Amended in Assembly June 18, 2015

Amended in Senate April 9, 2015

Senate Bill No. 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 begin delete that is consistent with the standardized form described above and end delete that meets the National Council for Prescription Drug Programs’ SCRIPT standard for electronic prior authorization transactions. To the extent that the bill would thereby require plans begin delete and insurers end delete to accept that form of submission, the bill would expand the scope of a crime and would impose a state-mandated local program. 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.

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

1367.241.  

(a) Notwithstanding any other begin delete provision of end delete law, on
and after January 1, 2013, a health care service plan that provides
prescription drug benefits shall 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 drug benefits. 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) If a health care service plan fails to utilize or accept the prior
authorization form, or fails to respond within two business days
upon receipt of a completed prior authorization request from a
prescribing provider, pursuant to the submission of the prior
authorization form developed as described in subdivision (c), or
an electronic prior authorization process described in subdivision
(e), the prior authorization request shall be deemed to have been
granted. The requirements of this subdivision shall not apply to
contracts entered into pursuant to Article 2.7 (commencing with
Section 14087.3), Article 2.8 (commencing with Section 14087.5),
Article 2.81 (commencing with Section 14087.96), or Article 2.91
(commencing with Section 14089) of Chapter 7 of, or Chapter 8
(commencing with Section 14200) of, Part 3 of Division 9 of the
Welfare and Institutions Code.

(c) On or before July 1, 2012, the department and the
Department of Insurance shall jointly develop a uniform prior
authorization form. Notwithstanding any other provision of law,
on and after January 1, 2013, or six months after the form is
developed, 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 drug benefits and every
health care service plan shall accept that form as sufficient to
request prior authorization for prescription drug benefits.

(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 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.

(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 begin delete that is consistent with
the standardized form described in subdivision (c) and end delete that meets
the National Council for Prescription Drug Programs’ SCRIPT
standard for electronic prior authorization transactions.

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

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

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

(g) 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.

SEC. 2.  

Section 10123.191 of the Insurance Code is amended
to read:

10123.191.  

(a) Notwithstanding any other begin delete provision of end delete law,
on and after January 1, 2013, a health insurer that provides
prescription drug benefits 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 drug benefits.

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

(c) On or before July 1, 2012, the department and the
Department of Managed Health Care shall jointly develop a
uniform prior authorization form. Notwithstanding any other
provision of law, on and after January 1, 2013, or six months after
the form is developed, 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 drug
benefits and every health insurer shall accept that form as sufficient
to request prior authorization for prescription drug benefits.

(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 begin delete that is consistent with
the standardized form described in subdivision (c) and end delete that meets
the National Council for Prescription Drug Programs’ SCRIPT
standard for electronic prior authorization transactions.

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

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

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

(g) 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.

SEC. 3.  

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.