Amended in Senate September 1, 2015

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 begin insert or health insurer end insert that provides prescription drug benefits begin delete 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 end delete begin insert to utilize a specified uniform prior authorization form or electronic authorization process when requiring prior authorization for prescription drug benefits end insert .

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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 delete begin insert

This bill would authorize a request for an exception to a health care service plan’s or health insurer’s step therapy process for prescription drugs to be submitted in the same manner as a request for prior authorization for prescription drugs, and would require the plan or insurer to treat, and respond to, the request in the same manner as a request for prior authorization for prescription drugs.

end insert begin insert

The bill would require the Department of Managed Health Care and the Department of Insurance to include a provision for step therapy exception requests in the uniform prior authorization form specified above.

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:

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begin insert SECTION 1. end insert   

end insert

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

begin insert

begin insert 1367.244. end insert   

(a) A request for an exception to a health care
service plan’s step therapy process for prescription drugs may be
submitted in the same manner as a request for prior authorization
for prescription drugs pursuant to Section 1367.241, and shall be
treated in the same manner, and shall be responded to by the health
care service plan in the same manner, as a request for prior
authorization for prescription drugs, including utilization of the
grievance process applicable to the denial of a request for prior
authorization for prescription drugs specified in Section 1368.

(b) The department and the Department of Insurance shall
include a provision for step therapy exception requests in the
uniform prior authorization form developed pursuant to subdivision
(c) of Section 1367.241.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 10123.197 is added to the end insert begin insert Insurance Code end insert begin insert , to
read: end insert

begin insert

begin insert 10123.197. end insert   

(a) A request for an exception to a health insurer’s
step therapy process for prescription drugs may be submitted in
the same manner as a request for prior authorization for
prescription drugs pursuant to Section 10123.191, and shall be
treated in the same manner, and shall be responded to by the health
insurer in the same manner, as a request for prior authorization
for prescription drugs, including utilization of any grievance
process applicable to the denial of a request for prior authorization
for prescription drugs.

(b) The department and the Department of Managed Health
Care shall include a provision for step therapy exception requests
in the uniform prior authorization form developed pursuant to
subdivision (c) of Section 10123.191.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert begin insert

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.

end insert

begin delete

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 a 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:

1367.244.  

(a) 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.

(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.

(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.

(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.

SEC. 3.  

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

10123.197.  

(a) 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.

(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.

(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.

(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.

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.

end delete