Amended in Assembly June 18, 2015

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 informationbegin delete that is consistent with the standardized form described above andend 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 plansbegin delete and insurersend 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:

P2    1

SECTION 1.  

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

3

1367.241.  

(a) Notwithstanding any otherbegin delete provision ofend delete 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 informationbegin delete that is consistent with
13the standardized form described in subdivision (c) andend delete
that meets
14the National Council for Prescription Drug Programs’ SCRIPT
15 standard for electronic prior authorization transactions.

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

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.

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

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.

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

31

SEC. 2.  

Section 10123.191 of the Insurance Code is amended
32to read:

33

10123.191.  

(a) Notwithstanding any otherbegin delete provision ofend delete law,
34on and after January 1, 2013, a health insurer that provides
35prescription drug benefits shall utilize and accept only the prior
36authorization form developed pursuant to subdivision (c), or an
37electronic prior authorization process described in subdivision (e),
38when requiring prior authorization for prescription drug benefits.

39(b) If a health insurer fails to utilize or accept the prior
40authorization form, or fails to respond within two business days
P5    1upon receipt of a completed prior authorization request from a
2prescribing provider, pursuant to the submission of the prior
3authorization form developed as described in subdivision (c), or
4an electronic prior authorization process described in subdivision
5(e), the prior authorization request shall be deemed to have been
6granted. The requirements of this subdivision shall not apply to
7contracts entered into pursuant to Article 2.7 (commencing with
8Section 14087.3), Article 2.8 (commencing with Section 14087.5),
9Article 2.81 (commencing with Section 14087.96), or Article 2.91
10(commencing with Section 14089) of Chapter 7 of, or Chapter 8
11(commencing with Section 14200) of, Part 3 of Division 9 of the
12Welfare and Institutions Code.

13(c) On or before July 1, 2012, the department and the
14Department of Managed Health Care shall jointly develop a
15uniform prior authorization form. Notwithstanding any other
16provision of law, on and after January 1, 2013, or six months after
17the form is developed, whichever is later, every prescribing
18provider shall use that uniform prior authorization form, or an
19electronic prior authorization process described in subdivision (e),
20to request prior authorization for coverage of prescription drug
21benefits and every health insurer shall accept that form as sufficient
22to request prior authorization for prescription drug benefits.

23(d) The prior authorization form developed pursuant to
24subdivision (c) shall meet the following criteria:

25(1) The form shall not exceed two pages.

26(2) The form shall be made electronically available by the
27department and the health insurer.

28(3) The completed form may also be electronically submitted
29from the prescribing provider to the health insurer.

30(4) The department and the Department of Managed Health
31Care shall develop the form with input from interested parties from
32at least one public meeting.

33(5) The department and the Department of Managed Health
34Care, in development of the standardized form, shall take into
35consideration the following:

36(A) Existing prior authorization forms established by the federal
37Centers for Medicare and Medicaid Services and the State
38Department of Health Care Services.

39(B) National standards pertaining to electronic prior
40authorization.

P6    1(e) A prescribing provider may use an electronic prior
2authorization system utilizing the standardized form described in
3subdivision (c) or an electronic process developed specifically for
4transmitting prior authorization informationbegin delete that is consistent with
5the standardized form described in subdivision (c) andend delete
that meets
6the National Council for Prescription Drug Programs’ SCRIPT
7standard for electronic prior authorization transactions.

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

9(1) A contracted network physician group is delegated the
10financial risk for the pharmacy or medical drug benefit by a health
11insurer.

12(2) A contracted network physician group uses its own internal
13prior authorization process rather than the health insurer’s prior
14authorization process for the health insurer’s insureds.

15(3) A contracted network physician group is delegated a
16utilization management function by the health insurer concerning
17any pharmacy or medical drug benefit, regardless of the delegation
18of financial risk.

19(g) For purposes of this section, a “prescribing provider” shall
20include a provider authorized to write a prescription, pursuant to
21subdivision (a) of Section 4040 of the Business and Professions
22Code, to treat a medical condition of an insured.

23

SEC. 3.  

No reimbursement is required by this act pursuant to
24Section 6 of Article XIII B of the California Constitution because
25the only costs that may be incurred by a local agency or school
26district will be incurred because this act creates a new crime or
27infraction, eliminates a crime or infraction, or changes the penalty
28for a crime or infraction, within the meaning of Section 17556 of
29the Government Code, or changes the definition of a crime within
30the meaning of Section 6 of Article XIII B of the California
31Constitution.



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