AB374 (Nazarian)Page 1 of 2
SENATE COMMITTEE ONHEALTH
SenatorEd Hernandez, O.D., Chair
BILL NO: AB374
AUTHOR: / NazarianVERSION: / June 19, 2015
HEARING DATE: / July 15, 2015
CONSULTANT: / Melanie Moreno
SUBJECT: Health care coverage: prescription drugs.
SUMMARY:
Prohibits a health plan or insurer that provides coverage for medications pursuant to a step therapy or fail-first protocol from applying that requirement to a patient who has made a step therapy override determination request if, in the professional judgment of the prescribing provider, the step therapy or fail-first requirement would be medically inappropriate for that patient, as specified.
Existing law:
1)Provides for regulation of health insurers by the California Department of Insurance (CDI) under the Insurance Code, and provides for the regulation ofhealth plans by the Department of Managed Health Care (DMHC), pursuant to the Knox-Keene Health Care Service Plan Act of 1975 (Knox-Keene Act).
2)Requires carriers to provide certain benefits, but does not require carriers to cover prescription drugs. Establishes various requirements on carriers if they do offer prescription drug coverage.
3)Prohibits carriers that cover prescription drugs from limiting or excluding coverage for a drug on the basis that the drug is prescribed for a use different from the use for which the drug has been approved by the federal Food and Drug Administration (FDA), provided that specified conditions have been met, including that the drug is prescribed by a participating licensed health care professional for the treatment of a chronic and seriously debilitating condition, the drug is medically necessary to treat that condition, and the drug is on the plan formulary.
4)Requires DMHC-regulated plans to respond issue authorization determinations within two business days. Requires CDI-regulated insurers to issue nonurgent authorization determinations within five business days and urgent determinations to be made within 72 hours.
This bill:
1)Prohibits a health plan or insurer that provides coverage for medications pursuant to a step therapy or fail-first protocol from applying that requirement to a patient who has made a step therapy override determination request if, in the professional judgment of the prescribing provider, the step therapy or fail-first requirement would be medically inappropriate for that patient, as specified. Defines “step therapy override determination” as a determination as to whether a step therapy protocol should apply in a particular patient’s situation, or whether the step therapy protocol should be overridden in favor of immediate coverage of the health care provider’s selected prescription drug.
2)Requires an override determination request by a patient with adequate supporting rationale and documentation from the prescribing provider to be expeditiously reviewed by the plan or insurer if any of the following apply:
a)The prescription drug required by the plan is contraindicated or will likely cause an adverse reaction by,or physical or mental harm to, the patient;
b)The prescription drug required by the plan is expected to be ineffective based on the known relevant physical or mental characteristics of the patient and the known characteristics of the prescription drug regimen;
c)The prescription drug required by the plan is not in the best interest of the patient, based on medical appropriateness;
d)The patient is stable on a prescription drug selected by their health care provider for the medical condition under consideration; or,
e)The prescription drug required by the plan has not been approved by the federal FDA for the patient’s condition.
3)Requires a health plan or insurer, upon the granting of an override determination, to authorize coverage for the prescribed drug, provided that it is a covered prescription drug under that policy or contract.
4)Requires DMHC and CDI, on or before July 1, 2016, to jointly develop a step therapy override determination request form. Requires all prescribing providers,on and after January 1, 2017, or six months after the form is developed, whichever is later, to use the step therapy override determination request form to request an override determination. Requires health plans and insurers to accept that form as sufficient to request an override determination. Requires DMHC and CDI to develop the override determination request form in a manner that allows it to be submitted by a prescribing provider to a health plan or insurer electronically.
5)Prohibits this bill from preventing a health plan or insurer from requiring a patient to try an generic equivalent drug, as specified, prior to providing coverage for the equivalent branded prescription drug nor from preventing a health care provider from prescribing a prescription drug that is determined to be medically appropriate.
FISCAL EFFECT:
According to the Assembly Appropriations Committee, the California Health Benefits Review Program (CHBRP) reports:
a)State costs:
i)$969,000 annually in Medi-Cal managed care (General Fund/federal).
ii)$315,000 annually for provision of services through CalPERS benefit plans (General Fund/federal/special/local funds). About 60% of this cost is state cost, while the rest is a local cost.
b)Private sector and individual costs:
i)Increased employer-funded premium costs in the private insurance market of $3.7 million annually.
ii)Increased premium expenditures by employees and individuals purchasing insurance of $4.1 million annually, as well as increased out-of-pocket expenditures of $1.6 million.
c)Potential minor one-time costs to DMHC (Managed Care Fund) and CDI (Insurance Fund) to verify plan and policy compliance.
PRIOR VOTES:
Assembly Floor: / 63 - 14Assembly Appropriations Committee: / 12 - 5
Assembly Health Committee: / 14 - 4
COMMENTS:
1)Author’s statement. According to the author,AB 374 does not prohibit step therapy protocols. Rather, the bill establishes an override process that creates a balance between a provider’s professional judgment and health plan and insurer’s business practice. This bill recognizes that the health plan/insurer must not have complete and ultimate control on the medications a patient is permitted to try. Plans utilize step therapy to reduce their costs. This process forces patients to “fail first” on several alternative medications, before they are permitted to obtain the appropriate medication. Anecdotal data shows that plans may require a patient to try up to five different medications before receiving the one prescribed by their physician. Also, the duration of this protocol is left up to the health plan and has been known to last up to 90 days. Step therapy is based solely on cost and does not take into consideration patients’ unique needs. The use of step therapy can exacerbate patient’s condition, causing irreversible deterioration or damage to patients, such as limiting their daily functions and ability to remain a productive member of the workforce and society.
2)Background. According to CHBRP, step therapy, or fail-first protocols, may be implemented as methods of utilization management in a variety of ways and are known by a number of terms. Step therapy, when implemented by carriers, requires an enrollee to try a first-line medication (often a generic alternative) prior to receiving coverage for a second-line medication (often a brand-name medication). Step edit is a process by which a prescription, submitted for payment authorization, is electronically reviewed at point-of-service for use of a prior, first-line medication. For either step therapy or step edit, upon decline of coverage for the prescription, a patient’s health care provider may reissue the prescription for a first-line agent covered by the patient’s health plan contract or policy or appeal the decision. Alternatively, the patient may purchase the prescription despite the lack of coverage. A fail-first protocol may also be the basis for part or all of a precertification or prior authorization protocol, which may also require the prescribing provider to confirm to the plan or insurer that an alternate medication or medications have been unsuccessfully tried by the patient before the coverage for the prescribed medication is approved. However, not all prior authorization protocols have a fail-first component. Some prior authorization protocols are based on other criteria, such as intended use to treat a specific medical problem or diagnosis, or confirmation that the patient meets other criteria such as age or specified comorbidities.Information about what types of drugs are subject to step therapy by California plans/insurers was not available to this Committee, but for its review of this bill, CHBRP identified 15 studies of the impact of step therapy protocols on varying drugs. The studies CHBRP identified addressed STPs for: antidepressants, antihypertensives, antipsychotics and anticonvulsants, nonsteroidal anti-inflammatory drugs (to reduce inflation or pain, and proton pump inhibitors to reduce stomach acidity. No studies were found that addressed STP or override procedures across all drug classes.
3)Existing policy on step therapy exceptions. Under regulation, Knox-Keene plans are permitted to require step therapy, but must have an expeditious process in place to authorize exceptions when medically necessary and to conform effectively and efficiently with continuity of care requirements. In circumstances where an enrollee is changing plans, the new plan may not require the enrollee to repeat step therapy when he or she is already being treated for a medical condition by a prescription drug, provided that the drug is appropriately prescribed and is considered safe and effective for the enrollee's condition. Under these circumstances, the regulation permits the new plan to impose a prior authorization requirement for the continued coverage. This Knox-Keene regulation is referenced in regulations related CDI insurers, but there is some question as to whether it applies to those products. Nevertheless, it appears that, in practice, insurers apply the same protocol for step therapy exceptions across all lines of business regardless of the regulator. According to CHBRP, to obtain a step therapy overridea prescriber first submits clinical documentation to the health plan or insurer documenting why an enrollee should be allowed should skip one or more step. Reasons prescribers use to justify such an override include the enrollee has already tried a drug unsuccessfully or the drug is contraindicated for that enrollee due to drug-drug interactions, drug-disease interactions, or drug allergy or intolerance. According to CHRBP, step therapy override requests may take several days to be reviewed by the health plan or insurer.
4)CHBRP analysis. AB 1996 (Thomson, Chapter 795, Statutes of 2002), requests the University of California to assess legislation proposing a mandated benefit or service and prepare a written analysis with relevant data on the medical, economic, and public health impacts of proposed health plan and health insurance benefit mandate legislation. CHBRP was created in response to AB 1996, and reviewed this bill. Key findings include:
a)Enrollees covered. In 2016, approximately 24.6 million Californians will have state-regulated health insurance subject to AB 374.
b)EHBs. AB 374 would not exceed EHBs, because the mandate is applicable to particular terms or conditions but does not require new benefit coverage.
c)Medical effectiveness. CHBRP found insufficient evidence to conclude whether overrides affect health outcomes. The absence of evidence is not evidence of no effect.
d)Benefit coverage. The terms and conditions of 27% of enrollees would change to become fully compliant with AB 374’s override approval criteria.
e)Utilization. Filled prescriptions would be unchanged, although use of initially prescribed drugs would increase and use of STP-required drugs would decrease. The change would affect expenditures because initially prescribed drugs are frequently more expensive than STP-required drugs.
f)Impact on expenditures. CHBRP estimates that premium impacts related to an increase in approved override requests would be 0.008%.
g)Public Health. Because there is insufficient evidence to link approved overrides and health outcomes, the public health impact is unknown. Note: insufficient evidence is not evidence of no effect.
According to CHBRP, there is no pattern as to particular drugs being more likely to be subject to step therapy protocols amongst California plans/insurers. Among enrollees with an outpatient prescription drug (OPD) benefit, there is not even a pattern in the presence or number-of protocols. For example, 34.4% of enrollees with an OPD benefit are not subject to step therapy protocols. Among the remaining 62.6% of enrollees with an OPD benefit, the number of drugs subject to step therapy varies widely, from two to more than 100.
5)Related legislation.AB 73 (Waldron),would haverequired a prescriber’s reasonable professional judgment prevail over the policies and utilization controls of the Medi-Cal program, including the utilization controls of a Medi-Cal managed care plan, in prescribing a pharmaceutical from specified therapeutic drug classes. AB 73 died on the Assembly Appropriations Committee Suspense File.
AB 68 (Waldron), wouldrequire a prescriber’s reasonable professional judgment to prevail over the policies and utilization controls of the Medi-Cal program, including the utilization controls of a Medi-Cal managed care plan, in prescribing a pharmaceutical that is in the seizure or epilepsy drug class.AB 68 is set to be heard in the Senate Health Committee on July 15, 2015.
AB 339 (Gordon), would make a number of changes toexisting law governing health plans and insurers, including restricting cost-sharing, specifying coverage requirements for prescription drugs, and codifying the DMHC regulations related to exceptions for step therapy discussed in 3) above. AB 339 is set for hearing in the Senate Health Committee on July 15, 2015.
6)Prior legislation. AB 889 (Huffman,2014),would have permitted health plans and insurers, when there is more than one drug that is appropriate for the treatment of a medical condition, to require step therapy, but would have prohibited them from requiring an enrollee to try and fail on more than two medications before allowing the enrollee access to the medication, or generically equivalent drug, as specified.AB 889 died on the Senate Appropriations Committee Suspense File.
AB 1814 (Waldron, 2014)was substantially similar to AB 73. AB 889 died on the Assembly Appropriations Committee Suspense File.
AB 369 (Huffman, 2012), would have prohibited carriers that restrict medications for the treatment of pain, pursuant to step therapy or fail-first protocol, from requiring a patient to try and fail on more than two pain medications before allowing the patient access to the pain medication, or generically equivalent drug, as defined, prescribed by the prescribing provider, as defined. AB 369 was vetoed by Governor Brown, who stated:
While I sympathize with the author's good intentions, I am notconvinced that this bill strikes the right balance between physiciandiscretion and health plan or insurer oversight. A doctor's judgmentand a health plan's clinical protocols both have a role in ensuringthe prudent prescribing of pain medications. Independent medicalreviews are available to resolve differences in clinical judgment when they occur, even on an expedited basis.
If current law does not suffice, and I am not certain that it doesn't, any limitations on the practice of "step-therapy" should better reflect a health plan or insurer's legitimate role in determining the allowable steps.
AB 1826 (Huffman, 2010), would have required a carrier that covers prescription drug benefits to provide coverage for a drug that has been prescribed for the treatment of pain without first requiring the enrollee or insured to use an alternative drug or product. AB 1826 died on the Senate Appropriations Committee Suspense File.
7)Support. According to the Arthritis Foundation, the sponsor of this bill, it may appear that the increased number of steps will lead to lower health care costs; however, excessive steps over a length of time will actually increase utilization of health care services in some patients. A study by the American Journal of Managed Care looked at the effects antihypertensive step therapy has on prescription drug utilization, as well as other medical care utilization and spending. It found that “step therapy was associated with an increase in outpatient office visits and inpatient admissions… [and] emergency room visits [increased] with the amount of time elapsed since step therapy was implemented.” The Association of Northern California Oncologists states that it is not always clinically appropriate to mandate a patient take a similar drug that is not a generic equivalent. The decision as to which medication should be prescribed should be left solely in the hand of the physician, in consultation with the patient. California Affiliates of Susan G. Komen write that most STPs rely on generalized information regarding patients and their treatments, as opposed to taking into account unique patient experiences and responses to treatments. Furthermore, due to the lack of standardized override process, and varying formularies among plans, physicians face considerable challenges identifying drugs that are subject to step therapy, and patients face barriers to accessing timely and appropriate treatments. Western Center on Law and Poverty writes that local legal services programs, which serve low-income clients in the Medi-Cal program, have reported the increased use of step therapy in the programs managed care plans, which has kept beneficiaries from getting mediations that their doctors intended for them to use and has led to poorer health outcomes. NAMI California contends that requiring a mental health consumer to fail-first on one or two older, less effective medications before an appropriate newer medication is prescribed is an inhumane method of treatment and the practice has serious negative consequences for consumers who are denied the best standard of care. The National Multiple Sclerosis Society – CA Action Network states that if the appropriate treatment is not provided to the patient, step therapy, especially for people living with a chronic condition like MS, actually can increase the direct cost of health care due to increased hospital admissions, excessive use of emergency rooms, and even loss of employment. The California State Retirees writes that this bill ensures it is a patient’s physician and not the health care provider or insurer who is responsible for understanding the patient’s individual circumstance and the appropriate treatment plan. The California Life Sciences Association states the override process in this bill helps ensure that a provider’s professional judgment is respected, and the provider’s prescription medication is tailored specifically to each patient’s unique needs. The California Pharmacists Association contends that this bill strikes an appropriate balance of managing costs and access, because it allows health plans and insurers to continue utilizing step therapy protocols while giving patients and their prescribing providers a uniform method of requesting an exception to the requirement of a protocol. The California Health Care Institute writesthat this bill is an attempt to decrease the practice ofdenying or delaying a patient’s access to the treatments they need and the override process helps ensure that a provider’s professional judgment is respected and prescription medication is tailored specifically to each patient’s unique needs.