Amended in Assembly August 4, 2014

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 Bill No. 1052

Introduced by Senator Torres

(Coauthor: Assembly Member Waldron)

February 18, 2014

An act to add Section 100503.1 to the 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 Web site and update that posting begin delete within 72 hours after making any formulary changes end delete begin insert with changes on a monthly basis and within 72 hours during open enrollment periods end insert . The bill would require the departments to jointly develop a standard formulary template begin insert by January 1, 2017, end insert and would require plans and insurers to use that template to display formularies, as specified. 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 before the later of October 1, 2017, or 18 months after the standard formulary template described above is developed, to create a search tool on its Internet Web site that allows potential enrollees to search for qualified health plans by a particular drug and compare coverage and cost sharing for that drug.

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 100503.1 is added to the Government
Code, to read:

100503.1.  

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

(b) On or before the later of October 1, 2017, or the date that is
18 months after the date the standard formulary template is
developed pursuant to subdivision (b) of Section 1367.205 of the
Health and Safety Code and subdivision (b) of Section 10123.192
of the Insurance Code, the board shall create a search tool on the
Internet Web site maintained under subdivision (c) of Section
100502 that allows potential enrollees to search for qualified health
plans by a particular drug and compare coverage and cost sharing
for that drug.

SEC. 2.  

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

1363.01.  

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

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

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

SEC. 3.  

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

1367.205.  

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

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

begin insert

(2) Except as provided in paragraph (3), update the formularies
posted pursuant to paragraph (1) with any change to those
formularies on a monthly basis.

end insert begin delete

(2)  Update the formularies

end delete

begin insert (3) end insert begin insert   end insert begin insert During any applicable open enrollment period for a product,
update the formulary or formularies for the product end insert posted
pursuant to paragraph (1) with any change to those formularies
within 72 hours after making the change.

begin delete

(3)

end delete

begin insert (4) end insert  No later than six months after the date that a standard
formulary template is developed under subdivision (b), use that
template to display the formulary or formularies for each product
offered by the plan.

(b) (1) By begin delete April 1, 2016, end delete begin insert January 1, 2017, end insert the department and
the Department of Insurance shall jointly, and with input from
interested parties from at least one public meeting, develop a
standard formulary template for purposes of paragraph (3) of
subdivision (a). In developing the template, the department and
Department of Insurance shall take into consideration existing
requirements for reporting of formulary information established
by the federal Centers for Medicare and Medicaid Services. begin insert To
the extent feasible, in developing the template, the department and
the Department of Insurance shall evaluate a way to include on
the template, in addition to the information required to be included
under paragraph (2), cost-sharing information for drugs subject
to coinsurance. end insert

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

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

begin delete

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

(C)

end delete

begin insert (B) end insert  Indicate any drugs on the formulary that are preferred over
other drugs on the formulary.

begin delete

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

end delete begin insert

(C) Indicate the drugs that are covered under the product’s
medical benefit or indicate how a consumer can obtain this
information before enrolling in the product.

end insert begin insert

(D) Include information advising a consumer of his or her right
to access medicine deemed medically necessary if that medicine
is not covered by the product. This information shall include
information indicating how an enrollee may access the Independent
Medical Review System pursuant Article 5.55 (commencing with
Section 1374.30).

end insert

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

SEC. 4.  

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

1368.016.  

(a) A health care service plan that provides coverage
for professional mental health services, including a specialized
health care service plan that provides coverage for professional
mental health services, shall, pursuant to subdivision (f) of Section
1368.015, include on its Internet Web site, or provide a link to,
the following information:

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

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

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

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

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

(6) A detailed description of how an enrollee may request
continuity of care pursuant to subdivisions (a) and (b) of Section
1373.95.

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

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

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

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

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

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

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

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

SEC. 5.  

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

10123.192.  

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

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

begin insert

(2) Except as provided in paragraph (3), update the formularies
posted pursuant to paragraph (1) with any change to those
formularies on a monthly basis.

end insert begin delete

(2)  Update the formularies

end delete

begin insert (3) end insert begin insert   end insert begin insert During any applicable open enrollment period for a product,
update the formulary or formularies for the product end insert posted
pursuant to paragraph (1) with any change to those formularies
within 72 hours after making the change.

begin delete

(3)

end delete

begin insert (4) end insert  No later than six months after the date that a standard
formulary template is developed under subdivision (b), use that
template to display the formulary or formularies for each product
offered by the insurer.

(b) (1) By begin delete April 1, 2016, end delete begin insert January 1, 2017, end insert the department and
the Department of Managed Health Care shall jointly, and with
input from interested parties from at least one public meeting,
develop a standard formulary template for purposes of paragraph
begin delete (3) end delete begin insert (4) end insert of subdivision (a). In developing the template, the
department and Department of Managed Health Care shall take
into consideration existing requirements for reporting of formulary
information established by the federal Centers for Medicare and
Medicaid Services. begin insert To the extent feasible, in developing the
template, the department and the Department of Managed Health
Care shall evaluate a way to include on the template, in addition
to the information required to be included under paragraph (2),
cost-sharing information for drugs subject to coinsurance. end insert

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

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

begin delete

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

end delete begin delete

(C)

end delete

begin insert (B) end insert  Indicate any drugs on the formulary that are preferred over
other drugs on the formulary.

begin delete

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

end delete begin insert

(C) Indicate the drugs that are covered under the product’s
medical benefit or indicate how a consumer can obtain this
information before enrolling in the product.

end insert begin insert

(D) Include information advising a consumer of his or her right
to access medicine deemed medically necessary if that medicine
is not covered by the product. This information shall include
information indicating how an insured may access the Independent
Medical Review System pursuant Article 3.5 (commencing with
Section 10169).

end insert begin insert

(c) The commissioner may adopt regulations as may be
necessary to carry out the purposes of this section. In adopting
regulations, the commissioner shall comply with Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title
2 of the Government Code.

end insert begin delete

(c)

end delete

begin insert (d) end insert  For purposes of this section, “formulary” means the complete
list of drugs preferred for use and eligible for coverage under a
health insurance product and includes the drugs covered under
both the pharmacy benefit of the product and the medical benefit
of the product.

SEC. 6.  

Section 10123.199 of the Insurance Code is amended
to read:

10123.199.  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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.