Amended in Senate July 16, 2015

Amended in Senate June 19, 2015

Amended in Assembly April 30, 2015

Amended in Assembly March 2, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 374

Introduced by Assembly Member Nazarian

February 17, 2015

An act to add Section 1367.244 to the Health and Safety Code, and to add Section 10123.197 to the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

AB 374, as amended, Nazarian. Health care coverage: prescription drugs.

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 and makes a willful violation of that act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance. Existing law imposes various requirements and restrictions on health care service plans and health insurers, including, among other things, requiring a health care service plan that provides prescription drug benefits to maintain an expeditious process by which prescribing providers, as described, may obtain authorization for a medically necessary nonformulary prescription drug, according to certain procedures.

begin delete

This bill would prohibit a health care service plan or health insurer that provides medication pursuant to a step therapy or fail-first requirement from applying that requirement to a patient who has made a step therapy override determination request if, in the professional judgment of the prescribing provider, the step therapy or fail-first requirement would be either medically inappropriate or medically unnecessary for that patient reasons, as specified.

end delete begin insert

This bill would require the Department of Managed Health Care and the Department of Insurance to develop a step therapy override determination request form by July, 2016, and would require a prescribing provider to use the form to make a step therapy override determination request. The bill would require a health care service plan or health insurer to respond to a step therapy override determination request within 72 hours for nonurgent requests, or within 24 hours if exigent circumstances exist, as specified. The bill would allow a determination by a health care service plan or health insurer denying a request to be appealed through an independent medical review process, as specified.

end insert

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.  

The Legislature finds and declares all of the
following:

(a) Health care service plans and health insurers are increasingly
making use of step therapy or fail-first protocols, hereafter referred
to as begin insert a end insert step therapy protocol, under which patients are required to
try one or more prescription drugs before coverage is provided for
a drug selected by the patient’s health care provider.

(b) Step therapy protocols, when they are based on
well-developed scientific standards and administered in a flexible
manner that takes into account the individual needs of patients,
can play an important role in controlling health care costs.

(c) In some cases, requiring a patient to follow a step therapy
protocol may have adverse and even dangerous consequences for
the patient who may either not realize a benefit from taking a
prescription drug or may suffer harm from taking an inappropriate
drug.

(d) It is imperative that step therapy protocols preserve the health
care provider’s right to make treatment decisions in the best interest
of the patient.

(e) Therefore, the Legislature declares it a matter of public
interest that it require health care service plans and health insurers
to base step therapy protocols on appropriate clinical practice
guidelines developed by professional medical societies with
expertise in the condition or conditions under consideration, that
patients be exempt from step therapy protocols when inappropriate
or otherwise not in the best interest of the patients, and that patients
have access to a fair, transparent, and independent process for
requesting an exception to a step therapy protocol when
appropriate.

SEC. 2.  

Section 1367.244 is added to the Health and Safety
Code, to read:

begin delete

1367.244.  

(a) A health care service plan that provides coverage
for medications pursuant to a step therapy or fail-first protocol
shall not apply that requirement to a patient who has made a step
therapy override determination request if, in the professional
judgment of the prescribing provider, the step therapy or fail-first
requirement would be medically inappropriate for that patient for
any of the reasons specified in subdivision (b).

(b) A step therapy override determination request by a patient
with adequate supporting rationale and documentation from the
prescribing provider shall be expeditiously reviewed by the plan
if any of the following apply:

(1) The prescription drug required by the plan is contraindicated
or will likely cause an adverse reaction by, or physical or mental
harm to, the patient.

(2) The prescription drug required by the plan is expected to be
ineffective based on the known relevant physical or mental
characteristics of the patient and the known characteristics of the
prescription drug regimen.

(3) The prescription drug required by the plan is not in the best
interest of the patient, based on medical appropriateness.

(4) The patient is stable on a prescription drug selected by their
health care provider for the medical condition under consideration.

(5) The prescription drug required by the plan has not been
approved by the federal Food and Drug Administration for the
patient’s condition.

(c) Upon the granting of a step therapy override determination,
the health care service plan shall authorize coverage for the
prescription drug prescribed by the patient’s treating health care
provider, provided such prescription drug is a covered prescription
drug under that policy or contract.

(d) For purposes of this section, “step therapy override
determination” means a determination as to whether a step therapy
protocol should apply in a particular patient’s situation, or whether
the step therapy protocol should be overridden in favor of
immediate coverage of the health care provider’s selected
prescription drug.

(e) 

end delete

begin insert

begin insert 1367.244. end insert   

end insert

begin insert (a) end insert begin insert   end insert On or before July 1, 2016, the Department of
Managed Health Care and the Department of Insurance shall jointly
develop a step therapy override determination request form. On
and after January 1, 2017, or six months after the form is
developed, whichever is later, every prescribing provider shall use
the step therapy override determination request form to request a
step therapy override determination, and every health care service
plan shall accept that form as sufficient to request a step therapy
override determination. The Department of Managed Health Care
and the Department of Insurance shall develop the step therapy
override determination request form in a manner that allows it to
be submitted by a prescribing provider to a health care service plan
by an electronic method.

begin delete

(f) This section does not prevent a health care service plan from
requiring a patient to try an AB-rated generic equivalent drug prior
to providing coverage for the equivalent branded prescription drug.
This section does not prevent a health care provider from
prescribing a prescription drug that is determined to be medically
appropriate.

end delete begin insert

(b) A prescribing provider may request a step therapy override
determination if he or she determines that a prescription drug that
is subject to a step therapy or fail-first protocol by the health care
service plan is in the best interest of a patient, based on medical
appropriateness.

end insert begin insert

(c) If a health care service plan fails to utilize or accept the
override request form, or fails to respond within 72 hours for
nonurgent requests, or within 24 hours if exigent circumstances
exist, upon receipt of a completed override request from a
prescribing provider, pursuant to the submission of the override
request form developed pursuant to subdivision (a), the override
request shall be deemed to have been granted.

end insert begin insert

(d) A determination by a health care service plan to deny a step
therapy override request may be appealed through the independent
medical review process established pursuant to Article 5.55
(commencing with Section 1374.30), except that the decision of
the reviewers shall be rendered within three days of the receipt of
the information, as required for an expedited review as specified
in subdivision (c) of Section 1374.33.

end insert

SEC. 3.  

Section 10123.197 is added to the Insurance Code, to
read:

begin delete

10123.197.  

(a) A health insurer that provides coverage for
medications pursuant to a step therapy or fail-first protocol shall
not apply that requirement to a patient who has made a step therapy
override determination request if, in the professional judgment of
the prescribing provider, the step therapy or fail-first requirement
would be medically unnecessary for that patient for any of the
reasons specified in subdivision (b).

(b) A step therapy override determination request by a patient
with adequate supporting rationale and documentation from the
prescribing provider shall be expeditiously reviewed by the health
insurer if any of the following apply:

(1) The prescription drug required by the health insurer is
contraindicated or will likely cause an adverse reaction by, or
physical or mental harm to, the patient.

(2) The prescription drug required by the health insurer is
expected to be ineffective based on the known relevant physical
or mental characteristics of the patient and the known
characteristics of the prescription drug regimen.

(3) The prescription drug required by the health insurer is not
in the best interest of the patient, based on medical necessity.

(4) The patient is stable on a prescription drug selected by his
or her health care provider for the medical condition under
consideration.

(5) The prescription drug required by the health insurer has not
been approved by the federal Food and Drug Administration for
the patient’s condition.

(c) Upon the granting of a step therapy override determination,
the health insurer shall authorize coverage for the prescription drug
prescribed by the patient’s treating health care provider, provided
the prescription drug is a covered prescription drug under that
policy.

(d) For purposes of this section, “step therapy override
determination” means a determination as to whether a step therapy
protocol should apply in a particular patient’s situation, or whether
the step therapy protocol should be overridden in favor of
immediate coverage of the health care provider’s selected
prescription drug.

(e) 

end delete

begin insert

begin insert 10123.197. end insert   

end insert

begin insert (a) end insert begin insert   end insert On or before July 1, 2016, the Department of
Insurance and the Department of Managed Health Care shall jointly
develop a step therapy override determination request form. On
and after January 1, 2017, or six months after the form is
developed, whichever is later, every prescribing provider shall use
the step therapy override determination request form to request a
step therapy override determination, and every health insurer shall
accept that form as sufficient to request a step therapy override
determination. The Department of Insurance and the Department
of Managed Health Care shall develop the step therapy override
determination request form in a manner that allows it to be
submitted by a prescribing provider to a health insurer by an
electronic method.

begin delete

(f) This section does not prevent a health insurer from requiring
a patient to try an AB-rated generic equivalent drug prior to
providing coverage for the equivalent branded prescription drug.
This section does not prevent a health care provider from
prescribing a prescription drug that is determined to be medically
necessary.

end delete begin insert

(b) A prescribing provider may request a step therapy override
determination if he or she determines that a prescription drug that
is subject to a step therapy or fail-first protocol by the health
insurer is in the best interest of a patient, based on medical
appropriateness.

end insert begin insert

(c) If a health insurer fails to utilize or accept the override
request form, or fails to respond within 72 hours for nonurgent
requests, or within 24 hours if exigent circumstances exist, upon
receipt of a completed override request from a prescribing
provider, pursuant to the submission of the override request form
developed pursuant to subdivision (a), the override request shall
be deemed to have been granted.

end insert begin insert

(d) A determination by a health insurer to deny a step therapy
override request may be appealed through the independent medical
review process established pursuant to Article 3.5 (commencing
with Section 10169), except that the decision of the reviewers shall
be rendered within three days of the receipt of the information, as
required for an expedited review as specified in subdivision (c) of
Section 10169.3.

end insert

SEC. 4.  

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.