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ARIZONA STATE SENATE
Fifty-Fourth Legislature, Second Regular Session
insurance; prescription drugs; step therapy
Purpose
Outlines requirements for health care insurers that implement a step therapy protocol for prescription drugs. Requires health care insurers to provide a process for step therapy exemption requests and sets deadlines for request responses.
Background
The Department of Insurance (DOI) regulates policies, certificates, evidences of coverage and contracts of insurance that are issued or delivered by health care insurers. Examples of health care insurers are disability insurers, group disability insurers, blanket disability insurers, health care services organizations (HCSOs), hospital service corporations, medical service corporations and hospital and medical service corporations (A.R.S. § 20-1379). Beginning July 1, 2020, DOI will be renamed the Department of Insurance and Financial Institutions (DIFI) (Laws 2019, Chapter 252).
Certain health care insurers with a prescription drug benefit that uses a drug formulary as a component of the health care plan must provide covered individuals with a notice regarding the applicable drug formulary. The notice must include: 1) an explanation of what a drug formulary is; 2) how the insurer determines which prescription drugs are included or excluded; and 3) how often the insurer reviews the contents of the drug formulary. These health care insurers must develop and maintain a process by which health care professionals may request authorization for medically necessary nonformulary prescription drugs, unless the pharmacy benefit plan does not require authorization. The health care insurer must approve an alternative prescription drug for an individual when: 1) the equivalent prescription drug on the formulary has been ineffective in the treatment of the individual's disease or condition; or 2) the equivalent prescription drug on the formulary has caused an adverse or harmful reaction in the individual (A.R.S. §§ 20-841.05 and 20-1057.02).
When calculating a covered individual's contribution to any out-of-pocket maximum, deductible, copayment, coinsurance or other cost sharing requirement, a health care insurer that provides pharmacy benefits or a pharmacy benefits manager (PBM) must include any cost sharing amount paid by the individual for a prescription drug that is without a generic equivalent or a prescription drug that is with a generic equivalent where the enrollee has obtained access to the prescription drug through: 1) prior authorization; 2) a step therapy protocol; or 3) the health care insurer's exceptions and appeals process (A.R.S. § 20-1126).
According to a Joint Legislative Budget Committee (JLBC) fiscal note, H.B. 2420 may increase state employee health insurance costs by $4,250,000, if 50 percent of current prescription drug claims affected by the state's step therapy protocol are eliminated due to exceptions. Since the state employee health insurance plan is run by the Arizona Department of Administration through the Health Insurance Trust Fund (HITF) and the state General Fund typically pays for 26 percent of HITF expenses, there would be a negative fiscal impact of $1,100,000 to the state General Fund associated with this cost (JLBC fiscal note).
Provisions
Clinical Review Criteria
1. Requires a health care insurer, PBM or utilization review organization, when establishing a step therapy protocol, to use clinical review criteria based on clinical practice guidelines that:
a) recommend that prescription drugs be taken in a specific sequence required by the step therapy protocol;
b) are developed and endorsed by a multidisciplinary panel of experts that manages conflicts of interest among members of writing and review groups by:
i. requiring the members to disclose any potential conflict of interest with an entity and recuse themselves from voting if they have a conflict of interest;
ii. using a methodologist to work with writing groups to provide objectivity in data analysis and ranking of evidence through preparing evidence tables and facilitating consensus; and
iii. offering opportunities for public review and comments;
c) are based on high-quality studies, research and medical practice;
d) are created by an explicit and transparent process that:
i. minimizes biases and conflicts of interest;
ii. explains the relationship between treatment options and outcomes;
iii. rates the quality of the evidence supporting recommendations; and
iv. considers relevant patient subgroups and preferences; and
e) are continually updated through a review of new evidence and research and newly developed treatments.
2. Allows, if no clinical guidelines are developed and endorsed by a multidisciplinary panel of experts, a health care insurer, PBM or utilization review organization to use peer review publications to fulfill that requirement.
3. Requires a utilization review agent, when considering clinical review criteria to establish a step therapy protocol, to also consider the needs of atypical patient populations and diagnoses.
4. Directs each health care insurer, PBM and utilization review organization to annually certify to DOI that the clinical review criteria used in their step therapy protocol meet the prescribed requirements.
5. Requires a health care insurer, PBM or utilization review organization to submit their clinical review criteria for DOI approval upon request.
6. Specifies that a health care insurer is not required to establish a new entity to develop clinical review criteria used for a step therapy protocol.
Step Therapy Exception
7. Entitles a patient and prescribing practitioner to have access to a clear and convenient process to request a step therapy exception, if prescription drug coverage for any medical condition is restricted through a step therapy protocol.
8. Allows a health care insurer, PBM or utilization review organization to use their existing medical exceptions process, if the process is consistent with prescribed step therapy protocol and exception request requirements.
9. Requires each health care insurer, health benefit plan, PBM and utilization review organization to make the process for a step therapy exception request easily accessible on their website.
10. Requires a health care insurer, PBM or utilization review organization to grant a step therapy exception, if sufficient evidence submitted demonstrates that the:
a) required prescription drug is contraindicated or will likely cause an adverse reaction or physical or mental harm to the patient;
b) required prescription drug is expected to be ineffective based on the known clinical characteristics of the patient and the known characteristics of the prescription drug regimen;
c) patient has tried the required prescription drug while under the patient's current or previous health care plan, or another prescription drug in the same pharmacologic class or with the same mechanism of action, and the prescription drug was discontinued due to lack of efficacy or effectiveness, diminished effect or an adverse event;
d) required prescription drug is not in the best interest of the patient based on medical necessity; or
e) patient remained stable on a prescribed drug selected by the patient's health care provider for the medical condition under consideration while on the patient's current or previous health care plan.
11. Prohibits a health care provider from using a pharmaceutical sample to qualify a step therapy exception for a patient who remained stable on the drug.
12. Directs a health care insurer, PBM or utilization review organization, upon granting a step therapy exception, to authorize coverage for the prescription drug prescribed by the patient's health care provider.
13. Requires a health care insurer, PBM or utilization review organization to respond to a step therapy exception determination request after receiving all required documentation within 72 hours, or within 24 hours if an exigent circumstance exists.
14. Deems a step therapy exception granted if a health care insurer, PBM or utilization review organization does not respond within the required time period.
15. Allows an insured, enrollee or subscriber to appeal an adverse step therapy exception determination.
16. Specifies that the prescribed step therapy exception request requirements do not prevent a:
a) health care insurer, PBM or utilization review organization from requiring a patient to try a generic equivalent before providing coverage for the equivalent branded prescription drug; or
b) health care provider from prescribing a prescription drug that is determined to be medically appropriate.
Definitions
17. Defines step therapy protocol as a protocol or program that establishes the specific sequence in which prescription drugs for a specific medical condition that are medically appropriate for a patient are covered by a health care insurer under a health care plan.
18. Defines step therapy exception as a step therapy protocol that is overridden in favor of immediate coverage of a health care provider's selected prescription drug.
19. Defines clinical practice guidelines as a systematically developed statement to assist health care providers and patients in making decisions about appropriate health care for specific clinical circumstances and conditions.
20. Defines clinical review criteria as written screening procedures, decision abstracts, clinical protocols and practice guidelines that are used by a health care insurer, PBM or utilization review organization to determine the medical necessity and appropriateness of health care services.
21. Defines exigent circumstance as occurring when an insured, enrollee or subscriber is:
a) experiencing a health condition that could seriously jeopardize the insured's, enrollee's or subscriber's life, health or ability to regain maximum function; or
b) undergoing a current course of treatment.
22. Defines medically appropriate as appropriate under the applicable standard of care:
a) to improve or preserve health, life or function;
b) to slow the deterioration of health, life or function; or
c) for the early screening, prevention, evaluation, diagnosis or treatment of a disease, condition, illness or injury.
23. Defines health care insurer as a disability insurer, group disability insurer, blanket disability insurer, HCSO, hospital service corporation, medical service corporation or hospital and medical service corporation.
24. Defines health care plan as a policy, contract or evidence of coverage that a health care insurer issues to an insured, enrollee or subscriber.
25. Defines PBM as a person who administers pharmacy benefits for a health care insurer.
26. Defines utilization review as a system for reviewing the appropriate and efficient allocation of:
a) inpatient hospital resources, inpatient medical services and outpatient surgery services that are being given or are proposed to be given to a patient; and
b) any medical, surgical and health care services or claims for services that may be covered by a health care insurer depending on determinable contingencies.
27. Excludes elective requests for the clarification of coverage from the definition of utilization review.
28. Defines utilization review organization as an entity that conducts utilization review, other than a PBM or health care insurer performing utilization review pursuant to its own health care plans.
29. Defines pharmaceutical sample as a unit of a prescription drug that is not intended to be sold but is intended to promote the sale of the prescription drug.
Miscellaneous
30. Applies the step therapy requirements to any health care plan issued or renewed on or after December 31, 2021, that provides prescription drug benefits and that includes coverage for a step therapy protocol.
31. Exempts DIFI from rulemaking requirements relating to step therapy protocol guidelines for one year.
32. Becomes effective on the general effective date.
House Action
HHS 2/6/20 DPA 9-0-0-0
3rd Read 2/27/20 60-0-0
Prepared by Senate Research
March 16, 2020
MG/AB/gs