Amended in Assembly March 17, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 2400


Introduced by Assembly Member Nazarian

February 18, 2016


An act to amend Sections 1367.24,begin delete 1367.241, 1367.244, 1368, 1368.01, and 1374.30 of the Health and Safety Code, and to amend Sections 10123.191, 10123.197, and 10169 of, and to add Section 10123.190 to, the Insurance Code,end deletebegin insert 1368, 1368.01, and 1374.30 of the Health and Safety Code, and to amend Sections 10123.191 and 10169 of the Insurance Code,end insert relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

AB 2400, as amended, Nazarian. Prescription drug coverage: prior authorization and external review.

Existing federal law requires a group health plan and a health insurance issuer offering group or individual health insurance coverage to provide for a coverage appeals process, which includes both an internal review and an external review process, that applies if an enrollee receives an adverse benefit determination for a drug that is included on the health plan’s formulary drug list.

For plan years commencing on or after January 1, 2016, existing federal law requires a health plan providing essential health benefits to have procedures in place that allow an enrollee, the enrollee’s designee, or the enrollee’s prescribing provider to request and gain access to clinically appropriate nonformulary drugs within certain timeframes, and have an external review if the initial request is denied by the plan.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law provides for the regulation of health insurers by the Department of Insurance. Existing law requires health care service plans to establish and maintain a grievance system approved by the department under which enrollees may submit grievances to the plan and requires plans to resolve those grievances within 30 days, except as specified. Existing law requires individual, small group, and large group health care service plans and health insurers that provide prescription drug coverage to comply with the external exception requestbegin insert reviewend insert process required by federal law for nonformulary drugs.

begin delete

This bill would require those plans and insurers to also comply with that external exception request process for formulary drugs that require prior authorization by the plan or health insurer. The bill would specify that, for both nonformulary and formulary drugs, the external exception process is in lieu of the health care service plan’s grievance process and the health insurer’s internal review process following an adverse benefit determination.

end delete
begin insert

The bill would specify that for nonformulary drugs, an external exception request may be filed in lieu of filing a grievance with the health care service plan or health insurer following an adverse benefit determination. With respect to formulary drugs, the bill would require the grievance system established by the plan or an insurer’s internal grievance process to require a plan or insurer that provides coverage for outpatient prescription drugs to resolve grievances or complaints that involve the disapproval of a request for a formulary drug within 72 hours for nonurgent requests, and within 24 hours if exigent circumstances exist.

end insert

The bill would make other conforming changes to implement these changes.

Because a willful violation of these requirements by a health care service plan would be a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

P3    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 1367.24 of the end insertbegin insertHealth and Safety Codeend insert
2begin insert is amended to read:end insert

3

1367.24.  

(a) Every health care service plan that provides
4prescription drug benefits shall maintain an expeditious process
5by which prescribing providers may obtain authorization for a
6medically necessary nonformulary prescription drug. On or before
7July 1, 1999, every health care service plan that provides
8prescription drug benefits shall file with the department a
9description of its process, including timelines, for responding to
10authorization requests for nonformulary drugs. Any changes to
11this process shall be filed with the department pursuant to Section
121352. Each plan shall provide a written description of its most
13current process, including timelines, to its prescribing providers.
14For purposes of this section, a prescribing provider shall include
15a provider authorized to write a prescription, pursuant to
16subdivision (a) of Section 4040 of the Business and Professions
17Code, to treat a medical condition of an enrollee.

18(b) Any plan that disapproves a request made pursuant to
19subdivision (a) by a prescribing provider to obtain authorization
20for a nonformulary drug shall provide the reasons for the
21disapproval in a notice provided to the enrollee. The notice shall
22indicate that the enrollee may file a grievance with the plan if the
23enrollee objects to the disapproval, including any alternative drug
24or treatment offered by the plan. The notice shall comply with
25subdivision (b) of Section 1368.02. Any health plan that is required
26to maintain an external exception request review process pursuant
27to subdivision (k) shall indicate in the notice required under this
28subdivision that the enrollee maybegin delete fileend deletebegin insert file,end insertbegin insert in lieu of filing a
29grievance with the plan pursuant to Section 1368,end insert
a grievance
30seeking an external exception request review.begin insert An enrollee shall
31not be required to file a grievance with the plan or its contracting
32provider pursuant to Section 1368 if a plan disapproves a request
33to obtain authorization for a nonformulary drug under subdivision
34(a). If a plan disapproves a request to obtain authorization for a
35nonformulary drug and the enrollee files a grievance with the plan
36pursuant to Section 1368, the plan shall treat that request as a
37request to obtain an external exception request review.end insert

P4    1(c) The process described in subdivision (a) by which
2prescribing providers may obtain authorization for medically
3necessary nonformulary drugs shall not apply to a nonformulary
4drug that has been prescribed for an enrollee in conformance with
5the provisions of Section 1367.22.

6(d) The process described in subdivision (a) by which enrollees
7may obtain medically necessary nonformulary drugs, including
8specified timelines for responding to prescribing provider
9authorization requests, shall be described in evidence of coverage
10and disclosure forms, as required by subdivision (a) of Section
111363, issued on or after July 1, 1999.

12(e) Every health care service plan that provides prescription
13drug benefits shall maintain, as part of its books and records under
14Section 1381, all of the following information, which shall be
15made available to the director upon request:

16(1) The complete drug formulary or formularies of the plan, if
17the plan maintains a formulary, including a list of the prescription
18drugs on the formulary of the plan by major therapeutic category
19with an indication of whether any drugs are preferred over other
20drugs.

21(2) Records developed by the pharmacy and therapeutic
22committee of the plan, or by others responsible for developing,
23modifying, and overseeing formularies, including medical groups,
24individual practice associations, and contracting pharmaceutical
25benefit management companies, used to guide the drugs prescribed
26for the enrollees of the plan, that fully describe the reasoning
27behind formulary decisions.

28(3) Any plan arrangements with prescribing providers, medical
29groups, individual practice associations, pharmacists, contracting
30pharmaceutical benefit management companies, or other entities
31that are associated with activities of the plan to encourage
32formulary compliance or otherwise manage prescription drug
33benefits.

34(f) If a plan provides prescription drug benefits, the department
35shall, as part of its periodic onsite medical survey of each plan
36undertaken pursuant to Section 1380, review the performance of
37the plan in providing those benefits, including, but not limited to,
38a review of the procedures and information maintained pursuant
39to this section, and describe the performance of the plan as part of
40its report issued pursuant to Section 1380.

P5    1(g) The director shall not publicly disclose any information
2reviewed pursuant to this section that is determined by the director
3to be confidential pursuant to state law.

4(h) For purposes of this section, “authorization” means approval
5by the health care service plan to provide payment for the
6prescription drug.

7(i) Nonformulary prescription drugs shall include any drug for
8which an enrollee’s copayment or out-of-pocket costs are different
9than the copayment for a formulary prescription drug, except as
10otherwise provided by law or regulation or in cases in which the
11drug has been excluded in the plan contract pursuant to Section
121342.7.

13(j) Nothing in this section shall be construed to restrict or impair
14the application of any other provision of this chapter, including,
15but not limited to, Section 1367, which includes among its
16requirements that a health care service plan furnish services in a
17manner providing continuity of care and demonstrate that medical
18decisions are rendered by qualified medical providers unhindered
19by fiscal and administrative management.

20(k) For any individual, small group, or large health plan
21contracts, a health care service plan’s process described in
22subdivision (a) shall comply with the request for exception and
23external exception request review processes described in
24subdivision (c) of Section 156.122 of Title 45 of the Code of
25Federal Regulations. This subdivision shall not apply to Medi-Cal
26managed care health care service plan contracts as described in
27subdivision (l).

28(l) “Medi-Cal managed care health care service plan contract”
29means any entity that enters into a contract with the State
30Department of Health Care Services pursuant to Chapter 7
31(commencing with Section 14000), Chapter 8 (commencing with
32Section 14200), or Chapter 8.75 (commencing with Section 14591)
33of Part 3 of Division 9 of the Welfare and Institutions Code.

34(m) Nothing in this section shall be construed to affect an
35enrollee’s or subscriber’s eligibility to submit a grievance to the
36department for review under Section 1368 or to apply to the
37 department for an independent medical review under Section
381370.4, or Article 5.55 (commencing with Section 1374.30) of
39this chapter.

P6    1begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 1368 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is amended
2to read:end insert

3

1368.  

(a) Every plan shall do all of the following:

4(1) Establish and maintain a grievance system approved by the
5department under which enrollees may submit their grievances to
6the plan. Each system shall provide reasonable procedures in
7accordance with department regulations that shall ensure adequate
8consideration of enrollee grievances and rectification when
9appropriate.

10(2) Inform its subscribers and enrollees upon enrollment in the
11plan and annually thereafter of the procedure for processing and
12resolving grievances. The information shall include the location
13and telephone number where grievances may be submitted.

14(3) Provide forms for grievances to be given to subscribers and
15enrollees who wish to register written grievances. The forms used
16by plans licensed pursuant to Section 1353 shall be approved by
17the director in advance as to format.

18(4) (A) Provide for a written acknowledgment within five
19calendar days of the receipt of a grievance, except as noted in
20subparagraph (B). The acknowledgment shall advise the
21complainant of the following:

22(i) That the grievance has been received.

23(ii) The date of receipt.

24(iii) The name of the plan representative and the telephone
25number and address of the plan representative who may be
26contacted about the grievance.

27(B) (i) Grievances received by telephone, by facsimile, by
28email, or online through the plan’s Internet Web site pursuant to
29Section 1368.015, that are not coverage disputes, disputed health
30care services involving medical necessity, or experimental or
31investigational treatment and that are resolved by the next business
32day following receipt are exempt from the requirements of
33subparagraph (A) and paragraph (5). The plan shall maintain a log
34of all these grievances. The log shall be periodically reviewed by
35the plan and shall include the following information for each
36complaint:

37(I) The date of the call.

38(II) The name of the complainant.

39(III) The complainant’s member identification number.

40(IV) The nature of the grievance.

P7    1(V) The nature of the resolution.

2(VI) The name of the plan representative who took the call and
3resolved the grievance.

4(ii) For health plan contracts in the individual, small group, or
5large group markets, a health care service plan’s response to
6grievances subject to Section 1367.24 shall also comply with
7subdivision (c) of Section 156.122 of Title 45 of the Code of
8Federal Regulations. This paragraph shall not apply to Medi-Cal
9managed care health care service plan contracts or any entity that
10enters into a contract with the State Department of Health Care
11Services pursuant to Chapter 7 (commencing with Section 14000),
12Chapter 8 (commencing with Section 14200), or Chapter 8.75
13(commencing with Section 14591) of Part 3 of Division 9 of the
14Welfare and Institutions Code.

15(5) Provide subscribers and enrollees with written responses to
16grievances, with a clear and concise explanation of the reasons for
17the plan’s response. For grievances involving the delay, denial, or
18modification of health care services, the plan response shall
19describe the criteria used and the clinical reasons for its decision,
20including all criteria and clinical reasons related to medical
21necessity. If a plan, or one of its contracting providers, issues a
22decision delaying, denying, or modifying health care services based
23in whole or in part on a finding that the proposed health care
24services are not a covered benefit under the contract that applies
25to the enrollee, the decision shall clearly specify the provisions in
26the contract that exclude that coverage.

27(6) For grievances involving the cancellation, rescission, or
28nonrenewal of a health care service plan contract, the health care
29service plan shall continue to provide coverage to the enrollee or
30subscriber under the terms of the health care service plan contract
31until a final determination of the enrollee’s or subscriber’s request
32for review has been made by the health care service plan or the
33director pursuant to Section 1365 and this section. This paragraph
34shall not apply if the health care service plan cancels or fails to
35renew the enrollee’s or subscriber’s health care service plan
36contract for nonpayment of premiums pursuant to paragraph (1)
37of subdivision (a) of Section 1365.

38(7) Keep in its files all copies of grievances, and the responses
39thereto, for a period of five years.

P8    1(b) (1) (A) Afterbegin delete eitherend delete completing the grievance process
2described in subdivision (a),begin delete orend delete participating in the process for at
3least 30 days,begin insert or completing the external exception request review
4process described in subdivision (k) of Section 1367.24,end insert
a
5subscriber or enrollee may submit the grievancebegin insert or external
6exception request review decisionend insert
to the department for review.
7In any casebegin insert under the grievance processend insert determined by the
8department to be a case involving an imminent and serious threat
9to the health of the patient, including, but not limited to, severe
10pain, the potential loss of life, limb, or major bodily function,
11cancellations, rescissions, or the nonrenewal of a health care service
12plan contract, or in any other casebegin delete whereend deletebegin insert whenend insert the department
13determines that an earlier review is warranted, a subscriber or
14enrollee shall not be required to complete the grievance process
15or to participate in the process for at least 30 days before submitting
16a grievance to the department for review.

17(B) A grievancebegin insert or external exception request review decisionend insert
18 may be submitted to the department for review and resolution prior
19to any arbitration.

20(C) Notwithstanding subparagraphs (A) and (B), the department
21may refer any grievancebegin insert or external exception request review
22decisionend insert
that does not pertain to compliance with this chapter to
23the State Department of Public Health, the California Department
24of Aging, the federalbegin delete Health Care Financing Administration,end delete
25begin insert Centers for Medicare and Medicaid Services,end insert or any other
26appropriate governmental entity for investigation and resolution.

27(2) If the subscriber or enrollee is a minor, or is incompetent or
28incapacitated, the parent, guardian, conservator, relative, or other
29designee of the subscriber or enrollee, as appropriate, may submit
30the grievancebegin insert or external exception request review decisionend insert to the
31department as the agent of the subscriber or enrollee. Further, a
32provider may join with, or otherwise assist, a subscriber or enrollee,
33or the agent, to submit the grievancebegin insert or external exception request
34review decisionend insert
to the department. In addition, following
35submission of the grievancebegin insert or external exception request review
36decisionend insert
to the department, the subscriber or enrollee, or the agent,
37may authorize the provider to assist, including advocating on behalf
38of the subscriber or enrollee. For purposes of this section, a
39“relative” includes the parent, stepparent, spouse, adult son or
P9    1daughter, grandparent, brother, sister, uncle, or aunt of the
2subscriber or enrollee.

3(3) The department shall review the written documents submitted
4with the subscriber’s or the enrollee’s request for review, or
5submitted by the agent on behalf of the subscriber or enrollee. The
6department may ask for additional information, and may hold an
7informal meeting with the involved parties, including providers
8who have joined in submitting the grievancebegin insert or external exception
9request review decisionend insert
or who are otherwise assisting or
10advocating on behalf of the subscriber or enrollee. If after
11reviewing the record, the department concludes that thebegin delete grievance,end delete
12begin insert grievance or external exception request review decision,end insert in whole
13or in part, is eligible for review under the independent medical
14review system established pursuant to Article 5.55 (commencing
15with Section 1374.30), the department shall immediately notify
16the subscriber or enrollee, or agent, of that option and shall, if
17requested orally or in writing, assist the subscriber or enrollee in
18participating in the independent medical review system.

19(4) If after reviewing the record of abegin delete grievance,end deletebegin insert grievance or
20external exception request review decision,end insert
the department
21concludes that a health care service eligible for coverage and
22payment under a health care service plan contract has been delayed,
23denied, or modified by a plan, or by one of its contracting
24providers, in whole or in part due to a determination that the service
25is not medically necessary, and that determination was not
26communicated to the enrollee in writing along with a notice of the
27enrollee’s potential right to participate in the independent medical
28review system, as required by this chapter, the director shall, by
29order, assess administrative penalties. A proceeding for the issuance
30of an order assessing administrative penalties shall be subject to
31appropriate notice of, and the opportunity for, a hearing with regard
32to the person affected in accordance with Section 1397. The
33administrative penalties shall not be deemed an exclusive remedy
34available to the director. These penalties shall be paid to the
35Managed Care Administrative Fines and Penalties Fund and shall
36be used for the purposes specified in Section 1341.45.

37(5) The department shall send a written notice of the final
38disposition of thebegin delete grievance,end deletebegin insert grievance or external exception
39request review decision,end insert
and the reasons therefor, to the subscriber
40or enrollee, the agent, to any provider that has joined with or is
P10   1otherwise assisting the subscriber or enrollee, and to the plan,
2within 30 calendar days of receipt of the request for review unless
3the director, in his or her discretion, determines that additional
4time is reasonably necessary to fully and fairly evaluate the relevant
5begin delete grievance.end deletebegin insert grievance or external exception request review decision.end insert
6 In any case not eligible for the independent medical review system
7established pursuant to Article 5.55 (commencing with Section
81374.30), the department’s written notice shall include, at a
9minimum, the following:

10(A) A summary of its findings and the reasons why the
11department found the plan to be, or not to be, in compliance with
12any applicable laws, regulations, or orders of the director.

13(B) A discussion of the department’s contact with any medical
14provider, or any other independent expert relied on by the
15department, along with a summary of the views and qualifications
16of that provider or expert.

17(C) If the enrollee’sbegin delete grievanceend deletebegin insert grievance or external exception
18request review decisionend insert
is sustained in whole or in part, information
19about any corrective action taken.

20(6) In any department review of a grievancebegin insert or external
21exception request review decisionend insert
involving a disputed health care
22service, as defined in subdivision (b) of Section 1374.30, that is
23not eligible for the independent medical review system established
24pursuant to Article 5.55 (commencing with Section 1374.30), in
25which the department finds that the plan has delayed, denied, or
26modified health care services that are medically necessary, based
27on the specific medical circumstances of the enrollee, and those
28services are a covered benefit under the terms and conditions of
29the health care service plan contract, the department’s written
30notice shall do either of the following:

31(A) Order the plan to promptly offer and provide those health
32care services to the enrollee.

33(B) Order the plan to promptly reimburse the enrollee for any
34reasonable costs associated with urgent care or emergency services,
35or other extraordinary and compelling health care services, when
36the department finds that the enrollee’s decision to secure those
37services outside of the plan network was reasonable under the
38circumstances.

39The department’s order shall be binding on the plan.

P11   1(7) Distribution of the written notice shall not be deemed a
2waiver of any exemption or privilege under existing law, including,
3but not limited to, Section 6254.5 of the Government Code, for
4any information in connection with and including the written
5notice, nor shall any person employed or in any way retained by
6the department be required to testify as to that information or
7notice.

8(8) The director shall establish and maintain a system of aging
9of grievances that are pending and unresolved for 30 days or more
10that shall include a brief explanation of the reasons each grievance
11is pending and unresolved for 30 days or more.

12(9) A subscriber or enrollee, or the agent acting on behalf of a
13subscriber or enrollee, may also request voluntary mediation with
14the plan prior to exercising the right to submit a grievancebegin insert or
15external exception request review decisionend insert
to the department. The
16use of mediation services shall not preclude the right to submit a
17grievancebegin insert or external exception request review decisionend insert to the
18department upon completion of mediation. In order to initiate
19mediation, the subscriber or enrollee, or the agent acting on behalf
20of the subscriber or enrollee, and the plan shall voluntarily agree
21to mediation. Expenses for mediation shall be borne equally by
22both sides. The department shall have no administrative or
23enforcement responsibilities in connection with the voluntary
24mediation process authorized by this paragraph.

25(c) The plan’s grievance system shall include a system of aging
26of grievances that are pending and unresolved for 30 days or more.
27The plan shall provide a quarterly report to the director of
28grievances pending and unresolved for 30 or more days with
29separate categories of grievances for Medicare enrollees and
30Medi-Cal enrollees. The plan shall include with the report a brief
31explanation of the reasons each grievance is pending and
32unresolved for 30 days or more. The plan may include the
33following statement in the quarterly report that is made available
34to the public by the director:


36“Under Medicare and Medi-Cal law, Medicare enrollees and
37Medi-Cal enrollees each have separate avenues of appeal that
38are not available to other enrollees. Therefore, grievances
39pending and unresolved may reflect enrollees pursuing their
40Medicare or Medi-Cal appeal rights.”


P12   2If requested by a plan, the director shall include this statement in
3a written report made available to the public and prepared by the
4director that describes or compares grievances that are pending
5and unresolved with the plan for 30 days or more. Additionally,
6the director shall, if requested by a plan, append to that written
7report a brief explanation, provided in writing by the plan, of the
8reasons why grievances described in that written report are pending
9and unresolved for 30 days or more. The director shall not be
10required to include a statement or append a brief explanation to a
11written report that the director is required to prepare under this
12chapter, including Sections 1380 and 1397.5.

13(d) Subject to subparagraph (C) of paragraph (1) of subdivision
14(b), the grievance or resolution procedures authorized by this
15section shall be in addition to any other procedures that may be
16available to any person, and failure to pursue, exhaust, or engage
17in the procedures described in this section shall not preclude the
18use of any other remedy provided by law.

19(e) Nothing in this section shall be construed to allow the
20submission to the department of any provider grievance under this
21section. However, as part of a provider’s duty to advocate for
22medically appropriate health care for his or her patients pursuant
23to Sections 510 and 2056 of the Business and Professions Code,
24nothing in this subdivision shall be construed to prohibit a provider
25from contacting and informing the department about any concerns
26he or she has regarding compliance with or enforcement of this
27chapter.

28(f) To the extent required by Section 2719 of the federal Public
29Health Service Act (42 U.S.C. Sec. 300gg-19) and any subsequent
30rules or regulations, there shall be an independent external review
31pursuant to the standards required by the United States Secretary
32of Health and Human Services of a health care service plan’s
33cancellation, rescission, or nonrenewal of an enrollee’s or
34subscriber’s coverage.

35begin insert

begin insertSEC. 3.end insert  

end insert

begin insertSection 1368.01 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
36amended to read:end insert

37

1368.01.  

(a)  The grievance system shall require the plan to
38resolve grievances within 30 days, except as provided in
39begin delete subdivision (c).end deletebegin insert subdivisions (c) and (d).end insert

P13   1(b)  The grievance system shall include a requirement for
2expedited plan review of grievances for cases involving an
3imminent and serious threat to the health of the patient, including,
4but not limited to, severe pain, potential loss of life, limb, or major
5bodily function. When the plan has notice of a case requiring
6expedited review, the grievance system shall require the plan to
7immediately inform enrollees and subscribers in writing of their
8right to notify the department of the grievance. The grievance
9system shall also require the plan to provide enrollees, subscribers,
10and the department with a written statement on the disposition or
11pending status of the grievance no later than three days from receipt
12of the grievance, except as provided in subdivision (c). Paragraph
13(4) of subdivision (a) of Section 1368 shall not apply to grievances
14handled pursuant to this section.

15(c) A health care service plan contract in the individual, small
16group, or large group markets that provides coverage for outpatient
17prescription drugs shall comply with subdivision (c) of Section
18156.122 of Title 45 of the Code of Federal Regulations. This
19subdivision shall not apply to Medi-Cal managed care health care
20service plan contracts or any entity that enters into a contract with
21the State Department of Health Care Services pursuant to Chapter
227 (commencing with Section 14000), Chapter 8 (commencing with
23Section 14200), or Chapter 8.75 (commencing with Section 14591)
24of Part 3 of Division 9 of the Welfare and Institutions Code.

begin insert

25(d) The grievance system shall require a health care service
26plan that provides coverage for outpatient prescription drugs to
27resolve grievances within 72 hours for nonurgent requests, and
28within 24 hours if exigent circumstances exist, if the original
29request was an authorization for a formulary drug that requires
30prior authorization by the plan. For purposes of this subdivision,
31“exigent circumstances” shall have the same meaning as set forth
32in Section 1367.241.

end insert
33begin insert

begin insertSEC. 4.end insert  

end insert

begin insertSection 1374.30 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
34amended to read:end insert

35

1374.30.  

(a) Commencing January 1, 2001, there is hereby
36established in the department the Independent Medical Review
37System.

38(b) For the purposes of this chapter, “disputed health care
39service” means any health care service eligible for coverage and
40payment under a health care service plan contract that has been
P14   1denied, modified, or delayed by a decision of the plan, or by one
2of its contracting providers, in whole or in part due to a finding
3that the service is not medically necessary. A decision regarding
4a disputed health care service relates to the practice of medicine
5and is not a coverage decision. A disputed health care service does
6not include services provided by a specialized health care service
7plan, except to the extent that the service (1) involves the practice
8of medicine, or (2) is provided pursuant to a contract with a health
9care service plan that covers hospital, medical, or surgical benefits.
10If a plan, or one of its contracting providers, issues a decision
11denying, modifying, or delaying health care services, based in
12whole or in part on a finding that the proposed health care services
13are not a covered benefit under the contract that applies to the
14enrollee, the statement of decision shall clearly specify the
15provision in the contract that excludes that coverage.

16(c) For the purposes of this chapter, “coverage decision” means
17the approval or denial of health care services by a plan, or by one
18of its contracting entities, substantially based on a finding that the
19provision of a particular service is included or excluded as a
20covered benefit under the terms and conditions of the health care
21service plan contract. A “coverage decision” does not encompass
22a plan or contracting provider decision regarding a disputed health
23care service.

24(d) (1) All enrollee grievances involving a disputed health care
25service are eligible for review under the Independent Medical
26Review System if the requirements of this article are met. If the
27department finds that an enrollee grievance involving a disputed
28health care service does not meet the requirements of this article
29for review under the Independent Medical Review System, the
30enrollee request for review shall be treated as a request for the
31department to review the grievance pursuant to subdivision (b) of
32Section 1368. All other enrollee grievances, including grievances
33involving coverage decisions, remain eligible for review by the
34department pursuant to subdivision (b) of Section 1368.

35(2) In any case in which an enrollee or provider asserts that a
36decision to deny, modify, or delay health care services was based,
37in whole or in part, on consideration of medical necessity, the
38department shall have the final authority to determine whether the
39grievance is more properly resolved pursuant to an independent
P15   1medical review as provided under this article or pursuant to
2subdivision (b) of Section 1368.

3(3) The department shall be the final arbiter when there is a
4question as to whether an enrollee grievance is a disputed health
5care service or a coverage decision. The department shall establish
6a process to complete an initial screening of an enrollee grievance.
7If there appears to be any medical necessity issue, the grievance
8shall be resolved pursuant to an independent medical review as
9provided under this article or pursuant to subdivision (b) of Section
101368.

11(e) Every health care service plan contract that is issued,
12amended, renewed, or delivered in this state on or after January
131, 2000, shall provide an enrollee with the opportunity to seek an
14independent medical review whenever health care services have
15been denied, modified, or delayed by the plan, or by one of its
16contracting providers, if the decision was based in whole or in part
17on a finding that the proposed health care services are not medically
18necessary. For purposes of this article, an enrollee may designate
19an agent to act on his or her behalf, as described in paragraph (2)
20of subdivision (b) of Section 1368. The provider may join with or
21otherwise assist the enrollee in seeking an independent medical
22review, and may advocate on behalf of the enrollee.

23(f) Medi-Cal beneficiaries enrolled in a health care service plan
24shall not be excluded from participation. Medicare beneficiaries
25enrolled in a health care service plan shall not be excluded unless
26expressly preempted by federal law. Reviews of cases for Medi-Cal
27enrollees shall be conducted in accordance with statutes and
28regulations for the Medi-Cal program.

29(g) The department may seek to integrate the quality of care
30and consumer protection provisions, including remedies, of the
31Independent Medical Review System with related dispute
32resolution procedures of other health care agency programs,
33including the Medicare and Medi-Cal programs, in a way that
34minimizes the potential for duplication, conflict, and added costs.
35Nothing in this subdivision shall be construed to limit any rights
36conferred upon enrollees under this chapter.

37(h) The independent medical review process authorized by this
38article is in addition to any other procedures or remedies that may
39be available.

P16   1(i) Every health care service plan shall prominently display in
2every plan member handbook or relevant informational brochure,
3in every plan contract, on enrollee evidence of coverage forms, on
4copies of plan procedures for resolving grievances, on letters of
5denials issued by either the plan or its contracting organization,
6on the grievance forms required under Section 1368, and on all
7written responses to grievances, information concerning the right
8of an enrollee to request an independent medical review in cases
9where the enrollee believes that health care services have been
10improperly denied, modified, or delayed by the plan, or by one of
11its contracting providers.

12(j) An enrollee may apply to the department for an independent
13medical review when all of the following conditions are met:

14(1) (A) The enrollee’s provider has recommended a health care
15service as medicallybegin delete necessary, orend deletebegin insert necessary.end insert

16(B) The enrollee has received urgent care or emergency services
17that a provider determined was medicallybegin delete necessary, orend deletebegin insert necessary.end insert

18(C) The enrollee, in the absence of a provider recommendation
19under subparagraph (A) or the receipt of urgent care or emergency
20services by a provider under subparagraph (B), has been seen by
21an in-plan provider for the diagnosis or treatment of the medical
22condition for which the enrollee seeks independent review. The
23plan shall expedite access to an in-plan provider upon request of
24an enrollee. The in-plan provider need not recommend the disputed
25health care service as a condition for the enrollee to be eligible for
26an independent review.

27For purposes of this article, the enrollee’s provider may be an
28out-of-plan provider. However, the plan shall have no liability for
29payment of services provided by an out-of-plan provider, except
30as provided pursuant to subdivision (c) of Section 1374.34.

31(2) The disputed health care service has been denied, modified,
32or delayed by the plan, or by one of its contracting providers, based
33in whole or in part on a decision that the health care service is not
34medically necessary.

begin insert

35(3) Either of the following:

end insert
begin delete

36(3)

end delete

37begin insert(A)end insert The enrollee has filed a grievance with the plan or its
38contracting provider pursuant to Section 1368, and the disputed
39decision is upheld or the grievance remains unresolved after 30
40days. The enrollee shall not be required to participate in the plan’s
P17   1grievance process for more than 30 days. In the case of a grievance
2that requires expedited review pursuant tobegin insert subdivision (b) ofend insert
3 Section 1368.01, the enrollee shall not be required to participate
4in the plan’s grievance process for more than three days.begin insert In the
5case of a grievance that requires expedited review pursuant to
6subdivision (d) of Section 1368.01, the enrollee shall not be
7required to participate in the plan’s grievance process for more
8than 72 hours, or more than 24 hours if exigent circumstances
9exist.end insert

begin insert

10(B) The enrollee has filed for an external exception request
11review decision with the plan or its contracting provider pursuant
12to subdivision (k) of Section 1367.24, and the disputed decision is
13upheld or the external review remains unresolved after 72 hours,
14or after 24 hours if exigent circumstances exist.

end insert

15(k) An enrollee may apply to the department for an independent
16medical review of a decision to deny, modify, or delay health care
17services, based in whole or in part on a finding that the disputed
18health care services are not medically necessary, within six months
19of any of the qualifying periods or events under subdivision (j).
20The director may extend the application deadline beyond six
21months if the circumstances of a case warrant the extension.

22(l) The enrollee shall pay no application or processing fees of
23any kind.

24(m) As part of its notification to the enrollee regarding a
25disposition of the enrollee’s grievance that denies, modifies, or
26delays health care services, the plan shall provide the enrollee with
27a one- or two-page application form approved by the department,
28and an addressed envelope, which the enrollee may return to initiate
29an independent medical review. The plan shall include on the form
30any information required by the department to facilitate the
31completion of the independent medical review, such as the
32enrollee’s diagnosis or condition, the nature of the disputed health
33care service sought by the enrollee, a means to identify the
34enrollee’s case, and any other material information. The form shall
35also include the following:

36(1) Notice that a decision not to participate in the independent
37medical review process may cause the enrollee to forfeit any
38statutory right to pursue legal action against the plan regarding the
39disputed health care service.

P18   1(2) A statement indicating the enrollee’s consent to obtain any
2necessary medical records from the plan, any of its contracting
3providers, and any out-of-plan provider the enrollee may have
4consulted on the matter, to be signed by the enrollee.

5(3) Notice of the enrollee’s right to provide information or
6documentation, either directly or through the enrollee’s provider,
7regarding any of the following:

8(A) A provider recommendation indicating that the disputed
9health care service is medically necessary for the enrollee’s medical
10condition.

11(B) Medical information or justification that a disputed health
12care service, on an urgent care or emergency basis, was medically
13necessary for the enrollee’s medical condition.

14(C) Reasonable information supporting the enrollee’s position
15that the disputed health care service is or was medically necessary
16for the enrollee’s medical condition, including all information
17provided to the enrollee by the plan or any of its contracting
18providers, still in the possession of the enrollee, concerning a plan
19or provider decision regarding disputed health care services, and
20a copy of any materials the enrollee submitted to the plan, still in
21the possession of the enrollee, in support of the grievance, as well
22as any additional material that the enrollee believes is relevant.

23(4) A section designed to collect information on the enrollee’s
24ethnicity, race, and primary language spoken that includes both of
25the following:

26(A) A statement of intent indicating that the information is used
27for statistics only, in order to ensure that all enrollees get the best
28care possible.

29(B) A statement indicating that providing this information is
30optional and will not affect the independent medical review process
31in any way.

32(n) Upon notice from the department that the health care service
33plan’s enrollee has applied for an independent medical review, the
34plan or its contracting providers shall provide to the independent
35medical review organization designated by the department a copy
36of all of the following documents within three business days of
37 the plan’s receipt of the department’s notice of a request by an
38enrollee for an independent review:

P19   1(1) (A) A copy of all of the enrollee’s medical records in the
2possession of the plan or its contracting providers relevant to each
3of the following:

4(i) The enrollee’s medical condition.

5(ii) The health care services being provided by the plan and its
6contracting providers for the condition.

7(iii) The disputed health care services requested by the enrollee
8for the condition.

9(B) Any newly developed or discovered relevant medical records
10in the possession of the plan or its contracting providers after the
11initial documents are provided to the independent medical review
12 organization shall be forwarded immediately to the independent
13medical review organization. The plan shall concurrently provide
14a copy of medical records required by this subparagraph to the
15enrollee or the enrollee’s provider, if authorized by the enrollee,
16unless the offer of medical records is declined or otherwise
17prohibited by law. The confidentiality of all medical record
18information shall be maintained pursuant to applicable state and
19federal laws.

20(2) A copy of all information provided to the enrollee by the
21plan and any of its contracting providers concerning plan and
22provider decisions regarding the enrollee’s condition and care, and
23a copy of any materials the enrollee or the enrollee’s provider
24submitted to the plan and to the plan’s contracting providers in
25support of the enrollee’s request for disputed health care services.
26This documentation shall include the written response to the
27enrollee’s grievance, required by paragraph (4) of subdivision (a)
28of Section 1368. The confidentiality of any enrollee medical
29information shall be maintained pursuant to applicable state and
30federal laws.

31(3) A copy of any other relevant documents or information used
32by the plan or its contracting providers in determining whether
33disputed health care services should have been provided, and any
34statements by the plan and its contracting providers explaining the
35reasons for the decision to deny, modify, or delay disputed health
36care services on the basis of medical necessity. The plan shall
37concurrently provide a copy of documents required by this
38paragraph, except for any information found by the director to be
39legally privileged information, to the enrollee and the enrollee’s
40provider. The department and the independent medical review
P20   1organization shall maintain the confidentiality of any information
2found by the director to be the proprietary information of the plan.

3(o) This section shall become operative on July 1, 2015.

4begin insert

begin insertSEC. 5.end insert  

end insert

begin insertSection 10123.191 of the end insertbegin insertInsurance Codeend insertbegin insert is amended
5to read:end insert

6

10123.191.  

(a) Notwithstanding any other law, on and after
7January 1, 2013, a health insurer that provides coverage for
8prescription drugs shall utilize and accept only the prior
9authorization form developed pursuant to subdivision (c), or an
10electronic prior authorization process described in subdivision (e),
11when requiring prior authorization for prescription drugs.

12(b) begin insert(1)end insertbegin insertend insert If a health insurer or a contracted physician group fails
13to respond within 72 hours for nonurgent requests, and within 24
14hours if exigent circumstances exist, upon receipt of a completed
15prior authorization request from a prescribing provider, the prior
16authorization request shall be deemed to have been granted.

begin insert

17(2) A health insurer’s internal grievance process shall require
18a health insurer that provides coverage for outpatient prescription
19drugs to resolve grievances within 72 hours for nonurgent requests,
20and within 24 hours if exigent circumstances exist, if the original
21request was an authorization for a formulary drug that requires
22prior authorization by the health insurer.

end insert

23(c) On or before January 1, 2017, the department and the
24Department of Managed Health Care shall jointly develop a
25uniform prior authorization form. Notwithstanding any other law,
26on and after July 1, 2017, or six months after the form is completed
27 pursuant to this section, whichever is later, every prescribing
28provider shall use that uniform prior authorization form, or an
29electronic prior authorization process described in subdivision (e),
30to request prior authorization for coverage of prescription drugs
31and every health insurer shall accept that form or electronic process
32as sufficient to request prior authorization for prescription drugs.

33(d) The prior authorization form developed pursuant to
34subdivision (c) shall meet the following criteria:

35(1) The form shall not exceed two pages.

36(2) The form shall be made electronically available by the
37department and the health insurer.

38(3) The completed form may also be electronically submitted
39from the prescribing provider to the health insurer.

P21   1(4) The department and the Department of Managed Health
2Care shall develop the form with input from interested parties from
3at least one public meeting.

4(5) The department and the Department of Managed Health
5Care, in development of the standardized form, shall take into
6consideration the following:

7(A) Existing prior authorization forms established by the federal
8Centers for Medicare and Medicaid Services and the State
9Department of Health Care Services.

10(B) National standards pertaining to electronic prior
11authorization.

12(e) A prescribing provider may use an electronic prior
13authorization system utilizing the standardized form described in
14subdivision (c) or an electronic process developed specifically for
15transmitting prior authorization information that meets the National
16Council for Prescription Drug Programs’ SCRIPT standard for
17electronic prior authorization transactions.

18(f) Subdivision (a) does not apply if any of the following occurs:

19(1) A contracted physician group is delegated the financial risk
20for the pharmacy or medical drug benefit by a health insurer.

21(2) A contracted physician group uses its own internal prior
22authorization process rather than the health insurer’s prior
23authorization process for the health insurer’s insureds.

24(3) A contracted physician group is delegated a utilization
25management function by the health insurer concerning any
26prescription drug, regardless of the delegation of financial risk.

27(g) For prescription drugs, prior authorization requirements
28described in subdivisions (c) and (e) apply regardless of how that
29benefit is classified under the terms of the health insurer’s group
30or individual policy.

31(h) begin insert(1)end insertbegin insertend insert A health insurer shall maintain a process for an external
32exception request review that complies with subdivision (c) of
33Section 156.122 of Title 45 of the Code of Federal Regulations.

begin insert

34(2) An insured shall not be required to file a complaint with the
35health insurer or its contracting provider pursuant to its internal
36grievance process if a health insurer disapproves a request to
37obtain authorization for a nonformulary drug under subdivision
38(i). If a health insurer disapproves a request to obtain authorization
39for a nonformulary drug and the insured files a complaint with
P22   1the health insurer, the health insurer shall treat that as a request
2to obtain an external exception request review.

end insert

3(i) For an individual, small group, or large group health
4insurance policy, a health insurer that provides coverage for
5outpatient prescription drugs shall comply with subdivision (c) of
6Section 156.122 of Title 45 of the Code of Federal Regulations.

begin insert

7(j) Nothing in this section shall be construed to affect an
8insured’s or policyholder’s eligibility to submit a complaint to the
9department for review or to apply to the department for an
10independent medical review under Article 3.5 (commencing with
11Section 10169).

end insert
begin delete

12(j)

end delete

13begin insert(k)end insert For purposes of this section:

14(1) “Prescribing provider” shall include a provider authorized
15to write a prescription, pursuant to subdivision (a) of Section 4040
16of the Business and Professions Code, to treat a medical condition
17of an insured.

18(2) “Exigent circumstances” exist when an insured is suffering
19from a health condition that may seriously jeopardize the insured’s
20 life, health, or ability to regain maximum function or when an
21insured is undergoing a current course of treatment using a
22nonformulary drug.

23(3) “Completed prior authorization request” means a completed
24uniform prior authorization form developed pursuant to subdivision
25(c), or a completed request submitted using an electronic prior
26authorization system described in subdivision (e), or, for contracted
27physician groups described in subdivision (f), the process used by
28the contracted physician group.

29begin insert

begin insertSEC. 6.end insert  

end insert

begin insertSection 10169 of the end insertbegin insertInsurance Codeend insertbegin insert, as added by
30Section 19 of Chapter 348 of the Statutes of 2015, is amended to
31read:end insert

32

10169.  

(a) Commencing January 1, 2001, there is hereby
33established in the department the Independent Medical Review
34System.

35(b) For the purposes of this chapter, “disputed health care
36service” means any health care service eligible for coverage and
37payment under a disability insurance contract that has been denied,
38modified, or delayed by a decision of the insurer, or by one of its
39contracting providers, in whole or in part due to a finding that the
40service is not medically necessary. A decision regarding a disputed
P23   1health care service relates to the practice of medicine and is not a
2coverage decision. A disputed health care service does not include
3services provided by a group or individual policy of vision-only
4or dental-only coverage, except to the extent that (1) the service
5involves the practice of medicine, or (2) is provided pursuant to a
6contract with a disability insurer that covers hospital, medical, or
7surgical benefits. If an insurer, or one of its contracting providers,
8issues a decision denying, modifying, or delaying health care
9services, based in whole or in part on a finding that the proposed
10health care services are not a covered benefit under the contract
11that applies to the insured, the statement of decision shall clearly
12specify the provision in the contract that excludes that coverage.

13(c) For the purposes of this chapter, “coverage decision” means
14the approval or denial of health care services by a disability insurer,
15or by one of its contracting entities, substantially based on a finding
16that the provision of a particular service is included or excluded
17as a covered benefit under the terms and conditions of the disability
18insurance contract. A coverage decision does not encompass a
19 disability insurer or contracting provider decision regarding a
20disputed health care service.

21(d) (1) All insured grievances involving a disputed health care
22service are eligible for review under the Independent Medical
23Review System if the requirements of this article are met. If the
24department finds that an insured grievance involving a disputed
25health care service does not meet the requirements of this article
26for review under the Independent Medical Review System, the
27insured request for review shall be treated as a request for the
28department to review the grievance. All other insured grievances,
29including grievances involving coverage decisions, remain eligible
30for review by the department.

31(2) In any case in which an insured or provider asserts that a
32decision to deny, modify, or delay health care services was based,
33in whole or in part, on consideration of medical necessity, the
34department shall have the final authority to determine whether the
35grievance is more properly resolved pursuant to an independent
36medical review as provided under this article.

37(3) The department shall be the final arbiter when there is a
38question as to whether an insured grievance is a disputed health
39care service or a coverage decision. The department shall establish
40a process to complete an initial screening of an insured grievance.
P24   1If there appears to be any medical necessity issue, the grievance
2shall be resolved pursuant to an independent medical review as
3provided under this article.

4(e) Every disability insurance contract that is issued, amended,
5renewed, or delivered in this state on or after January 1, 2000, shall
6provide an insured with the opportunity to seek an independent
7medical review whenever health care services have been denied,
8modified, or delayed by the insurer, or by one of its contracting
9providers, if the decision was based in whole or in part on a finding
10that the proposed health care services are not medically necessary.
11For purposes of this article, an insured may designate an agent to
12act on his or her behalf. The provider may join with or otherwise
13assist the insured in seeking an independent medical review, and
14may advocate on behalf of the insured.

15(f) Medicare beneficiaries enrolled in Medicare + Choice
16products shall not be excluded unless expressly preempted by
17federal law.

18(g) The department may seek to integrate the quality of care
19and consumer protection provisions, including remedies, of the
20Independent Medical Review System with related dispute
21resolution procedures of other health care agency programs,
22including the Medicare program, in a way that minimizes the
23potential for duplication, conflict, and added costs. Nothing in this
24subdivision shall be construed to limit any rights conferred upon
25insureds under this chapter.

26(h) The independent medical review process authorized by this
27article is in addition to any other procedures or remedies that may
28be available.

29(i) Every disability insurer shall prominently display in every
30insurer member handbook or relevant informational brochure, in
31every insurance contract, on insured evidence of coverage forms,
32on copies of insurer procedures for resolving grievances, on letters
33of denials issued by either the insurer or its contracting
34organization, and on all written responses to grievances,
35information concerning the right of an insured to request an
36independent medical review when the insured believes that health
37care services have been improperly denied, modified, or delayed
38by the insurer, or by one of its contracting providers. The
39department’s telephone number, 1-800-927-4357, and Internet
40Web site, www.insurance.ca.gov, shall also be displayed.

P25   1(j) An insured may apply to the department for an independent
2medical review when all of the following conditions are met:

3(1) (A) The insured’s provider has recommended a health care
4service as medically necessary, or

5(B) The insured has received urgent care or emergency services
6that a provider determined was medically necessary, or

7(C) The insured, in the absence of a provider recommendation
8under subparagraph (A) or the receipt of urgent care or emergency
9services by a provider under subparagraph (B), has been seen by
10a contracting provider for the diagnosis or treatment of the medical
11condition for which the insured seeks independent review. The
12insurer shall expedite access to a contracting provider upon request
13of an insured. The contracting provider need not recommend the
14disputed health care service as a condition for the insured to be
15eligible for an independent review.

16For purposes of this article, the insured’s provider may be a
17noncontracting provider. However, the insurer shall have no
18liability for payment of services provided by a noncontracting
19provider, except as provided pursuant to Section 10169.3.

20(2) The disputed health care service has been denied, modified,
21or delayed by the insurer, or by one of its contracting providers,
22based in whole or in part on a decision that the health care service
23is not medically necessary.

begin insert

24(3) Either of the following:

end insert
begin delete

25(3)

end delete

26begin insert(A)end insert The insured has filed a grievance with the insurer or its
27contracting provider, and the disputed decision is upheld or the
28grievance remains unresolved after 30 days. The insured shall not
29be required to participate in the insurer’s grievance process for
30more than 30 days. In the case of a grievance that requires
31expedited review, the insured shall not be required to participate
32in the insurer’s grievance process for more than three days.begin insert In the
33case of a grievance that requires expedited review pursuant to
34paragraph (2) of subdivision (b) of Section 10123.191, the insured
35shall not be required to participate in the insured’s grievance
36process for more than 72 hours, or more than 24 hours if exigent
37circumstances exist.end insert

begin insert

38(B) The insured has filed for an external exception request
39review decision with the insurer or its contracting provider
40pursuant to subdivision (h) of Section 10123.191, and the disputed
P26   1decision is upheld or the external review remains unresolved after
272 hours, or after 24 hours if exigent circumstances exist.

end insert

3(k) An insured may apply to the department for an independent
4medical review of a decision to deny, modify, or delay health care
5services, based in whole or in part on a finding that the disputed
6health care services are not medically necessary, within six months
7of any of the qualifying periods or events under subdivision (j).
8The commissioner may extend the application deadline beyond
9six months if the circumstances of a case warrant the extension.

10(l) The insured shall pay no application or processing fees of
11any kind.

12(m) As part of its notification to the insured regarding a
13disposition of the insured’s grievance that denies, modifies, or
14delays health care services, the insurer shall provide the insured
15with a one- or two-page application form approved by the
16department, and an addressed envelope, which the insured may
17return to initiate an independent medical review. The insurer shall
18include on the form any information required by the department
19to facilitate the completion of the independent medical review,
20such as the insured’s diagnosis or condition, the nature of the
21disputed health care service sought by the insured, a means to
22identify the insured’s case, and any other material information.
23The form shall also include the following:

24(1) Notice that a decision not to participate in the independent
25review process may cause the insured to forfeit any statutory right
26to pursue legal action against the insurer regarding the disputed
27health care service.

28(2) A statement indicating the insured’s consent to obtain any
29necessary medical records from the insurer, any of its contracting
30providers, and any noncontracting provider the insured may have
31consulted on the matter, to be signed by the insured.

32(3) Notice of the insured’s right to provide information or
33documentation, either directly or through the insured’s provider,
34regarding any of the following:

35(A) A provider recommendation indicating that the disputed
36health care service is medically necessary for the insured’s medical
37condition.

38(B) Medical information or justification that a disputed health
39care service, on an urgent care or emergency basis, was medically
40necessary for the insured’s medical condition.

P27   1(C) Reasonable information supporting the insured’s position
2that the disputed health care service is or was medically necessary
3for the insured’s medical condition, including all information
4provided to the insured by the insurer or any of its contracting
5providers, still in the possession of the insured, concerning an
6insurer or provider decision regarding disputed health care services,
7and a copy of any materials the insured submitted to the insurer,
8still in the possession of the insured, in support of the grievance,
9as well as any additional material that the insured believes is
10relevant.

11(4) A section designed to collect information on the insured’s
12ethnicity, race, and primary language spoken that includes both of
13the following:

14(A) A statement of intent indicating that the information is used
15for statistics only, in order to ensure that all insureds get the best
16care possible.

17(B) A statement indicating that providing this information is
18optional and will not affect the independent medical review process
19in any way.

20(n) Upon notice from the department that the insured has applied
21for an independent medical review, the insurer or its contracting
22providers, shall provide to the independent medical review
23organization designated by the department a copy of all of the
24following documents within three business days of the insurer’s
25receipt of the department’s notice of a request by an insured for
26an independent review:

27(1) (A) A copy of all of the insured’s medical records in the
28possession of the insurer or its contracting providers relevant to
29each of the following:

30(i) The insured’s medical condition.

31(ii) The health care services being provided by the insurer and
32its contracting providers for the condition.

33(iii) The disputed health care services requested by the insured
34for the condition.

35(B) Any newly developed or discovered relevant medical records
36in the possession of the insurer or its contracting providers after
37the initial documents are provided to the independent medical
38review organization shall be forwarded immediately to the
39independent medical review organization. The insurer shall
40concurrently provide a copy of medical records required by this
P28   1subparagraph to the insured or the insured’s provider, if authorized
2by the insured, unless the offer of medical records is declined or
3otherwise prohibited by law. The confidentiality of all medical
4record information shall be maintained pursuant to applicable state
5and federal laws.

6(2) A copy of all information provided to the insured by the
7insurer and any of its contracting providers concerning insurer and
8provider decisions regarding the insured’s condition and care, and
9a copy of any materials the insured or the insured’s provider
10submitted to the insurer and to the insurer’s contracting providers
11in support of the insured’s request for disputed health care services.
12This documentation shall include the written response to the
13insured’s grievance. The confidentiality of any insured medical
14information shall be maintained pursuant to applicable state and
15federal laws.

16(3) A copy of any other relevant documents or information used
17by the insurer or its contracting providers in determining whether
18disputed health care services should have been provided, and any
19statements by the insurer and its contracting providers explaining
20the reasons for the decision to deny, modify, or delay disputed
21health care services on the basis of medical necessity. The insurer
22shall concurrently provide a copy of documents required by this
23paragraph, except for any information found by the commissioner
24to be legally privileged information, to the insured and the insured’s
25provider. The department and the independent medical review
26organization shall maintain the confidentiality of any information
27found by the commissioner to be the proprietary information of
28the insurer.

begin delete

29(o) This section shall become operative on January 1, 2017.

end delete
30begin insert

begin insertSEC. 7.end insert  

end insert
begin insert

No reimbursement is required by this act pursuant to
31Section 6 of Article XIII B of the California Constitution because
32the only costs that may be incurred by a local agency or school
33district will be incurred because this act creates a new crime or
34infraction, eliminates a crime or infraction, or changes the penalty
35for a crime or infraction, within the meaning of Section 17556 of
36the Government Code, or changes the definition of a crime within
37the meaning of Section 6 of Article XIII B of the California
38Constitution.

end insert
begin delete
39

SECTION 1.  

Section 1367.24 of the Health and Safety Code
40 is amended to read:

P29   1

1367.24.  

(a) (1) Every health care service plan that provides
2prescription drug benefits shall maintain an expeditious process,
3as described in this subdivision, by which enrollees, enrollees’
4designees, or prescribing providers may request and obtain
5authorization for medically necessary nonformulary prescription
6drugs and medically necessary formulary prescription drugs that
7require prior authorization by the plan. The plan shall provide that
8 the enrollee, the enrollee’s designee, or the enrollee’s prescribing
9provider may seek a prior authorization for a prescription drug
10under this subdivision.

11(2) Each plan shall respond to a prior authorization request
12within 72 hours following receipt of the prior authorization request.
13A plan that grants a prior authorization request under this paragraph
14shall provide coverage of the prescription drug for the duration of
15the prescription, including refills.

16(3) Each plan shall provide that a prior authorization may be
17obtained within 24 hours if an enrollee is suffering from a health
18condition that may seriously jeopardize the enrollee’s life, health,
19or ability to regain maximum function or if an enrollee is
20undergoing a current course of treatment using a nonformulary
21drug. A plan that grants a prior authorization request under this
22paragraph based on exigent circumstances shall provide coverage
23of the prescription drug for the duration of the exigency.

24(4) If a plan fails to respond within 72 hours for a prior
25authorization request, or within 24 hours if exigent circumstances
26exist, upon receipt of a completed prior authorization request, the
27prior authorization request shall be deemed to have been granted.

28(5) Each plan shall provide a written description of the process
29described in paragraph (1) to its prescribing providers. For purposes
30of this section, a prescribing provider shall include a provider
31authorized to write a prescription, pursuant to subdivision (a) of
32Section 4040 of the Business and Professions Code, to treat a
33medical condition of an enrollee.

34(b) If a plan disapproves a prior authorization request made
35pursuant to subdivision (a), the plan shall maintain an expeditious
36process to authorize an enrollee to obtain an external review.

37(1) A determination on an external review shall be made no
38later than 72 hours following receipt of the request, if the original
39request was an authorization request under paragraph (2) of
40subdivision (a), and no later than 24 hours following receipt of the
P30   1request, if the original request was an authorization request under
2paragraph (3) of subdivision (a).

3(2) If an external review decision of a prior authorization request
4under paragraph (2) of subdivision (a) is granted, the plan shall
5provide coverage of the prescription drug for the duration of the
6prescription, including refills. If an external review decision of a
7prior authorization request under paragraph (3) of subdivision (a)
8is granted, the plan shall provide coverage of the prescription drug
9for the duration of the exigency.

10(c) Any plan that disapproves a request made pursuant to
11subdivision (a) to obtain authorization for a nonformulary or
12formulary drug shall provide the reasons for the disapproval in a
13notice provided to the enrollee. The notice shall indicate that the
14enrollee may file, in lieu of filing a grievance with the plan, a
15request for an external review pursuant to subdivision (b) if the
16enrollee objects to the disapproval, including any alternative drug
17or treatment offered by the plan. The notice shall comply with
18subdivision (b) of Section 1368.02. If a plan disapproves a request
19made pursuant to subdivision (a), an enrollee shall not be required
20to file a grievance with the plan or its contracting provider pursuant
21to Section 1368.

22(d) The process described in subdivisions (a) and (b) by which
23enrollee’s, enrollees’ designees, and prescribing providers may
24obtain authorization for medically necessary nonformulary drugs
25shall not apply to a nonformulary drug that has been prescribed
26for an enrollee in conformance with the provisions of Section
271367.22.

28(e) The process described in subdivisions (a) and (b) by which
29enrollees may obtain medically necessary nonformulary drugs and
30formulary drugs shall be described in evidence of coverage and
31disclosure forms, as required by subdivision (a) of Section 1363,
32issued on or after July 1, 2017.

33(f) Every health care service plan that provides prescription
34drug benefits shall maintain, as part of its books and records under
35Section 1381, all of the following information, which shall be
36made available to the director upon request:

37(1) The complete drug formulary or formularies of the plan, if
38the plan maintains a formulary, including a list of the prescription
39drugs on the formulary of the plan by major therapeutic category
P31   1with an indication of whether any drugs are preferred over other
2drugs.

3(2) Records developed by the pharmacy and therapeutic
4committee of the plan, or by others responsible for developing,
5modifying, and overseeing formularies, including medical groups,
6individual practice associations, and contracting pharmaceutical
7benefit management companies, used to guide the drugs prescribed
8for the enrollees of the plan, that fully describe the reasoning
9behind formulary decisions.

10(3) Any plan arrangements with prescribing providers, medical
11groups, individual practice associations, pharmacists, contracting
12pharmaceutical benefit management companies, or other entities
13that are associated with activities of the plan to encourage
14formulary compliance or otherwise manage prescription drug
15benefits.

16(g) If a plan provides prescription drug benefits, the department
17shall, as part of its periodic onsite medical survey of each plan
18undertaken pursuant to Section 1380, review the performance of
19the plan in providing those benefits, including, but not limited to,
20a review of the procedures and information maintained pursuant
21to this section, and describe the performance of the plan as part of
22its report issued pursuant to Section 1380.

23(h) The director shall not publicly disclose any information
24reviewed pursuant to this section that is determined by the director
25to be confidential pursuant to state law.

26(i) For purposes of this section, “authorization” means approval
27by the health care service plan to provide payment for the
28prescription drug.

29(j) Nonformulary prescription drugs shall include any drug for
30which an enrollee’s copayment or out-of-pocket costs are different
31than the copayment for a formulary prescription drug, except as
32otherwise provided by law or regulation or in cases in which the
33drug has been excluded in the plan contract pursuant to Section
341342.7.

35(k) Nothing in this section shall be construed to restrict or impair
36the application of any other provision of this chapter, including,
37but not limited to, Section 1367, which includes among its
38requirements that a health care service plan furnish services in a
39manner providing continuity of care and demonstrate that medical
P32   1decisions are rendered by qualified medical providers unhindered
2by fiscal and administrative management.

3(l) A health care service plan contract in the individual, small
4group, and large group markets that provides coverage for
5outpatient prescription drugs shall comply with this section. This
6section shall not apply to Medi-Cal managed care health care
7service plan contracts.

8(m) “Medi-Cal managed care health care service plan contract”
9means any entity that enters into a contract with the State
10Department of Health Care Services pursuant to Chapter 7
11(commencing with Section 14000), Chapter 8 (commencing with
12Section 14200), or Chapter 8.75 (commencing with Section 14591)
13of Part 3 of Division 9 of the Welfare and Institutions Code.

14(n) Nothing in this section shall be construed to affect an
15enrollee’s or subscriber’s eligibility to submit a grievance to the
16department for review under Section 1368 or to apply to the
17department for an independent medical review under Section
181370.4, or Article 5.55 (commencing with Section 1374.30) of
19this chapter.

20

SEC. 2.  

Section 1367.241 of the Health and Safety Code is
21amended to read:

22

1367.241.  

(a) Notwithstanding any other law, on and after
23January 1, 2013, a health care service plan that provides coverage
24for prescription drugs shall accept only the prior authorization
25form developed pursuant to subdivision (b), or an electronic prior
26authorization process described in subdivision (d), when requiring
27prior authorization for prescription drugs. This section does not
28apply in the event that a physician or physician group has been
29delegated the financial risk for prescription drugs by a health care
30service plan and does not use a prior authorization process. This
31section does not apply to a health care service plan, or to its
32affiliated providers, if the health care service plan owns and
33operates its pharmacies and does not use a prior authorization
34process for prescription drugs.

35(b) On or before January 1, 2017, the department and the
36Department of Insurance shall jointly develop a uniform prior
37authorization form. Notwithstanding any other law, on and after
38July 1, 2017, or six months after the form is completed pursuant
39to this section, whichever is later, every prescribing provider shall
40use that uniform prior authorization form, or an electronic prior
P33   1authorization process described in subdivision (d), to request prior
2authorization for coverage of prescription drugs and every health
3care service plan shall accept that form or electronic process as
4sufficient to request prior authorization for prescription drugs.

5(c) The prior authorization form developed pursuant to
6subdivision (b) shall meet the following criteria:

7(1) The form shall not exceed two pages.

8(2) The form shall be made electronically available by the
9department and the health care service plan.

10(3) The completed form may also be electronically submitted
11from the prescribing provider to the health care service plan.

12(4) The department and the Department of Insurance shall
13develop the form with input from interested parties from at least
14one public meeting.

15(5) The department and the Department of Insurance, in
16development of the standardized form, shall take into consideration
17the following:

18(A) Existing prior authorization forms established by the federal
19Centers for Medicare and Medicaid Services and the State
20Department of Health Care Services.

21(B) National standards pertaining to electronic prior
22authorization.

23(d) A prescribing provider may use an electronic prior
24authorization system utilizing the standardized form described in
25subdivision (b) or an electronic process developed specifically for
26transmitting prior authorization information that meets the National
27Council for Prescription Drug Programs’ SCRIPT standard for
28electronic prior authorization transactions.

29(e) Subdivision (a) does not apply if any of the following occurs:

30(1) A contracted physician group is delegated the financial risk
31for prescription drugs by a health care service plan.

32(2) A contracted physician group uses its own internal prior
33authorization process rather than the health care service plan’s
34prior authorization process for plan enrollees.

35(3) A contracted physician group is delegated a utilization
36management function by the health care service plan concerning
37any prescription drug, regardless of the delegation of financial
38risk.

39(f) For prescription drugs, prior authorization requirements
40described in subdivisions (b) and (d) apply regardless of how that
P34   1benefit is classified under the terms of the health plan’s group or
2individual contract.

3(g) For purposes of this section:

4(1) “Prescribing provider” shall include a provider authorized
5to write a prescription, pursuant to subdivision (a) of Section 4040
6of the Business and Professions Code, to treat a medical condition
7of an enrollee.

8(2) “Completed prior authorization request” means a completed
9uniform prior authorization form developed pursuant to subdivision
10 (b), or a completed request submitted using an electronic prior
11authorization system described in subdivision (d), or, for contracted
12physician groups described in subdivision (e), the process used by
13the contracted physician group.

14

SEC. 3.  

Section 1367.244 of the Health and Safety Code is
15amended to read:

16

1367.244.  

(a) A request for an exception to a health care
17service plan’s step therapy process for prescription drugs may be
18submitted in the same manner as a request for prior authorization
19for prescription drugs pursuant to Section 1367.24, and shall be
20treated in the same manner, and shall be responded to by the health
21care service plan in the same manner, as a request for prior
22authorization for prescription drugs.

23(b) The department and the Department of Insurance shall
24include a provision for step therapy exception requests in the
25uniform prior authorization form developed pursuant to subdivision
26(b) of Section 1367.241.

27

SEC. 4.  

Section 1368 of the Health and Safety Code is amended
28to read:

29

1368.  

(a) Every plan shall do all of the following:

30(1) Establish and maintain a grievance system approved by the
31department under which enrollees may submit their grievances to
32the plan. Each system shall provide reasonable procedures in
33accordance with department regulations that shall ensure adequate
34consideration of enrollee grievances and rectification when
35appropriate.

36(2) Inform its subscribers and enrollees upon enrollment in the
37plan and annually thereafter of the procedure for processing and
38resolving grievances. The information shall include the location
39and telephone number where grievances may be submitted.

P35   1(3) Provide forms for grievances to be given to subscribers and
2enrollees who wish to register written grievances. The forms used
3by plans licensed pursuant to Section 1353 shall be approved by
4the director in advance as to format.

5(4) (A) Provide for a written acknowledgment within five
6calendar days of the receipt of a grievance, except as noted in
7subparagraph (B). The acknowledgment shall advise the
8complainant of the following:

9(i) That the grievance has been received.

10(ii) The date of receipt.

11(iii) The name of the plan representative and the telephone
12number and address of the plan representative who may be
13contacted about the grievance.

14(B) Grievances received by telephone, by facsimile, by email,
15or online through the plan’s Internet Web site pursuant to Section
161368.015, that are not coverage disputes, disputed health care
17services involving medical necessity, or experimental or
18investigational treatment and that are resolved by the next business
19day following receipt are exempt from the requirements of
20subparagraph (A) and paragraph (5). The plan shall maintain a log
21of all these grievances. The log shall be periodically reviewed by
22the plan and shall include the following information for each
23complaint:

24(i) The date of the call.

25(ii) The name of the complainant.

26(iii) The complainant’s member identification number.

27(iv) The nature of the grievance.

28(v) The nature of the resolution.

29(vi) The name of the plan representative who took the call and
30resolved the grievance.

31(5) Provide subscribers and enrollees with written responses to
32grievances, with a clear and concise explanation of the reasons for
33the plan’s response. For grievances involving the delay, denial, or
34modification of health care services, the plan response shall
35describe the criteria used and the clinical reasons for its decision,
36including all criteria and clinical reasons related to medical
37necessity. If a plan, or one of its contracting providers, issues a
38decision delaying, denying, or modifying health care services based
39in whole or in part on a finding that the proposed health care
40services are not a covered benefit under the contract that applies
P36   1to the enrollee, the decision shall clearly specify the provisions in
2the contract that exclude that coverage.

3(6) For grievances involving the cancellation, rescission, or
4nonrenewal of a health care service plan contract, the health care
5service plan shall continue to provide coverage to the enrollee or
6subscriber under the terms of the health care service plan contract
7until a final determination of the enrollee’s or subscriber’s request
8for review has been made by the health care service plan or the
9director pursuant to Section 1365 and this section. This paragraph
10shall not apply if the health care service plan cancels or fails to
11renew the enrollee’s or subscriber’s health care service plan
12contract for nonpayment of premiums pursuant to paragraph (1)
13of subdivision (a) of Section 1365.

14(7) Keep in its files all copies of grievances, and the responses
15thereto, for a period of five years.

16(b) (1) (A) After either completing the grievance process
17described in subdivision (a), participating in the process for at least
1830 days, or completing the external review process described in
19subdivision (b) of Section 1367.24, a subscriber or enrollee may
20submit the grievance or external review decision to the department
21for review. In any case under the grievance process determined
22by the department to be a case involving an imminent and serious
23threat to the health of the patient, including, but not limited to,
24severe pain, the potential loss of life, limb, or major bodily
25function, cancellations, rescissions, or the nonrenewal of a health
26care service plan contract, or in any other case where the
27department determines that an earlier review is warranted, a
28subscriber or enrollee shall not be required to complete the
29grievance process or to participate in the process for at least 30
30days before submitting a grievance to the department for review.

31(B) A grievance or external review decision may be submitted
32to the department for review and resolution prior to any arbitration.

33(C) Notwithstanding subparagraphs (A) and (B), the department
34may refer any grievance or external review decision that does not
35pertain to compliance with this chapter to the State Department of
36Public Health, the California Department of Aging, the federal
37Centers for Medicare and Medicaid Services, or any other
38appropriate governmental entity for investigation and resolution.

39(2) If the subscriber or enrollee is a minor, or is incompetent or
40incapacitated, the parent, guardian, conservator, relative, or other
P37   1designee of the subscriber or enrollee, as appropriate, may submit
2the grievance or external review decision to the department as the
3agent of the subscriber or enrollee. Further, a provider may join
4with, or otherwise assist, a subscriber or enrollee, or the agent, to
5submit the grievance or external review decision to the department.
6In addition, following submission of the grievance or external
7review decision to the department, the subscriber or enrollee, or
8the agent, may authorize the provider to assist, including
9advocating on behalf of the subscriber or enrollee. For purposes
10of this section, a “relative” includes the parent, stepparent, spouse,
11adult son or daughter, grandparent, brother, sister, uncle, or aunt
12of the subscriber or enrollee.

13(3) The department shall review the written documents submitted
14with the subscriber’s or the enrollee’s request for review, or
15submitted by the agent on behalf of the subscriber or enrollee. The
16department may ask for additional information, and may hold an
17informal meeting with the involved parties, including providers
18who have joined in submitting the grievance or external review
19decision or who are otherwise assisting or advocating on behalf
20of the subscriber or enrollee. If after reviewing the record, the
21department concludes that the grievance or external review
22decision, in whole or in part, is eligible for review under the
23independent medical review system established pursuant to Article
245.55 (commencing with Section 1374.30), the department shall
25immediately notify the subscriber or enrollee, or agent, of that
26option and shall, if requested orally or in writing, assist the
27subscriber or enrollee in participating in the independent medical
28review system.

29(4) If after reviewing the record of a grievance or external review
30decision, the department concludes that a health care service
31eligible for coverage and payment under a health care service plan
32contract has been delayed, denied, or modified by a plan, or by
33one of its contracting providers, in whole or in part due to a
34determination that the service is not medically necessary, and that
35determination was not communicated to the enrollee in writing
36along with a notice of the enrollee’s potential right to participate
37in the independent medical review system, as required by this
38chapter, the director shall, by order, assess administrative penalties.
39A proceeding for the issuance of an order assessing administrative
40penalties shall be subject to appropriate notice of, and the
P38   1opportunity for, a hearing with regard to the person affected in
2accordance with Section 1397. The administrative penalties shall
3not be deemed an exclusive remedy available to the director. These
4penalties shall be paid to the Managed Care Administrative Fines
5and Penalties Fund and shall be used for the purposes specified in
6Section 1341.45.

7(5) The department shall send a written notice of the final
8disposition of the grievance or external review decision, and the
9reasons therefor, to the subscriber or enrollee, the agent, to any
10provider that has joined with or is otherwise assisting the subscriber
11or enrollee, and to the plan, within 30 calendar days of receipt of
12the request for review unless the director, in his or her discretion,
13determines that additional time is reasonably necessary to fully
14and fairly evaluate the relevant grievance or external review
15decision. In any case not eligible for the independent medical
16review system established pursuant to Article 5.55 (commencing
17with Section 1374.30), the department’s written notice shall
18include, at a minimum, the following:

19(A) A summary of its findings and the reasons why the
20department found the plan to be, or not to be, in compliance with
21any applicable laws, regulations, or orders of the director.

22(B) A discussion of the department’s contact with any medical
23provider, or any other independent expert relied on by the
24department, along with a summary of the views and qualifications
25of that provider or expert.

26(C) If the enrollee’s grievance or external review decision is
27sustained in whole or in part, information about any corrective
28action taken.

29(6) In any department review of a grievance or external review
30decision involving a disputed health care service, as defined in
31subdivision (b) of Section 1374.30, that is not eligible for the
32independent medical review system established pursuant to Article
335.55 (commencing with Section 1374.30), in which the department
34finds that the plan has delayed, denied, or modified health care
35services that are medically necessary, based on the specific medical
36circumstances of the enrollee, and those services are a covered
37benefit under the terms and conditions of the health care service
38plan contract, the department’s written notice shall do either of
39the following:

P39   1(A) Order the plan to promptly offer and provide those health
2care services to the enrollee.

3(B) Order the plan to promptly reimburse the enrollee for any
4reasonable costs associated with urgent care or emergency services,
5or other extraordinary and compelling health care services, when
6the department finds that the enrollee’s decision to secure those
7services outside of the plan network was reasonable under the
8circumstances.

9The department’s order shall be binding on the plan.

10(7) Distribution of the written notice shall not be deemed a
11waiver of any exemption or privilege under existing law, including,
12but not limited to, Section 6254.5 of the Government Code, for
13any information in connection with and including the written
14notice, nor shall any person employed or in any way retained by
15the department be required to testify as to that information or
16notice.

17(8) The director shall establish and maintain a system of aging
18of grievances that are pending and unresolved for 30 days or more
19that shall include a brief explanation of the reasons each grievance
20is pending and unresolved for 30 days or more.

21(9) A subscriber or enrollee, or the agent acting on behalf of a
22subscriber or enrollee, may also request voluntary mediation with
23the plan prior to exercising the right to submit a grievance or
24external review decision to the department. The use of mediation
25services shall not preclude the right to submit a grievance or
26external review decision to the department upon completion of
27mediation. In order to initiate mediation, the subscriber or enrollee,
28or the agent acting on behalf of the subscriber or enrollee, and the
29plan shall voluntarily agree to mediation. Expenses for mediation
30shall be borne equally by both sides. The department shall have
31no administrative or enforcement responsibilities in connection
32with the voluntary mediation process authorized by this paragraph.

33(c) The plan’s grievance system shall include a system of aging
34of grievances that are pending and unresolved for 30 days or more.
35The plan shall provide a quarterly report to the director of
36grievances pending and unresolved for 30 or more days with
37separate categories of grievances for Medicare enrollees and
38Medi-Cal enrollees. The plan shall include with the report a brief
39explanation of the reasons each grievance is pending and
40unresolved for 30 days or more. The plan may include the
P40   1following statement in the quarterly report that is made available
2to the public by the director:


4“Under Medicare and Medi-Cal law, Medicare enrollees and
5Medi-Cal enrollees each have separate avenues of appeal that
6are not available to other enrollees. Therefore, grievances
7pending and unresolved may reflect enrollees pursuing their
8Medicare or Medi-Cal appeal rights.”
9


10If requested by a plan, the director shall include this statement in
11a written report made available to the public and prepared by the
12director that describes or compares grievances that are pending
13and unresolved with the plan for 30 days or more. Additionally,
14the director shall, if requested by a plan, append to that written
15report a brief explanation, provided in writing by the plan, of the
16reasons why grievances described in that written report are pending
17and unresolved for 30 days or more. The director shall not be
18required to include a statement or append a brief explanation to a
19written report that the director is required to prepare under this
20chapter, including Sections 1380 and 1397.5.

21(d) Subject to subparagraph (C) of paragraph (1) of subdivision
22(b), the grievance or resolution procedures authorized by this
23section shall be in addition to any other procedures that may be
24available to any person, and failure to pursue, exhaust, or engage
25in the procedures described in this section shall not preclude the
26use of any other remedy provided by law.

27(e) Nothing in this section shall be construed to allow the
28submission to the department of any provider grievance under this
29section. However, as part of a provider’s duty to advocate for
30medically appropriate health care for his or her patients pursuant
31to Sections 510 and 2056 of the Business and Professions Code,
32nothing in this subdivision shall be construed to prohibit a provider
33from contacting and informing the department about any concerns
34he or she has regarding compliance with or enforcement of this
35chapter.

36(f) To the extent required by Section 2719 of the federal Public
37Health Service Act (42 U.S.C. Sec. 300gg-19) and any subsequent
38rules or regulations, there shall be an independent external review
39pursuant to the standards required by the United States Secretary
40of Health and Human Services of a health care service plan’s
P41   1cancellation, rescission, or nonrenewal of an enrollee’s or
2subscriber’s coverage.

3

SEC. 5.  

Section 1368.01 of the Health and Safety Code is
4amended to read:

5

1368.01.  

(a)  The grievance system shall require the plan to
6resolve grievances within 30 days.

7(b)  The grievance system shall include a requirement for
8expedited plan review of grievances for cases involving an
9imminent and serious threat to the health of the patient, including,
10but not limited to, severe pain, potential loss of life, limb, or major
11bodily function. When the plan has notice of a case requiring
12expedited review, the grievance system shall require the plan to
13immediately inform enrollees and subscribers in writing of their
14 right to notify the department of the grievance. The grievance
15system shall also require the plan to provide enrollees, subscribers,
16and the department with a written statement on the disposition or
17pending status of the grievance no later than three days from receipt
18of the grievance. Paragraph (4) of subdivision (a) of Section 1368
19shall not apply to grievances handled pursuant to this section.

20

SEC. 6.  

Section 1374.30 of the Health and Safety Code is
21amended to read:

22

1374.30.  

(a) Commencing January 1, 2001, there is hereby
23established in the department the Independent Medical Review
24System.

25(b) For the purposes of this chapter, “disputed health care
26service” means any health care service eligible for coverage and
27payment under a health care service plan contract that has been
28denied, modified, or delayed by a decision of the plan, or by one
29of its contracting providers, in whole or in part due to a finding
30that the service is not medically necessary. A decision regarding
31a disputed health care service relates to the practice of medicine
32and is not a coverage decision. A disputed health care service does
33not include services provided by a specialized health care service
34plan, except to the extent that the service (1) involves the practice
35of medicine, or (2) is provided pursuant to a contract with a health
36care service plan that covers hospital, medical, or surgical benefits.
37If a plan, or one of its contracting providers, issues a decision
38denying, modifying, or delaying health care services, based in
39whole or in part on a finding that the proposed health care services
40are not a covered benefit under the contract that applies to the
P42   1enrollee, the statement of decision shall clearly specify the
2provision in the contract that excludes that coverage.

3(c) For the purposes of this chapter, “coverage decision” means
4the approval or denial of health care services by a plan, or by one
5of its contracting entities, substantially based on a finding that the
6provision of a particular service is included or excluded as a
7covered benefit under the terms and conditions of the health care
8service plan contract. A “coverage decision” does not encompass
9a plan or contracting provider decision regarding a disputed health
10care service.

11(d) (1) All enrollee grievances involving a disputed health care
12service are eligible for review under the Independent Medical
13Review System if the requirements of this article are met. If the
14department finds that an enrollee grievance involving a disputed
15health care service does not meet the requirements of this article
16for review under the Independent Medical Review System, the
17enrollee request for review shall be treated as a request for the
18department to review the grievance pursuant to subdivision (b) of
19Section 1368. All other enrollee grievances, including grievances
20involving coverage decisions, remain eligible for review by the
21department pursuant to subdivision (b) of Section 1368.

22(2) In any case in which an enrollee or provider asserts that a
23decision to deny, modify, or delay health care services was based,
24in whole or in part, on consideration of medical necessity, the
25department shall have the final authority to determine whether the
26grievance is more properly resolved pursuant to an independent
27medical review as provided under this article or pursuant to
28subdivision (b) of Section 1368.

29(3) The department shall be the final arbiter when there is a
30question as to whether an enrollee grievance is a disputed health
31care service or a coverage decision. The department shall establish
32a process to complete an initial screening of an enrollee grievance.
33If there appears to be any medical necessity issue, the grievance
34shall be resolved pursuant to an independent medical review as
35provided under this article or pursuant to subdivision (b) of Section
361368.

37(e) Every health care service plan contract that is issued,
38amended, renewed, or delivered in this state on or after January
391, 2000, shall provide an enrollee with the opportunity to seek an
40independent medical review whenever health care services have
P43   1been denied, modified, or delayed by the plan, or by one of its
2contracting providers, if the decision was based in whole or in part
3on a finding that the proposed health care services are not medically
4necessary. For purposes of this article, an enrollee may designate
5an agent to act on his or her behalf, as described in paragraph (2)
6of subdivision (b) of Section 1368. The provider may join with or
7otherwise assist the enrollee in seeking an independent medical
8review, and may advocate on behalf of the enrollee.

9(f) Medi-Cal beneficiaries enrolled in a health care service plan
10shall not be excluded from participation. Medicare beneficiaries
11enrolled in a health care service plan shall not be excluded unless
12expressly preempted by federal law. Reviews of cases for Medi-Cal
13enrollees shall be conducted in accordance with statutes and
14regulations for the Medi-Cal program.

15(g) The department may seek to integrate the quality of care
16and consumer protection provisions, including remedies, of the
17Independent Medical Review System with related dispute
18resolution procedures of other health care agency programs,
19including the Medicare and Medi-Cal programs, in a way that
20minimizes the potential for duplication, conflict, and added costs.
21Nothing in this subdivision shall be construed to limit any rights
22conferred upon enrollees under this chapter.

23(h) The independent medical review process authorized by this
24article is in addition to any other procedures or remedies that may
25be available.

26(i) Every health care service plan shall prominently display in
27every plan member handbook or relevant informational brochure,
28in every plan contract, on enrollee evidence of coverage forms, on
29copies of plan procedures for resolving grievances, on letters of
30denials issued by either the plan or its contracting organization,
31on the grievance forms required under Section 1368, and on all
32written responses to grievances, information concerning the right
33of an enrollee to request an independent medical review in cases
34where the enrollee believes that health care services have been
35improperly denied, modified, or delayed by the plan, or by one of
36its contracting providers.

37(j) An enrollee may apply to the department for an independent
38medical review when all of the following conditions are met:

39(1) (A) The enrollee’s provider has recommended a health care
40service as medically necessary, or

P44   1(B) The enrollee has received urgent care or emergency services
2that a provider determined was medically necessary, or

3(C) The enrollee, in the absence of a provider recommendation
4under subparagraph (A) or the receipt of urgent care or emergency
5services by a provider under subparagraph (B), has been seen by
6an in-plan provider for the diagnosis or treatment of the medical
7condition for which the enrollee seeks independent review. The
8plan shall expedite access to an in-plan provider upon request of
9an enrollee. The in-plan provider need not recommend the disputed
10health care service as a condition for the enrollee to be eligible for
11an independent review.

12For purposes of this article, the enrollee’s provider may be an
13out-of-plan provider. However, the plan shall have no liability for
14payment of services provided by an out-of-plan provider, except
15as provided pursuant to subdivision (c) of Section 1374.34.

16(2) The disputed health care service has been denied, modified,
17or delayed by the plan, or by one of its contracting providers, based
18in whole or in part on a decision that the health care service is not
19medically necessary.

20(3) (A) The enrollee has filed a grievance with the plan or its
21contracting provider pursuant to Section 1368, and the disputed
22decision is upheld or the grievance remains unresolved after 30
23days. The enrollee shall not be required to participate in the plan’s
24grievance process for more than 30 days. In the case of a grievance
25that requires expedited review pursuant to Section 1368.01, the
26enrollee shall not be required to participate in the plan’s grievance
27process for more than three days, or

28(B) The enrollee has filed for an external review decision with
29the plan or its contracting provider pursuant to subdivision (b) of
30Section 1367.24, and the disputed decision is upheld or the external
31review remains unresolved after 72 hours, or 24 hours if exigent
32circumstances exist.

33(k) An enrollee may apply to the department for an independent
34medical review of a decision to deny, modify, or delay health care
35services, based in whole or in part on a finding that the disputed
36health care services are not medically necessary, within six months
37of any of the qualifying periods or events under subdivision (j).
38The director may extend the application deadline beyond six
39months if the circumstances of a case warrant the extension.

P45   1(l) The enrollee shall pay no application or processing fees of
2any kind.

3(m) As part of its notification to the enrollee regarding a
4disposition of the enrollee’s grievance that denies, modifies, or
5delays health care services, the plan shall provide the enrollee with
6a one- or two-page application form approved by the department,
7and an addressed envelope, which the enrollee may return to initiate
8an independent medical review. The plan shall include on the form
9any information required by the department to facilitate the
10completion of the independent medical review, such as the
11enrollee’s diagnosis or condition, the nature of the disputed health
12care service sought by the enrollee, a means to identify the
13enrollee’s case, and any other material information. The form shall
14also include the following:

15(1) Notice that a decision not to participate in the independent
16medical review process may cause the enrollee to forfeit any
17statutory right to pursue legal action against the plan regarding the
18disputed health care service.

19(2) A statement indicating the enrollee’s consent to obtain any
20necessary medical records from the plan, any of its contracting
21providers, and any out-of-plan provider the enrollee may have
22consulted on the matter, to be signed by the enrollee.

23(3) Notice of the enrollee’s right to provide information or
24documentation, either directly or through the enrollee’s provider,
25regarding any of the following:

26(A) A provider recommendation indicating that the disputed
27health care service is medically necessary for the enrollee’s medical
28condition.

29(B) Medical information or justification that a disputed health
30care service, on an urgent care or emergency basis, was medically
31necessary for the enrollee’s medical condition.

32(C) Reasonable information supporting the enrollee’s position
33that the disputed health care service is or was medically necessary
34for the enrollee’s medical condition, including all information
35provided to the enrollee by the plan or any of its contracting
36providers, still in the possession of the enrollee, concerning a plan
37or provider decision regarding disputed health care services, and
38a copy of any materials the enrollee submitted to the plan, still in
39the possession of the enrollee, in support of the grievance, as well
40as any additional material that the enrollee believes is relevant.

P46   1(4) A section designed to collect information on the enrollee’s
2ethnicity, race, and primary language spoken that includes both of
3the following:

4(A) A statement of intent indicating that the information is used
5for statistics only, in order to ensure that all enrollees get the best
6care possible.

7(B) A statement indicating that providing this information is
8optional and will not affect the independent medical review process
9in any way.

10(n) Upon notice from the department that the health care service
11plan’s enrollee has applied for an independent medical review, the
12plan or its contracting providers shall provide to the independent
13medical review organization designated by the department a copy
14of all of the following documents within three business days of
15the plan’s receipt of the department’s notice of a request by an
16enrollee for an independent review:

17(1) (A) A copy of all of the enrollee’s medical records in the
18possession of the plan or its contracting providers relevant to each
19of the following:

20(i) The enrollee’s medical condition.

21(ii) The health care services being provided by the plan and its
22contracting providers for the condition.

23(iii) The disputed health care services requested by the enrollee
24for the condition.

25(B) Any newly developed or discovered relevant medical records
26in the possession of the plan or its contracting providers after the
27initial documents are provided to the independent medical review
28organization shall be forwarded immediately to the independent
29medical review organization. The plan shall concurrently provide
30a copy of medical records required by this subparagraph to the
31enrollee or the enrollee’s provider, if authorized by the enrollee,
32unless the offer of medical records is declined or otherwise
33prohibited by law. The confidentiality of all medical record
34information shall be maintained pursuant to applicable state and
35federal laws.

36(2) A copy of all information provided to the enrollee by the
37plan and any of its contracting providers concerning plan and
38provider decisions regarding the enrollee’s condition and care, and
39a copy of any materials the enrollee or the enrollee’s provider
40submitted to the plan and to the plan’s contracting providers in
P47   1support of the enrollee’s request for disputed health care services.
2This documentation shall include the written response to the
3enrollee’s grievance, required by paragraph (4) of subdivision (a)
4of Section 1368. The confidentiality of any enrollee medical
5information shall be maintained pursuant to applicable state and
6federal laws.

7(3) A copy of any other relevant documents or information used
8by the plan or its contracting providers in determining whether
9disputed health care services should have been provided, and any
10statements by the plan and its contracting providers explaining the
11reasons for the decision to deny, modify, or delay disputed health
12care services on the basis of medical necessity. The plan shall
13concurrently provide a copy of documents required by this
14paragraph, except for any information found by the director to be
15legally privileged information, to the enrollee and the enrollee’s
16provider. The department and the independent medical review
17organization shall maintain the confidentiality of any information
18found by the director to be the proprietary information of the plan.

19

SEC. 7.  

Section 10123.190 is added to the Insurance Code, 20immediately following Section 10123.19, to read:

21

10123.190.  

(a) (1) Every health insurer that provides
22prescription drug benefits shall maintain an expeditious process,
23as described in this subdivision, by which insureds, insureds’
24designees, or prescribing providers may request and obtain
25authorization for medically necessary nonformulary prescription
26drugs and medically necessary formulary drugs that require prior
27authorization by the health insurer. The health insurer shall provide
28that the insured, the insured’s designee, or the insured’s prescribing
29provider may seek a prior authorization for a prescription drug
30under this subdivision.

31(2) Each health insurer shall respond to a prior authorization
32request within 72 hours following receipt of the prior authorization
33request. A health insurer that grants a prior authorization request
34under this paragraph shall provide coverage of the prescription
35drug for the duration of the prescription, including refills.

36(3) Each health insurer shall provide that a prior authorization
37may be obtained within 24 hours if an insured is suffering from a
38health condition that may seriously jeopardize the insured’s life,
39health, or ability to regain maximum function or if an insured is
40undergoing a current course of treatment using a nonformulary
P48   1drug. A health insurer that grants a prior authorization request
2under this paragraph based on exigent circumstances shall provide
3coverage of the prescription drug for the duration of the exigency.

4(4) If a health insurer fails to respond within 72 hours for a prior
5authorization request, or within 24 hours if exigent circumstances
6exist, upon receipt of a completed prior authorization request, the
7prior authorization request shall be deemed to have been granted.

8(5) Each health insurer shall provide a written description of
9the process described in paragraph (1) to its prescribing providers.
10For purposes of this section, a prescribing provider shall include
11a provider authorized to write a prescription, pursuant to
12subdivision (a) of Section 4040 of the Business and Professions
13Code, to treat a medical condition of an insured.

14(b) If a health insurer disapproves a prior authorization request
15made pursuant to subdivision (a), the health insurer shall maintain
16an expeditious process to authorize an insured to obtain an external
17review.

18(1) A determination on an external review shall be made no
19later than 72 hours following receipt of the request, if the original
20request was an authorization request under paragraph (2) of
21subdivision (a), and no later than 24 hours following receipt of the
22 request, if the original request was an authorization request under
23paragraph (3) of subdivision (a).

24(2) If an external review decision of a prior authorization request
25under paragraph (2) of subdivision (a) is granted, the health insurer
26shall provide coverage of the prescription drug for the duration of
27the prescription, including refills. If an external review decision
28of a prior authorization request under paragraph (3) of subdivision
29(a) is granted, the health insurer shall provide coverage of the
30prescription drug for the duration of the exigency.

31(c) Any health insurer that disapproves a request made pursuant
32to subdivision (a) to obtain authorization for a nonformulary or
33formulary drug shall provide the reasons for the disapproval in a
34notice provided to the insured. The notice shall indicate that the
35insured may file, in lieu of filing a grievance with the health
36insurer, a request for an external review pursuant to subdivision
37(b) if the insured objects to the disapproval, including any
38alternative drug or treatment offered by the health insurer. If a
39health insurer disapproves a request made pursuant to subdivision
40(a), an insured shall not be required to file a grievance with the
P49   1health insurer or its contracting provider pursuant the grievance
2process established by the health insurer.

3(d) The process described in subdivisions (a) and (b) by which
4insureds may obtain medically necessary nonformulary and
5formulary drugs shall be described in the evidence of coverage or
6certificate of insurance issued by the health insurer on or after July
71, 2017.

8(e) A health insurance policy in the individual, small group, and
9large group markets that provides coverage for outpatient
10prescription drugs shall comply with this section.

11(f) Nothing in this section shall be construed to affect an
12insured’s or policyholder’s eligibility to submit a complaint to the
13department for review or to apply to the department for an
14independent medical review under Article 3.5 (commencing with
15Section 10169).

16

SEC. 8.  

Section 10123.191 of the Insurance Code is amended
17to read:

18

10123.191.  

(a) Notwithstanding any other law, on and after
19January 1, 2013, a health insurer that provides coverage for
20prescription drugs shall utilize and accept only the prior
21authorization form developed pursuant to subdivision (b), or an
22electronic prior authorization process described in subdivision (d),
23when requiring prior authorization for prescription drugs.

24(b) On or before January 1, 2017, the department and the
25Department of Managed Health Care shall jointly develop a
26uniform prior authorization form. Notwithstanding any other law,
27on and after July 1, 2017, or six months after the form is completed
28pursuant to this section, whichever is later, every prescribing
29provider shall use that uniform prior authorization form, or an
30electronic prior authorization process described in subdivision (d),
31to request prior authorization for coverage of prescription drugs
32and every health insurer shall accept that form or electronic process
33as sufficient to request prior authorization for prescription drugs.

34(c) The prior authorization form developed pursuant to
35subdivision (b) shall meet the following criteria:

36(1) The form shall not exceed two pages.

37(2) The form shall be made electronically available by the
38department and the health insurer.

39(3) The completed form may also be electronically submitted
40from the prescribing provider to the health insurer.

P50   1(4) The department and the Department of Managed Health
2Care shall develop the form with input from interested parties from
3at least one public meeting.

4(5) The department and the Department of Managed Health
5Care, in development of the standardized form, shall take into
6consideration the following:

7(A) Existing prior authorization forms established by the federal
8Centers for Medicare and Medicaid Services and the State
9Department of Health Care Services.

10(B) National standards pertaining to electronic prior
11authorization.

12(d) A prescribing provider may use an electronic prior
13authorization system utilizing the standardized form described in
14subdivision (b) or an electronic process developed specifically for
15transmitting prior authorization information that meets the National
16Council for Prescription Drug Programs’ SCRIPT standard for
17electronic prior authorization transactions.

18(e) Subdivision (a) does not apply if any of the following occurs:

19(1) A contracted physician group is delegated the financial risk
20for the pharmacy or medical drug benefit by a health insurer.

21(2) A contracted physician group uses its own internal prior
22authorization process rather than the health insurer’s prior
23authorization process for the health insurer’s insureds.

24(3) A contracted physician group is delegated a utilization
25management function by the health insurer concerning any
26prescription drug, regardless of the delegation of financial risk.

27(f) For prescription drugs, prior authorization requirements
28described in subdivisions (b) and (d) apply regardless of how that
29benefit is classified under the terms of the health insurer’s group
30or individual policy.

31(g) For purposes of this section:

32(1) “Prescribing provider” shall include a provider authorized
33to write a prescription, pursuant to subdivision (a) of Section 4040
34of the Business and Professions Code, to treat a medical condition
35of an insured.

36(2) “Completed prior authorization request” means a completed
37uniform prior authorization form developed pursuant to subdivision
38(b), or a completed request submitted using an electronic prior
39authorization system described in subdivision (d), or, for contracted
P51   1physician groups described in subdivision (e), the process used by
2the contracted physician group.

3

SEC. 9.  

Section 10123.197 of the Insurance Code is amended
4to read:

5

10123.197.  

(a) A request for an exception to a health insurer’s
6step therapy process for prescription drugs may be submitted in
7the same manner as a request for prior authorization for prescription
8drugs pursuant to Section 10123.190 and shall be treated in the
9same manner, and shall be responded to by the health insurer in
10the same manner, as a request for prior authorization for
11prescription drugs.

12(b) The department and the Department of Managed Health
13Care shall include a provision for step therapy exception requests
14in the uniform prior authorization form developed pursuant to
15subdivision (b) of Section 10123.191.

16

SEC. 10.  

Section 10169 of the Insurance Code, as added by
17Section 19 of Chapter 348 of the Statutes of 2015, is amended to
18read:

19

10169.  

(a) Commencing January 1, 2001, there is hereby
20established in the department the Independent Medical Review
21System.

22(b) For the purposes of this chapter, “disputed health care
23service” means any health care service eligible for coverage and
24payment under a disability insurance contract that has been denied,
25modified, or delayed by a decision of the insurer, or by one of its
26contracting providers, in whole or in part due to a finding that the
27service is not medically necessary. A decision regarding a disputed
28health care service relates to the practice of medicine and is not a
29coverage decision. A disputed health care service does not include
30services provided by a group or individual policy of vision-only
31or dental-only coverage, except to the extent that (1) the service
32involves the practice of medicine, or (2) is provided pursuant to a
33contract with a disability insurer that covers hospital, medical, or
34surgical benefits. If an insurer, or one of its contracting providers,
35issues a decision denying, modifying, or delaying health care
36services, based in whole or in part on a finding that the proposed
37health care services are not a covered benefit under the contract
38that applies to the insured, the statement of decision shall clearly
39specify the provision in the contract that excludes that coverage.

P52   1(c) For the purposes of this chapter, “coverage decision” means
2the approval or denial of health care services by a disability insurer,
3or by one of its contracting entities, substantially based on a finding
4that the provision of a particular service is included or excluded
5as a covered benefit under the terms and conditions of the disability
6insurance contract. A coverage decision does not encompass a
7 disability insurer or contracting provider decision regarding a
8disputed health care service.

9(d) (1) All insured grievances involving a disputed health care
10service are eligible for review under the Independent Medical
11Review System if the requirements of this article are met. If the
12department finds that an insured grievance involving a disputed
13health care service does not meet the requirements of this article
14for review under the Independent Medical Review System, the
15insured request for review shall be treated as a request for the
16department to review the grievance. All other insured grievances,
17including grievances involving coverage decisions, remain eligible
18for review by the department.

19(2) In any case in which an insured or provider asserts that a
20decision to deny, modify, or delay health care services was based,
21in whole or in part, on consideration of medical necessity, the
22department shall have the final authority to determine whether the
23grievance is more properly resolved pursuant to an independent
24medical review as provided under this article.

25(3) The department shall be the final arbiter when there is a
26question as to whether an insured grievance is a disputed health
27care service or a coverage decision. The department shall establish
28a process to complete an initial screening of an insured grievance.
29If there appears to be any medical necessity issue, the grievance
30shall be resolved pursuant to an independent medical review as
31provided under this article.

32(e) Every disability insurance contract that is issued, amended,
33renewed, or delivered in this state on or after January 1, 2000, shall
34provide an insured with the opportunity to seek an independent
35medical review whenever health care services have been denied,
36modified, or delayed by the insurer, or by one of its contracting
37providers, if the decision was based in whole or in part on a finding
38that the proposed health care services are not medically necessary.
39For purposes of this article, an insured may designate an agent to
40act on his or her behalf. The provider may join with or otherwise
P53   1assist the insured in seeking an independent medical review, and
2may advocate on behalf of the insured.

3(f) Medicare beneficiaries enrolled in Medicare + Choice
4products shall not be excluded unless expressly preempted by
5federal law.

6(g) The department may seek to integrate the quality of care
7and consumer protection provisions, including remedies, of the
8Independent Medical Review System with related dispute
9resolution procedures of other health care agency programs,
10including the Medicare program, in a way that minimizes the
11potential for duplication, conflict, and added costs. Nothing in this
12subdivision shall be construed to limit any rights conferred upon
13insureds under this chapter.

14(h) The independent medical review process authorized by this
15article is in addition to any other procedures or remedies that may
16be available.

17(i) Every disability insurer shall prominently display in every
18insurer member handbook or relevant informational brochure, in
19every insurance contract, on insured evidence of coverage forms,
20on copies of insurer procedures for resolving grievances, on letters
21of denials issued by either the insurer or its contracting
22organization, and on all written responses to grievances,
23information concerning the right of an insured to request an
24independent medical review when the insured believes that health
25care services have been improperly denied, modified, or delayed
26by the insurer, or by one of its contracting providers. The
27department’s telephone number, 1-800-927-4357, and Internet
28Web site, www.insurance.ca.gov, shall also be displayed.

29(j) An insured may apply to the department for an independent
30medical review when all of the following conditions are met:

31(1) (A) The insured’s provider has recommended a health care
32service as medically necessary, or

33(B) The insured has received urgent care or emergency services
34that a provider determined was medically necessary, or

35(C) The insured, in the absence of a provider recommendation
36under subparagraph (A) or the receipt of urgent care or emergency
37services by a provider under subparagraph (B), has been seen by
38a contracting provider for the diagnosis or treatment of the medical
39condition for which the insured seeks independent review. The
40insurer shall expedite access to a contracting provider upon request
P54   1of an insured. The contracting provider need not recommend the
2disputed health care service as a condition for the insured to be
3eligible for an independent review.

4For purposes of this article, the insured’s provider may be a
5noncontracting provider. However, the insurer shall have no
6liability for payment of services provided by a noncontracting
7provider, except as provided pursuant to Section 10169.3.

8(2) The disputed health care service has been denied, modified,
9or delayed by the insurer, or by one of its contracting providers,
10based in whole or in part on a decision that the health care service
11is not medically necessary.

12(3) (A) The insured has filed a grievance with the insurer or its
13contracting provider, and the disputed decision is upheld or the
14grievance remains unresolved after 30 days. The insured shall not
15be required to participate in the insurer’s grievance process for
16more than 30 days. In the case of a grievance that requires
17expedited review, the insured shall not be required to participate
18in the insurer’s grievance process for more than three days, or

19(B) The insured has filed for an external review decision with
20the insurer or its contracting provider pursuant to subdivision (b)
21of Section 10123.190, and the disputed decision is upheld or the
22external review remains unresolved after 72 hours, or 24 hours if
23exigent circumstances exist.

24(k) An insured may apply to the department for an independent
25medical review of a decision to deny, modify, or delay health care
26services, based in whole or in part on a finding that the disputed
27health care services are not medically necessary, within six months
28of any of the qualifying periods or events under subdivision (j).
29The commissioner may extend the application deadline beyond
30six months if the circumstances of a case warrant the extension.

31(l) The insured shall pay no application or processing fees of
32any kind.

33(m) As part of its notification to the insured regarding a
34disposition of the insured’s grievance that denies, modifies, or
35delays health care services, the insurer shall provide the insured
36with a one- or two-page application form approved by the
37department, and an addressed envelope, which the insured may
38return to initiate an independent medical review. The insurer shall
39include on the form any information required by the department
40to facilitate the completion of the independent medical review,
P55   1such as the insured’s diagnosis or condition, the nature of the
2disputed health care service sought by the insured, a means to
3identify the insured’s case, and any other material information.
4The form shall also include the following:

5(1) Notice that a decision not to participate in the independent
6review process may cause the insured to forfeit any statutory right
7to pursue legal action against the insurer regarding the disputed
8health care service.

9(2) A statement indicating the insured’s consent to obtain any
10necessary medical records from the insurer, any of its contracting
11providers, and any noncontracting provider the insured may have
12consulted on the matter, to be signed by the insured.

13(3) Notice of the insured’s right to provide information or
14documentation, either directly or through the insured’s provider,
15regarding any of the following:

16(A) A provider recommendation indicating that the disputed
17health care service is medically necessary for the insured’s medical
18condition.

19(B) Medical information or justification that a disputed health
20care service, on an urgent care or emergency basis, was medically
21necessary for the insured’s medical condition.

22(C) Reasonable information supporting the insured’s position
23that the disputed health care service is or was medically necessary
24for the insured’s medical condition, including all information
25provided to the insured by the insurer or any of its contracting
26providers, still in the possession of the insured, concerning an
27insurer or provider decision regarding disputed health care services,
28and a copy of any materials the insured submitted to the insurer,
29still in the possession of the insured, in support of the grievance,
30as well as any additional material that the insured believes is
31relevant.

32(4) A section designed to collect information on the insured’s
33ethnicity, race, and primary language spoken that includes both of
34the following:

35(A) A statement of intent indicating that the information is used
36for statistics only, in order to ensure that all insureds get the best
37care possible.

38(B) A statement indicating that providing this information is
39optional and will not affect the independent medical review process
40in any way.

P56   1(n) Upon notice from the department that the insured has applied
2for an independent medical review, the insurer or its contracting
3providers, shall provide to the independent medical review
4organization designated by the department a copy of all of the
5following documents within three business days of the insurer’s
6receipt of the department’s notice of a request by an insured for
7an independent review:

8(1) (A) A copy of all of the insured’s medical records in the
9possession of the insurer or its contracting providers relevant to
10each of the following:

11(i) The insured’s medical condition.

12(ii) The health care services being provided by the insurer and
13its contracting providers for the condition.

14(iii) The disputed health care services requested by the insured
15for the condition.

16(B) Any newly developed or discovered relevant medical records
17in the possession of the insurer or its contracting providers after
18the initial documents are provided to the independent medical
19review organization shall be forwarded immediately to the
20independent medical review organization. The insurer shall
21concurrently provide a copy of medical records required by this
22subparagraph to the insured or the insured’s provider, if authorized
23by the insured, unless the offer of medical records is declined or
24otherwise prohibited by law. The confidentiality of all medical
25record information shall be maintained pursuant to applicable state
26and federal laws.

27(2) A copy of all information provided to the insured by the
28insurer and any of its contracting providers concerning insurer and
29provider decisions regarding the insured’s condition and care, and
30a copy of any materials the insured or the insured’s provider
31submitted to the insurer and to the insurer’s contracting providers
32in support of the insured’s request for disputed health care services.
33This documentation shall include the written response to the
34insured’s grievance. The confidentiality of any insured medical
35information shall be maintained pursuant to applicable state and
36federal laws.

37(3) A copy of any other relevant documents or information used
38by the insurer or its contracting providers in determining whether
39disputed health care services should have been provided, and any
40statements by the insurer and its contracting providers explaining
P57   1the reasons for the decision to deny, modify, or delay disputed
2health care services on the basis of medical necessity. The insurer
3shall concurrently provide a copy of documents required by this
4paragraph, except for any information found by the commissioner
5to be legally privileged information, to the insured and the insured’s
6provider. The department and the independent medical review
7organization shall maintain the confidentiality of any information
8found by the commissioner to be the proprietary information of
9the insurer.

10

SEC. 11.  

No reimbursement is required by this act pursuant to
11Section 6 of Article XIII B of the California Constitution because
12the only costs that may be incurred by a local agency or school
13district will be incurred because this act creates a new crime or
14infraction, eliminates a crime or infraction, or changes the penalty
15for a crime or infraction, within the meaning of Section 17556 of
16the Government Code, or changes the definition of a crime within
17the meaning of Section 6 of Article XIII B of the California
18Constitution.

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