BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 866|
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UNFINISHED BUSINESS
Bill No: SB 866
Author: Hernandez (D)
Amended: 8/26/11
Vote: 21
SENATE HEALTH COMMITTEE : 7-0, 4/13/11
AYES: Hernandez, Strickland, Alquist, Anderson, De Le�n,
DeSaulnier, Rubio
NO VOTE RECORDED: Blakeslee, Wolk
SENATE APPROPRIATIONS COMMITTEE : 6-2, 5/26/11
AYES: Kehoe, Alquist, Lieu, Pavley, Price, Steinberg
NOES: Walters, Runner
NO VOTE RECORDED: Emmerson
SENATE FLOOR : 27-10, 6/2/11
AYES: Alquist, Anderson, Calderon, Corbett, Correa, De
Le�n, DeSaulnier, Evans, Hancock, Hernandez, Kehoe, Leno,
Lieu, Liu, Lowenthal, Negrete McLeod, Padilla, Pavley,
Price, Rubio, Simitian, Steinberg, Strickland, Vargas,
Wolk, Wright, Yee
NOES: Berryhill, Blakeslee, Dutton, Emmerson, Fuller,
Gaines, Harman, La Malfa, Walters, Wyland
NO VOTE RECORDED: Cannella, Huff, Runner
ASSEMBLY FLOOR : Not available
SUBJECT : Health care coverage: prescription drugs
SOURCE : Author
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DIGEST : This bill requires the Department of Managed
Health Care and the Department of Insurance to jointly
develop an electronic uniform prior authorization form for
use on and after January 1, 2013, or six months after the
form is developed, that health plans and insurers must
accept when prescribing providers seek authorization for
prescription drug benefits.
Assembly Amendments clarify the timeframe for the
authorization form to be developed, and make technical
corrections.
ANALYSIS :
Existing law:
1. Provides for the regulation of health care services
plans (health plans) by the Department of Managed Health
Care (DMHC), and for the regulation of health insurers
by the Department of Insurance (CDI).
2. Imposes various requirements and restrictions on certain
procedures, commonly referred to as utilization review,
that apply to every health plan and insurer that
prospectively, retrospectively, or concurrently reviews
and approves, modifies, delays, or denies, based on
medical necessity, requests by providers prior to,
retrospectively, or concurrent with, the provision of
health care services to enrollees or insureds, as
specified.
3. Imposes various requirements and restrictions on health
plans and insurers, including, among other things, a
prohibition on health plans and insurers that provide
prescription drug benefits from excluding or limiting
coverage for a drug on the basis that the drug is
prescribed for a use that is different from the use for
which the drug has been approved for marketing by the
federal Food and Drug Administration.
4. Requires health plans and insurers to respond to
requests for authorization within five business days for
non-urgent medically necessary health care services, as
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specified, or within 72 hours for situations when the
enrollee or insured's condition is such that he or she
faces an imminent and serious threat to his or her
health, as specified.
5. Requires health plans and insurers to communicate
decisions to approve, modify or deny requests within 24
hours of the decision to the provider, with certain
exceptions.
6. Requires health plans and insurers to communicate
decisions resulting in the denial, delay or modification
of all or part of the request to the enrollee or insured
within two business days.
7. Requires health plans that provide prescription drug
benefits to maintain an expeditious process by which
prescribing providers, as described, may obtain
authorization for a medically necessary nonformulary
prescription drug, according to certain procedures.
This bill:
1. Deems authorization granted if a health plan or health
insurer fails to utilize or accept the completed prior
authorization form (PA 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.
2. Requires, on or before July 1, 2012, the DMHC and the
CDI to jointly develop the PA form and establishes
criteria for the PA form.
3. Defines "prescribing provider" to include a provider
authorized to write prescriptions to treat a medical
condition of an enrollee.
Background
Prior authorization is a common cost-containment and
utilization review method used by health plans, insurers,
and some public coverage programs. The practice of prior
authorization, also called prior approval or
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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 prior authorization forms when the provider
prescribes a medicine or treatment not covered by the plan
or insurer's formulary. Each plan or insurer has their own
prior authorization form, and some plans and insurers may
have multiple forms depending on the type of drug
requested.
Prior authorization is intended to curb abuse and diversion
of controlled substances, and has been shown to be
effective in controlling prescription drug costs.
Medications that commonly require prior authorization
include:
1. Brand name medications that have a generic available;
2. Expensive medications;
3. Drugs not usually covered by the insurance company, but
said to be medically necessary by the doctor;
4. Drugs usually covered but prescribed at a higher dosage;
5. Drugs used for cosmetic reasons; and
6. Drugs prescribed to treat a non-life threatening medical
condition.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Assembly Appropriations Committee,
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
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Provider 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 California Public
Employees' Retirement System-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 are unknown.
SUPPORT : (Verified 8/25/11)
Alliance for Patient Access
Alzheimer's Association
American Academy of Private Physicians
American Cancer Society
Association of Northern California Oncologists
BayBio
BIOCOM
California Academy of Family Physicians
California Arthritis Foundation Council
California Association of Health Plans
California Association of Joint Powers Authorities
California Association of Physician Groups
California Chronic Care Coalition
California Council of Community Mental Health Agencies
California Healthcare Institute
California Medical Association
California NeuroAlliance
California Optometric Association
California Psychiatric Association
California Society of Industrial Medicine and Surgery
California Society of Physical Medicine and Rehabilitation
Corona Mind-Body Institute, Inc.
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Department of Insurance
Los Angeles County Medical Association
Medical Oncology Association of S. California, Inc.
Mental Health Association in California
National Council of Asian Pacific Islander Physicians
National Multiple Sclerosis Society
Neuropathy Action Foundation
Orange County Medical Association
Osteopathic Physicians and Surgeons of California
Ovarian Cancer Coalition of Greater California
Pharmaceutical Research and Manufacturers of America
Power of Pain Foundation
US Pain Foundation
OPPOSITION : (Verified 8/25/11)
California Association of Health Plans
Express Scripts, Inc.
ARGUMENTS IN SUPPORT : The California Medical Association
writes in support, stating that preauthorization policies
lead to costly bureaucratic hassles that take time from
patient care. The Medical Oncology Association of Southern
California, Inc. asserts that the prior authorization
process is currently highly complex, lacks transparency,
and the criteria and processes vary significantly among
health plans. Furthermore, these different requirements
create logistical complexity for providers, as well as
adding duplicative overhead and staff time. The American
Academy of Private Physicians concurs, stating that
providers need to be able to get back to the work of
patient care and should not be spending needless time
trying to figure out which health plan has what protocol
and what form.
The Alliance for Patient Access supports this bill, citing
that health plans and insurers have great incentive to
limit a physician's treatment options by using prior
authorization as a way to cut costs. Writing in
concurrence, the Power of Pain Foundation states that they
receive calls regularly from Californians stating that, in
the course of the prior authorization process, they are
forced to go days and/or weeks before they obtain/continue
to get treatments deemed necessary by their provider, and
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that they are forced to go through the prior authorization
process multiple times a year for the same medication for
the same condition.
ARGUMENTS IN OPPOSITION : The Californian Association of
Health Plans (CAHP) opposes the bill unless amended, citing
that health plans use drug specific prior authorization
forms because each drug is unique in its requirements for
diagnosis, limitations, existing diseases, treatment
failures and other clinically relevant information, and
that applying a standardized prior authorization form could
create even more administrative burdens if the form does
not ask the appropriate questions which will subsequently
lead to follow-up calls and faxes. CAHP further objects to
the provision in the bill that deems approval of a prior
authorization request if a plan or insurer does not respond
to a prior authorization request within 48 hours or if the
plan or insurer fails to use the standard form, and raises
concerns that the bill does not address situations where
the provider fails to respond to a request for additional
information or fails to use the standardized form. In
addition, CAHP notes that the implementation date for
plans, insurers and providers is unclear.
CTW:mw 9/7/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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