BILL ANALYSIS Ó
AB 374
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Date of Hearing: April 28, 2015
ASSEMBLY COMMITTEE ON HEALTH
Rob Bonta, Chair
AB 374
(Nazarian) - As Amended March 2, 2015
SUBJECT: Health care coverage: prescription drugs.
SUMMARY: Prohibits a health care service plan (plan) or insurer
from applying a step therapy protocol (STP) when a patient has
made a "step therapy override determination request,", if the
patient's physician determines that step therapy would not be
medically appropriate. Specifically, this bill:
1)Requires a carrier to "expeditiously grant" the step therapy
override determination request by a patient with adequate
supporting rationale and documentation from the prescribing
physician, if any of the following apply:
a) The drug required by the carrier is contraindicated or
will likely cause an adverse reaction by, or physical or
mental harm to, the patient;
b) The drug required by the carrier is expected to be
ineffective based on the known relevant physical or mental
characteristics of the patient and the known
characteristics of the drug;
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c) The drug required by the carrier is not in the best
interest of the patient, based on medical appropriateness;
d) The patient's condition is currently stable on a
medication selected by their health care provider; or,
e) The drug required by the carrier has not been approved
by the federal Food and Drug Administration (FDA) for the
patient's condition
2)Upon granting a step therapy override determination, the
carrier must authorize coverage for the drug prescribed by the
patient's provider, if that drug is covered in the patient's
policy or contract.
3)Specifies that this section does not prevent a carrier from
requiring a patient to try a generic equivalent drug prior to
providing coverage for the branded prescription.
EXISTING LAW:
1)Provides for regulation of health insurers by the California
Department of Insurance (CDI) under the Insurance Code, and
provides for the regulation of plans by the Department of
Managed Health Care (DMHC), pursuant to the Knox-Keene Health
Care Service Plan Act of 1975 (Knox-Keene Act).
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2)Requires carriers to provide certain benefits, but does not
require carriers to cover prescription drugs. Establishes
various requirements on carriers if they do offer prescription
drug coverage.
3)Allows, pursuant to DMHC regulations, a plan to require step
therapy and requires a plan to have an expeditious process in
place to authorize exceptions to step therapy when medically
necessary. Prohibits, in situations where an enrollee changes
plans, the new plan from requiring the enrollee to repeat step
therapy when that enrollee is already being treated for a
medical condition by a prescription drug provided that the
drug is appropriately prescribed and is considered safe and
effective for the enrollee's condition.
4)Requires any plan denial pursuant to 3) above to provide the
enrollee with the reasons for the denial and notify the
enrollee of the right to file a grievance and/or Independent
Medical Review (IMR) if the enrollee objects to the denial;
including any alternative drug or treatment offered by the
plan.
5)Prohibits carriers that cover prescription drugs from limiting
or excluding coverage for a drug on the basis that the drug is
prescribed for a use different from the use for which the drug
has been approved by the FDA, provided that specified
conditions have been met, including that the drug is
prescribed by a participating licensed health care
professional for the treatment of a chronic and seriously
debilitating condition, the drug is medically necessary to
treat that condition, and the drug is on the plan formulary.
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6)Establishes the Patient Protection and Affordable Care Act
(ACA), which imposes various requirements, some of which take
effect on January 1, 2014, on states, carriers, employers, and
individuals regarding health care coverage.
7)Requires, under the ACA, carriers that offer coverage in the
small group or individual market to ensure coverage includes
essential health benefits (EHBs), as defined. Provides that
the EHB package will be determined by the federal Department
of Health and Human Services (HHS) Secretary and must include,
at a minimum, ambulatory patient services, emergency services,
hospitalizations, and prescription drugs, among other things.
FISCAL EFFECT: This bill has not been analyzed by a fiscal
committee.
COMMENTS:
1)PURPOSE OF THIS BILL. According to the author, use of step
therapy leads to an exacerbation of a patient's condition,
causing irreversible deterioration or damage to the patient,
such as limiting their daily functions and ability to remain a
productive member of the workforce and society. The author
writes that the insurer is not the treating physician and
cannot possible know the individual circumstances or pain a
particular patient may be experiencing. It does not make
logical sense for the plan to have complete and ultimate
control on the medications a patient is allowed to try. The
author asserts that a determination about whether a STP is
appropriate should take into account the individual needs and
circumstances of the patient, along with the professional
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judgment of the prescribing physician.
2)STEP THERAPY PROTOCOLS. According to the California Health
Benefits Review Program (CHBRP), step therapy, or fail-first
protocols, may be implemented as methods of utilization
management in a variety of ways and are known by a number of
terms. Step therapy, when implemented by carriers, requires
an enrollee to try a first-line medication (often a generic
alternative) prior to receiving coverage for a second-line
medication (often a brand-name medication). Step edit is a
process by which a prescription, submitted for payment
authorization, is electronically reviewed at point-of-service
for use of a prior, first-line medication. A fail-first
protocol may also be the basis for part or all of a
precertification or prior authorization protocol, which may
also require the prescribing provider to confirm to the plan
or insurer that an alternate medication or medications have
been unsuccessfully tried by the patient before the coverage
for the prescribed medication is approved. However, not all
prior authorization protocols have a fail-first component.
Some prior authorization protocols are based on other
criteria, such as intended use to treat a specific medical
problem or diagnosis, or confirmation that the patient meets
other criteria such as age or specified comorbidities.
There is a wide variation in the presence of STPs among plans.
According to CHBRP, approximately 3% of covered enrollees
have no outpatient drug benefits, and 34% have drug benefits
that are not subject to STPs. Of the remaining 63% of
enrollees with outpatient drug coverage, the number of drugs
subjected to STP varies from two to more than 100.
3)CURRENT PROTOCOLS FOR STEP THERAPY EXCEPTIONS. Existing law
provides protections for insured patients. Under state
regulation, a plan that requires step therapy must have an
expeditious process in place to authorize exceptions to step
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therapy when medically necessary. Step therapy overrides
follow a procedure by which a prescriber submits clinical
documentation to the plan or insurer documenting why an
enrollee should be allowed to skip one or more of a protocol's
steps. Reasons prescribers use to justify such an step
therapy override include:
a) The enrollee has already tried step-required drug(s)
unsuccessfully, or
b) The step-required drug is contraindicated for that
enrollee due to drug-drug interactions, drug-disease
interactions, or drug allergy or intolerance.
In many plans, the step therapy override process is the same
as the prior authorization process. Step therapy override
requests may take several days to be reviewed by the plan or
insurer. For prior authorization, DMHC-regulated plans are
required to respond and issue authorization determinations
within two business days. CDI-regulated insurers are required
to issue nonurgent authorization determinations within five
business days. Urgent determinations must be made within 72
hours. Existing regulations also state that a plan or insurer
must notify the patient of their right to appeal the dispute
through IMR.
4)CHBRP ANALYSIS. AB 1996 (Thomson), Chapter 795, Statutes of
2002, requests the University of California to assess
legislation proposing a mandated benefit or service and
prepare a written analysis with relevant data on the medical,
economic, and public health impacts of proposed plan and
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health insurance benefit mandate legislation. Below are major
findings of CHBRP's analysis:
a) Enrollees covered. In 2016, approximately 24.6 million
Californians will have state-regulated health insurance
that would be subject to this bill.
b) EHBs. This bill would not exceed EHBs, because the
mandate is applicable to particular terms or conditions,
but does not require new benefit coverage.
c) Medical effectiveness. CHBRP found insufficient
evidence to conclude whether STP overrides affect health
outcomes. The absence of evidence is not evidence of no
effect.
d) Benefit coverage. The terms and conditions of 27% of
enrollees would change to become fully compliant with this
bill's override approval criteria.
e) Override criteria. CHBRP found that all enrollees in
DMHC-regulated plans or CDI-regulated policies with drug
benefits subject to step therapy protocols have override
procedures in place. This bill would require plans and
policies to grant step therapy overrides in five
circumstances, as specified, when the prescriber provides
specific documentation. CHBRP found that most override
policies already consider the specific criteria laid forth
by this bill, and therefore are already partially compliant
with this bill. However, not all override procedures are
fully compliant with the five criteria specified by this
bill.
f) Utilization. Filled prescriptions would be unchanged,
although use of initially prescribed drugs would increase
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and use of step therapy drugs would decrease. Annual step
therapy overrides granted would increase by 4%. The change
would affect expenditures because initially prescribed
drugs are frequently more expensive than step therapy
required drugs. this bill would not affect cost-sharing
terms and condition and that it would not require coverage
of drugs not on the plan/policy formulary.
g) Impact on expenditures. CHBRP estimates that premium
impacts related to an increase in approved override
requests would be 0.008%, or $10.8 million total. In
DMHC-regulated plans, CHBRP estimates that premium
increases would range from $0.03 (large group) to $0.07
(individual) per member per month (PMPM). In CDI-regulated
policies, estimated premium increases range from $0.06
(large group and individual) to $0.13 (small group) PMPM.
5)SUPPORT. The Association of Northern California Oncologists
states that it is not always clinically appropriate to mandate
a patient take a similar drug that is not a generic
equivalent. The decision as to which medication should be
prescribed should be left solely in the hand of the physician,
in consultation with the patient. California Affiliates of
Susan G. Komen write that most STPs rely on generalized
information regarding patients and their treatments, as
opposed to taking into account unique patient experiences and
responses to treatments. Furthermore, due to the lack of
standardized override process, and varying formularies among
plans, physicians face considerable challenges identifying
drugs that are subject to step therapy, and patients face
barriers to accessing timely and appropriate treatments.
6)OPPOSITION. America's Health Insurance Plans states that step
therapy for prescription drugs is one utilization protocol
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that health insurers use to control health care costs and
ensure patient safety. This bill would place overly broad
restrictions on the use of step therapy, hindering health
insurers' use of this important tool and limiting its
effectiveness. The California Chamber of Commerce opposes
this bill, stating that it would contribute to the problem of
rising health care costs by unnecessarily increasing
utilization of more expensive prescription medications; its
impact on premiums and co-payments will grow in future years
as more and more high-priced pharmaceutical drugs enter the
market.
7)OPPOSE UNLESS AMENDED. The For Grace Foundation, sponsor of
several previous iterations of step therapy bills, opposes
this bill stating that it does not respond to the governor's
veto message on AB 369 (Huffman) of 2012. This bill hands
over all of the STP authority to the doctors, thus flying in
the face of Governor Brown's 2012 veto. For Grace states that
they would change to a support position if the bill was
amended to restrict the STP to two "fails" (as Medicare does)
and gave the physician no authority in their implementation.
8)RELATED LEGISLATION.
a) AB 68 (Waldron) establishes that a prescriber's
reasonable professional judgment prevails over the policies
and utilization controls of the Medi-Cal program, including
the utilization controls of a Medi-Cal managed care plan,
in prescribing a pharmaceutical that is in the seizure or
epilepsy drug class. AB 68 was approved by in Assembly
Health Committee on April 21, 2015 with a vote of 19-0 and
is now pending in Assembly Appropriations Committee.
b) AB 73 (Waldron) establishes that a prescriber's
reasonable professional judgment prevails over the policies
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and utilization controls of the Medi-Cal program, including
the utilization controls of a Medi-Cal managed care plan,
in prescribing a pharmaceutical from specified therapeutic
drug classes. AB 73 is pending in this Committee.
9)PREVIOUS LEGISLATION.
a) AB 889 (Frazier) of 2013 would have prohibited plans and
health insurers from requiring a patient to try and fail on
two medications before allowing the patient access to the
medication originally prescribed by the patient's medical
provider. AB 889 was held on the Suspense File in Senate
Appropriations Committee.
b) AB 369 (Huffman) of 2012 would have prohibited plans and
health insurers that restrict medications for the treatment
of pain from requiring a patient to try and fail on more
than two pain medications before allowing the patient
access to the pain medication, or generically equivalent
drug, prescribed by the provider. The Governor vetoed AB
369 because it did not strike "the right balance between
physician discretion and health plan or insurer oversight.
A doctor's judgment and a health plan's clinical protocols
both have a role in ensuring the prudent prescribing of
pain medications. Independent medical reviews are available
to resolve differences in clinical judgment when they
occur, even on an expedited basis. If current law does not
suffice - and I am not certain that it doesn't, any
limitations on the practice of "step therapy" should better
reflect a health plan or insurer's legitimate role in
determining the allowable steps."
c) AB 1826 (Huffman) of 2010 would have required plans and
health insurers that cover outpatient prescription drug
benefits to provide coverage for a drug that has been
prescribed for the treatment of pain. AB 1826 would have
prohibited health plans and insurers from requiring the
subscriber or enrollee to first use an alternative
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prescription drug or an over-the-counter drug, as
specified. Held on the Suspense File in the Senate
Appropriations Committee.
d) AB 1144 (Price) of 2009 would have required plans and
health insurers that provide prescription drug benefits to
submit written reports about step therapy each year to DMHC
and CDI. Held on the Suspense File in the Assembly
Appropriations Committee.
10)POLICY COMMENT.
a) Does this bill achieve the author's goal? This bill
seeks to address concerns raised by the Governor in his
veto message of a prior bill by establishing a set of
circumstances under which a plan/insurer must agree to
bypass step therapy, rather than imposing blanket
restrictions on its use. As drafted, this bill requires
override approval when the prescriber provides the medical
documentation, without explicitly giving the carrier any
option to review or deny the request. It is unclear
whether this is, also, a blanket restriction on the use of
STPs.
b) Expeditious review? Current law already has an appeal
review process to override step therapy requirements.
Expeditious is not defined in the Knox-Keene Act or in
regulation, giving plans leeway to take into account the
severity of the condition in the timing of their response.
Because this bill uses the same phrase "expeditious
review," it is not clear how setting up a new process for
step therapy appeals would offer any improvement on current
law.
11)SUGGESTED AMENDMENT. This bill requires that all override
requests be approved after the physician has submitted their
medical opinion, without review or response from the plan or
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insurer. If the author intends to have the request actually
be a request, an amendment should be taken to reflect that.
(b) A step therapy override determination request by a
patient with adequate supporting rationale and
documentation from the prescribing physician shall be
expeditiously reviewed granted by the plan if any of the
following apply
REGISTERED SUPPORT / OPPOSITION:
Support
Arthritis Foundation (cosponsor)
California Rheumatology Alliance (cosponsor)
Union of American Physicians and Dentists (cosponsor)
American Cancer Society Cancer Action Network
American GI Forum Education Foundation of Santa Maria
Association of Northern California Oncologists
Bay Area Women's Health Advocacy Council
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Biocom
California Affiliates of Susan G. Komen
California Association of Area Agencies on Aging
California Healthcare Institute
California Primary Care Association
California Psychological Association
California School Employees Association, AFL-CIO
Chronic Care Coalition
Congress of California Seniors
Latina Breast Cancer Agency
Leukemia and Lymphoma Society
Medical Oncology Association of Southern California
Mental Health America of California
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National Alliance on Mental Illness
National Association of Social Workers, California Chapter
Neuropathy Action Foundation
Osteopathic Physicians and Surgeons of California
Pharmaceuticals Research and Manufacturers of America
Western Center on Law and Poverty
Opposition
America's Health Insurance Plans
Association of California Life and Health Insurance Companies
Blue Shield of California
California Association of Health Plans
California Chamber of Commerce
CSAC Excess Insurance Authority
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Express Scripts
For Grace (unless amended)
Simi Valley Chamber of Commerce
Southwest California Legislative Council
Analysis Prepared by:Dharia McGrew / HEALTH / (916) 319-2097