BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON HEALTH
                          Senator Ed Hernandez, O.D., Chair

          BILL NO:                    SB 282    
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          |AUTHOR:        |Hernandez                                      |
          |---------------+-----------------------------------------------|
          |VERSION:       |April 9, 2015                                  |
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          |HEARING DATE:  |April 22, 2015 |               |               |
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          |CONSULTANT:    |Shannon Muir                                   |
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           SUBJECT  :  Health care coverage:  prescription drugs

           SUMMARY  :  Permits the use of alternative methods of electronic prior  
          authorization of prescription drugs other than the required  
          standardized form, and exempts physician groups with delegated  
          financial risk from the standardized prior authorization  
          process.

          Existing law:
          1.Regulates health plans under the Knox-Keene Health Care  
            Service Plan Act of 1975 through the Department of Managed  
            Health Care (DMHC) and regulates health insurers under the  
            Insurance Code through the California Department of Insurance  
            (CDI).

          2.Requires DMHC and CDI to jointly develop a uniform prior  
            authorization form that health plans and insurers must accept  
            when prescribing providers seek authorization for prescription  
            drug benefits. 

          3.Prohibits the standardized prior authorization form from  
            exceeding two pages. Requires the standardized prior  
            authorization form to be made electronically available by the  
            DMHC, CDI, and health insurers. Requires the standardized  
            prior authorization form, through regulation, to be accepted  
            by any reasonable means of transmission, including, but not  
            limited to, paper, electronic transmission, telephone, web  
            portal, or another mutually agreeable method of transmission.  
            Prohibits, through regulation, standardized prior  
            authorization forms accepted telephonically or through a web  
            portal from requiring more information than is on the two-page  
            form. Requires the standardized prior authorization form to  
            request only the minimum amount of information DMHC and CDI  







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            deemed necessary for an insurer to approve or disapprove the  
            prior authorization request. 

          4.Requires prescribers to use the standardized prior  
            authorization form to request prior authorization for coverage  
            of prescription drug benefits. 

          5.Requires health plans and health insurers to accept only the  
            standardized form when requiring prior authorization for  
            prescription drug benefits.

          6.Exempts from the standardized prior authorization process a  
            physician or physician group that has been delegated the  
            financial risk for prescription drugs by a health care service  
            plan and does not use a prior authorization process. 

          7.Deems authorization granted if a health plan or health insurer  
            fails to utilize or accept the standardized prior  
            authorization form, or fails to respond within two business  
            days upon receipt of a request from a prescribing provider.   
            Exempts health plan contracts and insurance policies for  
            enrolled Medi-Cal beneficiaries from the standardized prior  
            authorization process.

          
          This bill:
          1.Authorizes a prescribing provider to use an electronic prior  
            authorization system that utilizes the standardized form or an  
            electronic process developed specifically for transmuting  
            prior authorization information that is consistent with the  
            standardized form and that meets the National Council for  
            Prescription Drug Programs' SCRIPT standard for electronic  
            prior authorization transactions.  

           2.Redefines the groups that are exempt from the requirement to  
            use the standardized prior          authorization process to  
            any contracted network physician group that:

                  a.        Is delegated the financial risk for the  
                    pharmacy or medical drug benefit by a health plan; 
                  b.        Uses its own internal prior authorization  
                    process, rather than the health plan's prior  
                    authorization process for plan enrollees; or, 
                  c.        Is delegated a utilization management function  
                    by the health plan concerning any pharmacy or medical  








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                    drug benefit, regardless of the delegation of  
                    financial risk. 

           FISCAL  
          EFFECT  : This bill has not yet been analyzed by a fiscal  
          committee

           COMMENTS  :
          1.Author's statement. According to the author, advances in  
            health information technology have increased health care  
            efficiency and lowered costs, and innovation promises to make  
            health care delivery faster and cheaper. This bill increases  
            efficiency by removing roadblocks to electronic prior  
            authorization - a utilization review method used to curb abuse  
            of controlled substances and control prescription drug costs  
            by requiring prescribers to obtain permission from an insurer  
            before prescribing certain drugs.  


             Until the passage of SB 866, (Hernandez) Chapter 648, Statues  
            of 2011, each insurer had their own prior authorization form,  
            and some had multiple forms, depending on the type of drug  
            requested. The complexity of the process made it confusing and  
            costly for many prescribers. SB 866 streamlined the process  
            and improved timely access to prescription drugs by creating a  
            standardized electronic form. This bill further increases  
            efficiency by permitting additional methods of electronic  
            prior authorization, including, innovative software programs  
            and user-friendly computer portals.


          2.Prior authorization. According to the Consumer Health  
            Information Corporation, prior authorization is a utilization  
            review method used by health plans, insurers, and some public  
            coverage programs, and requires prescribers to obtain  
            permission from the health plan or insurer before prescribing  
            certain medications.  Prior authorization is used by insurance  
            companies like Blue Cross Blue Shield of Massachusetts to curb  
            abuse and diversion of controlled substances. Medications that  
            commonly require prior authorization include:


             a.   Brand name medications that have an available generic; 

             b.   Expensive medications;








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             c.   Drugs not usually covered by the insurance company, but  
               said to be medically necessary by the doctor;

             d.   Drugs usually covered but prescribed at a higher dosage;

             e.   Drugs used for cosmetic reasons; and,

             f.   Drugs prescribed to treat a non-life threatening medical  
               condition. 

          1.Emerging technologies. A 2012 study by the California  
            HealthCare Foundation showed that the health care industry is  
            increasingly moving toward electronic health information  
            systems that manage patients' prescriptions and medication  
            history. Electronic prior authorization systems can be  
            integrated with electronic prescriptions and electronic health  
            records, potentially reducing errors and enabling better  
            coordination of care. Beginning in 1997, the National Council  
            for Prescription Drug Programs (NCPDP) began publishing  
            technical standards for electronic prescribing, and later  
            developed the SCRIPT standard for transmitting prescription  
            information electronically between prescribers, pharmacies,  
            and payers. Included in the SCRIPT standards are standards for  
            prior authorization. NCPDP is a not-for-profit,  
            multi-stakeholder forum for developing and promoting industry  
            electronic transmission standards.

          4.   Prior legislation. SB 866 (Hernandez), Chapter 648,  
            Statutes of 2011, requires DMHC and CDI to jointly develop a  
            uniform prior authorization form that health plans and  
            insurers must accept when prescribing providers seek  
            authorization for prescription drug benefits. 

          5.  Support.  CoverMyMeds states that this bill will allow  
            innovative companies to automate prior authorization, saving  
            valuable time and money while ensuring patients receive the  
            medication they need faster. The California Council of Community  
            Mental Health Agencies and Mental Health America of California  
            state that eliminating roadblocks to timely filling of  
            prescriptions can improve outcomes. AARP states that by providing  
            for the use of electronic transmission of prior authorization  
            information for prescription drugs, [health information  
            technology] can reduce prescription errors and duplication, as  
            well as contain costs." The California Society of Health-System  








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            Pharmacists states that allowing prior authorization to be handled  
            via electronic means would expedite the delivery of healthcare  
            services and reduce undue stress or delays for patients and  
            providers

           SUPPORT AND OPPOSITION  :
          Support:  AARP
                    Alamitos Independent Physicians Association
                    AllCare Independent Physician Association
                    Biocom
                    Brookshire Independent Physicians Association
                    Brown and Toland Physicians
                    California Academy of Family Physicians
                    California Association of Physician Groups
                    California Council of Community Mental Health Agencies
                    California Healthcare Institute
                    California Society of Health-System Pharmacists
                    Coachella Valley Physicians
                    CoverMyMeds
                    Facey Medical Group
                    Fountain Valley Independent Physicians Association
                    Greater Tri-Cities Independent Physicians Association
                    HealthCare Partners Medical Group and Affiliated  
                    Physicians
                    MedPOINT Management
                    Memorial Care Medical Foundation
                    Mental Health America of California
                    Mercy Medical Group
                    Mercy Physicians Medical Group, Inc.
                    Lakewood Independent Physicians Association
                    Noble AMA Independent Practice Association
                    Primary Care Associates
                    Prime Care of Chino
                    Prime Care of Citrus Valley
                    Prime Care of Hemet Valley
                    Prime Care of Inland Valley
                    Prime Care of Moreno Valley
                    Prime Care of Redlands
                    Prime Care of Riverside
                    Prime Care of San Bernadino
                    Prime Care of Sun City
                    Prime Care of Temecula
                    Sansum Clinic
                    Scripps Health Plan Services
                    Sharp Community Medical Group








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                    St. Mary Independent Physicians Association
                    SynerMed
                    Valley Physicians Network
                    Ventegra

          
          Oppose:   None received.
          
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