BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 374 (Nazarian) - Health care coverage: prescription drugs
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|Version: July 16, 2015 |Policy Vote: HEALTH 7 - 2 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: August 17, 2015 |Consultant: Brendan McCarthy |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 374 would create a process for prescribers to
request an override of a health plan or health insurer's step
therapy requirement.
Fiscal
Impact:
One-time costs of $131,000 over two fiscal years to develop
policies, create a step therapy override request form, and
adopt regulations by the Department of Insurance (Insurance
Fund).
One-time costs between $150,000 and $300,000 to develop
policies, create a step therapy override request form, and
adopt regulations by the Department of Managed Health Care
(Managed Care Fund).
Unknown additional costs to provide independent medical
reviews of rejected step therapy override requests (Managed
Care Fund and Insurance Fund). The bill would place relatively
AB 374 (Nazarian) Page 1 of
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short deadlines for health insurers and managed care plans to
respond to step therapy override requests. If health insurers
and health plans end up rejecting a large number of override
requests, patients or providers may request a significant
number of independent medical reviews of those decisions. To
the extent that the bill results in more independent medical
reviews, costs to the two departments could be significant.
Background: Under current law, health plans are regulated by the
Department of Managed Health Care and health insurers are
regulated by the Department of Insurance. Health plans and
health insurers in the state are not currently required to cover
pharmacy benefits, but they are subject to regulatory
requirements if they do.
Health plans and insurers (or subcontracted pharmacy benefit
managers) sometimes require patients to use a process known as
"fail first protocol" or "step therapy" for certain drugs. Under
step therapy, before a patient can access a specific medication
prescribed by the provider, the patient must first attempt to
use one or more alternative medications. If those medications do
not have the intended therapeutic effect or have significant
side-effects, the patient progresses to the next medication. The
use of step therapy varies between health plans and insurers,
with different drugs covered by such protocols and different
numbers of steps required.
Under current law, health care consumers who have been denied
coverage of services can appeal to the state's independent
medical review process. There are three categories of decisions
that can be appealed through this process: coverage decisions
relating to medical necessity of the service, the urgency of
emergency care, or the need for experimental or investigational
services. Under independent medical review, an outside
contractor (hired by either the Department of Insurance or the
Department of Managed Health Care) arranges for medical
professionals with relevant training and experience to review
the appeal and decide whether to overturn the coverage decision,
based on the consumer's medical condition and the best available
information about the service requested.
Proposed Law:
AB 374 (Nazarian) Page 2 of
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AB 374 would create a process for prescribers to request an
override of a health plan or health insurer's step therapy
requirement.
Specific provisions of the bill would:
Require the Department of Managed Health Care and the
Department of Insurance to jointly develop a step therapy
override determination request form;
After January 1, 2017 or six months after the form has
been developed, every prescribing provider would be
required to use the form when requesting an override of a
health insurer or health plan's step therapy requirement
and every health insurer and health plan must accept the
form;
Authorize a prescribing provider to request a step
therapy override determination if he or she determines that
a prescription drug subject to step therapy requirements is
in the best interest of the patient;
If an insurer or health plan fails to accept the form,
fails to respond within 72 hours for noncurrent requests or
24 hours for urgent requests, the request shall be deemed
to be granted;
Authorize the rejection of an override request by a
health insurer or health plan to be appealed through the
independent medical review process, except that decisions
of the reviewers shall be rendered within three days (the
same standard for the existing expedited review process).
Related
Legislation:
AB 889 (Huffman, 2014) would have limited step therapy
protocols by only allowing such policies to require two
failures before an enrollee could access the originally
prescribed drug. That bill was held on this committee's
Suspense File.
AB 369 (Huffman, 2012) was similar to AB 889. However,
the limitations on step therapy in that bill were limited
to pain medications. AB 369 was vetoed by Governor Brown.
AB 1826 (Huffman, 2010) was substantially similar to AB
369 (Huffman, 2012). That bill was held on this committee's
Suspense File.
Staff
AB 374 (Nazarian) Page 3 of
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Comments: As noted above, the bill does not substantially limit
the use of step therapy protocols as prior bills have. However,
the bill does impose short timelines for health insurers and
health plans to consider a step therapy override request. How
health plans and health insurers will respond to those deadlines
will determine whether there are any increased costs due to
additional independent medical review requests.
The only costs that may be incurred by a local agency relate to
crimes and infractions. Under the California Constitution, such
costs are not reimbursable by the state.
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