BILL ANALYSIS Ó AB 374 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 374 (Nazarian) As Amended September 2, 2015 Majority vote -------------------------------------------------------------------- |ASSEMBLY: |63-14 |(June 2, 2015) |SENATE: | 35-4 |(September 8, | | | | | | |2015) | | | | | | | | | | | | | | | -------------------------------------------------------------------- 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 AB 374 Page 2 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 AB 374 Page 3 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 AB 374 Page 4