BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 374
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|AUTHOR: |Nazarian |
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|VERSION: |June 19, 2015 |
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|HEARING DATE: |July 15, 2015 | | |
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|CONSULTANT: |Melanie Moreno |
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SUBJECT : Health care coverage: prescription drugs.
SUMMARY : Prohibits a health plan or insurer that provides coverage for
medications pursuant to a step therapy or fail-first protocol
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 medically inappropriate for that
patient, as specified.
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 health plans by the Department
of Managed Health Care (DMHC), pursuant to the Knox-Keene
Health Care Service Plan Act of 1975 (Knox-Keene Act).
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)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 federal Food and Drug Administration
(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.
AB 374 (Nazarian) Page 2 of ?
4)Requires DMHC-regulated plans to respond issue authorization
determinations within two business days. Requires
CDI-regulated insurers to issue nonurgent authorization
determinations within five business days and urgent
determinations to be made within 72 hours.
This bill:
1)Prohibits a health plan or insurer that provides coverage for
medications pursuant to a step therapy or fail-first protocol
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 medically
inappropriate for that patient, as specified. Defines "step
therapy override determination" as 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.
2)Requires an override determination request by a patient with
adequate supporting rationale and documentation from the
prescribing provider to be expeditiously reviewed by the plan
or insurer if any of the following apply:
a) 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;
b) 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;
c) The prescription drug required by the plan is
not in the best interest of the patient, based on
medical appropriateness;
d) The patient is stable on a prescription drug
selected by their health care provider for the medical
condition under consideration; or,
e) The prescription drug required by the plan has
not been approved by the federal FDA for the patient's
condition.
3)Requires a health plan or insurer, upon the granting of an
AB 374 (Nazarian) Page 3 of ?
override determination, to authorize coverage for the
prescribed drug, provided that it is a covered prescription
drug under that policy or contract.
4)Requires DMHC and CDI, on or before July 1, 2016, to jointly
develop a step therapy override determination request form.
Requires all prescribing providers, on and after January 1,
2017, or six months after the form is developed, whichever is
later, to use the step therapy override determination request
form to request an override determination. Requires health
plans and insurers to accept that form as sufficient to
request an override determination. Requires DMHC and CDI to
develop the override determination request form in a manner
that allows it to be submitted by a prescribing provider to a
health plan or insurer electronically.
5)Prohibits this bill from preventing a health plan or insurer
from requiring a patient to try an generic equivalent drug, as
specified, prior to providing coverage for the equivalent
branded prescription drug nor from preventing a health care
provider from prescribing a prescription drug that is
determined to be medically appropriate.
FISCAL
EFFECT : According to the Assembly Appropriations Committee, the
California Health Benefits Review Program (CHBRP) reports:
a) State costs:
i) $969,000 annually in Medi-Cal managed care (General
Fund/federal).
ii) $315,000 annually for provision of services through
CalPERS benefit plans (General Fund/federal/special/local
funds). About 60% of this cost is state cost, while the
rest is a local cost.
b) Private sector and individual costs:
i) Increased employer-funded premium costs in the
private insurance market of $3.7 million annually.
ii) Increased premium expenditures by employees and
individuals purchasing insurance of $4.1 million
annually, as well as increased out-of-pocket expenditures
of $1.6 million.
c)Potential minor one-time costs to DMHC (Managed Care Fund) and
CDI (Insurance Fund) to verify plan and policy compliance.
PRIOR
AB 374 (Nazarian) Page 4 of ?
VOTES :
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|Assembly Floor: |63 - 14 |
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|Assembly Appropriations Committee: |12 - 5 |
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|Assembly Health Committee: |14 - 4 |
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COMMENTS :
1)Author's statement. According to the author, AB 374 does not
prohibit step therapy protocols. Rather, the bill establishes
an override process that creates a balance between a
provider's professional judgment and health plan and insurer's
business practice. This bill recognizes that the health
plan/insurer must not have complete and ultimate control on
the medications a patient is permitted to try. Plans utilize
step therapy to reduce their costs. This process forces
patients to "fail first" on several alternative medications,
before they are permitted to obtain the appropriate
medication. Anecdotal data shows that plans may require a
patient to try up to five different medications before
receiving the one prescribed by their physician. Also, the
duration of this protocol is left up to the health plan and
has been known to last up to 90 days. Step therapy is based
solely on cost and does not take into consideration patients'
unique needs. The use of step therapy can exacerbate patient's
condition, causing irreversible deterioration or damage to
patients, such as limiting their daily functions and ability
to remain a productive member of the workforce and society.
2)Background. According to 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. For either step
therapy or step edit, upon decline of coverage for the
prescription, a patient's health care provider may reissue the
AB 374 (Nazarian) Page 5 of ?
prescription for a first-line agent covered by the patient's
health plan contract or policy or appeal the decision.
Alternatively, the patient may purchase the prescription
despite the lack of coverage. 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. Information about what types of drugs are
subject to step therapy by California plans/insurers was not
available to this Committee, but for its review of this bill,
CHBRP identified 15 studies of the impact of step therapy
protocols on varying drugs. The studies CHBRP identified
addressed STPs for: antidepressants, antihypertensives,
antipsychotics and anticonvulsants, nonsteroidal
anti-inflammatory drugs (to reduce inflation or pain, and
proton pump inhibitors to reduce stomach acidity. No studies
were found that addressed STP or override procedures across
all drug classes.
3)Existing policy on step therapy exceptions. Under regulation,
Knox-Keene plans are permitted to require step therapy, but
must have an expeditious process in place to authorize
exceptions when medically necessary and to conform effectively
and efficiently with continuity of care requirements. In
circumstances where an enrollee is changing plans, the new
plan may not require the enrollee to repeat step therapy when
he or she 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. Under these circumstances, the
regulation permits the new plan to impose a prior
authorization requirement for the continued coverage. This
Knox-Keene regulation is referenced in regulations related CDI
insurers, but there is some question as to whether it applies
to those products. Nevertheless, it appears that, in
practice, insurers apply the same protocol for step therapy
exceptions across all lines of business regardless of the
regulator. According to CHBRP, to obtain a step therapy
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override a prescriber first submits clinical documentation to
the health plan or insurer documenting why an enrollee should
be allowed should skip one or more step. Reasons prescribers
use to justify such an override include the enrollee has
already tried a drug unsuccessfully or the drug is
contraindicated for that enrollee due to drug-drug
interactions, drug-disease interactions, or drug allergy or
intolerance. According to CHRBP, step therapy override
requests may take several days to be reviewed by the health
plan or insurer.
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 health plan
and health insurance benefit mandate legislation. CHBRP was
created in response to AB 1996, and reviewed this bill. Key
findings include:
a) Enrollees covered . In 2016, approximately 24.6
million Californians will have state-regulated health
insurance subject to AB 374.
b) EHBs . AB 374 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 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 AB
374's override approval criteria.
e) Utilization . Filled prescriptions would be
unchanged, although use of initially prescribed drugs
would increase and use of STP-required drugs would
decrease. The change would affect expenditures because
initially prescribed drugs are frequently more expensive
than STP-required drugs.
f) Impact on expenditures . CHBRP estimates that premium
impacts related to an increase in approved override
requests would be 0.008%.
g) Public Health . Because there is insufficient
evidence to link approved overrides and health outcomes,
the public health impact is unknown. Note: insufficient
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evidence is not evidence of no effect.
According to CHBRP, there is no pattern as to particular drugs
being more likely to be subject to step therapy protocols
amongst California plans/insurers. Among enrollees with an
outpatient prescription drug (OPD) benefit, there is not even
a pattern in the presence or number-of protocols. For
example, 34.4% of enrollees with an OPD benefit are not
subject to step therapy protocols. Among the remaining 62.6%
of enrollees with an OPD benefit, the number of drugs subject
to step therapy varies widely, from two to more than 100.
5)Related legislation. AB 73 (Waldron), would have required a
prescriber's reasonable professional judgment prevail 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 from specified
therapeutic drug classes. AB 73 died on the Assembly
Appropriations Committee Suspense File.
AB 68 (Waldron), would require a prescriber's reasonable
professional judgment to prevail 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 is set to be heard in the Senate
Health Committee on July 15, 2015.
AB 339 (Gordon), would make a number of changes to existing
law governing health plans and insurers, including restricting
cost-sharing, specifying coverage requirements for
prescription drugs, and codifying the DMHC regulations related
to exceptions for step therapy discussed in 3) above. AB 339
is set for hearing in the Senate Health Committee on July 15,
2015.
6)Prior legislation. AB 889 (Huffman, 2014), would have
permitted health plans and insurers, when there is more than
one drug that is appropriate for the treatment of a medical
condition, to require step therapy, but would have prohibited
them from requiring an enrollee to try and fail on more than
two medications before allowing the enrollee access to the
medication, or generically equivalent drug, as specified. AB
889 died on the Senate Appropriations Committee Suspense File.
AB 374 (Nazarian) Page 8 of ?
AB 1814 (Waldron, 2014) was substantially similar to AB 73.
AB 889 died on the Assembly Appropriations Committee Suspense
File.
AB 369 (Huffman, 2012), would have prohibited carriers that
restrict medications for the treatment of pain, pursuant to
step therapy or fail-first protocol, 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, as defined, prescribed by the
prescribing provider, as defined. AB 369 was vetoed by
Governor Brown, who stated:
While I sympathize with the author's good intentions, I am not
convinced that this bill strikes 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.
AB 1826 (Huffman, 2010), would have required a carrier that
covers prescription drug benefits to provide coverage for a
drug that has been prescribed for the treatment of pain
without first requiring the enrollee or insured to use an
alternative drug or product. AB 1826 died on the Senate
Appropriations Committee Suspense File.
7)Support. According to the Arthritis Foundation, the sponsor
of this bill, it may appear that the increased number of steps
will lead to lower health care costs; however, excessive steps
over a length of time will actually increase utilization of
health care services in some patients. A study by the American
Journal of Managed Care looked at the effects antihypertensive
step therapy has on prescription drug utilization, as well as
other medical care utilization and spending. It found that
"step therapy was associated with an increase in outpatient
office visits and inpatient admissions? [and] emergency room
visits [increased] with the amount of time elapsed since step
AB 374 (Nazarian) Page 9 of ?
therapy was implemented." 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. Western Center on Law and Poverty writes that
local legal services programs, which serve low-income clients
in the Medi-Cal program, have reported the increased use of
step therapy in the programs managed care plans, which has
kept beneficiaries from getting mediations that their doctors
intended for them to use and has led to poorer health
outcomes. NAMI California contends that requiring a mental
health consumer to fail-first on one or two older, less
effective medications before an appropriate newer medication
is prescribed is an inhumane method of treatment and the
practice has serious negative consequences for consumers who
are denied the best standard of care. The National Multiple
Sclerosis Society - CA Action Network states that if the
appropriate treatment is not provided to the patient, step
therapy, especially for people living with a chronic condition
like MS, actually can increase the direct cost of health care
due to increased hospital admissions, excessive use of
emergency rooms, and even loss of employment. The California
State Retirees writes that this bill ensures it is a patient's
physician and not the health care provider or insurer who is
responsible for understanding the patient's individual
circumstance and the appropriate treatment plan. The
California Life Sciences Association states the override
process in this bill helps ensure that a provider's
professional judgment is respected, and the provider's
prescription medication is tailored specifically to each
patient's unique needs. The California Pharmacists Association
contends that this bill strikes an appropriate balance of
managing costs and access, because it allows health plans and
insurers to continue utilizing step therapy protocols while
giving patients and their prescribing providers a uniform
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method of requesting an exception to the requirement of a
protocol. The California Health Care Institute writes that
this bill is an attempt to decrease the practice of denying or
delaying a patient's access to the treatments they need and
the override process helps ensure that a provider's
professional judgment is respected and prescription medication
is tailored specifically to each patient's unique needs.
8)Opposition. America's Health Insurance Plans states that step
therapy for prescription drugs is one utilization protocol
that health insurers use to control health care costs and
ensure patient safety and that 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. The Association of California Life and Health
Insurance Companies states that this bill would allow for an
exception to step therapy, but in a manner that is far too
broad. A step therapy override determination request by the
patient, with the prescribing provider determining that a
particular drug is not "in the best interest of the patient"
is not sufficient rationale to override the clinical trials
that are the cornerstone of step therapy. The California
Association of Health Plans writes that step therapy is a
patient safety tool that helps ensure that medical and cost
management work in tandem in the delivery of appropriate care.
Existing law provides protections for insured patients, and it
is unclear why these protections are inadequate or why a new
law must be adopted. Express Scripts states that step therapy
programs are designed to protect from adverse outcomes. For
example, certain potent opioids, such as fentanyl, are covered
trough a prior authorization process that requires the use of
other opioids first because patients should be opioid-tolerant
before using fentanyl (as supported through the black box
warning on this drug). The California Association of Health
Underwriters and the California Association of Joint Powers
Authorities write that step therapy is a well-established and
medically documented practice of beginning drug therapy with
the most cost-effective and safest drug, and then progressing
to more costly or riskier mediation, which is an important
AB 374 (Nazarian) Page 11 of ?
tool in patient safety. DMHC writes that under this bill, the
provider's determination would, by statute, always prevail.
The DMHC notes that a doctor's judgment and a health plan's
clinical protocols both have a role in ensuring patient access
to medically appropriate and medically necessary prescription
drugs. Accordingly, the DMHC is concerned that AB 374 does not
strike the right balance between physician discretion and
health plan oversight.
9)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 step therapy authority to the doctors, thus
flying in the face of Governor Brown's 2012 veto. The For
Grace Foundation states that they would change to a support
position if the bill was amended to restrict the step therapy
protocols to two "fails" (as Medicare does) and gave the
physician no authority in their implementation.
10)Policy comments.
a) Existing process. Health plans and insurers
currently have a process for step-therapy override
requests. According to DMHC, for calendar years 2013 and
2014, they received a total of 52 grievances and 27 IMRs
related to health plan strategies to reduce prescription
drug costs. Of those 79, only a small number related to
step therapy or fail first protocols. The majority of
these complaints and IMRs concerned increased
prescription drug copayments due to health plan formulary
and tier status changes, with a smaller number related to
step therapy or fail first protocols. Given that detailed
data related to the approval or denial of override
requests was not made available to this Committee, it is
unclear why the existing override process is
insufficient.
b) Potential unintended consequences. It appears that
this bill prohibits plans and insurers from using step
therapy or fail first protocols if the prescribing
provider determines it is medically unnecessary due to
specified reasons, without plan or insurer approval of an
override request. This is sometimes referred to as
"provider prevails," meaning that the prescriber retains
AB 374 (Nazarian) Page 12 of ?
full authority to decide what medicine a patient needs.
Bypassing the utilization controls in this way might
result in significant additional costs.
SUPPORT AND OPPOSITION :
Support: Arthritis Foundation (co-sponsor)
California Rheumatology Alliance (co-sponsor)
Union of American Physician and Dentists/AFSCME Local
206 (co-sponsor)
ALS Association Golden West Chapter
American Cancer Society Cancer Action Network
American GI Forum
Association of Northern California Oncologists
Bay Area Women's Health Advocacy Council
Biocom
California Academy of Physician Assistants
California Association of Area Agencies on Aging
California Chapter of the National Association of
Social Workers
California Chronic Care Coalition
California Healthcare Institute
California Hepatitis C Task Force
California Life Sciences Association
California Pharmacists Association
California Primary Care Association
California School Employees Association
California State Retirees
Congress of California Seniors
Epilepsy California
International Foundation for Autoimmune Arthritis
Latina Breast Cancer Agency
Leukemia and Lymphoma Society
Lupus Foundation of Northern California
Lupus Foundation of Southern California
Medical Oncology Association of Southern California
Mental Health America of California
NAMI California
National Multiple Sclerosis Society California
Neuropathy Action Foundation
Osteopathic Physicians and Surgeons of California
Pharmaceutical Research and Manufacturers of America
Power of Pain Foundation
Susan G. Komen Central Valley Affiliate
Susan G. Komen Inland Empire Affiliate
Susan G. Komen Los Angeles County Affiliate
AB 374 (Nazarian) Page 13 of ?
Susan G. Komen Orange County Affiliate
Susan G. Komen Sacramento Valley Affiliate
Susan G. Komen San Diego Affiliate
Susan G. Komen San Francisco Bay Area Affiliate
Western Center on Law and Poverty
Western Neuropathy Association
Oppose:America's Health Insurance Plans
Association of California Life and Health Insurance
Companies
California Association of Health Plans
California Association of Health Underwriters
California Association of Joint Powers Authorities
California Chamber of Commerce
California Department of Managed Health Care
CSAC Excess Insurance Authority
CVS Health
Express Scripts
For Grace (unless amended)
Molina Healthcare of California
Pharmaceutical Care Management Association
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