BILL ANALYSIS                                                                                                                                                                                                    Ó

                                                                     SB 282

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          282 (Hernandez)

          As Amended  September 2, 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,     |                     |
          |                |     |                       |                     |


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          |                |     |                       |                     |
          |                |     |Eduardo 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  


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            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  
            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.

          6)Exempts Medi-Cal managed care health care service plans from  
            the provisions of this bill.

          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.


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          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.  

          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  


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          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  

          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, this 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:                                             


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                          An-Chi Tsou and Kelly Green / HEALTH / (916)  
          319-2097          FN: 0002009