BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 282|
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UNFINISHED BUSINESS
Bill No: SB 282
Author: Hernandez (D)
Amended: 9/2/15
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
SENATE FLOOR: 40-0, 6/1/15
AYES: Allen, Anderson, Bates, Beall, Berryhill, Block,
Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall,
Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson,
Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning,
Moorlach, Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Runner,
Stone, Vidak, Wieckowski, Wolk
ASSEMBLY FLOOR: 78-0, 9/4/15 - See last page for vote
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.
Assembly Amendments align the prior authorization grievance
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process with federal code.
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
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
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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.
8)Requires health care service plans to establish a grievance
process approved by DMHC.
This bill:
1)Authorizes a prescribing provider to use an electronic prior
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.
3)Aligns the electronic prior authorization grievance process
with federal code, and requires large group plans to comply.
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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
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;
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e) Drugs used for cosmetic reasons; and
f) Drugs prescribed to treat a non-life threatening medical
condition.
3)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,
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 Assembly Appropriations Committee:
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.
SUPPORT: (Verified9/4/15)
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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
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
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Valley Physicians Network
Ventegra
OPPOSITION: (Verified9/4/15)
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.
ASSEMBLY FLOOR: 78-0, 9/4/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,
Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,
Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,
Irwin, Jones, Kim, Lackey, Levine, Linder, Lopez, Low,
Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,
Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,
Quirk, Rendon, Rodriguez, Salas, Santiago, Steinorth, Mark
Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams,
Wood, Atkins
NO VOTE RECORDED: Jones-Sawyer, Ridley-Thomas
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Prepared by:Shannon Muir / HEALTH /
9/4/15 18:16:29
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