Amended in Assembly July 8, 2015

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 begin delete Section 1367.241 end delete begin insert Sections 1367.24, 1367.241, 1368, and 1368.01 end insert 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. begin delete 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. end delete

begin insert

Existing law requires the Department of Managed Health Care and the Department of Insurance to jointly develop a uniform prior authorization form for prescription drug benefits on or before July 1, 2012, and requires, 6 months after the form is developed, every prescribing provider, when requesting prior authorization for prescription drug benefits, to submit the request to the health care service plan or health insurer using the uniform form, and requires those plans and insurers to accept only the uniform form. Existing law authorizes a prescribing provider to submit the prior authorization form electronically to the plan or insurer, and, if the plan or insurer fails to respond to a request within 2 business days, the request is deemed granted. Existing law also requires health care service plans to maintain a process by which prescribing providers may obtain authorization for a medically necessary nonformulary prescription drug.

end insert

This bill would authorize the prescribing provider to additionally use 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. begin delete To the extent that the bill would thereby require plans to accept that form of submission, the bill would expand the scope of a crime and would impose a state-mandated local program. The end delete begin insert The bill would require the departments to develop the uniform prior authorization form on or before January 1, 2017, and would require prescribing providers to use, and health care service plans and health insurers to accept, only those forms on and after July 1, 2017, or 6 months after the form is developed, whichever is later. This bill would deem a prior authorization request to be granted if the plan or insurer fails to respond within 72 hours for nonurgent requests, and within 24 hours when exigent circumstances exist. end insert

begin insert This end insert bill would specify that the provisions described above relating to prior authorization for prescription begin delete drug benefits end delete begin insert drugs end insert do not apply if a contracted network physician group is delegated the financial risk for the begin delete pharmacy or medical drug benefit end delete begin insert prescription drugs end insert 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 begin delete pharmacy or medical drug benefit, end delete begin insert prescription drug, end insert regardless of the delegation of financial risk.

begin insert

Existing law requires health care service plans to establish a grievance process approved by the Department of Managed Health Care.

end insert begin insert

This bill would require the grievance process established by a health care service plan to comply with specified federal regulations.

end insert begin insert

Because a willful violation of the bill’s requirements relative to health care service plans would be a crime, this bill would impose a state-mandated local program.

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:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 1367.24 of the end insert begin insert Health and Safety Code end insert
begin insert is amended to read: end insert

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 begin insert seeking an external
exception request review end insert 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
begin delete 1368.02. end delete begin insert 1368.02, and the health care service plan shall comply
with subdivision (l) of this section. end insert

(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.

begin insert

(k) A health care service plan’s process described in subdivision
(a) shall comply with subdivision (c) of Section 156.122 of Title
45 of the Code of Federal Regulations.

end insert begin insert

(l) A health care service plan 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.

end insert begin insert

(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.

end insert

begin delete SECTION 1. end delete
begin insert SEC. 2. end insert   

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 begin insert coverage
for end insert prescription begin delete drug benefits end delete begin insert drugs end insert 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 begin delete drug benefits. end delete
begin insert drugs. end insert 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 begin delete two business days end delete
begin insert 72 hours for nonurgent requests, and within 24 hours if exigent
circumstances exist, end insert 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 begin delete July 1, 2012, end delete begin insert January 1, 2017, end insert the department
and the Department of Insurance shall jointly develop a uniform
prior authorization form. Notwithstanding any other begin delete provision of end delete
law, on and after begin delete January 1, 2013, end delete begin insert July 1, 2017, end insert or six months after
the form is begin delete developed, end delete begin insert completed pursuant to this section, end insert
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 begin delete drug benefits end delete begin insert drugs end insert and every health
care service plan shall accept that form as sufficient to request
prior authorization for prescription begin delete drug benefits. end delete begin insert drugs. end insert

(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 that meets the National
Council for Prescription Drug Programs’ SCRIPT standard for
electronic prior authorization transactions.

(f)  begin delete This section end delete begin insert Subdivision (a) end insert does not apply if any of the
following occurs:

(1) A contracted network physician group is delegated the
financial risk for begin delete the pharmacy or medical drug benefit end delete begin insert prescription
drugs end insert 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 begin delete pharmacy or medical drug benefit, end delete begin insert prescription
drug, end insert regardless of the delegation of financial risk.

begin insert

(g) Prior authorization requirements for prescription drugs
under this section apply regardless of how that benefit is classified
under the terms of the health plan’s subscriber or provider
contract.

end insert begin delete

(g)

end delete

begin insert (h) end insert  For purposes of this begin delete section, a “prescribing end delete begin insert section: end insert

begin insert end insert
begin insert (1) end insert begin insert   end insert begin insert “Prescribing end insert 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.

begin insert

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

end insert

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 1368 of the end insert begin insert Health and Safety Code end insert begin insert is amended
to read: end insert

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)  begin insert (i) end insert begin insert   end insert Grievances received by telephone, by facsimile, by
e-mail, 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:

begin delete

(i)

end delete

begin insert (I) end insert  The date of the call.

begin delete

(ii)

end delete

begin insert (II) end insert  The name of the complainant.

begin delete

(iii)

end delete

begin insert (III) end insert  The complainant’s member identification number.

begin delete

(iv)

end delete

begin insert (IV) end insert  The nature of the grievance.

begin delete

(v)

end delete

begin insert (V) end insert  The nature of the resolution.

begin delete

(vi)

end delete

begin insert (VI) end insert  The name of the plan representative who took the call and
resolved the grievance.

begin insert

(ii) 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.

end insert

(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, a subscriber or enrollee may submit the grievance
to the department for review. In any case 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 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 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, 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 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 to the
department. In addition, following submission of the grievance 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 who are otherwise
assisting or advocating on behalf of the subscriber or enrollee. If
after reviewing the record, the department concludes that the
grievance, 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, 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, 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. 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 is sustained in whole or in part,
information about any corrective action taken.

(6) In any department review of a grievance 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 to the
department. The use of mediation services shall not preclude the
right to submit a grievance 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.

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 1368.01 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

1368.01.  

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

(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 begin delete grievance. end delete begin insert grievance, except as provided in subdivision (c). end insert
Paragraph (4) of subdivision (a) of Section 1368 shall not apply
to grievances handled pursuant to this section.

begin insert

(c) A health care service plan 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.

end insert

begin delete SEC. 2. end delete
begin insert SEC. 5. end insert   

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 begin insert coverage for end insert
prescription begin delete drug benefits end delete begin insert drugs end insert 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 begin delete drug
benefits. end delete begin insert drugs. end insert

(b) If a health insurer fails to utilize or accept the prior
authorization form, or fails to respond within begin delete two business days end delete
begin insert 72 hours for nonurgent requests, and within 24 hours if exigent
circumstances exist, end insert 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 begin delete July 1, 2012, end delete begin insert January 1, 2017, end insert the department
and the Department of Managed Health Care shall jointly develop
a uniform prior authorization form. Notwithstanding any other
begin delete provision of end delete law, on and after begin delete January 1, 2013, end delete begin insert July 1, 2017, end insert or
six months after the form is begin delete developed, end delete begin insert completed pursuant to this
section, end insert 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 begin delete drug benefits end delete begin insert drugs end insert and
every health insurer shall accept that form as sufficient to request
prior authorization for prescription begin delete drug benefits. end delete begin insert drugs. end insert

(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)  begin delete This section end delete begin insert Subdivision (a) end insert 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 begin delete pharmacy or medical drug benefit, end delete begin insert prescription drug, end insert
regardless of the delegation of financial risk.

begin insert

(g) Prior authorization requirements for prescription drugs
under this section apply regardless of how that benefit is classified
under the terms of the health insurer’s policyholder or provider
contract.

end insert begin delete

(g)

end delete

begin insert (h) end insert  For purposes of this begin delete section, a “prescribing end delete begin insert section: end insert

begin insert (1) end insert begin insert   end insert begin insert “Prescribing end insert 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.

begin insert

(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.

end insert

begin delete SEC. 3. end delete
begin insert SEC. 6. end insert   

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.