BILL ANALYSIS �
SB 866
Page 1
Date of Hearing: August 17, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 866 (Hern�ndez) - As Amended: June 23, 2011
Policy Committee: HealthVote:15-0
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill standardizes prior authorization forms for
prescription drugs covered by health care plans and insurers.
Specifically, this bill:
1)Requires the Department of Managed Health Care (DMHC) and the
Department of Insurance (CDI) to, on or before July 1, 2012,
develop a prior authorization form for use by every health
care service plan and health insurer (carrier) that provides
prescription drug benefits, with some exceptions.
2)Requires providers to use the standard form, and requires
carriers to use and accept those prior authorization forms for
prescription drug benefits, after January 1, 2013 (or six
months after the form is developed, whichever is later).
3)Deems prior authorization requests as granted upon a failure
by the plan or insurer to respond to a prescribing provider
within two business days, with some exceptions.
FISCAL EFFECT
1)One-time costs to DMHC and CDI, combined, of approximately
$90,000 for staff time to develop the form, issue regulations,
and to review compliance with the new standard form.
2)Depending upon plan, provider, and consumer response to the
standardized form, the use of a such a form may have indirect
fiscal impacts on the state, including the following:
a) Potential for increased costs to DMHC associated with
increased complaints to the Help Center and Provider
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Complaint Unit related to shorter required response times
for prior authorization of prescription drugs.
Alternatively, the standardized form may reduce complaints
and associated workload costs.
b) Potential for cost impacts in CalPERS-funded plans
associated with plans' response to the standardized form
and shorter required response times. If the standardized
form results in fewer prescriptions approved, there could
be lower cost pressure on rates compared to the status quo.
Alternatively, if the use of a standardized form leads to
a larger number of prescriptions approved, there could be
increased cost pressure.
The likelihood, magnitude, and direction of these potential
indirect costs is unknown.
COMMENTS
1)Rationale . According to the author, prior authorization
requirements can delay medication accessibility for patients
and divert limited physician time from treating patients. SB
866 attempts to streamline the prior authorization process and
improve access to prescription drugs by creating a
standardized form for providers to use when making a request
for prior authorization.
2)Prior Authorization . Health plans and insurers require
physicians to fill out a prior authorization form when the
provider prescribes a medicine or treatment not covered by the
plan or insurer's formulary. Health plans indicate that prior
authorization is not required for most prescriptions, but is
used in circumstances where there is a concern over the drug,
if a drug is costly but provides no clear clinical advantage
over less expensive alternatives, is subject to abuse or
addictive, or if there is utilization management protocol such
as step therapy. Currently, state regulations require a
response to prior authorization requests within five business
days; this bill would shorten that time frame to two business
days or deem the request approved.
3)Forms for Prior Authorization . Each health plan and insurer
has their own PA forms, and though they generally include some
common elements, they vary greatly in length and specificity.
For example, Medi-Cal uses a generic, one-page "treatment
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authorization request" form and allows space for a physician
to verbally describe the diagnosis and medical justification
for the request. Some health plans use diagnosis- or
drug-specific forms that request detailed clinical information
and information about specific alternative drugs that were
attempted for the patient.
4)Concerns . The California Association of Health Plans (CAHP)
indicates that using one standardized form could result in
insufficient information to obtain approval for the drug, and
that this would lead to followup calls and faxes, creating
additional administrative burdens.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081