BILL ANALYSIS Ó SB 282 Page 1 SENATE THIRD READING SB 282 (Hernandez) As Amended July 8, 2015 Majority vote SENATE VOTE: 40-0 ------------------------------------------------------------------ |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+----------------------+--------------------| |Health |19-0 |Bonta, Maienschein, | | | | |Bonilla, Burke, | | | | |Chávez, Chiu, Gomez, | | | | |Gonzalez, Roger | | | | |Hernández, Lackey, | | | | |Nazarian, Patterson, | | | | |Ridley-Thomas, | | | | |Rodriguez, Santiago, | | | | |Steinorth, Thurmond, | | | | |Waldron, Wood | | | | | | | |----------------+-----+----------------------+--------------------| |Appropriations |17-0 |Gomez, Bigelow, | | | | |Bloom, Bonta, | | | | |Calderon, Chang, | | | | |Nazarian, Eggman, | | | | |Gallagher, Eduardo | | SB 282 Page 2 | | |Garcia, Holden, | | | | |Jones, Quirk, Rendon, | | | | |Wagner, Weber, Wood | | | | | | | ------------------------------------------------------------------ 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. 3)Exempts contracted network physician groups from requirements to use the uniform PA form if the contracted network physician group is delegated financial risk or utilization management, or uses its own internal PA process, as specified. 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, as defined, exist. Specifies that a completed PA request SB 282 Page 3 submitted to a contracted network physician group is deemed granted under these same timeframes. 5)Requires the grievance process established by a health care service plan to comply with specified federal regulations. FISCAL EFFECT: According to the Assembly Appropriations Committee, this bill will result in: 1)One-time costs in the range of $200,000 over two years to the CDI (Insurance Fund) to update regulations. 2)One-time costs in the range of $100,000 to DMHC (Managed Care Fund) to update regulations. COMMENTS: According to the author, 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. 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 SB 282 Page 4 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. Pursuant to SB 866, DMHC and CDI jointly developed the "Prescription Drug Prior Authorization Request Form" which 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. 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, or 24 hours based on exigent circumstances under which an enrollee suffers from a health condition that may 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. 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. SB 282 Page 5 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. Supporters state that this bill modernizes the PA process by allowing for the use of alternative programs and 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 supports this bill, and 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. Other supporters include CoverMyMeds which 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; and Blue Shield of California which states that electronic PA systems can be integrated with electronic prescriptions and health records, and this bill will increase efficiency in health care delivery by permitting additional methods of electronic PA. There is no known opposition. Analysis Prepared by: Kelly Green / HEALTH / (916) 319-2097 FN: 0001661 SB 282 Page 6