Health care coverage: step therapy.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975 (Knox-Keene) , provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law provides for the regulation of health insurers by the Department of Insurance. Existing law authorizes a health insurer to require step therapy if there is more than one drug that is appropriate for the treatment of a medical condition, and authorizes a health care service plan to utilize step therapy consistent with Knox-Keene. Under existing law, if a health care service plan, health insurer, or contracted physician group fails to respond to a completed prior authorization request from a prescribing provider within a specified timeframe, the prior authorization request is deemed to have been granted. This bill would clarify that a health care service plan that provides coverage for prescription drugs may require step therapy, as defined, if there is more than one drug that is clinically appropriate for the treatment of a medical condition. The bill would require a health care service plan or health insurer to expeditiously grant a step therapy exception request if the health care provider submits justification and supporting clinical documentation, as specified, supporting the provider's determination that the required prescription drug is inconsistent with good professional practice for provision of medically necessary covered services to the enrollee or insured, based on specified criteria. The bill would authorize a health care provider or prescribing provider to appeal a denial of an exception request for coverage of a nonformulary drug, prior authorization request, or step therapy exception request consistent with the health care service plan's or health insurer's current utilization management processes. The bill would authorize an enrollee or insured, or their designee or guardian, to appeal a denial of an exception request for coverage of a nonformulary drug, prior authorization request, or step therapy exception request, as specified. The bill would require a prior authorization or step therapy exception request to be deemed approved for the duration of the prescription, including refills, if a health care service plan, health insurer, or contracted physician group fails to send an approval or denial within a specified timeframe. Commencing January 1, 2022, the bill would require a contract between a health care service plan or health insurer and a utilization review organization that performs utilization review or utilization management functions on behalf of health care service plans or health insurers, or between a health care service plan and another contracted entity, to include terms that require the utilization review organization or other contracted entity to comply with specified provisions relating to step therapy determinations and procedures. Because a willful violation of the bill's requirements relative to health care service plans would be a crime, the bill would impose a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason.