BILL ANALYSIS                                                                                                                                                                                                    

                                                                     SB 282  

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          Date of Hearing:  August 19, 2015


                                 Jimmy Gomez, Chair

          SB 282  
          (Hernandez) - As Amended July 8, 2015

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          Urgency:  No  State Mandated Local Program:  YesReimbursable:   


          This bill updates the codes governing standard prior  
          authorization request forms, to conform to federal regulation  
          and modernize the allowable processes for standard prior  


                                                                     SB 282  

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          authorization (PA).  Specifically, this bill:

          1)Allows providers to use newer, electronic processes that meet  
            certain data standards, in addition to the standard form in  
            current law.

          2)Conforms to timelines in recent federal regulations, related  
            to reviews of exceptions to a plan's drug coverage guidelines  
            which must be conducted in order to ensure access medically  
            appropriate drugs. 

          3)Exempts contracted physician groups that manage their own drug  
            benefits from compliance with the existing standard PA law. 

          FISCAL EFFECT:

          1)One-time costs in the range of $200,000 over two years to the  
            California Department of Insurance (Insurance Fund) to update  

          2)One-time costs in the range of $100,000 to the Department of  
            Managed Health Care (Managed Care Fund) to update regulations.


          1)Purpose. The main purpose of this bill is to remove statutory  
            roadblocks to electronic PA, which are specially designed  
            systems that interface with health plan coverage data to  
            provide quicker or real-time answers to PA queries, and also  
            populate the electronic PA request with data from a patient's  
            health record, saving time and expense.  It also conforms to  


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            recent federal regulation and exempts certain physician groups  
            from compliance, many of whom use their own PA systems.

          2)Prior Authorization (PA). Health plans and pharmaceutical  
            benefit managers attempt to balance the medical needs of the  
            patient and prescriber preferences with the provision of  
            affordable benefits that meet clinical standards of  
            appropriate care.  In so doing, utilization review controls  
            such as PA are employed.  PA is health plan approval for  
            coverage of a drug.  It is not only employed to contain costs,  
            but to allow a clinical review to ensure medication is  
            prescribed appropriately and to allow consideration of safer  
            alternatives.  In some instances, inappropriate prescribing  
            can be identified.  

          3)Related Legislation.  AB 374 (Nazarian), pending in the Senate  
            Appropriations Committee, 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 specific criteria are met and  
            adequate supporting rationale and documentation is provided by  
            the prescribing physician.  

            AB 339 (Gordon) pending in the Senate Appropriations  
            Committee, 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.  


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          4)Prior Legislation. SB 866, (Ed Hernandez) Chapter 648,  
            Statutes of 2011, created a standardized electronic PA form.  

          Analysis Prepared by:Lisa Murawski / APPR. / (916)