BILL NUMBER: AB 2400 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MARCH 17, 2016
INTRODUCED BY Assembly Member Nazarian
FEBRUARY 18, 2016
An act to amend Sections 1367.24, 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, 1368, 1368.01, and
1374.30 of the Health and Safety Code, and to a mend
Sections 10123.191 and 10169 of the Insurance Code, 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 request
review process required by federal law for nonformulary drugs.
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.
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.
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:
SECTION 1. Section 1367.24 of the
Health and Safety Code is amended to read:
1367.24. (a) Every health care service plan that provides
prescription drug benefits shall maintain an expeditious process by
which prescribing providers may obtain authorization for a medically
necessary nonformulary prescription drug. On or before July 1, 1999,
every health care service plan that provides prescription drug
benefits shall file with the department a description of its process,
including timelines, for responding to authorization requests for
nonformulary drugs. Any changes to this process shall be filed with
the department pursuant to Section 1352. Each plan shall provide a
written description of its most current process, including timelines,
to its prescribing providers. For purposes of this section, a
prescribing provider shall include a provider authorized to write a
prescription, pursuant to subdivision (a) of Section 4040 of the
Business and Professions Code, to treat a medical condition of an
enrollee.
(b) Any plan that disapproves a request made pursuant to
subdivision (a) by a prescribing provider to obtain authorization for
a nonformulary drug shall provide the reasons for the disapproval in
a notice provided to the enrollee. The notice shall indicate that
the enrollee may file a grievance with the plan if the enrollee
objects to the disapproval, including any alternative drug or
treatment offered by the plan. The notice shall comply with
subdivision (b) of Section 1368.02. Any health plan that is required
to maintain an external exception request review process pursuant to
subdivision (k) shall indicate in the notice required under this
subdivision that the enrollee may file file,
in lieu of filing a grievance with the plan pursuant to
Section 1368, a grievance seeking an external exception request
review. An enrollee shall not be required to file a grievance
with the plan or its contracting provider pursuant to Section 1368 if
a plan disapproves a request to obtain authorization for a
nonformulary drug under subdivision (a). If a plan disapproves a
request to obtain authorization for a nonformulary drug and the
enrollee files a grievance with the plan pursuant to Section 1368,
the plan shall treat that request as a request to obtain an external
exception request review.
(c) The process described in subdivision (a) by which prescribing
providers may obtain authorization for medically necessary
nonformulary drugs shall not apply to a nonformulary drug that has
been prescribed for an enrollee in conformance with the provisions of
Section 1367.22.
(d) The process described in subdivision (a) by which enrollees
may obtain medically necessary nonformulary drugs, including
specified timelines for responding to prescribing provider
authorization requests, shall be described in evidence of coverage
and disclosure forms, as required by subdivision (a) of Section 1363,
issued on or after July 1, 1999.
(e) Every health care service plan that provides prescription drug
benefits shall maintain, as part of its books and records under
Section 1381, all of the following information, which shall be made
available to the director upon request:
(1) The complete drug formulary or formularies of the plan, if the
plan maintains a formulary, including a list of the prescription
drugs on the formulary of the plan by major therapeutic category with
an indication of whether any drugs are preferred over other drugs.
(2) Records developed by the pharmacy and therapeutic committee of
the plan, or by others responsible for developing, modifying, and
overseeing formularies, including medical groups, individual practice
associations, and contracting pharmaceutical benefit management
companies, used to guide the drugs prescribed for the enrollees of
the plan, that fully describe the reasoning behind formulary
decisions.
(3) Any plan arrangements with prescribing providers, medical
groups, individual practice associations, pharmacists, contracting
pharmaceutical benefit management companies, or other entities that
are associated with activities of the plan to encourage formulary
compliance or otherwise manage prescription drug benefits.
(f) If a plan provides prescription drug benefits, the department
shall, as part of its periodic onsite medical survey of each plan
undertaken pursuant to Section 1380, review the performance of the
plan in providing those benefits, including, but not limited to, a
review of the procedures and information maintained pursuant to this
section, and describe the performance of the plan as part of its
report issued pursuant to Section 1380.
(g) The director shall not publicly disclose any information
reviewed pursuant to this section that is determined by the director
to be confidential pursuant to state law.
(h) For purposes of this section, "authorization" means approval
by the health care service plan to provide payment for the
prescription drug.
(i) Nonformulary prescription drugs shall include any drug for
which an enrollee's copayment or out-of-pocket costs are different
than the copayment for a formulary prescription drug, except as
otherwise provided by law or regulation or in cases in which the drug
has been excluded in the plan contract pursuant to Section 1342.7.
(j) Nothing in this section shall be construed to restrict or
impair the application of any other provision of this chapter,
including, but not limited to, Section 1367, which includes among its
requirements that a health care service plan furnish services in a
manner providing continuity of care and demonstrate that medical
decisions are rendered by qualified medical providers unhindered by
fiscal and administrative management.
(k) For any individual, small group, or large health plan
contracts, a health care service plan's process described in
subdivision (a) shall comply with the request for exception and
external exception request review processes described in subdivision
(c) of Section 156.122 of Title 45 of the Code of Federal
Regulations. This subdivision shall not apply to Medi-Cal managed
care health care service plan contracts as described in subdivision
(l).
(l) "Medi-Cal managed care health care service plan contract"
means any entity that enters into a contract with the State
Department of Health Care Services pursuant to Chapter 7 (commencing
with Section 14000), Chapter 8 (commencing with Section 14200), or
Chapter 8.75 (commencing with Section 14591) of Part 3 of Division 9
of the Welfare and Institutions Code.
(m) Nothing in this section shall be construed to affect an
enrollee's or subscriber's eligibility to submit a grievance to the
department for review under Section 1368 or to apply to the
department for an independent medical review under Section 1370.4, or
Article 5.55 (commencing with Section 1374.30) of this chapter.
SEC. 2. Section 1368 of the Health and
Safety Code is amended to read:
1368. (a) Every plan shall do all of the following:
(1) Establish and maintain a grievance system approved by the
department under which enrollees may submit their grievances to the
plan. Each system shall provide reasonable procedures in accordance
with department regulations that shall ensure adequate consideration
of enrollee grievances and rectification when appropriate.
(2) Inform its subscribers and enrollees upon enrollment in the
plan and annually thereafter of the procedure for processing and
resolving grievances. The information shall include the location and
telephone number where grievances may be submitted.
(3) Provide forms for grievances to be given to subscribers and
enrollees who wish to register written grievances. The forms used by
plans licensed pursuant to Section 1353 shall be approved by the
director in advance as to format.
(4) (A) Provide for a written acknowledgment within five calendar
days of the receipt of a grievance, except as noted in subparagraph
(B). The acknowledgment shall advise the complainant of the
following:
(i) That the grievance has been received.
(ii) The date of receipt.
(iii) The name of the plan representative and the telephone number
and address of the plan representative who may be contacted about
the grievance.
(B) (i) Grievances received by telephone, by facsimile, by email,
or online through the plan's Internet Web site pursuant to Section
1368.015, that are not coverage disputes, disputed health care
services involving medical necessity, or experimental or
investigational treatment and that are resolved by the next business
day following receipt are exempt from the requirements of
subparagraph (A) and paragraph (5). The plan shall maintain a log of
all these grievances. The log shall be periodically reviewed by the
plan and shall include the following information for each complaint:
(I) The date of the call.
(II) The name of the complainant.
(III) The complainant's member identification number.
(IV) The nature of the grievance.
(V) The nature of the resolution.
(VI) The name of the plan representative who took the call and
resolved the grievance.
(ii) For health plan contracts in the individual, small group, or
large group markets, a health care service plan's response to
grievances subject to Section 1367.24 shall also comply with
subdivision (c) of Section 156.122 of Title 45 of the Code of Federal
Regulations. This paragraph shall not apply to Medi-Cal managed care
health care service plan contracts or any entity that enters into a
contract with the State Department of Health Care Services pursuant
to Chapter 7 (commencing with Section 14000), Chapter 8 (commencing
with Section 14200), or Chapter 8.75 (commencing with Section 14591)
of Part 3 of Division 9 of the Welfare and Institutions Code.
(5) Provide subscribers and enrollees with written responses to
grievances, with a clear and concise explanation of the reasons for
the plan's response. For grievances involving the delay, denial, or
modification of health care services, the plan response shall
describe the criteria used and the clinical reasons for its decision,
including all criteria and clinical reasons related to medical
necessity. If a plan, or one of its contracting providers, issues a
decision delaying, denying, or modifying health care services based
in whole or in part on a finding that the proposed health care
services are not a covered benefit under the contract that applies to
the enrollee, the decision shall clearly specify the provisions in
the contract that exclude that coverage.
(6) For grievances involving the cancellation, rescission, or
nonrenewal of a health care service plan contract, the health care
service plan shall continue to provide coverage to the enrollee or
subscriber under the terms of the health care service plan contract
until a final determination of the enrollee's or subscriber's request
for review has been made by the health care service plan or the
director pursuant to Section 1365 and this section. This paragraph
shall not apply if the health care service plan cancels or fails to
renew the enrollee's or subscriber's health care service plan
contract for nonpayment of premiums pursuant to paragraph (1) of
subdivision (a) of Section 1365.
(7) Keep in its files all copies of grievances, and the responses
thereto, for a period of five years.
(b) (1) (A) After either completing the
grievance process described in subdivision (a), or
participating in the process for at least 30 days, or
completing the external exception request review process described in
subdivision (k) of Section 1367.24, a subscriber or enrollee
may submit the grievance or external exception request review
decision to the department for review. In any case under
the grievance process determined by the department to be a case
involving an imminent and serious threat to the health of the
patient, including, but not limited to, severe pain, the potential
loss of life, limb, or major bodily function, cancellations,
rescissions, or the nonrenewal of a health care service plan
contract, or in any other case where when
the department determines that an earlier review is warranted,
a subscriber or enrollee shall not be required to complete the
grievance process or to participate in the process for at least 30
days before submitting a grievance to the department for review.
(B) A grievance or external exception request review decision
may be submitted to the department for review and resolution
prior to any arbitration.
(C) Notwithstanding subparagraphs (A) and (B), the department may
refer any grievance or external exception request review
decision that does not pertain to compliance with this chapter
to the State Department of Public Health, the California Department
of Aging, the federal Health Care Financing Administration,
Centers for Medicare and Medicaid Services, or
any other appropriate governmental entity for investigation and
resolution.
(2) If the subscriber or enrollee is a minor, or is incompetent or
incapacitated, the parent, guardian, conservator, relative, or other
designee of the subscriber or enrollee, as appropriate, may submit
the grievance or external exception request review decision
to the department as the agent of the subscriber or enrollee.
Further, a provider may join with, or otherwise assist, a subscriber
or enrollee, or the agent, to submit the grievance or external
exception request review decision to the department. In
addition, following submission of the grievance or external
exception request review decision to the department, the
subscriber or enrollee, or the agent, may authorize the provider to
assist, including advocating on behalf of the subscriber or enrollee.
For purposes of this section, a "relative" includes the parent,
stepparent, spouse, adult son or daughter, grandparent, brother,
sister, uncle, or aunt of the subscriber or enrollee.
(3) The department shall review the written documents submitted
with the subscriber's or the enrollee's request for review, or
submitted by the agent on behalf of the subscriber or enrollee. The
department may ask for additional information, and may hold an
informal meeting with the involved parties, including providers who
have joined in submitting the grievance or external exception
request review decision or who are otherwise assisting or
advocating on behalf of the subscriber or enrollee. If after
reviewing the record, the department concludes that the
grievance, grievance or external exception request
review decision, in whole or in part, is eligible for review
under the independent medical review system established pursuant to
Article 5.55 (commencing with Section 1374.30), the department shall
immediately notify the subscriber or enrollee, or agent, of that
option and shall, if requested orally or in writing, assist the
subscriber or enrollee in participating in the independent medical
review system.
(4) If after reviewing the record of a grievance,
grievance or external exception request review
decision, the department concludes that a health care service
eligible for coverage and payment under a health care service plan
contract has been delayed, denied, or modified by a plan, or by one
of its contracting providers, in whole or in part due to a
determination that the service is not medically necessary, and that
determination was not communicated to the enrollee in writing along
with a notice of the enrollee's potential right to participate in the
independent medical review system, as required by this chapter, the
director shall, by order, assess administrative penalties. A
proceeding for the issuance of an order assessing administrative
penalties shall be subject to appropriate notice of, and the
opportunity for, a hearing with regard to the person affected in
accordance with Section 1397. The administrative penalties shall not
be deemed an exclusive remedy available to the director. These
penalties shall be paid to the Managed Care Administrative Fines and
Penalties Fund and shall be used for the purposes specified in
Section 1341.45.
(5) The department shall send a written notice of the final
disposition of the grievance, grievance or
external exception request review decision, and the reasons
therefor, to the subscriber or enrollee, the agent, to any provider
that has joined with or is otherwise assisting the subscriber or
enrollee, and to the plan, within 30 calendar days of receipt of the
request for review unless the director, in his or her discretion,
determines that additional time is reasonably necessary to fully and
fairly evaluate the relevant grievance.
grievance or external exception request review decision. In any
case not eligible for the independent medical review system
established pursuant to Article 5.55 (commencing with Section
1374.30), the department's written notice shall include, at a
minimum, the following:
(A) A summary of its findings and the reasons why the department
found the plan to be, or not to be, in compliance with any applicable
laws, regulations, or orders of the director.
(B) A discussion of the department's contact with any medical
provider, or any other independent expert relied on by the
department, along with a summary of the views and qualifications of
that provider or expert.
(C) If the enrollee's grievance grievance
or external exception request review decision is sustained in
whole or in part, information about any corrective action taken.
(6) In any department review of a grievance or external
exception request review decision involving a disputed health
care service, as defined in subdivision (b) of Section 1374.30, that
is not eligible for the independent medical review system established
pursuant to Article 5.55 (commencing with Section 1374.30), in which
the department finds that the plan has delayed, denied, or modified
health care services that are medically necessary, based on the
specific medical circumstances of the enrollee, and those services
are a covered benefit under the terms and conditions of the health
care service plan contract, the department's written notice shall do
either of the following:
(A) Order the plan to promptly offer and provide those health care
services to the enrollee.
(B) Order the plan to promptly reimburse the enrollee for any
reasonable costs associated with urgent care or emergency services,
or other extraordinary and compelling health care services, when the
department finds that the enrollee's decision to secure those
services outside of the plan network was reasonable under the
circumstances.
The department's order shall be binding on the plan.
(7) Distribution of the written notice shall not be deemed a
waiver of any exemption or privilege under existing law, including,
but not limited to, Section 6254.5 of the Government Code, for any
information in connection with and including the written notice, nor
shall any person employed or in any way retained by the department be
required to testify as to that information or notice.
(8) The director shall establish and maintain a system of aging of
grievances that are pending and unresolved for 30 days or more that
shall include a brief explanation of the reasons each grievance is
pending and unresolved for 30 days or more.
(9) A subscriber or enrollee, or the agent acting on behalf of a
subscriber or enrollee, may also request voluntary mediation with the
plan prior to exercising the right to submit a grievance or
external exception request review decision to the department.
The use of mediation services shall not preclude the right to submit
a grievance or external exception request review
decision to the department upon completion of mediation. In
order to initiate mediation, the subscriber or enrollee, or the agent
acting on behalf of the subscriber or enrollee, and the plan shall
voluntarily agree to mediation. Expenses for mediation shall be borne
equally by both sides. The department shall have no administrative
or enforcement responsibilities in connection with the voluntary
mediation process authorized by this paragraph.
(c) The plan's grievance system shall include a system of aging of
grievances that are pending and unresolved for 30 days or more. The
plan shall provide a quarterly report to the director of grievances
pending and unresolved for 30 or more days with separate categories
of grievances for Medicare enrollees and Medi-Cal enrollees. The plan
shall include with the report a brief explanation of the reasons
each grievance is pending and unresolved for 30 days or more. The
plan may include the following statement in the quarterly report that
is made available to the public by the director:
"Under Medicare and Medi-Cal law, Medicare enrollees and Medi-Cal
enrollees each have separate avenues of appeal that are not available
to other enrollees. Therefore, grievances pending and unresolved may
reflect enrollees pursuing their Medicare or Medi-Cal appeal rights."
If requested by a plan, the director shall include this statement in
a written report made available to the public and prepared by the
director that describes or compares grievances that are pending and
unresolved with the plan for 30 days or more. Additionally, the
director shall, if requested by a plan, append to that written report
a brief explanation, provided in writing by the plan, of the reasons
why grievances described in that written report are pending and
unresolved for 30 days or more. The director shall not be required to
include a statement or append a brief explanation to a written
report that the director is required to prepare under this chapter,
including Sections 1380 and 1397.5.
(d) Subject to subparagraph (C) of paragraph (1) of subdivision
(b), the grievance or resolution procedures authorized by this
section shall be in addition to any other procedures that may be
available to any person, and failure to pursue, exhaust, or engage in
the procedures described in this section shall not preclude the use
of any other remedy provided by law.
(e) Nothing in this section shall be construed to allow the
submission to the department of any provider grievance under this
section. However, as part of a provider's duty to advocate for
medically appropriate health care for his or her patients pursuant to
Sections 510 and 2056 of the Business and Professions Code, nothing
in this subdivision shall be construed to prohibit a provider from
contacting and informing the department about any concerns he or she
has regarding compliance with or enforcement of this chapter.
(f) To the extent required by Section 2719 of the federal Public
Health Service Act (42 U.S.C. Sec. 300gg-19) and any subsequent rules
or regulations, there shall be an independent external review
pursuant to the standards required by the United States Secretary of
Health and Human Services of a health care service plan's
cancellation, rescission, or nonrenewal of an enrollee's or
subscriber's coverage.
SEC. 3. Section 1368.01 of the Health
and Safety Code is amended to read:
1368.01. (a) The grievance system shall require the plan to
resolve grievances within 30 days, except as provided in
subdivision (c). subdivisions (c) and (d).
(b) The grievance system shall include a requirement for
expedited plan review of grievances for cases involving an imminent
and serious threat to the health of the patient, including, but not
limited to, severe pain, potential loss of life, limb, or major
bodily function. When the plan has notice of a case requiring
expedited review, the grievance system shall require the plan to
immediately inform enrollees and subscribers in writing of their
right to notify the department of the grievance. The grievance system
shall also require the plan to provide enrollees, subscribers, and
the department with a written statement on the disposition or pending
status of the grievance no later than three days from receipt of the
grievance, except as provided in subdivision (c). Paragraph (4) of
subdivision (a) of Section 1368 shall not apply to grievances handled
pursuant to this section.
(c) A health care service plan contract in the individual, small
group, or large group markets that provides coverage for outpatient
prescription drugs shall comply with subdivision (c) of Section
156.122 of Title 45 of the Code of Federal Regulations. This
subdivision shall not apply to Medi-Cal managed care health care
service plan contracts or any entity that enters into a contract with
the State Department of Health Care Services pursuant to Chapter 7
(commencing with Section 14000), Chapter 8 (commencing with Section
14200), or Chapter 8.75 (commencing with Section 14591) of Part 3 of
Division 9 of the Welfare and Institutions Code.
(d) The grievance system shall require a health care service plan
that provides coverage for outpatient prescription drugs to resolve
grievances within 72 hours for nonurgent requests, and within 24
hours if exigent circumstances exist, if the original request was an
authorization for a formulary drug that requires prior authorization
by the plan. For purposes of this subdivision, "exigent circumstances"
shall have the same meaning as set forth in Section 1367.241.
SEC. 4. Section 1374.30 of the Health
and Safety Code is amended to read:
1374.30. (a) Commencing January 1, 2001, there is hereby
established in the department the Independent Medical Review System.
(b) For the purposes of this chapter, "disputed health care
service" means any health care service eligible for coverage and
payment under a health care service plan contract that has been
denied, modified, or delayed by a decision of the plan, or by one of
its contracting providers, in whole or in part due to a finding that
the service is not medically necessary. A decision regarding a
disputed health care service relates to the practice of medicine and
is not a coverage decision. A disputed health care service does not
include services provided by a specialized health care service plan,
except to the extent that the service (1) involves the practice of
medicine, or (2) is provided pursuant to a contract with a health
care service plan that covers hospital, medical, or surgical
benefits. If a plan, or one of its contracting providers, issues a
decision denying, modifying, or delaying health care services, based
in whole or in part on a
finding that the proposed health care services are not a covered
benefit under the contract that applies to the enrollee, the
statement of decision shall clearly specify the provision in the
contract that excludes that coverage.
(c) For the purposes of this chapter, "coverage decision" means
the approval or denial of health care services by a plan, or by one
of its contracting entities, substantially based on a finding that
the provision of a particular service is included or excluded as a
covered benefit under the terms and conditions of the health care
service plan contract. A "coverage decision" does not encompass a
plan or contracting provider decision regarding a disputed health
care service.
(d) (1) All enrollee grievances involving a disputed health care
service are eligible for review under the Independent Medical Review
System if the requirements of this article are met. If the department
finds that an enrollee grievance involving a disputed health care
service does not meet the requirements of this article for review
under the Independent Medical Review System, the enrollee request for
review shall be treated as a request for the department to review
the grievance pursuant to subdivision (b) of Section 1368. All other
enrollee grievances, including grievances involving coverage
decisions, remain eligible for review by the department pursuant to
subdivision (b) of Section 1368.
(2) In any case in which an enrollee or provider asserts that a
decision to deny, modify, or delay health care services was based, in
whole or in part, on consideration of medical necessity, the
department shall have the final authority to determine whether the
grievance is more properly resolved pursuant to an independent
medical review as provided under this article or pursuant to
subdivision (b) of Section 1368.
(3) The department shall be the final arbiter when there is a
question as to whether an enrollee grievance is a disputed health
care service or a coverage decision. The department shall establish a
process to complete an initial screening of an enrollee grievance.
If there appears to be any medical necessity issue, the grievance
shall be resolved pursuant to an independent medical review as
provided under this article or pursuant to subdivision (b) of Section
1368.
(e) Every health care service plan contract that is issued,
amended, renewed, or delivered in this state on or after January 1,
2000, shall provide an enrollee with the opportunity to seek an
independent medical review whenever health care services have been
denied, modified, or delayed by the plan, or by one of its
contracting providers, if the decision was based in whole or in part
on a finding that the proposed health care services are not medically
necessary. For purposes of this article, an enrollee may designate
an agent to act on his or her behalf, as described in paragraph (2)
of subdivision (b) of Section 1368. The provider may join with or
otherwise assist the enrollee in seeking an independent medical
review, and may advocate on behalf of the enrollee.
(f) Medi-Cal beneficiaries enrolled in a health care service plan
shall not be excluded from participation. Medicare beneficiaries
enrolled in a health care service plan shall not be excluded unless
expressly preempted by federal law. Reviews of cases for Medi-Cal
enrollees shall be conducted in accordance with statutes and
regulations for the Medi-Cal program.
(g) The department may seek to integrate the quality of care and
consumer protection provisions, including remedies, of the
Independent Medical Review System with related dispute resolution
procedures of other health care agency programs, including the
Medicare and Medi-Cal programs, in a way that minimizes the potential
for duplication, conflict, and added costs. Nothing in this
subdivision shall be construed to limit any rights conferred upon
enrollees under this chapter.
(h) The independent medical review process authorized by this
article is in addition to any other procedures or remedies that may
be available.
(i) Every health care service plan shall prominently display in
every plan member handbook or relevant informational brochure, in
every plan contract, on enrollee evidence of coverage forms, on
copies of plan procedures for resolving grievances, on letters of
denials issued by either the plan or its contracting organization, on
the grievance forms required under Section 1368, and on all written
responses to grievances, information concerning the right of an
enrollee to request an independent medical review in cases where the
enrollee believes that health care services have been improperly
denied, modified, or delayed by the plan, or by one of its
contracting providers.
(j) An enrollee may apply to the department for an independent
medical review when all of the following conditions are met:
(1) (A) The enrollee's provider has recommended a health care
service as medically necessary, or necessary.
(B) The enrollee has received urgent care or emergency services
that a provider determined was medically necessary, or
necessary.
(C) The enrollee, in the absence of a provider recommendation
under subparagraph (A) or the receipt of urgent care or emergency
services by a provider under subparagraph (B), has been seen by an
in-plan provider for the diagnosis or treatment of the medical
condition for which the enrollee seeks independent review. The plan
shall expedite access to an in-plan provider upon request of an
enrollee. The in-plan provider need not recommend the disputed health
care service as a condition for the enrollee to be eligible for an
independent review.
For purposes of this article, the enrollee's provider may be an
out-of-plan provider. However, the plan shall have no liability for
payment of services provided by an out-of-plan provider, except as
provided pursuant to subdivision (c) of Section 1374.34.
(2) The disputed health care service has been denied, modified, or
delayed by the plan, or by one of its contracting providers, based
in whole or in part on a decision that the health care service is not
medically necessary.
(3) Either of the following:
(3)
(A) The enrollee has filed a grievance with the plan or
its contracting provider pursuant to Section 1368, and the disputed
decision is upheld or the grievance remains unresolved after 30 days.
The enrollee shall not be required to participate in the plan's
grievance process for more than 30 days. In the case of a grievance
that requires expedited review pursuant to subdivision (b) of
Section 1368.01, the enrollee shall not be required to
participate in the plan's grievance process for more than three days.
In the case of a grievance that requires expedited review
pursuant to subdivision (d) of Section 1368.01, the enrollee shall
not be required to participate in the plan's grievance
process for more than 72 hours, or more than 24 hours if exigent
circumstances exist.
(B) The enrollee has filed for an external exception request
review decision with the plan or its contracting provider pursuant to
subdivision (k) of Section 1367.24, and the disputed decision is
upheld or the external review remains unresolved after 72 hours, or
after 24 hours if exigent circumstances exist.
(k) An enrollee may apply to the department for an independent
medical review of a decision to deny, modify, or delay health care
services, based in whole or in part on a finding that the disputed
health care services are not medically necessary, within six months
of any of the qualifying periods or events under subdivision (j). The
director may extend the application deadline beyond six months if
the circumstances of a case warrant the extension.
(l) The enrollee shall pay no application or processing fees of
any kind.
(m) As part of its notification to the enrollee regarding a
disposition of the enrollee's grievance that denies, modifies, or
delays health care services, the plan shall provide the enrollee with
a one- or two-page application form approved by the department, and
an addressed envelope, which the enrollee may return to initiate an
independent medical review. The plan shall include on the form any
information required by the department to facilitate the completion
of the independent medical review, such as the enrollee's diagnosis
or condition, the nature of the disputed health care service sought
by the enrollee, a means to identify the enrollee's case, and any
other material information. The form shall also include the
following:
(1) Notice that a decision not to participate in the independent
medical review process may cause the enrollee to forfeit any
statutory right to pursue legal action against the plan regarding the
disputed health care service.
(2) A statement indicating the enrollee's consent to obtain any
necessary medical records from the plan, any of its contracting
providers, and any out-of-plan provider the enrollee may have
consulted on the matter, to be signed by the enrollee.
(3) Notice of the enrollee's right to provide information or
documentation, either directly or through the enrollee's provider,
regarding any of the following:
(A) A provider recommendation indicating that the disputed health
care service is medically necessary for the enrollee's medical
condition.
(B) Medical information or justification that a disputed health
care service, on an urgent care or emergency basis, was medically
necessary for the enrollee's medical condition.
(C) Reasonable information supporting the enrollee's position that
the disputed health care service is or was medically necessary for
the enrollee's medical condition, including all information provided
to the enrollee by the plan or any of its contracting providers,
still in the possession of the enrollee, concerning a plan or
provider decision regarding disputed health care services, and a copy
of any materials the enrollee submitted to the plan, still in the
possession of the enrollee, in support of the grievance, as well as
any additional material that the enrollee believes is relevant.
(4) A section designed to collect information on the enrollee's
ethnicity, race, and primary language spoken that includes both of
the following:
(A) A statement of intent indicating that the information is used
for statistics only, in order to ensure that all enrollees get the
best care possible.
(B) A statement indicating that providing this information is
optional and will not affect the independent medical review process
in any way.
(n) Upon notice from the department that the health care service
plan's enrollee has applied for an independent medical review, the
plan or its contracting providers shall provide to the independent
medical review organization designated by the department a copy of
all of the following documents within three business days of the plan'
s receipt of the department's notice of a request by an enrollee for
an independent review:
(1) (A) A copy of all of the enrollee's medical records in the
possession of the plan or its contracting providers relevant to each
of the following:
(i) The enrollee's medical condition.
(ii) The health care services being provided by the plan and its
contracting providers for the condition.
(iii) The disputed health care services requested by the enrollee
for the condition.
(B) Any newly developed or discovered relevant medical records in
the possession of the plan or its contracting providers after the
initial documents are provided to the independent medical review
organization shall be forwarded immediately to the independent
medical review organization. The plan shall concurrently provide a
copy of medical records required by this subparagraph to the enrollee
or the enrollee's provider, if authorized by the enrollee, unless
the offer of medical records is declined or otherwise prohibited by
law. The confidentiality of all medical record information shall be
maintained pursuant to applicable state and federal laws.
(2) A copy of all information provided to the enrollee by the plan
and any of its contracting providers concerning plan and provider
decisions regarding the enrollee's condition and care, and a copy of
any materials the enrollee or the enrollee's provider submitted to
the plan and to the plan's contracting providers in support of the
enrollee's request for disputed health care services. This
documentation shall include the written response to the enrollee's
grievance, required by paragraph (4) of subdivision (a) of Section
1368. The confidentiality of any enrollee medical information shall
be maintained pursuant to applicable state and federal laws.
(3) A copy of any other relevant documents or information used by
the plan or its contracting providers in determining whether disputed
health care services should have been provided, and any statements
by the plan and its contracting providers explaining the reasons for
the decision to deny, modify, or delay disputed health care services
on the basis of medical necessity. The plan shall concurrently
provide a copy of documents required by this paragraph, except for
any information found by the director to be legally privileged
information, to the enrollee and the enrollee's provider. The
department and the independent medical review organization shall
maintain the confidentiality of any information found by the director
to be the proprietary information of the plan.
(o) This section shall become operative on July 1, 2015.
SEC. 5. Section 10123.191 of the
Insurance Code is amended to read:
10123.191. (a) Notwithstanding any other law, on and after
January 1, 2013, a health insurer that provides coverage for
prescription drugs shall utilize and accept only the prior
authorization form developed pursuant to subdivision (c), or an
electronic prior authorization process described in subdivision (e),
when requiring prior authorization for prescription drugs.
(b) (1) If a health insurer or a contracted
physician group fails to respond within 72 hours for nonurgent
requests, and within 24 hours if exigent circumstances exist, upon
receipt of a completed prior authorization request from a prescribing
provider, the prior authorization request shall be deemed to have
been granted.
(2) A health insurer's internal grievance process shall require a
health insurer that provides coverage for outpatient prescription
drugs to resolve grievances within 72 hours for nonurgent requests,
and within 24 hours if exigent circumstances exist, if the original
request was an authorization for a formulary drug that requires prior
authorization by the health insurer.
(c) On or before January 1, 2017, the department and the
Department of Managed Health Care shall jointly develop a uniform
prior authorization form. Notwithstanding any other law, on and after
July 1, 2017, or six months after the form is completed pursuant to
this section, whichever is later, every prescribing provider shall
use that uniform prior authorization form, or an electronic prior
authorization process described in subdivision (e), to request prior
authorization for coverage of prescription drugs and every health
insurer shall accept that form or electronic process as sufficient to
request prior authorization for prescription drugs.
(d) The prior authorization form developed pursuant to subdivision
(c) shall meet the following criteria:
(1) The form shall not exceed two pages.
(2) The form shall be made electronically available by the
department and the health insurer.
(3) The completed form may also be electronically submitted from
the prescribing provider to the health insurer.
(4) The department and the Department of Managed Health Care shall
develop the form with input from interested parties from at least
one public meeting.
(5) The department and the Department of Managed Health Care, in
development of the standardized form, shall take into consideration
the following:
(A) Existing prior authorization forms established by the federal
Centers for Medicare and Medicaid Services and the State Department
of Health Care Services.
(B) National standards pertaining to electronic prior
authorization.
(e) A prescribing provider may use an electronic prior
authorization system utilizing the standardized form described in
subdivision (c) or an electronic process developed specifically for
transmitting prior authorization information that meets the National
Council for Prescription Drug Programs' SCRIPT standard for
electronic prior authorization transactions.
(f) Subdivision (a) does not apply if any of the following occurs:
(1) A contracted physician group is delegated the financial risk
for the pharmacy or medical drug benefit by a health insurer.
(2) A contracted physician group uses its own internal prior
authorization process rather than the health insurer's prior
authorization process for the health insurer's insureds.
(3) A contracted physician group is delegated a utilization
management function by the health insurer concerning any prescription
drug, regardless of the delegation of financial risk.
(g) For prescription drugs, prior authorization requirements
described in subdivisions (c) and (e) apply regardless of how that
benefit is classified under the terms of the health insurer's group
or individual policy.
(h) (1) A health insurer shall maintain a
process for an external exception request review that complies with
subdivision (c) of Section 156.122 of Title 45 of the Code of Federal
Regulations.
(2) An insured shall not be required to file a complaint with the
health insurer or its contracting provider pursuant to its internal
grievance process if a health insurer disapproves a request to obtain
authorization for a nonformulary drug under subdivision (i). If a
health insurer disapproves a request to obtain authorization for a
nonformulary drug and the insured files a complaint with the health
insurer, the health insurer shall treat that as a request to obtain
an external exception request review.
(i) For an individual, small group, or large group health
insurance policy, a health insurer that provides coverage for
outpatient prescription drugs shall comply with subdivision (c) of
Section 156.122 of Title 45 of the Code of Federal Regulations.
(j) Nothing in this section shall be construed to affect an
insured's or policyholder's eligibility to submit a complaint to the
department for review or to apply to the department for an
independent medical review under Article 3.5 (commencing with Section
10169).
(j)
(k) For purposes of this section:
(1) "Prescribing provider" shall include a provider authorized to
write a prescription, pursuant to subdivision (a) of Section 4040 of
the Business and Professions Code, to treat a medical condition of an
insured.
(2) "Exigent circumstances" exist when an insured is suffering
from a health condition that may seriously jeopardize the insured's
life, health, or ability to regain maximum function or when an
insured is undergoing a current course of treatment using a
nonformulary drug.
(3) "Completed prior authorization request" means a completed
uniform prior authorization form developed pursuant to subdivision
(c), or a completed request submitted using an electronic prior
authorization system described in subdivision (e), or, for contracted
physician groups described in subdivision (f), the process used by
the contracted physician group.
SEC. 6. Section 10169 of the Insurance
Code , as added by Section 19 of Chapter 348 of
the Statutes of 2015, is amended to read:
10169. (a) Commencing January 1, 2001, there is hereby
established in the department the Independent Medical Review System.
(b) For the purposes of this chapter, "disputed health care
service" means any health care service eligible for coverage and
payment under a disability insurance contract that has been denied,
modified, or delayed by a decision of the insurer, or by one of its
contracting providers, in whole or in part due to a finding that the
service is not medically necessary. A decision regarding a disputed
health care service relates to the practice of medicine and is not a
coverage decision. A disputed health care service does not include
services provided by a group or individual policy of vision-only or
dental-only coverage, except to the extent that (1) the service
involves the practice of medicine, or (2) is provided pursuant to a
contract with a disability insurer that covers hospital, medical, or
surgical benefits. If an insurer, or one of its contracting
providers, issues a decision denying, modifying, or delaying health
care services, based in whole or in part on a finding that the
proposed health care services are not a covered benefit under the
contract that applies to the insured, the statement of decision shall
clearly specify the provision in the contract that excludes that
coverage.
(c) For the purposes of this chapter, "coverage decision" means
the approval or denial of health care services by a disability
insurer, or by one of its contracting entities, substantially based
on a finding that the provision of a particular service is included
or excluded as a covered benefit under the terms and conditions of
the disability insurance contract. A coverage decision does not
encompass a disability insurer or contracting provider decision
regarding a disputed health care service.
(d) (1) All insured grievances involving a disputed health care
service are eligible for review under the Independent Medical Review
System if the requirements of this article are met. If the department
finds that an insured grievance involving a disputed health care
service does not meet the requirements of this article for review
under the Independent Medical Review System, the insured request for
review shall be treated as a request for the department to review the
grievance. All other insured grievances, including grievances
involving coverage decisions, remain eligible for review by the
department.
(2) In any case in which an insured or provider asserts that a
decision to deny, modify, or delay health care services was based, in
whole or in part, on consideration of medical necessity, the
department shall have the final authority to determine whether the
grievance is more properly resolved pursuant to an independent
medical review as provided under this article.
(3) The department shall be the final arbiter when there is a
question as to whether an insured grievance is a disputed health care
service or a coverage decision. The department shall establish a
process to complete an initial screening of an insured grievance. If
there appears to be any medical necessity issue, the grievance shall
be resolved pursuant to an independent medical review as provided
under this article.
(e) Every disability insurance contract that is issued, amended,
renewed, or delivered in this state on or after January 1, 2000,
shall provide an insured with the opportunity to seek an independent
medical review whenever health care services have been denied,
modified, or delayed by the insurer, or by one of its contracting
providers, if the decision was based in whole or in part on a finding
that the proposed health care services are not medically necessary.
For purposes of this article, an insured may designate an agent to
act on his or her behalf. The provider may join with or otherwise
assist the insured in seeking an independent medical review, and may
advocate on behalf of the insured.
(f) Medicare beneficiaries enrolled in Medicare + Choice products
shall not be excluded unless expressly preempted by federal law.
(g) The department may seek to integrate the quality of care and
consumer protection provisions, including remedies, of the
Independent Medical Review System with related dispute resolution
procedures of other health care agency programs, including the
Medicare program, in a way that minimizes the potential for
duplication, conflict, and added costs. Nothing in this subdivision
shall be construed to limit any rights conferred upon insureds under
this chapter.
(h) The independent medical review process authorized by this
article is in addition to any other procedures or remedies that may
be available.
(i) Every disability insurer shall prominently display in every
insurer member handbook or relevant informational brochure, in every
insurance contract, on insured evidence of coverage forms, on copies
of insurer procedures for resolving grievances, on letters of denials
issued by either the insurer or its contracting organization, and on
all written responses to grievances, information concerning the
right of an insured to request an independent medical review when the
insured believes that health care services have been improperly
denied, modified, or delayed by the insurer, or by one of its
contracting providers. The department's telephone number,
1-800-927-4357, and Internet Web site, www.insurance.ca.gov, shall
also be displayed.
(j) An insured may apply to the department for an independent
medical review when all of the following conditions are met:
(1) (A) The insured's provider has recommended a health care
service as medically necessary, or
(B) The insured has received urgent care or emergency services
that a provider determined was medically necessary, or
(C) The insured, in the absence of a provider recommendation under
subparagraph (A) or the receipt of urgent care or emergency services
by a provider under subparagraph (B), has been seen by a contracting
provider for the diagnosis or treatment of the medical condition for
which the insured seeks independent review. The insurer shall
expedite access to a contracting provider upon request of an insured.
The contracting provider need not recommend the disputed health care
service as a condition for the insured to be eligible for an
independent review.
For purposes of this article, the insured's provider may be a
noncontracting provider. However, the insurer shall have no liability
for payment of services provided by a noncontracting provider,
except as provided pursuant to Section 10169.3.
(2) The disputed health care service has been denied, modified, or
delayed by the insurer, or by one of its contracting providers,
based in whole or in part on a decision that the health care service
is not medically
necessary.
(3) Either of the following:
(3)
(A) The insured has filed a grievance with the insurer
or its contracting provider, and the disputed decision is upheld or
the grievance remains unresolved after 30 days. The insured shall not
be required to participate in the insurer's grievance process for
more than 30 days. In the case of a grievance that requires expedited
review, the insured shall not be required to participate in the
insurer's grievance process for more than three days. In the
case of a grievance that requires expedited review
pursuant to paragraph (2) of subdivision (b) of Section 10123.191,
the insured shall not be required to participate in the insured's
grievance process for more than 72 hours, or more than 24 hours if
exigent circumstances exist.
(B) The insured has filed for an external exception request review
decision with the insurer or its contracting provider pursuant to
subdivision (h) of Section 10123.191, and the disputed decision is
upheld or the external review remains unresolved after 72 hours, or
after 24 hours if exigent circumstances exist.
(k) An insured may apply to the department for an independent
medical review of a decision to deny, modify, or delay health care
services, based in whole or in part on a finding that the disputed
health care services are not medically necessary, within six months
of any of the qualifying periods or events under subdivision (j). The
commissioner may extend the application deadline beyond six months
if the circumstances of a case warrant the extension.
( l ) The insured shall pay no application or
processing fees of any kind.
(m) As part of its notification to the insured regarding a
disposition of the insured's grievance that denies, modifies, or
delays health care services, the insurer shall provide the insured
with a one- or two-page application form approved by the department,
and an addressed envelope, which the insured may return to initiate
an independent medical review. The insurer shall include on the form
any information required by the department to facilitate the
completion of the independent medical review, such as the insured's
diagnosis or condition, the nature of the disputed health care
service sought by the insured, a means to identify the insured's
case, and any other material information. The form shall also include
the following:
(1) Notice that a decision not to participate in the independent
review process may cause the insured to forfeit any statutory right
to pursue legal action against the insurer regarding the disputed
health care service.
(2) A statement indicating the insured's consent to obtain any
necessary medical records from the insurer, any of its contracting
providers, and any noncontracting provider the insured may have
consulted on the matter, to be signed by the insured.
(3) Notice of the insured's right to provide information or
documentation, either directly or through the insured's provider,
regarding any of the following:
(A) A provider recommendation indicating that the disputed health
care service is medically necessary for the insured's medical
condition.
(B) Medical information or justification that a disputed health
care service, on an urgent care or emergency basis, was medically
necessary for the insured's medical condition.
(C) Reasonable information supporting the insured's position that
the disputed health care service is or was medically necessary for
the insured's medical condition, including all information provided
to the insured by the insurer or any of its contracting providers,
still in the possession of the insured, concerning an insurer or
provider decision regarding disputed health care services, and a copy
of any materials the insured submitted to the insurer, still in the
possession of the insured, in support of the grievance, as well as
any additional material that the insured believes is relevant.
(4) A section designed to collect information on the insured's
ethnicity, race, and primary language spoken that includes both of
the following:
(A) A statement of intent indicating that the information is used
for statistics only, in order to ensure that all insureds get the
best care possible.
(B) A statement indicating that providing this information is
optional and will not affect the independent medical review process
in any way.
(n) Upon notice from the department that the insured has applied
for an independent medical review, the insurer or its contracting
providers, shall provide to the independent medical review
organization designated by the department a copy of all of the
following documents within three business days of the insurer's
receipt of the department's notice of a request by an insured for an
independent review:
(1) (A) A copy of all of the insured's medical records in the
possession of the insurer or its contracting providers relevant to
each of the following:
(i) The insured's medical condition.
(ii) The health care services being provided by the insurer and
its contracting providers for the condition.
(iii) The disputed health care services requested by the insured
for the condition.
(B) Any newly developed or discovered relevant medical records in
the possession of the insurer or its contracting providers after the
initial documents are provided to the independent medical review
organization shall be forwarded immediately to the independent
medical review organization. The insurer shall concurrently provide a
copy of medical records required by this subparagraph to the insured
or the insured's provider, if authorized by the insured, unless the
offer of medical records is declined or otherwise prohibited by law.
The confidentiality of all medical record information shall be
maintained pursuant to applicable state and federal laws.
(2) A copy of all information provided to the insured by the
insurer and any of its contracting providers concerning insurer and
provider decisions regarding the insured's condition and care, and a
copy of any materials the insured or the insured's provider submitted
to the insurer and to the insurer's contracting providers in support
of the insured's request for disputed health care services. This
documentation shall include the written response to the insured's
grievance. The confidentiality of any insured medical information
shall be maintained pursuant to applicable state and federal laws.
(3) A copy of any other relevant documents or information used by
the insurer or its contracting providers in determining whether
disputed health care services should have been provided, and any
statements by the insurer and its contracting providers explaining
the reasons for the decision to deny, modify, or delay disputed
health care services on the basis of medical necessity. The insurer
shall concurrently provide a copy of documents required by this
paragraph, except for any information found by the commissioner to be
legally privileged information, to the insured and the insured's
provider. The department and the independent medical review
organization shall maintain the confidentiality of any information
found by the commissioner to be the proprietary information of the
insurer.
(o) This section shall become operative on January 1, 2017.
SEC. 7. No reimbursement is required by this act
pursuant to Section 6 of Article XIII B of the California
Constitution because the only costs that may be incurred by a local
agency or school district will be incurred because this act creates a
new crime or infraction, eliminates a crime or infraction, or
changes the penalty for a crime or infraction, within the meaning of
Section 17556 of the Government Code, or changes the definition of a
crime within the meaning of Section 6 of Article XIII B of the
California Constitution.
SECTION 1. Section 1367.24 of the Health and
Safety Code is amended to read:
1367.24. (a) (1) Every health care service plan that provides
prescription drug benefits shall maintain an expeditious process, as
described in this subdivision, by which enrollees, enrollees'
designees, or prescribing providers may request and obtain
authorization for medically necessary nonformulary prescription drugs
and medically necessary formulary prescription drugs that require
prior authorization by the plan. The plan shall provide that the
enrollee, the enrollee's designee, or the enrollee's prescribing
provider may seek a prior authorization for a prescription drug under
this subdivision.
(2) Each plan shall respond to a prior authorization request
within 72 hours following receipt of the prior authorization request.
A plan that grants a prior authorization request under this
paragraph shall provide coverage of the prescription drug for the
duration of the prescription, including refills.
(3) Each plan shall provide that a prior authorization may be
obtained within 24 hours if an enrollee is suffering from a health
condition that may seriously jeopardize the enrollee's life, health,
or ability to regain maximum function or if an enrollee is undergoing
a current course of treatment using a nonformulary drug. A plan that
grants a prior authorization request under this paragraph based on
exigent circumstances shall provide coverage of the prescription drug
for the duration of the exigency.
(4) If a plan fails to respond within 72 hours for a prior
authorization request, or within 24 hours if exigent circumstances
exist, upon receipt of a completed prior authorization request, the
prior authorization request shall be deemed to have been granted.
(5) Each plan shall provide a written description of the process
described in paragraph (1) to its prescribing providers. For purposes
of this section, a prescribing provider shall include a provider
authorized to write a prescription, pursuant to subdivision (a) of
Section 4040 of the Business and Professions Code, to treat a medical
condition of an enrollee.
(b) If a plan disapproves a prior authorization request made
pursuant to subdivision (a), the plan shall maintain an expeditious
process to authorize an enrollee to obtain an external review.
(1) A determination on an external review shall be made no later
than 72 hours following receipt of the request, if the original
request was an authorization request under paragraph (2) of
subdivision (a), and no later than 24 hours following receipt of the
request, if the original request was an authorization request under
paragraph (3) of subdivision (a).
(2) If an external review decision of a prior authorization
request under paragraph (2) of subdivision (a) is granted, the plan
shall provide coverage of the prescription drug for the duration of
the prescription, including refills. If an external review decision
of a prior authorization request under paragraph (3) of subdivision
(a) is granted, the plan shall provide coverage of the prescription
drug for the duration of the exigency.
(c) Any plan that disapproves a request made pursuant to
subdivision (a) to obtain authorization for a nonformulary or
formulary drug shall provide the reasons for the disapproval in a
notice provided to the enrollee. The notice shall indicate that the
enrollee may file, in lieu of filing a grievance with the plan, a
request for an external review pursuant to subdivision (b) if the
enrollee objects to the disapproval, including any alternative drug
or treatment offered by the plan. The notice shall comply with
subdivision (b) of Section 1368.02. If a plan disapproves a request
made pursuant to subdivision (a), an enrollee shall not be required
to file a grievance with the plan or its contracting provider
pursuant to Section 1368.
(d) The process described in subdivisions (a) and (b) by which
enrollee's, enrollees' designees, and prescribing providers may
obtain authorization for medically necessary nonformulary drugs shall
not apply to a nonformulary drug that has been prescribed for an
enrollee in conformance with the provisions of Section 1367.22.
(e) The process described in subdivisions (a) and (b) by which
enrollees may obtain medically necessary nonformulary drugs and
formulary drugs shall be described in evidence of coverage and
disclosure forms, as required by subdivision (a) of Section 1363,
issued on or after July 1, 2017.
(f) Every health care service plan that provides prescription drug
benefits shall maintain, as part of its books and records under
Section 1381, all of the following information, which shall be made
available to the director upon request:
(1) The complete drug formulary or formularies of the plan, if the
plan maintains a formulary, including a list of the prescription
drugs on the formulary of the plan by major therapeutic category with
an indication of whether any drugs are preferred over other drugs.
(2) Records developed by the pharmacy and therapeutic committee of
the plan, or by others responsible for developing, modifying, and
overseeing formularies, including medical groups, individual practice
associations, and contracting pharmaceutical benefit management
companies, used to guide the drugs prescribed for the enrollees of
the plan, that fully describe the reasoning behind formulary
decisions.
(3) Any plan arrangements with prescribing providers, medical
groups, individual practice associations, pharmacists, contracting
pharmaceutical benefit management companies, or other entities that
are associated with activities of the plan to encourage formulary
compliance or otherwise manage prescription drug benefits.
(g) If a plan provides prescription drug benefits, the department
shall, as part of its periodic onsite medical survey of each plan
undertaken pursuant to Section 1380, review the performance of the
plan in providing those benefits, including, but not limited to, a
review of the procedures and information maintained pursuant to this
section, and describe the performance of the plan as part of its
report issued pursuant to Section 1380.
(h) The director shall not publicly disclose any information
reviewed pursuant to this section that is determined by the director
to be confidential pursuant to state law.
(i) For purposes of this section, "authorization" means approval
by the health care service plan to provide payment for the
prescription drug.
(j) Nonformulary prescription drugs shall include any drug for
which an enrollee's copayment or out-of-pocket costs are different
than the copayment for a formulary prescription drug, except as
otherwise provided by law or regulation or in cases in which the drug
has been excluded in the plan contract pursuant to Section 1342.7.
(k) Nothing in this section shall be construed to restrict or
impair the application of any other provision of this chapter,
including, but not limited to, Section 1367, which includes among its
requirements that a health care service plan furnish services in a
manner providing continuity of care and demonstrate that medical
decisions are rendered by qualified medical providers unhindered by
fiscal and administrative management.
(l) A health care service plan contract in the individual, small
group, and large group markets that provides coverage for outpatient
prescription drugs shall comply with this section. This section shall
not apply to Medi-Cal managed care health care service plan
contracts.
(m) "Medi-Cal managed care health care service plan contract"
means any entity that enters into a contract with the State
Department of Health Care Services pursuant to Chapter 7 (commencing
with Section 14000), Chapter 8 (commencing with Section 14200), or
Chapter 8.75 (commencing with Section 14591) of Part 3 of Division 9
of the Welfare and Institutions Code.
(n) Nothing in this section shall be construed to affect an
enrollee's or subscriber's eligibility to submit a grievance to the
department for review under Section 1368 or to apply to the
department for an independent medical review under Section 1370.4, or
Article 5.55 (commencing with Section 1374.30) of this chapter.
SEC. 2. Section 1367.241 of the Health and
Safety Code is amended to read:
1367.241. (a) Notwithstanding any other law, on and after January
1, 2013, a health care service plan that provides coverage for
prescription drugs shall accept only the prior authorization form
developed pursuant to subdivision (b), or an electronic prior
authorization process described in subdivision (d), when requiring
prior authorization for prescription drugs. This section does not
apply in the event that a physician or physician group has been
delegated the financial risk for prescription drugs by a health care
service plan and does not use a prior authorization process. This
section does not apply to a health care service plan, or to its
affiliated providers, if the health care service plan owns and
operates its pharmacies and does not use a prior authorization
process for prescription drugs.
(b) On or before January 1, 2017, the department and the
Department of Insurance shall jointly develop a uniform prior
authorization form. Notwithstanding any other law, on and after July
1, 2017, or six months after the form is completed pursuant to this
section, whichever is later, every prescribing provider shall use
that uniform prior authorization form, or an electronic prior
authorization process described in subdivision (d), to request prior
authorization for coverage of prescription drugs and every health
care service plan shall accept that form or electronic process as
sufficient to request prior authorization for prescription drugs.
(c) The prior authorization form developed pursuant to subdivision
(b) shall meet the following criteria:
(1) The form shall not exceed two pages.
(2) The form shall be made electronically available by the
department and the health care service plan.
(3) The completed form may also be electronically submitted from
the prescribing provider to the health care service plan.
(4) The department and the Department of Insurance shall develop
the form with input from interested parties from at least one public
meeting.
(5) The department and the Department of Insurance, in development
of the standardized form, shall take into consideration the
following:
(A) Existing prior authorization forms established by the federal
Centers for Medicare and Medicaid Services and the State Department
of Health Care Services.
(B) National standards pertaining to electronic prior
authorization.
(d) A prescribing provider may use an electronic prior
authorization system utilizing the standardized form described in
subdivision (b) or an electronic process developed specifically for
transmitting prior authorization information that meets the National
Council for Prescription Drug Programs' SCRIPT standard for
electronic prior authorization transactions.
(e) Subdivision (a) does not apply if any of the following occurs:
(1) A contracted physician group is delegated the financial risk
for prescription drugs by a health care service plan.
(2) A contracted physician group uses its own internal prior
authorization process rather than the health care service plan's
prior authorization process for plan enrollees.
(3) A contracted physician group is delegated a utilization
management function by the health care service plan concerning any
prescription drug, regardless of the delegation of financial risk.
(f) For prescription drugs, prior authorization requirements
described in subdivisions (b) and (d) apply regardless of how that
benefit is classified under the terms of the health plan's group or
individual contract.
(g) For purposes of this section:
(1) "Prescribing provider" shall include a provider authorized to
write a prescription, pursuant to subdivision (a) of Section 4040 of
the Business and Professions Code, to treat a medical condition of an
enrollee.
(2) "Completed prior authorization request" means a completed
uniform prior authorization form developed pursuant to subdivision
(b), or a completed request submitted using an electronic prior
authorization system described in subdivision (d), or, for contracted
physician groups described in subdivision (e), the process used by
the contracted physician group.
SEC. 3. Section 1367.244 of the Health and
Safety Code is amended to read:
1367.244. (a) A request for an exception to a health care service
plan's step therapy process for prescription drugs may be submitted
in the same manner as a request for prior authorization for
prescription drugs pursuant to Section 1367.24, and shall be treated
in the same manner, and shall be responded to by the health care
service plan in the same manner, as a request for prior authorization
for prescription drugs.
(b) The department and the Department of Insurance shall include a
provision for step therapy exception requests in the uniform prior
authorization form developed pursuant to subdivision (b) of Section
1367.241.
SEC. 4. Section 1368 of the Health and Safety
Code is amended to read:
1368. (a) Every plan shall do all of the following:
(1) Establish and maintain a grievance system approved by the
department under which enrollees may submit their grievances to the
plan. Each system shall provide reasonable procedures in accordance
with department regulations that shall ensure adequate consideration
of enrollee grievances and rectification when appropriate.
(2) Inform its subscribers and enrollees upon enrollment in the
plan and annually thereafter of the procedure for processing and
resolving grievances. The information shall include the location and
telephone number where grievances may be submitted.
(3) Provide forms for grievances to be given to subscribers and
enrollees who wish to register written grievances. The forms used by
plans licensed pursuant to Section 1353 shall be approved by the
director in advance as to format.
(4) (A) Provide for a written acknowledgment within five calendar
days of the receipt of a grievance, except as noted in subparagraph
(B). The acknowledgment shall advise the complainant of the
following:
(i) That the grievance has been received.
(ii) The date of receipt.
(iii) The name of the plan representative and the telephone number
and address of the plan representative who may be contacted about
the grievance.
(B) Grievances received by telephone, by facsimile, by email, or
online through the plan's Internet Web site pursuant to Section
1368.015, that are not coverage disputes, disputed health care
services involving medical necessity, or experimental or
investigational treatment and that are resolved by the next business
day following receipt are exempt from the requirements of
subparagraph (A) and paragraph (5). The plan shall maintain a log of
all these grievances. The log shall be periodically reviewed by the
plan and shall include the following information for each complaint:
(i) The date of the call.
(ii) The name of the complainant.
(iii) The complainant's member identification number.
(iv) The nature of the grievance.
(v) The nature of the resolution.
(vi) The name of the plan representative who took the call and
resolved the grievance.
(5) Provide subscribers and enrollees with written responses to
grievances, with a clear and concise explanation of the reasons for
the plan's response. For grievances involving the delay, denial, or
modification of health care services, the plan response shall
describe the criteria used and the clinical reasons for its decision,
including all criteria and clinical reasons related to medical
necessity. If a plan, or one of its contracting providers, issues a
decision delaying, denying, or modifying health care services based
in whole or in part on a finding that the proposed health care
services are not a covered benefit under the contract that applies to
the enrollee, the decision shall clearly specify the provisions in
the contract that exclude that coverage.
(6) For grievances involving the cancellation, rescission, or
nonrenewal of a health care service plan contract, the health care
service plan shall continue to provide coverage to the enrollee or
subscriber under the terms of the health care service plan contract
until a final determination of the enrollee's or subscriber's request
for review has been made by the health care service plan or the
director pursuant to Section 1365 and this section. This paragraph
shall not apply if the health care service plan cancels or fails to
renew the enrollee's or subscriber's health care service plan
contract for nonpayment of premiums pursuant to paragraph (1) of
subdivision (a) of Section 1365.
(7) Keep in its files all copies of grievances, and the responses
thereto, for a period of five years.
(b) (1) (A) After either completing the grievance process
described in subdivision (a), participating in the process for at
least 30 days, or completing the external review process described in
subdivision (b) of Section 1367.24, a subscriber or enrollee may
submit the grievance or external review decision to the department
for review. In any case under the grievance process determined by the
department to be a case involving an imminent and serious threat to
the health of the patient, including, but not limited to, severe
pain, the potential loss of life, limb, or major bodily function,
cancellations, rescissions, or the nonrenewal of a health care
service plan contract, or in any other case where the department
determines that an earlier review is warranted, a subscriber or
enrollee shall not be required to complete the grievance process or
to participate in the process for at least 30 days before submitting
a grievance to the department for review.
(B) A grievance or external review decision may be submitted to
the department for review and resolution prior to any arbitration.
(C) Notwithstanding subparagraphs (A) and (B), the department may
refer any grievance or external review decision that does not pertain
to compliance with this chapter to the State Department of Public
Health, the California Department of Aging, the federal Centers for
Medicare and Medicaid Services, or any other appropriate governmental
entity for investigation and resolution.
(2) If the subscriber or enrollee is a minor, or is incompetent or
incapacitated, the parent, guardian, conservator, relative, or other
designee of the subscriber or enrollee, as appropriate, may submit
the grievance or external review decision to the department as the
agent of the subscriber or enrollee. Further, a provider may join
with, or otherwise assist, a subscriber or enrollee, or the agent, to
submit the grievance or external review decision to the department.
In addition, following submission of the grievance or external review
decision to the department, the subscriber or enrollee, or the
agent, may authorize the provider to assist, including advocating on
behalf of the subscriber or enrollee. For purposes of this section, a
"relative" includes the parent, stepparent, spouse, adult son or
daughter, grandparent, brother, sister, uncle, or aunt of the
subscriber or enrollee.
(3) The department shall review the written documents submitted
with the subscriber's or the enrollee's request for review, or
submitted by the agent on behalf of the subscriber or enrollee. The
department may ask for additional information, and may hold an
informal meeting with the involved parties, including providers who
have joined in submitting the grievance or external review decision
or who are otherwise assisting or advocating on behalf of the
subscriber or enrollee. If after reviewing the record, the department
concludes that the grievance or external review decision, in whole
or in part, is eligible for review under the independent medical
review system established pursuant to Article 5.55 (commencing with
Section 1374.30), the department shall immediately notify the
subscriber or enrollee, or agent, of that option and shall, if
requested orally or in writing, assist the subscriber or enrollee in
participating in the independent medical review system.
(4) If after reviewing the record of a grievance or external
review decision, the department concludes that a health care service
eligible for coverage and payment under a health care service plan
contract has been delayed, denied, or modified by a plan, or by one
of its contracting providers, in whole or in part due to a
determination that the service is not medically necessary, and that
determination was not communicated to the enrollee in writing along
with a notice of the enrollee's potential right to participate in the
independent medical review system, as required by this chapter, the
director shall, by order, assess administrative penalties. A
proceeding for the issuance of an order assessing administrative
penalties shall be subject to appropriate notice of, and the
opportunity for, a hearing with regard to the person affected in
accordance with Section 1397. The administrative penalties shall not
be deemed an exclusive remedy available to the director. These
penalties shall be paid to the Managed Care Administrative Fines and
Penalties Fund and shall be used for the purposes specified in
Section 1341.45.
(5) The department shall send a written notice of the final
disposition of the grievance or external review decision, and the
reasons therefor, to the subscriber or enrollee, the agent, to any
provider that has joined with or is otherwise assisting the
subscriber or enrollee, and to the plan, within 30 calendar days of
receipt of the request for review unless the director, in his or her
discretion, determines that additional time is reasonably necessary
to fully and fairly evaluate the relevant grievance or external
review decision. In any case not eligible for the independent medical
review system established pursuant to Article 5.55 (commencing with
Section 1374.30), the department's written notice shall include, at a
minimum, the following:
(A) A summary of its findings and the reasons why the department
found the plan to be, or not to be, in compliance with any applicable
laws, regulations, or orders of the director.
(B) A discussion of the department's contact with any medical
provider, or any other independent expert relied on by the
department, along with a summary of the views and qualifications of
that provider or expert.
(C) If the enrollee's grievance or external review decision is
sustained in whole or in part, information about any corrective
action taken.
(6) In any department review of a grievance or external review
decision involving a disputed health care service, as defined in
subdivision (b) of Section 1374.30, that is not eligible for the
independent medical review system established pursuant to Article
5.55 (commencing with Section 1374.30), in which the department finds
that the plan has delayed, denied, or modified health care services
that are medically necessary, based on the specific medical
circumstances of the enrollee, and those services are a covered
benefit under the terms and conditions of the health care service
plan contract, the department's written notice shall do either of the
following:
(A) Order the plan to promptly offer and provide those health care
services to the enrollee.
(B) Order the plan to promptly reimburse the enrollee for any
reasonable costs associated with urgent care or emergency services,
or other extraordinary and compelling health care services, when the
department finds that the enrollee's decision to secure those
services outside of the plan network was reasonable under the
circumstances.
The department's order shall be binding on the plan.
(7) Distribution of the written notice shall not be deemed a
waiver of any exemption or privilege under existing law, including,
but not limited to, Section 6254.5 of the Government Code, for any
information in connection with and including the written notice, nor
shall any person employed or in any way retained by the department be
required to testify as to that information or notice.
(8) The director shall establish and maintain a system of aging of
grievances that are pending and unresolved for 30 days or more that
shall include a brief explanation of the reasons each grievance is
pending and unresolved for 30 days or more.
(9) A subscriber or enrollee, or the agent acting on behalf of a
subscriber or enrollee, may also request voluntary mediation with the
plan prior to exercising the right to submit a grievance or external
review decision to the department. The use of mediation services
shall not preclude the right to submit a grievance or external review
decision to the department upon completion of mediation. In order to
initiate mediation, the subscriber or enrollee, or the agent acting
on behalf of the subscriber or enrollee, and the plan shall
voluntarily agree to mediation. Expenses for mediation shall be borne
equally by both sides. The department shall have no administrative
or enforcement responsibilities in connection with the voluntary
mediation process authorized by this paragraph.
(c) The plan's grievance system shall include a system of aging of
grievances that are pending and unresolved for 30 days or more. The
plan shall provide a quarterly report to the director of grievances
pending and unresolved for 30 or more days with separate categories
of grievances for Medicare enrollees and Medi-Cal enrollees. The plan
shall include with the report a brief explanation of the reasons
each grievance is pending and unresolved for 30 days or more. The
plan may include the following statement in the quarterly report that
is made available to the public by the director:
"Under Medicare and Medi-Cal law, Medicare enrollees and Medi-Cal
enrollees each have separate avenues of appeal that are not available
to other enrollees. Therefore, grievances pending and unresolved may
reflect enrollees pursuing their Medicare or Medi-Cal appeal rights."
If requested by a plan, the director shall include this statement in
a written report made available to the public and prepared by the
director that describes or compares grievances that are pending and
unresolved with the plan for 30 days or more. Additionally, the
director shall, if requested by a plan, append to that written report
a brief explanation, provided in writing by the plan, of the reasons
why grievances described in that written report are pending and
unresolved for 30 days or more. The director shall not be required to
include a statement or append a brief explanation to a written
report that the director is required to prepare under this chapter,
including Sections 1380 and 1397.5.
(d) Subject to subparagraph (C) of paragraph (1) of subdivision
(b), the grievance or resolution procedures authorized by this
section shall be in addition to any other procedures that may be
available to any person, and failure to pursue, exhaust, or engage in
the procedures described in this section shall not preclude the use
of any other remedy provided by law.
(e) Nothing in this section shall be construed to allow the
submission to the department of any provider grievance under this
section. However, as part of a provider's duty to advocate for
medically appropriate health care for his or her patients pursuant to
Sections 510 and 2056 of the Business and Professions Code, nothing
in this subdivision shall be construed to prohibit a provider from
contacting and informing the department about any concerns he or she
has regarding compliance with or enforcement of this chapter.
(f) To the extent required by Section 2719 of the federal Public
Health Service Act (42 U.S.C. Sec. 300gg-19) and any subsequent rules
or regulations, there shall be an independent external review
pursuant to the standards required by the United States Secretary of
Health and Human Services of a health care service plan's
cancellation, rescission, or nonrenewal of an enrollee's or
subscriber's coverage.
SEC. 5. Section 1368.01 of the Health and
Safety Code is amended to read:
1368.01. (a) The grievance system shall require the plan to
resolve grievances within 30 days.
(b) The grievance system shall include a requirement for
expedited plan review of grievances for cases involving an imminent
and serious threat to the health of the patient, including, but not
limited to, severe pain, potential loss of life, limb, or major
bodily function. When the plan has notice of a case requiring
expedited review, the grievance system shall require the plan to
immediately inform enrollees and subscribers in writing of their
right to notify the department of the grievance. The grievance system
shall also require the plan to provide enrollees, subscribers, and
the department with a written statement on the disposition or pending
status of the grievance no later than three days from receipt of the
grievance. Paragraph (4) of subdivision (a) of Section 1368 shall
not apply to grievances handled pursuant to this section.
SEC. 6. Section 1374.30 of the Health and
Safety Code is amended to read:
1374.30. (a) Commencing January 1, 2001, there is hereby
established in the department the Independent Medical Review System.
(b) For the purposes of this chapter, "disputed health care
service" means any health care service eligible for coverage and
payment under a health care service plan contract that has been
denied, modified, or delayed by a decision of the plan, or by one of
its contracting providers, in whole or in part due to a finding that
the service is not medically necessary. A decision regarding a
disputed health care service relates to the practice of medicine and
is not a coverage decision. A disputed health care service does not
include services provided by a specialized health care service plan,
except to the extent that the service (1) involves the practice of
medicine, or (2) is provided pursuant to a contract with a health
care service plan that covers hospital, medical, or surgical
benefits. If a plan, or one of its contracting providers, issues a
decision denying, modifying, or delaying health care services, based
in whole or in part on a finding that the proposed health care
services are not a covered benefit under the contract that applies to
the enrollee, the statement of decision shall clearly specify the
provision in the contract that excludes that coverage.
(c) For the purposes of this chapter, "coverage decision" means
the approval or denial of health care services by a plan, or by one
of its contracting entities, substantially based on a finding that
the provision of a particular service is included or excluded as a
covered benefit under the terms and conditions of the health care
service plan contract. A "coverage decision" does not encompass a
plan or contracting provider decision regarding a disputed health
care service.
(d) (1) All enrollee grievances involving a disputed health care
service are eligible for review under the Independent Medical Review
System if the requirements of this article are met. If the department
finds that an enrollee grievance involving a disputed health care
service does not meet the requirements of this article for review
under the Independent Medical Review System, the enrollee request for
review shall be treated as a request for the department to review
the grievance pursuant to subdivision (b) of Section 1368. All other
enrollee grievances, including grievances involving coverage
decisions, remain eligible for review by the department pursuant to
subdivision (b) of Section 1368.
(2) In any case in which an enrollee or provider asserts that a
decision to deny, modify, or delay health care services was based, in
whole or in part, on consideration of medical necessity, the
department shall have the final authority to determine whether the
grievance is more properly resolved pursuant to an independent
medical review as provided under this article or pursuant to
subdivision (b) of Section 1368.
(3) The department shall be the final arbiter when there is a
question as to whether an enrollee grievance is a disputed health
care service or a coverage decision. The department shall establish a
process to complete an initial screening of an enrollee grievance.
If there appears to be any medical necessity issue, the grievance
shall be resolved pursuant to an independent medical review as
provided under this article or pursuant to subdivision (b) of Section
1368.
(e) Every health care service plan contract that is issued,
amended, renewed, or delivered in this state on or after January 1,
2000, shall provide an enrollee with the opportunity to seek an
independent medical review whenever health care services have been
denied, modified, or delayed by the plan, or by one of its
contracting providers, if the decision was based in whole or in part
on a finding that the proposed health care services are not medically
necessary. For purposes of this article, an enrollee may designate
an agent to act on his or her behalf, as described in paragraph (2)
of subdivision (b) of Section 1368. The provider may join with or
otherwise assist the enrollee in seeking an independent medical
review, and may advocate on behalf of the enrollee.
(f) Medi-Cal beneficiaries enrolled in a health care service plan
shall not be excluded from participation. Medicare beneficiaries
enrolled in a health care service plan shall not be excluded unless
expressly preempted by federal law. Reviews of cases for Medi-Cal
enrollees shall be conducted in accordance with statutes and
regulations for the Medi-Cal program.
(g) The department may seek to integrate the quality of care and
consumer protection provisions, including remedies, of the
Independent Medical Review System with related dispute resolution
procedures of other health care agency programs, including the
Medicare and Medi-Cal programs, in a way that minimizes the potential
for duplication, conflict, and added costs. Nothing in this
subdivision shall be construed to limit any rights conferred upon
enrollees under this chapter.
(h) The independent medical review process authorized by this
article is in addition to any other procedures or remedies that may
be available.
(i) Every health care service plan shall prominently display in
every plan member handbook or relevant informational brochure, in
every plan contract, on enrollee evidence of coverage forms, on
copies of plan procedures for resolving grievances, on letters of
denials issued by either the plan or its contracting organization, on
the grievance forms required under Section 1368, and on all written
responses to grievances, information concerning the right of an
enrollee to request an independent medical review in cases where the
enrollee believes that health care services have been improperly
denied, modified, or delayed by the plan, or by one of its
contracting providers.
(j) An enrollee may apply to the department for an independent
medical review when all of the following conditions are met:
(1) (A) The enrollee's provider has recommended a health care
service as medically necessary, or
(B) The enrollee has received urgent care or emergency services
that a provider determined was medically necessary, or
(C) The enrollee, in the absence of a provider recommendation
under subparagraph (A) or the receipt of urgent care or emergency
services by a provider under subparagraph (B), has been seen by an
in-plan provider for the diagnosis or treatment of the medical
condition for which the enrollee seeks independent review. The plan
shall expedite access to an in-plan provider upon request of an
enrollee. The in-plan provider need not recommend the disputed health
care service as a condition for the enrollee to be eligible for an
independent review.
For purposes of this article, the enrollee's provider may be an
out-of-plan provider. However, the plan shall have no liability for
payment of services provided by an out-of-plan provider, except as
provided pursuant to subdivision (c) of Section 1374.34.
(2) The disputed health care service has been denied, modified, or
delayed by the plan, or by one of its contracting providers, based
in whole or in part on a decision that the health care service is not
medically necessary.
(3) (A) The enrollee has filed a grievance with the plan or its
contracting provider pursuant to Section 1368, and the disputed
decision is upheld or the grievance remains unresolved after 30 days.
The enrollee shall not be required to participate in the plan's
grievance process for more than 30 days. In the case of a grievance
that requires expedited review pursuant to Section 1368.01, the
enrollee shall not be required to participate in the plan's grievance
process for more than three days, or
(B) The enrollee has filed for an external review decision with
the plan or its contracting provider pursuant to subdivision (b) of
Section 1367.24, and the disputed decision is upheld or the external
review remains unresolved after 72 hours, or 24 hours if exigent
circumstances exist.
(k) An enrollee may apply to the department for an independent
medical review of a decision to deny, modify, or delay health care
services, based in whole or in part on a finding that the disputed
health care services are not medically necessary, within six months
of any of the qualifying periods or events under subdivision (j). The
director may extend the application deadline beyond six months if
the circumstances of a case warrant the extension.
(l) The enrollee shall pay no application or processing fees of
any kind.
(m) As part of its notification to the enrollee regarding a
disposition of the enrollee's grievance that denies, modifies, or
delays health care services, the plan shall provide the enrollee with
a one- or two-page application form approved by the department, and
an addressed envelope, which the enrollee may return to initiate an
independent medical review. The plan shall include on the form any
information required by the department to facilitate the completion
of the independent medical review, such as the enrollee's diagnosis
or condition, the nature of the disputed health care service sought
by the enrollee, a means to identify the enrollee's case, and any
other material information. The form shall also include the
following:
(1) Notice that a decision not to participate in the independent
medical review process may cause the enrollee to forfeit any
statutory right to pursue legal action against the plan regarding the
disputed health care service.
(2) A statement indicating the enrollee's consent to obtain any
necessary medical records from the plan, any of its contracting
providers, and any out-of-plan provider the enrollee may have
consulted on the matter, to be signed by the enrollee.
(3) Notice of the enrollee's right to provide information or
documentation, either directly or through the enrollee's provider,
regarding any of the following:
(A) A provider recommendation indicating that the disputed health
care service is medically necessary for
the enrollee's medical condition.
(B) Medical information or justification that a disputed health
care service, on an urgent care or emergency basis, was medically
necessary for the enrollee's medical condition.
(C) Reasonable information supporting the enrollee's position that
the disputed health care service is or was medically necessary for
the enrollee's medical condition, including all information provided
to the enrollee by the plan or any of its contracting providers,
still in the possession of the enrollee, concerning a plan or
provider decision regarding disputed health care services, and a copy
of any materials the enrollee submitted to the plan, still in the
possession of the enrollee, in support of the grievance, as well as
any additional material that the enrollee believes is relevant.
(4) A section designed to collect information on the enrollee's
ethnicity, race, and primary language spoken that includes both of
the following:
(A) A statement of intent indicating that the information is used
for statistics only, in order to ensure that all enrollees get the
best care possible.
(B) A statement indicating that providing this information is
optional and will not affect the independent medical review process
in any way.
(n) Upon notice from the department that the health care service
plan's enrollee has applied for an independent medical review, the
plan or its contracting providers shall provide to the independent
medical review organization designated by the department a copy of
all of the following documents within three business days of the plan'
s receipt of the department's notice of a request by an enrollee for
an independent review:
(1) (A) A copy of all of the enrollee's medical records in the
possession of the plan or its contracting providers relevant to each
of the following:
(i) The enrollee's medical condition.
(ii) The health care services being provided by the plan and its
contracting providers for the condition.
(iii) The disputed health care services requested by the enrollee
for the condition.
(B) Any newly developed or discovered relevant medical records in
the possession of the plan or its contracting providers after the
initial documents are provided to the independent medical review
organization shall be forwarded immediately to the independent
medical review organization. The plan shall concurrently provide a
copy of medical records required by this subparagraph to the enrollee
or the enrollee's provider, if authorized by the enrollee, unless
the offer of medical records is declined or otherwise prohibited by
law. The confidentiality of all medical record information shall be
maintained pursuant to applicable state and federal laws.
(2) A copy of all information provided to the enrollee by the plan
and any of its contracting providers concerning plan and provider
decisions regarding the enrollee's condition and care, and a copy of
any materials the enrollee or the enrollee's provider submitted to
the plan and to the plan's contracting providers in support of the
enrollee's request for disputed health care services. This
documentation shall include the written response to the enrollee's
grievance, required by paragraph (4) of subdivision (a) of Section
1368. The confidentiality of any enrollee medical information shall
be maintained pursuant to applicable state and federal laws.
(3) A copy of any other relevant documents or information used by
the plan or its contracting providers in determining whether disputed
health care services should have been provided, and any statements
by the plan and its contracting providers explaining the reasons for
the decision to deny, modify, or delay disputed health care services
on the basis of medical necessity. The plan shall concurrently
provide a copy of documents required by this paragraph, except for
any information found by the director to be legally privileged
information, to the enrollee and the enrollee's provider. The
department and the independent medical review organization shall
maintain the confidentiality of any information found by the director
to be the proprietary information of the plan.
SEC. 7. Section 10123.190 is added to the
Insurance Code, immediately following Section 10123.19, to read:
10123.190. (a) (1) Every health insurer that provides
prescription drug benefits shall maintain an expeditious process, as
described in this subdivision, by which insureds, insureds'
designees, or prescribing providers may request and obtain
authorization for medically necessary nonformulary prescription drugs
and medically necessary formulary drugs that require prior
authorization by the health insurer. The health insurer shall provide
that the insured, the insured's designee, or the insured's
prescribing provider may seek a prior authorization for a
prescription drug under this subdivision.
(2) Each health insurer shall respond to a prior authorization
request within 72 hours following receipt of the prior authorization
request. A health insurer that grants a prior authorization request
under this paragraph shall provide coverage of the prescription drug
for the duration of the prescription, including refills.
(3) Each health insurer shall provide that a prior authorization
may be obtained within 24 hours if an insured is suffering from a
health condition that may seriously jeopardize the insured's life,
health, or ability to regain maximum function or if an insured is
undergoing a current course of treatment using a nonformulary drug. A
health insurer that grants a prior authorization request under this
paragraph based on exigent circumstances shall provide coverage of
the prescription drug for the duration of the exigency.
(4) If a health insurer fails to respond within 72 hours for a
prior authorization request, or within 24 hours if exigent
circumstances exist, upon receipt of a completed prior authorization
request, the prior authorization request shall be deemed to have been
granted.
(5) Each health insurer shall provide a written description of the
process described in paragraph (1) to its prescribing providers. For
purposes of this section, a prescribing provider shall include a
provider authorized to write a prescription, pursuant to subdivision
(a) of Section 4040 of the Business and Professions Code, to treat a
medical condition of an insured.
(b) If a health insurer disapproves a prior authorization request
made pursuant to subdivision (a), the health insurer shall maintain
an expeditious process to authorize an insured to obtain an external
review.
(1) A determination on an external review shall be made no later
than 72 hours following receipt of the request, if the original
request was an authorization request under paragraph (2) of
subdivision (a), and no later than 24 hours following receipt of the
request, if the original request was an authorization request under
paragraph (3) of subdivision (a).
(2) If an external review decision of a prior authorization
request under paragraph (2) of subdivision (a) is granted, the health
insurer shall provide coverage of the prescription drug for the
duration of the prescription, including refills. If an external
review decision of a prior authorization request under paragraph (3)
of subdivision (a) is granted, the health insurer shall provide
coverage of the prescription drug for the duration of the exigency.
(c) Any health insurer that disapproves a request made pursuant to
subdivision (a) to obtain authorization for a nonformulary or
formulary drug shall provide the reasons for the disapproval in a
notice provided to the insured. The notice shall indicate that the
insured may file, in lieu of filing a grievance with the health
insurer, a request for an external review pursuant to subdivision (b)
if the insured objects to the disapproval, including any alternative
drug or treatment offered by the health insurer. If a health insurer
disapproves a request made pursuant to subdivision (a), an insured
shall not be required to file a grievance with the health insurer or
its contracting provider pursuant the grievance process established
by the health insurer.
(d) The process described in subdivisions (a) and (b) by which
insureds may obtain medically necessary nonformulary and formulary
drugs shall be described in the evidence of coverage or certificate
of insurance issued by the health insurer on or after July 1, 2017.
(e) A health insurance policy in the individual, small group, and
large group markets that provides coverage for outpatient
prescription drugs shall comply with this section.
(f) Nothing in this section shall be construed to affect an
insured's or policyholder's eligibility to submit a complaint to the
department for review or to apply to the department for an
independent medical review under Article 3.5 (commencing with Section
10169).
SEC. 8. Section 10123.191 of the Insurance Code
is amended to read:
10123.191. (a) Notwithstanding any other law, on and after
January 1, 2013, a health insurer that provides coverage for
prescription drugs shall utilize and accept only the prior
authorization form developed pursuant to subdivision (b), or an
electronic prior authorization process described in subdivision (d),
when requiring prior authorization for prescription drugs.
(b) On or before January 1, 2017, the department and the
Department of Managed Health Care shall jointly develop a uniform
prior authorization form. Notwithstanding any other law, on and after
July 1, 2017, or six months after the form is completed pursuant to
this section, whichever is later, every prescribing provider shall
use that uniform prior authorization form, or an electronic prior
authorization process described in subdivision (d), to request prior
authorization for coverage of prescription drugs and every health
insurer shall accept that form or electronic process as sufficient to
request prior authorization for prescription drugs.
(c) The prior authorization form developed pursuant to subdivision
(b) shall meet the following criteria:
(1) The form shall not exceed two pages.
(2) The form shall be made electronically available by the
department and the health insurer.
(3) The completed form may also be electronically submitted from
the prescribing provider to the health insurer.
(4) The department and the Department of Managed Health Care shall
develop the form with input from interested parties from at least
one public meeting.
(5) The department and the Department of Managed Health Care, in
development of the standardized form, shall take into consideration
the following:
(A) Existing prior authorization forms established by the federal
Centers for Medicare and Medicaid Services and the State Department
of Health Care Services.
(B) National standards pertaining to electronic prior
authorization.
(d) A prescribing provider may use an electronic prior
authorization system utilizing the standardized form described in
subdivision (b) or an electronic process developed specifically for
transmitting prior authorization information that meets the National
Council for Prescription Drug Programs' SCRIPT standard for
electronic prior authorization transactions.
(e) Subdivision (a) does not apply if any of the following occurs:
(1) A contracted physician group is delegated the financial risk
for the pharmacy or medical drug benefit by a health insurer.
(2) A contracted physician group uses its own internal prior
authorization process rather than the health insurer's prior
authorization process for the health insurer's insureds.
(3) A contracted physician group is delegated a utilization
management function by the health insurer concerning any prescription
drug, regardless of the delegation of financial risk.
(f) For prescription drugs, prior authorization requirements
described in subdivisions (b) and (d) apply regardless of how that
benefit is classified under the terms of the health insurer's group
or individual policy.
(g) For purposes of this section:
(1) "Prescribing provider" shall include a provider authorized to
write a prescription, pursuant to subdivision (a) of Section 4040 of
the Business and Professions Code, to treat a medical condition of an
insured.
(2) "Completed prior authorization request" means a completed
uniform prior authorization form developed pursuant to subdivision
(b), or a completed request submitted using an electronic prior
authorization system described in subdivision (d), or, for contracted
physician groups described in subdivision (e), the process used by
the contracted physician group.
SEC. 9. Section 10123.197 of the Insurance Code
is amended to read:
10123.197. (a) A request for an exception to a health insurer's
step therapy process for prescription drugs may be submitted in the
same manner as a request for prior authorization for prescription
drugs pursuant to Section 10123.190 and shall be treated in the same
manner, and shall be responded to by the health insurer in the same
manner, as a request for prior authorization for prescription drugs.
(b) The department and the Department of Managed Health Care shall
include a provision for step therapy exception requests in the
uniform prior authorization form developed pursuant to subdivision
(b) of Section 10123.191.
SEC. 10. Section 10169 of the Insurance Code,
as added by Section 19 of Chapter 348 of the Statutes of 2015, is
amended to read:
10169. (a) Commencing January 1, 2001, there is hereby
established in the department the Independent Medical Review System.
(b) For the purposes of this chapter, "disputed health care
service" means any health care service eligible for coverage and
payment under a disability insurance contract that has been denied,
modified, or delayed by a decision of the insurer, or by one of its
contracting providers, in whole or in part due to a finding that the
service is not medically necessary. A decision regarding a disputed
health care service relates to the practice of medicine and is not a
coverage decision. A disputed health care service does not include
services provided by a group or individual policy of vision-only or
dental-only coverage, except to the extent that (1) the service
involves the practice of medicine, or (2) is provided pursuant to a
contract with a disability insurer that covers hospital, medical, or
surgical benefits. If an insurer, or one of its contracting
providers, issues a decision denying, modifying, or delaying health
care services, based in whole or in part on a finding that the
proposed health care services are not a covered benefit under the
contract that applies to the insured, the statement of decision shall
clearly specify the provision in the contract that excludes that
coverage.
(c) For the purposes of this chapter, "coverage decision" means
the approval or denial of health care services by a disability
insurer, or by one of its contracting entities, substantially based
on a finding that the provision of a particular service is included
or excluded as a covered benefit under the terms and conditions of
the disability insurance contract. A coverage decision does not
encompass a disability insurer or contracting provider decision
regarding a disputed health care service.
(d) (1) All insured grievances involving a disputed health care
service are eligible for review under the Independent Medical Review
System if the requirements of this article are met. If the department
finds that an insured grievance involving a disputed health care
service does not meet the requirements of this article for review
under the Independent Medical Review System, the insured request for
review shall be treated as a request for the department to review the
grievance. All other insured grievances, including grievances
involving coverage decisions, remain eligible for review by the
department.
(2) In any case in which an insured or provider asserts that a
decision to deny, modify, or delay health care services was based, in
whole or in part, on consideration of medical necessity, the
department shall have the final authority to determine whether the
grievance is more properly resolved pursuant to an independent
medical review as provided under this article.
(3) The department shall be the final arbiter when there is a
question as to whether an insured grievance is a disputed health care
service or a coverage decision. The department shall establish a
process to complete an initial screening of an insured grievance. If
there appears to be any medical necessity issue, the grievance shall
be resolved pursuant to an independent medical review as provided
under this article.
(e) Every disability insurance contract that is issued, amended,
renewed, or delivered in this state on or after January 1, 2000,
shall provide an insured with the opportunity to seek an independent
medical review whenever health care services have been denied,
modified, or delayed by the insurer, or by one of its contracting
providers, if the decision was based in whole or in part on a finding
that the proposed health care services are not medically necessary.
For purposes of this article, an insured may designate an agent to
act on his or her behalf. The provider may join with or otherwise
assist the insured in seeking an independent medical review, and may
advocate on behalf of the insured.
(f) Medicare beneficiaries enrolled in Medicare + Choice products
shall not be excluded unless expressly preempted by federal law.
(g) The department may seek to integrate the quality of care and
consumer protection provisions, including remedies, of the
Independent Medical Review System with related dispute resolution
procedures of other health care agency programs, including the
Medicare program, in a way that minimizes the potential for
duplication, conflict, and added costs. Nothing in this subdivision
shall be construed to limit any rights conferred upon insureds under
this chapter.
(h) The independent medical review process authorized by this
article is in addition to any other procedures or remedies that may
be available.
(i) Every disability insurer shall prominently display in every
insurer member handbook or relevant informational brochure, in every
insurance contract, on insured evidence of coverage forms, on copies
of insurer procedures for resolving grievances, on letters of denials
issued by either the insurer or its contracting organization, and on
all written responses to grievances, information concerning the
right of an insured to request an independent medical review when the
insured believes that health care services have been improperly
denied, modified, or delayed by the insurer, or by one of its
contracting providers. The department's telephone number,
1-800-927-4357, and Internet Web site, www.insurance.ca.gov, shall
also be displayed.
(j) An insured may apply to the department for an independent
medical review when all of the following conditions are met:
(1) (A) The insured's provider has recommended a health care
service as medically necessary, or
(B) The insured has received urgent care or emergency services
that a provider determined was medically necessary, or
(C) The insured, in the absence of a provider recommendation under
subparagraph (A) or the receipt of urgent care or emergency services
by a provider under subparagraph (B), has been seen by a contracting
provider for the diagnosis or treatment of the medical condition for
which the insured seeks independent review. The insurer shall
expedite access to a contracting provider upon request of an insured.
The contracting provider need not recommend the disputed health care
service as a condition for the insured to be eligible for an
independent review.
For purposes of this article, the insured's provider may be a
noncontracting provider. However, the insurer shall have no liability
for payment of services provided by a noncontracting provider,
except as provided pursuant to Section 10169.3.
(2) The disputed health care service has been denied, modified, or
delayed by the insurer, or by one of its contracting providers,
based in whole or in part on a decision that the health care service
is not medically necessary.
(3) (A) The insured has filed a grievance with the insurer or its
contracting provider, and the disputed decision is upheld or the
grievance remains unresolved after 30 days. The insured shall not be
required to participate in the insurer's grievance process for more
than 30 days. In the case of a grievance that requires expedited
review, the insured shall not be required to participate in the
insurer's grievance process for more than three days, or
(B) The insured has filed for an external review decision with the
insurer or its contracting provider pursuant to subdivision (b) of
Section 10123.190, and the disputed decision is upheld or the
external review remains unresolved after 72 hours, or 24 hours if
exigent circumstances exist.
(k) An insured may apply to the department for an independent
medical review of a decision to deny, modify, or delay health care
services, based in whole or in part on a finding that the disputed
health care services are not medically necessary, within six months
of any of the qualifying periods or events under subdivision (j). The
commissioner may extend the application deadline beyond six months
if the circumstances of a case warrant the extension.
( l ) The insured shall pay no application or
processing fees of any kind.
(m) As part of its notification to the insured regarding a
disposition of the insured's grievance that denies, modifies, or
delays health care services, the insurer shall provide the insured
with a one- or two-page application form approved by the department,
and an addressed envelope, which the insured may return to initiate
an independent medical review. The insurer shall include on the form
any information required by the department to facilitate the
completion of the independent medical review, such as the insured's
diagnosis or condition, the nature of the disputed health care
service sought by the insured, a means to identify the insured's
case, and any other material information. The form shall also include
the following:
(1) Notice that a decision not to participate in the independent
review process may cause the insured to forfeit any statutory right
to pursue legal action against the insurer regarding the disputed
health care service.
(2) A statement indicating the insured's consent to obtain any
necessary medical records from the insurer, any of its contracting
providers, and any noncontracting provider the insured may have
consulted on the matter, to be signed by the insured.
(3) Notice of the insured's right to provide information or
documentation, either directly or through the insured's provider,
regarding any of the following:
(A) A provider recommendation indicating that the disputed health
care service is medically necessary for the insured's medical
condition.
(B) Medical information or justification that a disputed health
care service, on an urgent care or emergency basis, was medically
necessary for the insured's medical condition.
(C) Reasonable information supporting the insured's position that
the disputed health care service is or was medically necessary for
the insured's medical condition, including all information provided
to the insured by the
insurer or any of its contracting providers, still in the possession
of the insured, concerning an insurer or provider decision regarding
disputed health care services, and a copy of any materials the
insured submitted to the insurer, still in the possession of the
insured, in support of the grievance, as well as any additional
material that the insured believes is relevant.
(4) A section designed to collect information on the insured's
ethnicity, race, and primary language spoken that includes both of
the following:
(A) A statement of intent indicating that the information is used
for statistics only, in order to ensure that all insureds get the
best care possible.
(B) A statement indicating that providing this information is
optional and will not affect the independent medical review process
in any way.
(n) Upon notice from the department that the insured has applied
for an independent medical review, the insurer or its contracting
providers, shall provide to the independent medical review
organization designated by the department a copy of all of the
following documents within three business days of the insurer's
receipt of the department's notice of a request by an insured for an
independent review:
(1) (A) A copy of all of the insured's medical records in the
possession of the insurer or its contracting providers relevant to
each of the following:
(i) The insured's medical condition.
(ii) The health care services being provided by the insurer and
its contracting providers for the condition.
(iii) The disputed health care services requested by the insured
for the condition.
(B) Any newly developed or discovered relevant medical records in
the possession of the insurer or its contracting providers after the
initial documents are provided to the independent medical review
organization shall be forwarded immediately to the independent
medical review organization. The insurer shall concurrently provide a
copy of medical records required by this subparagraph to the insured
or the insured's provider, if authorized by the insured, unless the
offer of medical records is declined or otherwise prohibited by law.
The confidentiality of all medical record information shall be
maintained pursuant to applicable state and federal laws.
(2) A copy of all information provided to the insured by the
insurer and any of its contracting providers concerning insurer and
provider decisions regarding the insured's condition and care, and a
copy of any materials the insured or the insured's provider submitted
to the insurer and to the insurer's contracting providers in support
of the insured's request for disputed health care services. This
documentation shall include the written response to the insured's
grievance. The confidentiality of any insured medical information
shall be maintained pursuant to applicable state and federal laws.
(3) A copy of any other relevant documents or information used by
the insurer or its contracting providers in determining whether
disputed health care services should have been provided, and any
statements by the insurer and its contracting providers explaining
the reasons for the decision to deny, modify, or delay disputed
health care services on the basis of medical necessity. The insurer
shall concurrently provide a copy of documents required by this
paragraph, except for any information found by the commissioner to be
legally privileged information, to the insured and the insured's
provider. The department and the independent medical review
organization shall maintain the confidentiality of any information
found by the commissioner to be the proprietary information of the
insurer.
SEC. 11. No reimbursement is required by this
act pursuant to Section 6 of Article XIII B of the California
Constitution because the only costs that may be incurred by a local
agency or school district will be incurred because this act creates a
new crime or infraction, eliminates a crime or infraction, or
changes the penalty for a crime or infraction, within the meaning of
Section 17556 of the Government Code, or changes the definition of a
crime within the meaning of Section 6 of Article XIII B of the
California Constitution.