BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     AB 374


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          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          374 (Nazarian)


          As Amended  September 2, 2015


          Majority vote


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          Original Committee Reference:  HEALTH


          SUMMARY:  Creates a process for prescribers to request an  
          override of a health plan or health insurer's step therapy  
          requirement.


          The Senate amendments further the initial policy intent of this  
          bill, but delete the assembly-approved language that limited the  
          use of step therapy protocols and instead: 


          1)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. 


          2)Require the plan or insurer to treat, and respond to, the  
            request in the same manner as a request for prior  








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            authorization for prescription drugs.


          3)Require the Department of Managed Health Care (DMHC) and the  
            Department of Insurance (CDI) to include a provision for step  
            therapy exception requests in the uniform prior authorization  
            form specified above.


          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee, minor costs to CDI and DMHC to revise the existing  
          prior authorization form to allow it to be used for step therapy  
          override requests.


          COMMENTS:  According to the author, use of step therapy leads to  
          an exacerbation of a patient's condition, potentially 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  
          asserts that a determination about whether a step therapy  
          protocol is appropriate should take into account the individual  
          needs and circumstances of the patient, along with the  
          professional judgment of the prescribing physician.


          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).  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  








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          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 step therapy  
          protocols 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 step therapy protocols.   
          Of the remaining 63% of enrollees with outpatient drug coverage,  
          the number of drugs subjected to Step Therapy Protocol varies  
          from two to more than 100. 


          Existing law provides certain 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 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.  


          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  
          independent medical review.


          Support and Opposition letters on file refer to a previous  
          version of this bill.


          Analysis Prepared by:                     Dharia McGrew / HEALTH  
          / (916) 319-2097                                 FN: 0002085








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