Amended in Senate April 9, 2015

Senate BillNo. 282


Introduced by Senator Hernandez

February 19, 2015


An act to amend Section 1367.241 of the Health and Safety Code, and to amend Section 10123.191 of the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

SB 282, as amended, Hernandez. Health care coverage: prescription drugs.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the 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. Commonly referred to as utilization review, existing law governs the procedures that apply to every health care service plan and health insurer that prospectively, retrospectively, or concurrently reviews and approves, modifies, delays, or denies, based on medical necessity, requests by providers prior to, retrospectively, or concurrent with, the provision of health care services to enrollees or insureds, as specified. Existing law requires every prescribing provider, as defined, when requesting prior authorization for prescription drug benefits, to submit a prior authorization form developed jointly by the Department of Managed Health Care and the Department of Insurance to the health care service plan or health insurer, and requires those plans and insurers to accept only those prior authorization forms for prescription drug benefits. Existing law authorizes a prescribing provider to submit the form electronically to the plan or insurer.

This bill would authorize the prescribing provider to additionally use an electronic process developed specifically for transmitting prior authorization information that is consistent with the standardized form described above and that meets the National Council for Prescription Drug Programs’ SCRIPTbegin insert standard forend insert electronic prior authorizationbegin delete standards.end deletebegin insert transactions.end insert To the extent that the bill would thereby require plans and insurers to accept that form of submission, the bill would expand the scope of a crime and would impose a state-mandated local program.begin insert The bill would specify that the provisions described above relating to prior authorization for prescription drug benefits do not apply if a contracted network physician group is delegated the financial risk for the pharmacy or medical drug benefit by a health care service plan or health insurer, if a contracted network physician group uses its own internal prior authorization process rather than the health care service plan’s or the health insurer’s prior authorization process for its enrollees or insureds, or if a contracted network physician group is delegated a utilization management function by the health care service plan or the health insurer concerning any pharmacy or medical drug benefit, regardless of the delegation of financial risk.end insert

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:

P2    1

SECTION 1.  

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

3

1367.241.  

(a) Notwithstanding any other provision of law, on
4and after January 1, 2013, a health care service plan that provides
5prescription drug benefits shall accept only the prior authorization
6form developed pursuant to subdivision (c), or an electronic prior
7authorization process described in subdivision (e), when requiring
8prior authorization for prescription drug benefits. This section does
9not apply in the event that a physician or physician group has been
P3    1delegated the financial risk for prescription drugs by a health care
2service plan and does not use a prior authorization process. This
3section does not apply to a health care service plan, or to its
4affiliated providers, if the health care service plan owns and
5operates its pharmacies and does not use a prior authorization
6process for prescription drugs.

7(b) If a health care service plan fails to utilize or accept the prior
8authorization form, or fails to respond within two business days
9upon receipt of a completed prior authorization request from a
10prescribing provider, pursuant to the submission of the prior
11authorization form developed as described in subdivision (c), or
12an electronic prior authorization process described in subdivision
13(e), the prior authorization request shall be deemed to have been
14granted. The requirements of this subdivision shall not apply to
15contracts entered into pursuant to Article 2.7 (commencing with
16Section 14087.3), Article 2.8 (commencing with Section 14087.5),
17Article 2.81 (commencing with Section 14087.96), or Article 2.91
18(commencing with Section 14089) of Chapter 7 of, or Chapter 8
19(commencing with Section 14200) of, Part 3 of Division 9 of the
20Welfare and Institutions Code.

21(c) On or before July 1, 2012, the department and the
22Department of Insurance shall jointly develop a uniform prior
23authorization form. Notwithstanding any other provision of law,
24on and after January 1, 2013, or six months after the form is
25developed, whichever is later, every prescribing provider shall use
26that uniform prior authorization form, or an electronic prior
27authorization process described in subdivision (e), to request prior
28authorization for coverage of prescription drug benefits and every
29health care service plan shall accept that form as sufficient to
30request prior authorization for prescription drug benefits.

31(d) The prior authorization form developed pursuant to
32subdivision (c) shall meet the following criteria:

33(1) The form shall not exceed two pages.

34(2) The form shall be made electronically available by the
35department and the health care service plan.

36(3) The completed form may also be electronically submitted
37from the prescribing provider to the health care service plan.

38(4) The department and the Department of Insurance shall
39develop the form with input from interested parties from at least
40one public meeting.

P4    1(5) The department and the Department of Insurance, in
2development of the standardized form, shall take into consideration
3the following:

4(A) Existing prior authorization forms established by the federal
5Centers for Medicare and Medicaid Services and the State
6Department of Health Care Services.

7(B) National standards pertaining to electronic prior
8authorization.

9(e) A prescribing provider may use an electronic prior
10authorization system utilizing the standardized form described in
11subdivision (c) or an electronic process developed specifically for
12transmitting prior authorization information that is consistent with
13the standardized form described in subdivision (c) and that meets
14begin insert theend insert National Council for Prescription Drug Programs’ SCRIPT
15begin insert standard forend insert electronic prior authorizationbegin delete standards.end deletebegin insert transactions.end insert

begin insert

16(f) This section does not apply if any of the following occurs:

end insert
begin insert

17(1) A contracted network physician group is delegated the
18financial risk for the pharmacy or medical drug benefit by a health
19care service plan.

end insert
begin insert

20(2) A contracted network physician group uses its own internal
21prior authorization process rather than the health care service
22plan’s prior authorization process for plan enrollees.

end insert
begin insert

23(3) A contracted network physician group is delegated a
24utilization management function by the health care service plan
25concerning any pharmacy or medical drug benefit, regardless of
26the delegation of financial risk.

end insert
begin delete

27(f)

end delete

28begin insert(g)end insert For purposes of this section, a “prescribing provider” shall
29include a provider authorized to write a prescription, pursuant to
30subdivision (a) of Section 4040 of the Business and Professions
31Code, to treat a medical condition of an enrollee.

32

SEC. 2.  

Section 10123.191 of the Insurance Code is amended
33to read:

34

10123.191.  

(a) Notwithstanding any other provision of law,
35on and after January 1, 2013, a health insurer that provides
36prescription drug benefits shall utilize and accept only the prior
37authorization form developed pursuant to subdivision (c), or an
38electronic prior authorization process described in subdivision (e),
39when requiring prior authorization for prescription drug benefits.

P5    1(b) If a health insurer fails to utilize or accept the prior
2authorization form, or fails to respond within two business days
3upon receipt of a completed prior authorization request from a
4prescribing provider, pursuant to the submission of the prior
5authorization form developed as described in subdivision (c), or
6an electronic prior authorization process described in subdivision
7(e), the prior authorization request shall be deemed to have been
8granted. The requirements of this subdivision shall not apply to
9contracts entered into pursuant to Article 2.7 (commencing with
10Section 14087.3), Article 2.8 (commencing with Section 14087.5),
11Article 2.81 (commencing with Section 14087.96), or Article 2.91
12(commencing with Section 14089) of Chapter 7 of, or Chapter 8
13(commencing with Section 14200) of, Part 3 of Division 9 of the
14Welfare and Institutions Code.

15(c) On or before July 1, 2012, the department and the
16Department of Managed Health Care shall jointly develop a
17uniform prior authorization form. Notwithstanding any other
18provision of law, on and after January 1, 2013, or six months after
19the form is developed, whichever is later, every prescribing
20provider shall use that uniform prior authorization form, or an
21electronic prior authorization process described in subdivision (e),
22to request prior authorization for coverage of prescription drug
23benefits and every health insurer shall accept that form as sufficient
24to request prior authorization for prescription drug benefits.

25(d) The prior authorization form developed pursuant to
26subdivision (c) shall meet the following criteria:

27(1) The form shall not exceed two pages.

28(2) The form shall be made electronically available by the
29department and the health insurer.

30(3) The completed form may also be electronically submitted
31from the prescribing provider to the health insurer.

32(4) The department and the Department of Managed Health
33Care shall develop the form with input from interested parties from
34at least one public meeting.

35(5) The department and the Department of Managed Health
36Care, in development of the standardized form, shall take into
37consideration the following:

38(A) Existing prior authorization forms established by the federal
39Centers for Medicare and Medicaid Services and the State
40Department of Health Care Services.

P6    1(B) National standards pertaining to electronic prior
2authorization.

3(e) A prescribing provider may use an electronic prior
4authorization system utilizing the standardized form described in
5subdivision (c) or an electronic process developed specifically for
6transmitting prior authorization information that is consistent with
7the standardized form described in subdivision (c) and that meets
8begin insert theend insert National Council for Prescription Drug Programs’ SCRIPT
9begin insert standard forend insert electronic prior authorizationbegin delete standards.end deletebegin insert transactions.end insert

begin insert

10(f) This section does not apply if any of the following occurs:

end insert
begin insert

11(1) A contracted network physician group is delegated the
12financial risk for the pharmacy or medical drug benefit by a health
13insurer.

end insert
begin insert

14(2) A contracted network physician group uses its own internal
15prior authorization process rather than the health insurer’s prior
16authorization process for the health insurer’s insureds.

end insert
begin insert

17(3) A contracted network physician group is delegated a
18utilization management function by the health insurer concerning
19any pharmacy or medical drug benefit, regardless of the delegation
20of financial risk.

end insert
begin delete

21(f)

end delete

22begin insert(g)end insert For purposes of this section, a “prescribing provider” shall
23include a provider authorized to write a prescription, pursuant to
24subdivision (a) of Section 4040 of the Business and Professions
25Code, to treat a medical condition of an insured.

26

SEC. 3.  

No reimbursement is required by this act pursuant to
27Section 6 of Article XIII B of the California Constitution because
28the only costs that may be incurred by a local agency or school
29district will be incurred because this act creates a new crime or
30infraction, eliminates a crime or infraction, or changes the penalty
31for a crime or infraction, within the meaning of Section 17556 of
32the Government Code, or changes the definition of a crime within
33the meaning of Section 6 of Article XIII B of the California
34Constitution.



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