BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 282| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: SB 282 Author: Hernandez (D) Amended: 4/9/15 Vote: 21 SENATE HEALTH COMMITTEE: 8-0, 4/22/15 AYES: Hernandez, Nguyen, Mitchell, Monning, Nielsen, Pan, Roth, Wolk NO VOTE RECORDED: Hall SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/28/15 AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen SUBJECT: Health care coverage: prescription drugs SOURCE: Author DIGEST: This bill 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.ANALYSIS: 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 SB 282 Page 2 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 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 SB 282 Page 3 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' (NCPDP) 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 drug benefit, regardless of the delegation of financial risk. 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 SB 282 Page 4 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; 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, NCPDP began publishing technical standards for electronic prescribing, and later developed the SCRIPT standard for transmitting prescription information electronically between prescribers, SB 282 Page 5 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. 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. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: Yes According to the Senate Appropriations Committee: One-time costs of $134,000 in 2015-16 and $169,000 in 2016-17 to revise existing regulations by CDI (Insurance Fund). One-time costs of about $90,000 to amend regulations by DMHC (Managed Care Fund). SUPPORT: (Verified 5/28/15) 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 SB 282 Page 6 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 St. Mary Independent Physicians Association SynerMed Valley Physicians Network Ventegra OPPOSITION: (Verified5/28/15) None received ARGUMENTS IN 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 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. SB 282 Page 7 Prepared by:Shannon Muir / HEALTH / 5/31/15 13:12:12 **** END ****