Amended in Assembly July 8, 2015

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 amendbegin delete Section 1367.241end deletebegin insert Sections 1367.24, 1367.241, 1368, and 1368.01end 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. Theend deletebegin 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 insertThisend insert bill would specify that the provisions described above relating to prior authorization for prescriptionbegin delete drug benefitsend deletebegin insert drugsend insert do not apply if a contracted network physician group is delegated the financial risk for thebegin delete pharmacy or medical drug benefitend deletebegin insert prescription drugsend 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 anybegin delete pharmacy or medical drug benefit,end deletebegin 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:

P3    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 1367.24 of the end insertbegin insertHealth and Safety Codeend insert
2begin insert is amended to read:end insert

3

1367.24.  

(a) Every health care service plan that provides
4prescription drug benefits shall maintain an expeditious process
5by which prescribing providers may obtain authorization for a
6medically necessary nonformulary prescription drug. On or before
7July 1, 1999, every health care service plan that provides
8prescription drug benefits shall file with the department a
9description of its process, including timelines, for responding to
10authorization requests for nonformulary drugs. Any changes to
11this process shall be filed with the department pursuant to Section
121352. Each plan shall provide a written description of its most
13current process, including timelines, to its prescribing providers.
14For purposes of this section, a prescribing provider shall include
15a provider authorized to write a prescription, pursuant to
P4    1subdivision (a) of Section 4040 of the Business and Professions
2Code, to treat a medical condition of an enrollee.

3(b) Any plan that disapproves a request made pursuant to
4subdivision (a) by a prescribing provider to obtain authorization
5for a nonformulary drug shall provide the reasons for the
6disapproval in a notice provided to the enrollee. The notice shall
7indicate that the enrollee may file a grievancebegin insert seeking an external
8exception request reviewend insert
with the plan if the enrollee objects to
9the disapproval, including any alternative drug or treatment offered
10by the plan. The notice shall comply with subdivision (b) of Section
11begin delete 1368.02.end deletebegin insert 1368.02, and the health care service plan shall comply
12with subdivision (l) of this section.end insert

13(c) The process described in subdivision (a) by which
14prescribing providers may obtain authorization for medically
15necessary nonformulary drugs shall not apply to a nonformulary
16drug that has been prescribed for an enrollee in conformance with
17the provisions of Section 1367.22.

18(d) The process described in subdivision (a) by which enrollees
19may obtain medically necessary nonformulary drugs, including
20specified timelines for responding to prescribing provider
21authorization requests, shall be described in evidence of coverage
22and disclosure forms, as required by subdivision (a) of Section
231363, issued on or after July 1, 1999.

24(e) Every health care service plan that provides prescription
25drug benefits shall maintain, as part of its books and records under
26Section 1381, all of the following information, which shall be
27made available to the director upon request:

28(1) The complete drug formulary or formularies of the plan, if
29the plan maintains a formulary, including a list of the prescription
30drugs on the formulary of the plan by major therapeutic category
31with an indication of whether any drugs are preferred over other
32drugs.

33(2) Records developed by the pharmacy and therapeutic
34committee of the plan, or by others responsible for developing,
35modifying, and overseeing formularies, including medical groups,
36individual practice associations, and contracting pharmaceutical
37benefit management companies, used to guide the drugs prescribed
38for the enrollees of the plan, that fully describe the reasoning
39behind formulary decisions.

P5    1(3) Any plan arrangements with prescribing providers, medical
2groups, individual practice associations, pharmacists, contracting
3pharmaceutical benefit management companies, or other entities
4that are associated with activities of the plan to encourage
5formulary compliance or otherwise manage prescription drug
6benefits.

7(f) If a plan provides prescription drug benefits, the department
8shall, as part of its periodic onsite medical survey of each plan
9undertaken pursuant to Section 1380, review the performance of
10the plan in providing those benefits, including, but not limited to,
11a review of the procedures and information maintained pursuant
12to this section, and describe the performance of the plan as part of
13its report issued pursuant to Section 1380.

14(g) The director shall not publicly disclose any information
15reviewed pursuant to this section that is determined by the director
16to be confidential pursuant to state law.

17(h) For purposes of this section, “authorization” means approval
18by the health care service plan to provide payment for the
19prescription drug.

20(i) Nonformulary prescription drugs shall include any drug for
21which an enrollee’s copayment or out-of-pocket costs are different
22than the copayment for a formulary prescription drug, except as
23otherwise provided by law or regulation or in cases in which the
24drug has been excluded in the plan contract pursuant to Section
251342.7.

26(j) Nothing in this section shall be construed to restrict or impair
27the application of any other provision of this chapter, including,
28but not limited to, Section 1367, which includes among its
29requirements that a health care service plan furnish services in a
30manner providing continuity of care and demonstrate that medical
31decisions are rendered by qualified medical providers unhindered
32by fiscal and administrative management.

begin insert

33(k) A health care service plan’s process described in subdivision
34(a) shall comply with subdivision (c) of Section 156.122 of Title
3545 of the Code of Federal Regulations.

end insert
begin insert

36(l) A health care service plan shall maintain a process for an
37external exception request review that complies with subdivision
38(c) of Section 156.122 of Title 45 of the Code of Federal
39Regulations.

end insert
begin insert

P6    1(m) Nothing in this section shall be construed to affect an
2enrollee’s or subscriber’s eligibility to submit a grievance to the
3department for review under Section 1368 or to apply to the
4department for an independent medical review under Section
51370.4, or Article 5.55 (commencing with Section 1374.30) of this
6chapter.

end insert
7

begin deleteSECTION 1.end delete
8begin insertSEC. 2.end insert  

Section 1367.241 of the Health and Safety Code is
9amended to read:

10

1367.241.  

(a) Notwithstanding any other law, on and after
11January 1, 2013, a health care service plan that providesbegin insert coverage
12forend insert
prescriptionbegin delete drug benefitsend deletebegin insert drugsend insert shall accept only the prior
13authorization form developed pursuant to subdivision (c), or an
14electronic prior authorization process described in subdivision (e),
15when requiring prior authorization for prescriptionbegin delete drug benefits.end delete
16begin insert drugs.end insert This section does not apply in the event that a physician or
17physician group has been delegated the financial risk for
18prescription drugs by a health care service plan and does not use
19a prior authorization process. This section does not apply to a
20health care service plan, or to its affiliated providers, if the health
21care service plan owns and operates its pharmacies and does not
22use a prior authorization process for prescription drugs.

23(b) If a health care service plan fails to utilize or accept the prior
24authorization form, or fails to respond withinbegin delete two business daysend delete
25begin insert 72 hours for nonurgent requests, and within 24 hours if exigent
26circumstances exist, end insert
upon receipt of a completed prior authorization
27request from a prescribing provider, pursuant to the submission
28of the prior authorization form developed as described in
29subdivision (c), or an electronic prior authorization process
30described in subdivision (e), the prior authorization request shall
31be deemed to have been granted. The requirements of this
32subdivision shall not apply to contracts entered into pursuant to
33Article 2.7 (commencing with Section 14087.3), Article 2.8
34(commencing with Section 14087.5), Article 2.81 (commencing
35with Section 14087.96), or Article 2.91 (commencing with Section
3614089) of Chapter 7 of, or Chapter 8 (commencing with Section
3714200) of, Part 3 of Division 9 of the Welfare and Institutions
38Code.

39(c) On or beforebegin delete July 1, 2012,end deletebegin insert January 1, 2017,end insert the department
40and the Department of Insurance shall jointly develop a uniform
P7    1prior authorization form. Notwithstanding any otherbegin delete provision ofend delete
2 law, on and afterbegin delete January 1, 2013,end deletebegin insert July 1, 2017,end insert or six months after
3the form isbegin delete developed,end deletebegin insert completed pursuant to this section,end insert
4 whichever is later, every prescribing provider shall use that uniform
5prior authorization form, or an electronic prior authorization
6process described in subdivision (e), to request prior authorization
7for coverage of prescriptionbegin delete drug benefitsend deletebegin insert drugsend insert and every health
8care service plan shall accept that form as sufficient to request
9prior authorization for prescriptionbegin delete drug benefits.end deletebegin insert drugs.end insert

10(d) The prior authorization form developed pursuant to
11subdivision (c) shall meet the following criteria:

12(1) The form shall not exceed two pages.

13(2) The form shall be made electronically available by the
14department and the health care service plan.

15(3) The completed form may also be electronically submitted
16from the prescribing provider to the health care service plan.

17(4) The department and the Department of Insurance shall
18develop the form with input from interested parties from at least
19one public meeting.

20(5) The department and the Department of Insurance, in
21development of the standardized form, shall take into consideration
22the following:

23(A) Existing prior authorization forms established by the federal
24Centers for Medicare and Medicaid Services and the State
25Department of Health Care Services.

26(B) National standards pertaining to electronic prior
27authorization.

28(e) A prescribing provider may use an electronic prior
29authorization system utilizing the standardized form described in
30subdivision (c) or an electronic process developed specifically for
31transmitting prior authorization information that meets the National
32Council for Prescription Drug Programs’ SCRIPT standard for
33electronic prior authorization transactions.

34(f) begin deleteThis section end deletebegin insertSubdivision (a) end insertdoes not apply if any of the
35following occurs:

36(1) A contracted network physician group is delegated the
37financial risk forbegin delete the pharmacy or medical drug benefitend deletebegin insert prescription
38drugsend insert
by a health care service plan.

P8    1(2) A contracted network physician group uses its own internal
2prior authorization process rather than the health care service plan’s
3prior authorization process for plan enrollees.

4(3) A contracted network physician group is delegated a
5utilization management function by the health care service plan
6concerning anybegin delete pharmacy or medical drug benefit,end deletebegin insert prescription
7drug,end insert
regardless of the delegation of financial risk.

begin insert

8(g) Prior authorization requirements for prescription drugs
9under this section apply regardless of how that benefit is classified
10under the terms of the health plan’s subscriber or provider
11contract.

end insert
begin delete

12(g)

end delete

13begin insert(h)end insert For purposes of thisbegin delete section, a “prescribingend deletebegin insert section:end insert

begin insert end insert
14begin insert(1)end insertbegin insertend insertbegin insert“Prescribingend insert provider” shall include a provider authorized
15to write a prescription, pursuant to subdivision (a) of Section 4040
16of the Business and Professions Code, to treat a medical condition
17of an enrollee.

begin insert

18(2) “Exigent circumstances” exist when an enrollee is suffering
19from a health condition that may seriously jeopardize the enrollee’s
20life, health, or ability to regain maximum function or when an
21enrollee is undergoing a current course of treatment using a
22nonformulary drug.

end insert
23begin insert

begin insertSEC. 3.end insert  

end insert

begin insertSection 1368 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is amended
24to read:end insert

25

1368.  

(a) Every plan shall do all of the following:

26(1) Establish and maintain a grievance system approved by the
27department under which enrollees may submit their grievances to
28the plan. Each system shall provide reasonable procedures in
29accordance with department regulations that shall ensure adequate
30consideration of enrollee grievances and rectification when
31appropriate.

32(2) Inform its subscribers and enrollees upon enrollment in the
33plan and annually thereafter of the procedure for processing and
34resolving grievances. The information shall include the location
35and telephone number where grievances may be submitted.

36(3) Provide forms for grievances to be given to subscribers and
37enrollees who wish to register written grievances. The forms used
38by plans licensed pursuant to Section 1353 shall be approved by
39the director in advance as to format.

P9    1(4) (A) Provide for a written acknowledgment within five
2calendar days of the receipt of a grievance, except as noted in
3subparagraph (B). The acknowledgment shall advise the
4complainant of the following:

5(i) That the grievance has been received.

6(ii) The date of receipt.

7(iii) The name of the plan representative and the telephone
8number and address of the plan representative who may be
9contacted about the grievance.

10(B) begin insert(i)end insertbegin insertend insertGrievances received by telephone, by facsimile, by
11e-mail, or online through the plan’s Internet Web site pursuant to
12Section 1368.015, that are not coverage disputes, disputed health
13care services involving medical necessity, or experimental or
14investigational treatment and that are resolved by the next business
15day following receipt are exempt from the requirements of
16subparagraph (A) and paragraph (5). The plan shall maintain a log
17of all these grievances. The log shall be periodically reviewed by
18the plan and shall include the following information for each
19complaint:

begin delete

20(i)

end delete

21begin insert(I)end insert The date of the call.

begin delete

22(ii)

end delete

23begin insert(II)end insert The name of the complainant.

begin delete

24(iii)

end delete

25begin insert(III)end insert The complainant’s member identification number.

begin delete

26(iv)

end delete

27begin insert(IV)end insert The nature of the grievance.

begin delete

28(v)

end delete

29begin insert(V)end insert The nature of the resolution.

begin delete

30(vi)

end delete

31begin insert(VI)end insert The name of the plan representative who took the call and
32resolved the grievance.

begin insert

33(ii) A health care service plan’s response to grievances subject
34to Section 1367.24 shall also comply with subdivision (c) of Section
35156.122 of Title 45 of the Code of Federal Regulations.

end insert

36(5) Provide subscribers and enrollees with written responses to
37grievances, with a clear and concise explanation of the reasons for
38the plan’s response. For grievances involving the delay, denial, or
39modification of health care services, the plan response shall
40describe the criteria used and the clinical reasons for its decision,
P10   1including all criteria and clinical reasons related to medical
2necessity. If a plan, or one of its contracting providers, issues a
3decision delaying, denying, or modifying health care services based
4in whole or in part on a finding that the proposed health care
5services are not a covered benefit under the contract that applies
6to the enrollee, the decision shall clearly specify the provisions in
7the contract that exclude that coverage.

8(6) For grievances involving the cancellation, rescission, or
9nonrenewal of a health care service plan contract, the health care
10service plan shall continue to provide coverage to the enrollee or
11subscriber under the terms of the health care service plan contract
12until a final determination of the enrollee’s or subscriber’s request
13for review has been made by the health care service plan or the
14director pursuant to Section 1365 and this section. This paragraph
15shall not apply if the health care service plan cancels or fails to
16renew the enrollee’s or subscriber’s health care service plan
17contract for nonpayment of premiums pursuant to paragraph (1)
18of subdivision (a) of Section 1365.

19(7) Keep in its files all copies of grievances, and the responses
20thereto, for a period of five years.

21(b) (1) (A) After either completing the grievance process
22described in subdivision (a), or participating in the process for at
23least 30 days, a subscriber or enrollee may submit the grievance
24to the department for review. In any case determined by the
25department to be a case involving an imminent and serious threat
26to the health of the patient, including, but not limited to, severe
27pain, the potential loss of life, limb, or major bodily function,
28cancellations, rescissions, or the nonrenewal of a health care service
29plan contract, or in any other case where the department determines
30that an earlier review is warranted, a subscriber or enrollee shall
31not be required to complete the grievance process or to participate
32in the process for at least 30 days before submitting a grievance
33to the department for review.

34(B) A grievance may be submitted to the department for review
35and resolution prior to any arbitration.

36(C) Notwithstanding subparagraphs (A) and (B), the department
37may refer any grievance that does not pertain to compliance with
38this chapter to the State Department of Public Health, the California
39Department of Aging, the federal Health Care Financing
P11   1Administration, or any other appropriate governmental entity for
2investigation and resolution.

3(2) If the subscriber or enrollee is a minor, or is incompetent or
4incapacitated, the parent, guardian, conservator, relative, or other
5designee of the subscriber or enrollee, as appropriate, may submit
6the grievance to the department as the agent of the subscriber or
7enrollee. Further, a provider may join with, or otherwise assist, a
8subscriber or enrollee, or the agent, to submit the grievance to the
9department. In addition, following submission of the grievance to
10the department, the subscriber or enrollee, or the agent, may
11authorize the provider to assist, including advocating on behalf of
12the subscriber or enrollee. For purposes of this section, a “relative”
13includes the parent, stepparent, spouse, adult son or daughter,
14grandparent, brother, sister, uncle, or aunt of the subscriber or
15enrollee.

16(3) The department shall review the written documents submitted
17with the subscriber’s or the enrollee’s request for review, or
18submitted by the agent on behalf of the subscriber or enrollee. The
19department may ask for additional information, and may hold an
20informal meeting with the involved parties, including providers
21who have joined in submitting the grievance or who are otherwise
22assisting or advocating on behalf of the subscriber or enrollee. If
23after reviewing the record, the department concludes that the
24grievance, in whole or in part, is eligible for review under the
25independent medical review system established pursuant to Article
265.55 (commencing with Section 1374.30), the department shall
27immediately notify the subscriber or enrollee, or agent, of that
28option and shall, if requested orally or in writing, assist the
29subscriber or enrollee in participating in the independent medical
30 review system.

31(4) If after reviewing the record of a grievance, the department
32concludes that a health care service eligible for coverage and
33payment under a health care service plan contract has been delayed,
34denied, or modified by a plan, or by one of its contracting
35providers, in whole or in part due to a determination that the service
36is not medically necessary, and that determination was not
37communicated to the enrollee in writing along with a notice of the
38enrollee’s potential right to participate in the independent medical
39review system, as required by this chapter, the director shall, by
40order, assess administrative penalties. A proceeding for the issuance
P12   1of an order assessing administrative penalties shall be subject to
2appropriate notice of, and the opportunity for, a hearing with regard
3to the person affected in accordance with Section 1397. The
4administrative penalties shall not be deemed an exclusive remedy
5available to the director. These penalties shall be paid to the
6Managed Care Administrative Fines and Penalties Fund and shall
7be used for the purposes specified in Section 1341.45.

8(5) The department shall send a written notice of the final
9disposition of the grievance, and the reasons therefor, to the
10subscriber or enrollee, the agent, to any provider that has joined
11with or is otherwise assisting the subscriber or enrollee, and to the
12plan, within 30 calendar days of receipt of the request for review
13unless the director, in his or her discretion, determines that
14additional time is reasonably necessary to fully and fairly evaluate
15the relevant grievance. In any case not eligible for the independent
16medical review system established pursuant to Article 5.55
17(commencing with Section 1374.30), the department’s written
18notice shall include, at a minimum, the following:

19(A) A summary of its findings and the reasons why the
20department found the plan to be, or not to be, in compliance with
21any applicable laws, regulations, or orders of the director.

22(B) A discussion of the department’s contact with any medical
23provider, or any other independent expert relied on by the
24department, along with a summary of the views and qualifications
25of that provider or expert.

26(C) If the enrollee’s grievance is sustained in whole or in part,
27 information about any corrective action taken.

28(6) In any department review of a grievance involving a disputed
29health care service, as defined in subdivision (b) of Section
301374.30, that is not eligible for the independent medical review
31system established pursuant to Article 5.55 (commencing with
32Section 1374.30), in which the department finds that the plan has
33delayed, denied, or modified health care services that are medically
34necessary, based on the specific medical circumstances of the
35enrollee, and those services are a covered benefit under the terms
36and conditions of the health care service plan contract, the
37department’s written notice shall do either of the following:

38(A) Order the plan to promptly offer and provide those health
39care services to the enrollee.

P13   1(B) Order the plan to promptly reimburse the enrollee for any
2reasonable costs associated with urgent care or emergency services,
3or other extraordinary and compelling health care services, when
4the department finds that the enrollee’s decision to secure those
5services outside of the plan network was reasonable under the
6circumstances.

7The department’s order shall be binding on the plan.

8(7) Distribution of the written notice shall not be deemed a
9waiver of any exemption or privilege under existing law, including,
10but not limited to, Section 6254.5 of the Government Code, for
11any information in connection with and including the written
12notice, nor shall any person employed or in any way retained by
13the department be required to testify as to that information or
14notice.

15(8) The director shall establish and maintain a system of aging
16of grievances that are pending and unresolved for 30 days or more
17that shall include a brief explanation of the reasons each grievance
18is pending and unresolved for 30 days or more.

19(9) A subscriber or enrollee, or the agent acting on behalf of a
20subscriber or enrollee, may also request voluntary mediation with
21the plan prior to exercising the right to submit a grievance to the
22department. The use of mediation services shall not preclude the
23right to submit a grievance to the department upon completion of
24mediation. In order to initiate mediation, the subscriber or enrollee,
25or the agent acting on behalf of the subscriber or enrollee, and the
26plan shall voluntarily agree to mediation. Expenses for mediation
27shall be borne equally by both sides. The department shall have
28no administrative or enforcement responsibilities in connection
29with the voluntary mediation process authorized by this paragraph.

30(c) The plan’s grievance system shall include a system of aging
31of grievances that are pending and unresolved for 30 days or more.
32The plan shall provide a quarterly report to the director of
33grievances pending and unresolved for 30 or more days with
34separate categories of grievances for Medicare enrollees and
35Medi-Cal enrollees. The plan shall include with the report a brief
36explanation of the reasons each grievance is pending and
37unresolved for 30 days or more. The plan may include the
38following statement in the quarterly report that is made available
39to the public by the director:


P14   1“Under Medicare and Medi-Cal law, Medicare enrollees and
2Medi-Cal enrollees each have separate avenues of appeal that
3are not available to other enrollees. Therefore, grievances
4pending and unresolved may reflect enrollees pursuing their
5Medicare or Medi-Cal appeal rights.”


7If requested by a plan, the director shall include this statement in
8a written report made available to the public and prepared by the
9director that describes or compares grievances that are pending
10and unresolved with the plan for 30 days or more. Additionally,
11the director shall, if requested by a plan, append to that written
12report a brief explanation, provided in writing by the plan, of the
13reasons why grievances described in that written report are pending
14and unresolved for 30 days or more. The director shall not be
15required to include a statement or append a brief explanation to a
16written report that the director is required to prepare under this
17chapter, including Sections 1380 and 1397.5.

18(d) Subject to subparagraph (C) of paragraph (1) of subdivision
19(b), the grievance or resolution procedures authorized by this
20section shall be in addition to any other procedures that may be
21available to any person, and failure to pursue, exhaust, or engage
22in the procedures described in this section shall not preclude the
23use of any other remedy provided by law.

24(e) Nothing in this section shall be construed to allow the
25submission to the department of any provider grievance under this
26section. However, as part of a provider’s duty to advocate for
27medically appropriate health care for his or her patients pursuant
28to Sections 510 and 2056 of the Business and Professions Code,
29nothing in this subdivision shall be construed to prohibit a provider
30from contacting and informing the department about any concerns
31he or she has regarding compliance with or enforcement of this
32chapter.

33(f) To the extent required by Section 2719 of the federal Public
34Health Service Act (42 U.S.C. Sec. 300gg-19) and any subsequent
35rules or regulations, there shall be an independent external review
36pursuant to the standards required by the United States Secretary
37of Health and Human Services of a health care service plan’s
38cancellation, rescission, or nonrenewal of an enrollee’s or
39subscriber’s coverage.

P15   1begin insert

begin insertSEC. 4.end insert  

end insert

begin insertSection 1368.01 of the end insertbegin insertHealth and Safety Codeend insertbegin insert is
2amended to read:end insert

3

1368.01.  

(a)  The grievance system shall require the plan to
4resolve grievances within 30begin delete days.end deletebegin insert days, except as provided in
5subdivision (c).end insert

6(b)  The grievance system shall include a requirement for
7expedited plan review of grievances for cases involving an
8imminent and serious threat to the health of the patient, including,
9but not limited to, severe pain, potential loss of life, limb, or major
10bodily function. When the plan has notice of a case requiring
11expedited review, the grievance system shall require the plan to
12immediately inform enrollees and subscribers in writing of their
13right to notify the department of the grievance. The grievance
14system shall also require the plan to provide enrollees, subscribers,
15and the department with a written statement on the disposition or
16pending status of the grievance no later than three days from receipt
17of thebegin delete grievance.end deletebegin insert grievance, except as provided in subdivision (c).end insert
18 Paragraph (4) of subdivision (a) of Section 1368 shall not apply
19to grievances handled pursuant to this section.

begin insert

20(c) A health care service plan that provides coverage for
21outpatient prescription drugs shall comply with subdivision (c) of
22Section 156.122 of Title 45 of the Code of Federal Regulations.

end insert
23

begin deleteSEC. 2.end delete
24begin insertSEC. 5.end insert  

Section 10123.191 of the Insurance Code is amended
25to read:

26

10123.191.  

(a) Notwithstanding any other law, on and after
27January 1, 2013, a health insurer that providesbegin insert coverage forend insert
28 prescriptionbegin delete drug benefitsend deletebegin insert drugsend insert shall utilize and accept only the
29prior authorization form developed pursuant to subdivision (c), or
30an electronic prior authorization process described in subdivision
31(e), when requiring prior authorization for prescriptionbegin delete drug
32benefits.end delete
begin insert drugs.end insert

33(b) If a health insurer fails to utilize or accept the prior
34authorization form, or fails to respond withinbegin delete two business daysend delete
35begin insert 72 hours for nonurgent requests, and within 24 hours if exigent
36circumstances exist,end insert
upon receipt of a completed prior authorization
37request from a prescribing provider, pursuant to the submission
38of the prior authorization form developed as described in
39subdivision (c), or an electronic prior authorization process
40described in subdivision (e), the prior authorization request shall
P16   1be deemed to have been granted. The requirements of this
2subdivision shall not apply to contracts entered into pursuant to
3Article 2.7 (commencing with Section 14087.3), Article 2.8
4(commencing with Section 14087.5), Article 2.81 (commencing
5with Section 14087.96), or Article 2.91 (commencing with Section
614089) of Chapter 7 of, or Chapter 8 (commencing with Section
714200) of, Part 3 of Division 9 of the Welfare and Institutions
8Code.

9(c) On or beforebegin delete July 1, 2012,end deletebegin insert January 1, 2017,end insert the department
10and the Department of Managed Health Care shall jointly develop
11a uniform prior authorization form. Notwithstanding any other
12begin delete provision ofend delete law, on and afterbegin delete January 1, 2013,end deletebegin insert July 1, 2017,end insert or
13six months after the form isbegin delete developed,end deletebegin insert completed pursuant to this
14section,end insert
whichever is later, every prescribing provider shall use
15that uniform prior authorization form, or an electronic prior
16authorization process described in subdivision (e), to request prior
17authorization for coverage of prescriptionbegin delete drug benefitsend deletebegin insert drugsend insert and
18every health insurer shall accept that form as sufficient to request
19prior authorization for prescriptionbegin delete drug benefits.end deletebegin insert drugs.end insert

20(d) The prior authorization form developed pursuant to
21subdivision (c) shall meet the following criteria:

22(1) The form shall not exceed two pages.

23(2) The form shall be made electronically available by the
24department and the health insurer.

25(3) The completed form may also be electronically submitted
26from the prescribing provider to the health insurer.

27(4) The department and the Department of Managed Health
28Care shall develop the form with input from interested parties from
29at least one public meeting.

30(5) The department and the Department of Managed Health
31Care, in development of the standardized form, shall take into
32consideration the following:

33(A) Existing prior authorization forms established by the federal
34Centers for Medicare and Medicaid Services and the State
35Department of Health Care Services.

36(B) National standards pertaining to electronic prior
37authorization.

38(e) A prescribing provider may use an electronic prior
39authorization system utilizing the standardized form described in
40subdivision (c) or an electronic process developed specifically for
P17   1transmitting prior authorization information that meets the National
2Council for Prescription Drug Programs’ SCRIPT standard for
3electronic prior authorization transactions.

4(f) begin deleteThis section end deletebegin insertSubdivision (a) end insertdoes not apply if any of the
5following occurs:

6(1) A contracted network physician group is delegated the
7financial risk for the pharmacy or medical drug benefit by a health
8insurer.

9(2) A contracted network physician group uses its own internal
10prior authorization process rather than the health insurer’s prior
11authorization process for the health insurer’s insureds.

12(3) A contracted network physician group is delegated a
13utilization management function by the health insurer concerning
14anybegin delete pharmacy or medical drug benefit,end deletebegin insert prescription drug,end insert
15 regardless of the delegation of financial risk.

begin insert

16(g) Prior authorization requirements for prescription drugs
17under this section apply regardless of how that benefit is classified
18under the terms of the health insurer’s policyholder or provider
19contract.

end insert
begin delete

20(g)

end delete

21begin insert(h)end insert For purposes of thisbegin delete section, a “prescribingend deletebegin insert section:end insert

22begin insert(1)end insertbegin insertend insertbegin insert“Prescribingend insert provider” shall include a provider authorized
23to write a prescription, pursuant to subdivision (a) of Section 4040
24of the Business and Professions Code, to treat a medical condition
25of an insured.

begin insert

26(2) “Exigent circumstances” exist when an insured is suffering
27from a health condition that may seriously jeopardize the insured’s
28life, health, or ability to regain maximum function or when an
29insured is undergoing a current course of treatment using a
30nonformulary drug.

end insert
31

begin deleteSEC. 3.end delete
32begin insertSEC. 6.end insert  

No reimbursement is required by this act pursuant to
33Section 6 of Article XIII B of the California Constitution because
34the only costs that may be incurred by a local agency or school
35district will be incurred because this act creates a new crime or
36infraction, eliminates a crime or infraction, or changes the penalty
37for a crime or infraction, within the meaning of Section 17556 of
38the Government Code, or changes the definition of a crime within
P18   1the meaning of Section 6 of Article XIII B of the California
2Constitution.



O

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