2023 California Code
Insurance Code - INS
DIVISION 2 - CLASSES OF INSURANCE
PART 2 - LIFE AND DISABILITY INSURANCE
CHAPTER 1 - The Contract
ARTICLE 1 - General Provisions
Section 10123.191.

10123.191. (a) Notwithstanding any other law, on and after January 1, 2013, a health insurer that provides coverage for prescription drugs shall utilize and accept only the prior authorization form developed pursuant to subdivision (c), or an electronic prior authorization process described in subdivision (e), when requiring prior authorization for prescription drugs.

(b) (1) If a health insurer, contracted physician group, or utilization review organization fails to notify a prescribing provider of its coverage determination within 72 hours for nonurgent requests, or within 24 hours if exigent circumstances exist, upon receipt of a completed prior authorization or step therapy exception request, the prior authorization or step therapy exception request shall be deemed approved for the duration of the prescription, including refills.

(2) If a request for prior authorization or a step therapy exception is incomplete or clinically relevant material information necessary to make a coverage determination is not included, the insurer, contracted physician group, or utilization review organization shall notify the prescribing provider within 72 hours of receipt, or within 24 hours of receipt if exigent circumstances exist, what additional or clinically relevant material information is needed to approve or deny the prior authorization or step therapy exception request, or to appeal the denial thereof. Once the requested information is received, the applicable time period to approve or deny a prior authorization or step therapy exception request, or to appeal, shall begin to elapse. If a coverage determination or request for additional or clinically relevant material information by an insurer, contracted physician group, or utilization review organization is not received by the prescribing provider within the time allotted, the prior authorization or step therapy exception request, or appeal of a denial thereof, shall be deemed approved for the duration of the prescription, including refills. In the event of a denial, the insurer, contracted physician group, or utilization review organization shall inform the prescribing provider and insured of the external appeal process under subdivision (h) of this section, which shall also apply to a denial of a prior authorization or step therapy exception request.

(3) A health insurer, contracted physician group, utilization review organization, or external independent review organization shall approve a step therapy exception request, or internal or external appeal of a denial thereof, if any of the criteria in subdivision (c) of Section 10123.201 are satisfied.

(c) On or before January 1, 2017, the department and the Department of Managed Health Care shall jointly develop a uniform prior authorization form. Notwithstanding any other law, on and after July 1, 2017, or six months after the form is completed pursuant to this section, whichever is later, every prescribing provider shall use that uniform prior authorization form, or an electronic prior authorization process described in subdivision (e), to request prior authorization for coverage of prescription drugs and every health insurer shall accept that form or electronic process as sufficient to request prior authorization for prescription drugs.

(d) The prior authorization form developed pursuant to subdivision (c) shall meet the following criteria:

(1) The form shall not exceed two pages.

(2) The form shall be made electronically available by the department and the health insurer.

(3) The completed form may also be electronically submitted from the prescribing provider to the health insurer.

(4) The department and the Department of Managed Health Care shall develop the form with input from interested parties from at least one public meeting.

(5) The department and the Department of Managed Health Care, in development of the standardized form, shall take into consideration the following:

(A) Existing prior authorization forms established by the federal Centers for Medicare and Medicaid Services and the State Department of Health Care Services.

(B) National standards pertaining to electronic prior authorization.

(e) A prescribing provider may use an electronic prior authorization system utilizing the standardized form described in subdivision (c) or an electronic process developed specifically for transmitting prior authorization information that meets the National Council for Prescription Drug Programs’ SCRIPT standard for electronic prior authorization transactions.

(f) Subdivision (a) does not apply if any of the following occurs:

(1) A contracted physician group is delegated the financial risk for the pharmacy or medical drug benefit by a health insurer.

(2) A contracted physician group uses its own internal prior authorization process rather than the health insurer’s prior authorization process for the health insurer’s insureds.

(3) A contracted physician group is delegated a utilization management function by the health insurer concerning any prescription drug, regardless of the delegation of financial risk.

(g) For prescription drugs, prior authorization requirements described in subdivisions (c) and (e) apply regardless of how that benefit is classified under the terms of the health insurer’s group or individual policy.

(h) A health insurer shall maintain a process for an external exception request review that complies with subdivision (c) of Section 156.122 of Title 45 of the Code of Federal Regulations. The external appeal process for exception requests shall also apply to a denial of a prior authorization or step therapy exception request. An independent review organization’s reversal of a health insurer’s denial of a request for an exception, prior authorization, or a step therapy exception shall be binding on the insurer and shall apply for the duration of the prescription, including refills. An insurer shall notify the insured and prescribing provider of the independent review organization’s coverage determination, or request for additional or clinically relevant material information necessary to make a coverage determination, within the time limits required by paragraph (2) of subdivision (b). This subdivision shall not affect or limit an insured’s eligibility for independent medical review under Section 10169 or to file an internal appeal with the insurer.

(i) For an individual, small group, or large group health insurance policy, a health insurer that provides coverage for prescription drugs shall comply with subdivision (c) of Section 156.122 of Title 45 of the Code of Federal Regulations.

(j) For purposes of this section:

(1) “Prescribing provider” shall include a provider authorized to write a prescription, pursuant to subdivision (a) of Section 4040 of the Business and Professions Code, to treat a medical condition of an insured.

(2) “Exigent circumstances” exist when an insured is suffering from a health condition that may seriously jeopardize the insured’s life, health, or ability to regain maximum function or when an insured is undergoing a current course of treatment using a nonformulary drug.

(3) “Completed prior authorization request” means a completed uniform prior authorization form developed pursuant to subdivision (c), or a completed request submitted using an electronic prior authorization system described in subdivision (e), or, for contracted physician groups described in subdivision (f), the process used by the contracted physician group.

(4) “Step therapy exception” means a decision to override a generally applicable step therapy protocol in favor of coverage of the prescription drug prescribed by a health care provider for an individual insured.

(Amended by Stats. 2021, Ch. 742, Sec. 4. (AB 347) Effective January 1, 2022.)