BILL ANALYSIS Ó
SB 282
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Date of Hearing: July 14, 2015
ASSEMBLY COMMITTEE ON HEALTH
Rob Bonta, Chair
SB
282 (Ed Hernandez) - As Amended July 8, 2015
SENATE VOTE: 40-0
SUBJECT: Health care coverage: prescription drugs.
SUMMARY: Authorizes a prescribing provider to use an electronic
process to transmit prior authorization (PA) requests for
prescription drugs, and modifies timeframes by which health
plans and insurers (collectively referred to as "carriers") must
respond to such PA requests. Specifically, this bill:
1)Authorizes a prescribing provider to use an electronic PA
system utilizing an established uniform PA form, or an
electronic process developed specifically for transmitting PA
information that meets the National Council for Prescription
Drug Programs' (NCPDP) SCRIPT standard for electronic PA.
2)Requires the Department of Managed Health Care (DMHC) and the
California Department of Insurance (CDI) to, on or before
January 1, 2017, jointly develop a uniform PA form, and
requires every prescribing provider to, on and after July 1,
2017, or six months after the form is completed, use the PA
form, or the electronic PA process referenced in 1) above.
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3)Exempts contracted network physician groups from requirements
to use the uniform PA form if the contracted network physician
group:
a) Is delegated financial risk for prescription drugs by a
carrier;
b) Uses its own internal PA process rather than the
carrier's PA process; or,
c) Is delegated a utilization management function by the
carrier concerning any prescription drug, regardless of the
delegation of financial risk.
4)Modifies the timeframe by which a PA request would be deemed
granted by a carrier from two business days to 72 hours for
non-urgent PA requests and 24 hours if exigent circumstances
exist. Specifies that a completed PA request submitted to a
contracted network physician group is deemed granted under
these same timeframes, and makes conforming changes requiring
compliance with the timeframes in existing statutes regarding
PA and grievances.
5)Provides that "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 non-formulary drug.
6)Specifies that PA requirements for prescription drugs apply
regardless of how that benefit is classified under the terms
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of the carrier's subscriber or provider contract.
EXISTING LAW:
1)Establishes the Knox-Keene Health Care Service Plan Act of
1975, the body of law governing health plans in the state, and
provides for the licensure and regulation of health plans by
DMHC.
2)Provides for the regulation of health insurers by CDI.
3)Establishes a standardized PA process through a uniform PA
form jointly developed by DMHC and CDI that prescribing
providers must use when requesting PA, and carriers must
accept when requiring PA for, prescription drug benefits.
4)Exempts the following from requirements to use and accept the
uniform PA form:
a) Physicians or physician groups that are delegated the
financial risk for prescription drugs by a carrier and that
do not use a PA process; and,
b) A carrier, or its affilated providers, that owns and
operates its own pharmacies and does not use a PA process
for prescription drugs.
5)Deems a PA request granted if a carrier fails to utilize or
accept the uniform PA form, or fails to respond within two
business days upon receipt of a completed PA request from a
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prescribing provider submitting the form. Exempts Medi-Cal
managed care plans from these provisions.
6)Requires DMHC and CDI to develop the uniform PA form with
input from interested parties, and to take into consideration
existing PA forms established by the federal Centers for
Medicare and Medicaid Services and the Department of Health
Care Services, as well as national standards pertaining to
electronic PA.
7)Requires the uniform PA form to meet specified criteria,
including that the form shall not exceed two pages and shall
be made available electronically by the carriers and DMHC and
CDI. Authorizes completed forms to be submitted
electronically by the prescribing provider to a carrier.
FISCAL EFFECT: According to the Senate Appropriations
Committee, this bill, as amended April 9, 2015, will result in:
1)One-time costs of $134,000 in 2015-16 and $169,000 in 2016-17
to revise existing regulations by CDI (Insurance Fund).
2)One-time costs of about $90,000 to amend regulations by DMHC
(Managed Care Fund).
COMMENTS:
1)PURPOSE OF THIS BILL. According to the author, advances in
health information technology have increased health care
efficiency and lowered costs, and innovation promises to make
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health care delivery faster and cheaper. This bill increases
efficiency by removing roadblocks to electronic PA - 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.
The author states that, until the passage of SB 866, (Ed
Hernandez) Chapter 648, Statutes of 2011, each insurer had
their own PA 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 PA, including, innovative
software programs and user-friendly computer portals.
2)BACKGROUND.
a) PA. PA is a common cost-containment and utilization
review method used by health plans, insurers, and some
public coverage programs. The practice of PA, also called
prior approval or preauthorization, requires a prescriber
to obtain permission from the health plan or insurer to
prescribe a medication before prescribing it.
Health plans and insurers routinely require physicians to
fill out PA forms when the provider prescribes a medicine
or treatment not covered by the plan or insurer's
formulary. PA is intended to curb abuse and diversion of
controlled substances, and has been shown to be effective
in controlling prescription drug costs. Medications that
commonly require PA include:
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i) Brand name medications that have a generic
available;
ii) Expensive medications;
iii) Drugs not usually covered by the insurance company,
but said to be medically necessary by the doctor;
iv) Drugs usually covered but prescribed at a higher
dosage;
v) Drugs used for cosmetic reasons; and
vi) Drugs prescribed to treat a non-life threatening
medical condition.
b) Uniform PA form and process. Pursuant to SB 866, DMHC
and CDI jointly developed the "Prescription Drug Prior
Authorization Request Form" which was approved and became
effective through regulations which took effect on July 1,
2014. The form requires prescribing providers to include
specified information, including patient information,
insurance information, prescriber information, medication
and dispensing information, patient diagnoses, relevant
clinical information to support the PA, and other
information. Through the use of this form, prescribing
provider face fewer issues regarding variation among PA
forms and processes used by carriers.
Pursuant to state regulations, carriers are required to make the
form available electronically on their websites; accept the form
through any reasonable means of transmission including paper,
electronic transmission, telephone, or web portal; and, request
only the minimum amount of material information necessary to
approve or disapprove the prescription drug PA request.
Carriers are also required to notify the prescribing provider
within two business days of receipt of a prescription PA request
that either:
i) The request is approved;
ii) The request is disapproved as not medically
necessary or not a covered benefit;
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iii) The request is disapproved as missing material
information necessary to approve or disapprove the
request;
iv) The patient is no longer eligible for coverage; or,
v) The request was not submitted on the required form
and must be resubmitted on the required uniform PA form.
c) Federal regulations. In February 2015, final
regulations from the federal Health and Human Services
Agency became effective requiring carriers to establish
certain exceptions processes that allow enrollees, or their
prescribing provider, to request and gain access to
clinically appropriate drugs not covered by the carrier.
Specifically, the regulations require, for plan years
beginning on or after January 1, 2016, carriers to make
determinations on a standard exception request, and to
notify the enrollee and the prescribing provider of its
coverage determination, no later than 72 hours following
receipt of the request.
The regulations also require a carrier to have a process for an
enrollee, or the enrollee's prescribing provider, to request an
expedited exception request based on exigent circumstances under
which 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 non-formulary drug. In
these cases, the carrier must notify the enrollee and the
prescribing provider of its coverage determination no later than
24 hours following receipt of the request.
Finally, the regulations require carriers that deny a standard
or expedited exception request for a non-formulary drug to have
a process for the enrollee or the enrollee's prescribing
provider to request a review of the denial by an independent
review organization. The same timing applied to the carrier's
initial review of the exception request apply. Thus, if the
enrollee submitted a standard exception request, the independent
review organization would have to make its determination, and
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the carrier would have to notify the enrollee and prescribing
provider of the decision within 72 hours. Similarly, the
independent review organization and carrier would have 24 hours
to make determinations on denials of expedited exception
requests.
Under this bill, consistent with the federal regulations,
carriers and physician groups using the PA process, either
through the uniform form or the electronic process, would be
required to make determinations within these same timeframes.
d) NCPDP SCRIPT. The NCPDP is a non-profit organization
which develops and promotes pharmacy industry standards,
including standards on the electronic exchange of
information. According to the NCPDP, it maintains a
primary focus on information exchange for prescribing,
dispensing, monitoring, managing, and paying for
medications and pharmacy services. Beginning in 1997, the
NCPDP began publishing technical standards for electronic
prescribing, and later developed the SCRIPT standard for
transmitting prescription information electronically
between prescribers, pharmacies, and payers. According to
the NCPDP, its SCRIPT standards were developed for
transmitting prescription information electronically
between prescribers, pharmacies, payers, and other entities
for new prescriptions, changes of prescriptions,
prescription refill requests, prescription fill status
notifications, cancellation notifications, relaying of
medication history, and transactions for long-term care,
and electronic PA. SCRIPT standards are implemented in
various federal guidelines governing electronic
prescription capabilities. The SCRIPT standards are also
used by the California Division of Workers Compensation for
the purposes of electronic billing.
3)SUPPORT. Supporters state that this bill modernizes the PA
process by allowing for the use of alternative programs and
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software to electronically transmit PA information. In doing
so, the bill eliminates road blocks to the expeditious filing
of prescription drugs and can achieve improved outcomes. The
California Association of Physician Groups states that their
members have implemented their own internal processes for PA,
and this bill will allow physician groups to utilize a broader
range of electronic systems than are currently allowed.
CoverMyMeds states that current law does not allow for
deviation from the uniform PA form, and this bill will
streamline the process and reduce the time it takes to secure
drug approval. Blue Shield of California state that
electronic PA systems can be integrated with electronic
prescriptions and health records, potentially reducing errors
and enabling better coordination of care; this bill will
increase efficiency in health care delivery by permitting
additional methods of electronic PA.
4)RELATED LEGISLATION.
a) AB 339 (Gordon) applies to covered outpatients
prescription drugs, restricts cost-sharing amounts for a
30-day supply to one-twenty-fourth of the annual
out-of-pocket limit, requires coverage for specified drugs
under a variety of specified circumstances, standardizes
tiers for prescription drug formularies, and restricts the
ability of health plans and insurers to institute
cost-sharing and place drugs on certain cost-sharing tiers,
unless specified conditions are met. This bill is pending
in the Senate Health Committee.
b) AB 374 (Nazarian) prohibits a carrier from applying a
step therapy protocol when a patient has made a "step
therapy override determination request," if the patient's
physician determines that step therapy would not be
medically appropriate, and requires a carrier to
expeditiously review a request made by a patient, if
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specific criteria are met and adequate supporting rationale
and documentation is provided by the prescribing physician.
This bill is pending in the Senate Health Committee.
5)PREVIOUS LEGISLATION.
a) AB 889 (Frazier) of 2013 would have prohibited carriers
from requiring a patient to try and fail on two medications
before allowing the patient access to the medication
originally prescribed by the patient's medical provider.
AB 889 was held on the Suspense File in Senate
Appropriations Committee.
b) AB 369 (Huffman) of 2012 would have prohibited carriers
that restrict medications for the treatment of pain from
requiring a patient to try and fail on more than two pain
medications before allowing the patient access to the pain
medication, or generically equivalent drug, prescribed by
the provider. The Governor vetoed AB 369 because it did
not strike "the right balance between physician discretion
and health plan or insurer oversight. A doctor's judgment
and a health plan's clinical protocols both have a role in
ensuring the prudent prescribing of pain medications.
Independent medical reviews are available to resolve
differences in clinical judgment when they occur, even on
an expedited basis. If current law does not suffice - and
I am not certain that it doesn't, any limitations on the
practice of "step therapy" should better reflect a health
plan or insurer's legitimate role in determining the
allowable steps."
c) SB 866 requires DMHC and CDI to jointly develop a
uniform PA form that health plans and insurers must accept
when prescribing providers seek authorization for
prescription drug benefits.
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d) AB 1826 (Huffman) of 2010 would have required plans and
health insurers that cover outpatient prescription drug
benefits to provide coverage for a drug that has been
prescribed for the treatment of pain. AB 1826 would have
prohibited health plans and insurers from requiring the
subscriber or enrollee to first use an alternative
prescription drug or an over-the-counter drug, as
specified. AB 1826 was held by the Senate Appropriations
Committee.
e) AB 1144 (Price) of 2009 would have required plans and
health insurers that provide prescription drug benefits to
submit written reports about step therapy each year to DMHC
and CDI. AB 1144 was held by the Assembly Appropriations
Committee.
REGISTERED SUPPORT / OPPOSITION:
Support
AARP
AllCare Independent Physician Association
AltaMed
Arthritis Foundation
Association of Northern California Oncologists
Biocom
Blue Shield of California
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 Life Sciences Association
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California Primary Care Association
California Society of Health-System Pharmacists
Coachella Valley Physicians
CoverMyMeds
Empire Physicians Medical Group
Express Scripts
Facey Medical Group
Greater Tri-Cities Independent Physicians Association
HealthCare Partners Medical Group and Affiliated Physicians
John Muir Physician Network
Medical Oncology Association of Southern California
MedPOINT Management
Memorial Care Medical Foundation
Mental Health America of California
Mercy Medical Group
Mercy Physicians Medical Group, Inc.
Monarch Healthcare
Noble AMA Independent Practice Association
Premier Health Plan Services
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 Bernardino
Prime Care of Sun City
Prime Care of Temecula
Sansum Clinic
Scripps Health Plan Services
Sharp Community Medical Group
SynerMed
Valley Physicians Network
Ventegra
Opposition
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None on file.
Analysis Prepared by:Kelly Green / HEALTH / (916)
319-2097