate BillNo. 1052


Introduced by Senator Torres

begin insert

(Coauthor: Assembly Member Waldron)

end insert

February 18, 2014


An act to add Section 100503.1begin delete totheend deletebegin insert to theend insert Government Code, to amend Sections 1363.01 and 1368.016 of, and to add Section 1367.205 to, the Health and Safety Code, and to amend Section 10123.199 of, and to add Section 10123.192 to, the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

SB 1052, as amended, Torres. Health care coverage.

Existing law, the Knox-Keene Health Care Service Plan Act (Knox-Keene Act) of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance. The Knox-Keene Act requires a health care service plan that provides prescription drug benefits and maintains one or more drug formularies to provide to members of the public, upon request, a copy of the most current list of prescription drugs on the formulary, as specified.

This bill would require a health care service plan or health insurer that provides prescription drug benefits and maintains one or more drug formularies to post those formularies on its Internet Webbegin delete site,end deletebegin insert site andend insert update that posting withinbegin delete 24end deletebegin insert 72end insert hours after making any formularybegin delete changes, use a standard template to display formularies, and include in any published formulary, among other information, the prior authorization or step edit requirements for, and the range of cost sharing for, each drug included on the formulary. The bill would authorize the Department of Managed Health Care and the Department of Insurance to develop a standard formulary template and would require plans and insurers to use that template to comply with specified provisions of the bill.end deletebegin insert changes. The bill would require the departments to jointly develop a standard formulary template and would require plans and insurers to use that template to display formularies, as specified.end insert The bill would make other related conforming changes. Because a willful violation of these requirements by a health care service plan would be a crime, the bill would impose a state-mandated local program.

Existing law establishes the California Health Benefit Exchange within state government, specifies the powers and duties of the board governing the Exchange, and requires the board to facilitate the purchase of qualified health plans through the Exchange by qualified individuals and small employers.

Existing law requires the board to determine the minimum requirements a health care service plan or health insurer must meet to be considered for participation in the Exchange and the standards and criteria for selecting qualified health plans to be offered through the Exchange that are in the best interests of qualified individuals and qualified small employers.

This bill would require the board of the Exchange to ensure that its Internet Web site provides a direct link to the formularies for each qualified health plan offered through the Exchange that are posted by plans and insurers pursuant to the bill’s provisions. The bill would also require the board, on or beforebegin delete January 1, 2016,end deletebegin insert the later of October 1, 2017, or 18 months after the standard formulary template described above is developed,end insert to create a search tool on its Internet Web site that allows potential enrollees to search for qualified health plans by a particular drugbegin delete and by a particular therapeutic condition.end deletebegin insert and compare coverage and cost sharing for that drug.end insert

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:

P3    1

SECTION 1.  

Section 100503.1 is added to the Government
2Code
, to read:

3

100503.1.  

(a) The board shall ensure that the Internet Web
4site maintained under subdivision (c) of Section 100502 provides
5a direct link to the formulary, or formularies, for each qualified
6health plan offered through the Exchange that is posted by the
7carrier pursuant to Section 1367.205 of the Health and Safety Code
8or Section 10123.192 of the Insurance Code.

9(b) On or beforebegin delete January 1, 2016,end deletebegin insert the later of October 1, 2017,
10or the date that is 18 months after the date the standard formulary
11template is developed pursuant to subdivision (b) of Section
121367.205 of the Health and Safety Code and subdivision (b) of
13Section 10123.192 of the Insurance Code,end insert
the board shall create
14a search tool on the Internet Web site maintained under subdivision
15(c) of Section 100502 that allows potential enrollees to search for
16qualified health plans by a particular drugbegin delete and by a particular
17therapeutic condition.end delete
begin insert and compare coverage and cost sharing for
18that drug.end insert

19

SEC. 2.  

Section 1363.01 of the Health and Safety Code is
20amended to read:

21

1363.01.  

(a) Every plan that covers prescription drug benefits
22shall provide notice in the evidence of coverage and disclosure
23form to enrollees regarding whether the plan uses a formulary.
24The notice shall be in language that is easily understood and in a
25format that is easy to understand. The notice shall include an
26explanation of what a formulary is, how the plan determines which
27prescription drugs are included or excluded, and how often the
28plan reviews the contents of the formulary.

29(b) Every plan that covers prescription drug benefits shall
30provide to members of the public, upon request, information
31regarding whether a specific drug or drugs are on the plan’s
32formulary. Notice of the opportunity to secure this information
33from the plan, including the plan’s telephone number for making
P4    1a request of this nature and the Internet Web site where the
2formulary is posted under Section 1367.205, shall be included in
3the evidence of coverage and disclosure form to enrollees.

4(c) Every plan shall notify enrollees, and members of the public
5who request formulary information, that the presence of a drug on
6the plan’s formulary does not guarantee that an enrollee will be
7prescribed that drug by his or her prescribing provider for a
8particular medical condition.

9

SEC. 3.  

Section 1367.205 is added to the Health and Safety
10Code
, to read:

11

1367.205.  

(a) In addition to the list required to be provided
12under Section 1367.20, a health care service plan that provides
13prescription drug benefits and maintains one or more drug
14formularies shall do all of the following:

15(1) Post the formulary or formularies for each product offered
16by the plan on the plan’s Internet Web site in a manner that is
17accessible and searchable by potential enrollees, enrollees, and
18providers.

19(2) Update the formularies posted pursuant to paragraph (1)
20with any change to those formularies withinbegin delete 24end deletebegin insert 72end insert hours after
21making the change.

22(3) begin deleteUse a standard end deletebegin insertNo later than six months after the date that
23a standard formulary template is developed under subdivision (b),
24use that end insert
template to display the formulary or formularies for each
25product offered by the plan.begin delete This template shall do both of the
26following:end delete

begin delete

27(A) Use the United States Pharmacopeia classification system.

28(B) Organize drugs by therapeutic class, listing drugs
29alphabetically.

30(4) Include all of the following on any published formulary for
31any product offered by the plan, including, but not limited to, the
32formulary or formularies posted pursuant to paragraph (1) and the
33list provided pursuant to Section 1367.20:

34(A) Any prior authorization or step edit requirements for each
35specific drug included on the formulary.

36(B) The range of cost sharing for a potential enrollee of each
37specific drug included on the formulary, as follows:

38(i) Under $100 - $.

39(ii) $100-$250 - $$.

40(iii) $251-$500 - $$$.

P5    1(iv) Over $500 - $$$$.

end delete
begin insert

2(b) (1) By April 1, 2016, the department and the Department
3of Insurance shall jointly, and with input from interested parties
4from at least one public meeting, develop a standard formulary
5template for purposes of paragraph (3) of subdivision (a). In
6developing the template, the department and Department of
7Insurance shall take into consideration existing requirements for
8reporting of formulary information established by the federal
9Centers for Medicare and Medicaid Services.

end insert
begin insert

10(2) The standard formulary template shall include the
11notification described in subdivision (c) of Section 1363.01, and
12as applied to a particular formulary for a product offered by a
13plan, shall do all of the following:

end insert
begin insert

14(A) Include information on cost sharing and utilization controls,
15including prior authorization or step therapy requirements, for
16each drug covered by the product. To the extent feasible, the
17template shall provide consumers with an estimate of their
18out-of-pocket costs for each drug covered by the product.

end insert
begin insert

19(B) Facilitate comparison of drug coverage, cost sharing, and
20utilization controls, including prior authorization or step therapy
21requirements, between products.

end insert

22(C) begin deleteIdentification of end deletebegin insertIndicate end insertany drugs on the formulary that
23are preferred over other drugs on the formulary.

begin delete

24(D) The notification described in subdivision (c) of Section
251363.01.

end delete
begin delete

26(b) The department may develop a standard formulary template
27provided that the department consults with the Department of
28 Insurance on the template design. If the department develops this
29template, a health care service plan shall use the template to comply
30with paragraph (3) of subdivision (a).

end delete
begin insert

31(D) Include information about the coverage of drugs under the
32product’s medical benefit. This information shall allow a consumer
33to easily determine whether a drug is covered.

end insert

34(c) For purposes of this section, “formulary” means the complete
35list of drugs preferred for use and eligible for coverage under a
36health care service plan product and includes the drugs covered
37under both the pharmacy benefit of the product and the medical
38benefit of the product.

39

SEC. 4.  

Section 1368.016 of the Health and Safety Code is
40amended to read:

P6    1

1368.016.  

(a) A health care service plan that provides coverage
2for professional mental health services, including a specialized
3health care service plan that provides coverage for professional
4mental health services, shall, pursuant to subdivision (f) of Section
51368.015, include on its Internet Web site, or provide a link to,
6the following information:

7(1) A telephone number that the enrollee or provider can call,
8during normal business hours, for assistance obtaining mental
9health benefits coverage information, including the extent to which
10 benefits have been exhausted, in-network provider access
11information, and claims processing information.

12(2) A link to prescription drug formularies posted pursuant to
13Section 1367.205, or instructions on how to obtain the formulary,
14as described in Section 1367.20.

15(3) A detailed summary that describes the process by which the
16plan reviews and authorizes or approves, modifies, or denies
17requests for health care services as described in Sections 1363.5
18and 1367.01.

19(4) Lists of providers or instructions on how to obtain the
20provider list, as required by Section 1367.26.

21(5) A detailed summary of the enrollee grievance process as
22described in Sections 1368 and 1368.015.

23(6) A detailed description of how an enrollee may request
24continuity of care pursuant to subdivisions (a) and (b) of Section
251373.95.

26(7) Information concerning the right, and applicable procedure,
27of an enrollee to request an independent medical review pursuant
28to Section 1374.30.

29(b) Any modified material described in subdivision (a) shall be
30updated at least quarterly.

31(c) The information described in subdivision (a) may be made
32available through a secured Internet Web site that is only accessible
33to enrollees.

34(d) The material described in subdivision (a) shall also be made
35available to enrollees in hard copy upon request.

36(e) Nothing in this article shall preclude a health care service
37plan from including additional information on its Internet Web
38site for applicants, enrollees or subscribers, or providers, including,
39but not limited to, the cost of procedures or services by health care
40providers in a plan’s network.

P7    1(f) The department shall include on the department’s Internet
2Web site a link to the Internet Web site of each health care service
3plan and specialized health care service plan described in
4subdivision (a).

5(g) This section shall not apply to Medicare supplement
6insurance, Employee Assistance Programs, short-term limited
7duration health insurance, Champus-supplement insurance, or
8TRI-CARE supplement insurance, or to hospital indemnity,
9accident-only, and specified disease insurance. This section shall
10also not apply to specialized health care service plans, except
11behavioral health-only plans.

12(h) This section shall not apply to a health care service plan that
13contracts with a specialized health care service plan, insurer, or
14other entity to cover professional mental health services for its
15enrollees, provided that the health care service plan provides a link
16on its Internet Web site to an Internet Web site operated by the
17specialized health care service plan, insurer, or other entity with
18which it contracts, and that plan, insurer, or other entity complies
19with this section or Section 10123.199 of the Insurance Code.

20

SEC. 5.  

Section 10123.192 is added to the Insurance Code, to
21read:

22

10123.192.  

(a) A health insurer that provides prescription drug
23benefits and maintains one or more drug formularies shall do all
24of the following:

25(1) Post the formulary or formularies for each product offered
26by the insurer on the insurer’s Internet Web site in a manner that
27is accessible and searchable by potential insureds, insureds, and
28providers.

29(2) Update the formularies posted pursuant to paragraph (1)
30with any change to those formularies withinbegin delete 24end deletebegin insert 72end insert hours after
31making the change.

32(3) begin deleteUse a standard end deletebegin insertNo later than six months after the date that
33a standard formulary template is developed under subdivision (b),
34use that end insert
template to display the formulary or formularies for each
35product offered by the insurer.begin delete This template shall do both of the
36following:end delete

begin delete

37(A) Use the United States Pharmacopeia classification system.

38(B) Organize drugs by therapeutic class, listing drugs
39alphabetically.

P8    1(4) Include all of the following on any published formulary for
2any product offered by the insurer, including, but not limited to,
3the formulary or formularies posted pursuant to paragraph (1):

4(A) Any prior authorization or step edit requirements for each
5specific drug included on the formulary.

6(B) The range of cost sharing for a potential insured of each
7specific drug included on the formulary, as follows:

8(i) Under $100 - $.

9(ii) $100-$250 - $$.

10(iii) $251-$500 - $$$.

11(iv) Over $500 - $$$$.

end delete
begin insert

12(b) (1) By April 1, 2016, the department and the Department
13of Managed Health Care shall jointly, and with input from
14interested parties from at least one public meeting, develop a
15standard formulary template for purposes of paragraph (3) of
16subdivision (a). In developing the template, the department and
17Department of Managed Health Care shall take into consideration
18existing requirements for reporting of formulary information
19established by the federal Centers for Medicare and Medicaid
20Services.

end insert
begin insert

21(2) The standard formulary template shall include a notification
22that the presence of a drug on the insurer’s formulary does not
23guarantee that an insured will be prescribed that drug by his or
24her prescribing provider for a particular medical condition. As
25applied to a particular formulary for a product offered by an
26insurer, the standard formulary template shall do all of the
27following:

end insert
begin insert

28(A) Include information on cost sharing and utilization controls,
29including prior authorization or step therapy requirements, for
30each drug covered by the product. To the extent feasible, the
31template shall provide consumers with an estimate of their
32out-of-pocket costs for each drug covered by the product.

end insert
begin insert

33(B) Facilitate comparison of drug coverage, cost sharing, and
34utilization controls, including prior authorization or step therapy
35requirements, between products.

end insert

36(C) begin deleteIdentification of end deletebegin insertIndicate end insertany drugs on the formulary that
37are preferred over other drugs on the formulary.

begin delete

38(D) A notification that the presence of a drug on the insurer’s
39formulary does not guarantee that an insured will be prescribed
P9    1that drug by his or her prescribing provider for a particular medical
2condition.

3(b) The department may develop a standard formulary template
4 provided that the department consults with the Department of
5Managed Health Care on the template design. If the department
6develops this template, a health insurer shall use the template to
7comply with paragraph (3) of subdivision (a).

end delete
begin insert

8(D) Include information about the coverage of drugs under the
9product’s medical benefit. This information shall allow a consumer
10to easily determine whether a drug is covered.

end insert

11(c) For purposes of this section, “formulary” means the complete
12list of drugs preferred for use and eligible for coverage under a
13health insurance product and includes the drugs covered under
14both the pharmacy benefit of the product and the medical benefit
15of the product.

16

SEC. 6.  

Section 10123.199 of the Insurance Code is amended
17to read:

18

10123.199.  

(a) A health insurer that provides coverage for
19professional mental health services shall establish an Internet Web
20site. Each Internet Web site shall include, or provide a link to, the
21following information:

22(1) A telephone number that the insured or provider can call,
23during normal business hours, for assistance obtaining mental
24health benefits coverage information, including the extent to which
25benefits have been exhausted, in-network provider access
26information, and claims processing information.

27(2) A link to prescription drug formularies posted pursuant to
28Section 10123.192, or instructions on how to obtain formulary
29information.

30(3) A detailed summary description of the process by which the
31insurer reviews and approves, modifies, or denies requests for
32health care services as described in Section 10123.135.

33(4) Lists of providers or instructions on how to obtain a provider
34list as required by Section 10133.1.

35(5) A detailed summary of the health insurer’s grievance process.

36(6) A detailed description of how the insured may request
37continuity of care as described in Section 10133.55.

38(7) Information concerning the right, and applicable procedure,
39of the insured to request an independent medical review pursuant
40to Section 10169.

P10   1(b) Except as otherwise specified, the material described in
2subdivision (a) shall be updated at least quarterly.

3(c) The information described in subdivision (a) may be made
4available through a secured Internet Web site that is only accessible
5to the insured.

6(d) The material described in subdivision (a) shall also be made
7available to insureds in hard copy upon request.

8(e) Nothing in this article shall preclude an insurer from
9including additional information on its Internet Web site for
10applicants or insureds, including, but not limited to, the cost of
11procedures or services by health care providers in an insurer’s
12network.

13(f) The department shall include on the department’s Internet
14Web site, a link to the Internet Web site of each health insurer
15described in subdivision (a).

16(g) This section shall not apply to Medicare supplement
17insurance, Employee Assistance Programs, short-term limited
18duration health insurance, Champus-supplement insurance, or
19TRI-CARE supplement insurance, or to hospital indemnity,
20accident-only, and specified disease insurance. This section shall
21also not apply to specialized health insurance policies, except
22behavioral health-only policies.

23(h) This section shall not apply to a health insurer that contracts
24with a specialized health care service plan, insurer, or other entity
25to cover professional mental health services for its insureds,
26provided that the health insurer provides a link on its Internet Web
27site to an Internet Web site operated by the specialized health care
28service plan, insurer, or other entity with which it contracts, and
29that plan, insurer, or other entity complies with this section or
30Section 1368.016 of the Health and Safety Code.

31

SEC. 7.  

No reimbursement is required by this act pursuant to
32Section 6 of Article XIII B of the California Constitution because
33the only costs that may be incurred by a local agency or school
34district will be incurred because this act creates a new crime or
35infraction, eliminates a crime or infraction, or changes the penalty
36for a crime or infraction, within the meaning of Section 17556 of
37the Government Code, or changes the definition of a crime within
P11   1the meaning of Section 6 of Article XIII B of the California
2Constitution.



O

    95