Amended IN Senate March 11, 2021 CALIFORNIA LEGISLATURE 20212022 REGULAR SESSION Senate Bill No. 524Introduced by Senator SkinnerFebruary 17, 2021 An act to amend Sections 4430, 4431, 4432, and 4439 of, to repeal the heading of Chapter 9.5 (commencing with Section 4430) of Division 2 of, and to add the heading of Article 26 (commencing with Section 4430) of Chapter 9 of Division 2 of, add Chapter 9.6 (commencing with Section 4450) to Division 2 of the Business and Professions Code, relating to health care coverage. LEGISLATIVE COUNSEL'S DIGESTSB 524, as amended, Skinner. Pharmacy benefits audits: California State Board of Pharmacy enforcement. Health care coverage: patient steering.Existing law provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and the regulation of health insurers by the Department of Insurance. Existing law requires a health care service plan contract or health insurance policy that provides coverage for outpatient prescription drugs to cover medically necessary prescription drugs.This bill would prohibit a health care service plan or a health insurer, including a self-insured employer plan, or the agent of a health care service plan or health insurer from engaging in patient steering. The bill would define patient steering to mean communicating to an enrollee or insured that they are required to have a prescription dispensed at, or pharmacy services provided by, a particular pharmacy, as specified, or offering group health care coverage contracts or policies that include provisions that limit access to only pharmacy providers that are owned or operated by the health care service plan, health insurer, or plans or insurers agent. The bill would also make related findings and declarations.Existing law, the Pharmacy Law, establishes the California State Board of Pharmacy in the Department of Consumer Affairs for the licensure and regulation of pharmacists and pharmacies. A violation of the Pharmacy Law is a crime. Existing law also imposes requirements on audits of pharmacy services provided to beneficiaries of a health benefit plan, as specified, and prohibits those audit provisions from being construed to suggest or imply that the department or the board has any jurisdiction or authority over those provisions.This bill would recast those audit provisions within the Pharmacy Law thereby vesting the board with administration and enforcement authority over those provisions. Because a violation of these provisions under the Pharmacy Law 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.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YESNO Local Program: YESNO Bill TextThe people of the State of California do enact as follows:SECTION 1. The Legislature finds and declares all of the following:(a) When a health care service plan, health insurer, or pharmacy benefit manager requires a patient to use a specific pharmacy provider for services that otherwise could be provided by any pharmacy in the provider network, it unjustifiably limits patient choice and may put the patients health at risk.(b) Evidence shows that limiting access to pharmacy providers is designed to eliminate competition and can result in higher costs for the patient and for the health care system as a whole. It can result in patients losing connection with trusted providers and being unable to get the advice and consultation they need.(c) Therefore, it is necessary to limit the practice of patient steering, used by some health care service plans and health insurers, and their contracted pharmacy benefit managers, to those situations when it is used for established clinical or logistical reasons, and not for financial benefit to the plan or insurer, or their agents.SEC. 2. Chapter 9.6 (commencing with Section 4450) is added to Division 2 of the Business and Professions Code, to read: CHAPTER 9.6. Patient Steering4450. (a) A health care service plan or a health insurer, including a self-insured employer plan, or the agent of a health care service plan or health insurer shall not engage in patient steering.(b) Patient steering means either of the following:(1) Communicating to an enrollee or insured, verbally, electronically, or in writing, that they are required to have a prescription dispensed at, or pharmacy services provided by, a particular pharmacy or pharmacies if there are other pharmacies in the network that have the ability to dispense the medication or provide the services.(2) Offering or including in contract or policy designs for purchasers of group health care coverage provisions that limit enrollees or insureds access to only those pharmacy providers that are owned or operated by the health care service plan, health insurer, or plans or insurers agent, or owned or operated by a corporate affiliate of the health care service plan, health insurer, or plans or insurers agent.(c) Patient steering does not include directing an enrollee or insured to a specific pharmacy for a specific prescription due to the need for special handling or clinical requirements that cannot be performed by other pharmacies in the provider network of the health care service plan, health insurer, or plans or insurers agent.SECTION 1.The heading of Chapter 9.5 (commencing with Section 4430) of Division 2 of the Business and Professions Code is repealed.SEC. 2.The heading of Article 26 (commencing with Section 4430) is added to Chapter 9 of Division 2 of the Business and Professions Code, to read:26.Audits of Pharmacy BenefitsSEC. 3.Section 4430 of the Business and Professions Code is amended to read:4430.For purposes of this article, the following definitions shall apply:(a)Carrier means a health care service plan, as defined in Section 1345 of the Health and Safety Code, or a health insurer that issues policies of health insurance, as defined in Section 106 of the Insurance Code.(b)Clerical or recordkeeping error includes a typographical error, scriveners error, or computer error in a required document or record.(c)Extrapolation means the practice of inferring a frequency or dollar amount of overpayments, underpayments, nonvalid claims, or other errors on any portion of claims submitted, based on the frequency or dollar amount of overpayments, underpayments, nonvalid claims, or other errors actually measured in a sample of claims.(d)Health benefit plan means any plan or program that provides, arranges, pays for, or reimburses the cost of health benefits. Health benefit plan includes, but is not limited to, a health care service plan contract issued by a health care service plan, as defined in Section 1345 of the Health and Safety Code, and a policy of health insurance, as defined in Section 106 of the Insurance Code, issued by a health insurer.(e)Maximum allowable cost means the maximum amount that a pharmacy benefit manager will reimburse a pharmacy for the cost of a drug.(f)Maximum allowable cost list means a list of drugs for which a maximum allowable cost has been established by a pharmacy benefit manager.(g)Obsolete means a drug that may be listed in national drug pricing compendia but is no longer available to be dispensed based on the expiration date of the last lot manufactured.(h)Pharmacy has the same meaning as provided in Section 4037.(i)Pharmacy audit means an audit, either onsite or remotely, of any records of a pharmacy conducted by or on behalf of a carrier or a pharmacy benefits manager, or a representative thereof, for prescription drugs that were dispensed by that pharmacy to beneficiaries of a health benefit plan pursuant to a contract with the health benefit plan or the issuer or administrator thereof. Pharmacy audit does not include a concurrent review or desk audit that occurs within three business days of transmission of a claim, or a concurrent review or desk audit if a chargeback or recoupment is not demanded.(j)Pharmacy benefit manager means a person, business, or other entity that, pursuant to a contract or under an employment relationship with a carrier, health benefit plan sponsor, or other third-party payer, either directly or through an intermediary, manages the prescription drug coverage provided by the carrier, plan sponsor, or other third-party payer, including, but not limited to, the processing and payment of claims for prescription drugs, the performance of drug utilization review, the processing of drug prior authorization requests, the adjudication of appeals or grievances related to prescription drug coverage, contracting with network pharmacies, and controlling the cost of covered prescription drugs.SEC. 4.Section 4431 of the Business and Professions Code is amended to read:4431.(a)This article does not apply to an audit conducted because a pharmacy benefit manager, carrier, health benefit plan sponsor, or other third-party payer has indications that support a reasonable suspicion that criminal wrongdoing, willful misrepresentation, fraud, or abuse has occurred.(b)This article does not apply to an audit conducted by, or at the direction of, the California State Board of Pharmacy, the State Department of Health Care Services, the State Department of Public Health, or the Medicare program.SEC. 5.Section 4432 of the Business and Professions Code is amended to read:4432.Notwithstanding any other law, a contract that is issued, amended, or renewed on or after January 1, 2013, between a pharmacy and a carrier or a pharmacy benefit manager to provide pharmacy services to beneficiaries of a health benefit plan shall comply with the provisions of this article. This article does not apply to contracts authorized by Section 4600.2 of the Labor Code.SEC. 6.Section 4439 of the Business and Professions Code is amended to read:4439.This article shall not be construed to suggest or imply that the Department of Consumer Affairs has any jurisdiction or authority over the provisions of this article.SEC. 7.No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.
Amended IN Senate March 11, 2021 CALIFORNIA LEGISLATURE 20212022 REGULAR SESSION Senate Bill No. 524Introduced by Senator SkinnerFebruary 17, 2021 An act to amend Sections 4430, 4431, 4432, and 4439 of, to repeal the heading of Chapter 9.5 (commencing with Section 4430) of Division 2 of, and to add the heading of Article 26 (commencing with Section 4430) of Chapter 9 of Division 2 of, add Chapter 9.6 (commencing with Section 4450) to Division 2 of the Business and Professions Code, relating to health care coverage. LEGISLATIVE COUNSEL'S DIGESTSB 524, as amended, Skinner. Pharmacy benefits audits: California State Board of Pharmacy enforcement. Health care coverage: patient steering.Existing law provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and the regulation of health insurers by the Department of Insurance. Existing law requires a health care service plan contract or health insurance policy that provides coverage for outpatient prescription drugs to cover medically necessary prescription drugs.This bill would prohibit a health care service plan or a health insurer, including a self-insured employer plan, or the agent of a health care service plan or health insurer from engaging in patient steering. The bill would define patient steering to mean communicating to an enrollee or insured that they are required to have a prescription dispensed at, or pharmacy services provided by, a particular pharmacy, as specified, or offering group health care coverage contracts or policies that include provisions that limit access to only pharmacy providers that are owned or operated by the health care service plan, health insurer, or plans or insurers agent. The bill would also make related findings and declarations.Existing law, the Pharmacy Law, establishes the California State Board of Pharmacy in the Department of Consumer Affairs for the licensure and regulation of pharmacists and pharmacies. A violation of the Pharmacy Law is a crime. Existing law also imposes requirements on audits of pharmacy services provided to beneficiaries of a health benefit plan, as specified, and prohibits those audit provisions from being construed to suggest or imply that the department or the board has any jurisdiction or authority over those provisions.This bill would recast those audit provisions within the Pharmacy Law thereby vesting the board with administration and enforcement authority over those provisions. Because a violation of these provisions under the Pharmacy Law 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.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YESNO Local Program: YESNO
Amended IN Senate March 11, 2021
Amended IN Senate March 11, 2021
CALIFORNIA LEGISLATURE 20212022 REGULAR SESSION
Senate Bill
No. 524
Introduced by Senator SkinnerFebruary 17, 2021
Introduced by Senator Skinner
February 17, 2021
An act to amend Sections 4430, 4431, 4432, and 4439 of, to repeal the heading of Chapter 9.5 (commencing with Section 4430) of Division 2 of, and to add the heading of Article 26 (commencing with Section 4430) of Chapter 9 of Division 2 of, add Chapter 9.6 (commencing with Section 4450) to Division 2 of the Business and Professions Code, relating to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
## LEGISLATIVE COUNSEL'S DIGEST
SB 524, as amended, Skinner. Pharmacy benefits audits: California State Board of Pharmacy enforcement. Health care coverage: patient steering.
Existing law provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and the regulation of health insurers by the Department of Insurance. Existing law requires a health care service plan contract or health insurance policy that provides coverage for outpatient prescription drugs to cover medically necessary prescription drugs.This bill would prohibit a health care service plan or a health insurer, including a self-insured employer plan, or the agent of a health care service plan or health insurer from engaging in patient steering. The bill would define patient steering to mean communicating to an enrollee or insured that they are required to have a prescription dispensed at, or pharmacy services provided by, a particular pharmacy, as specified, or offering group health care coverage contracts or policies that include provisions that limit access to only pharmacy providers that are owned or operated by the health care service plan, health insurer, or plans or insurers agent. The bill would also make related findings and declarations.Existing law, the Pharmacy Law, establishes the California State Board of Pharmacy in the Department of Consumer Affairs for the licensure and regulation of pharmacists and pharmacies. A violation of the Pharmacy Law is a crime. Existing law also imposes requirements on audits of pharmacy services provided to beneficiaries of a health benefit plan, as specified, and prohibits those audit provisions from being construed to suggest or imply that the department or the board has any jurisdiction or authority over those provisions.This bill would recast those audit provisions within the Pharmacy Law thereby vesting the board with administration and enforcement authority over those provisions. Because a violation of these provisions under the Pharmacy Law 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.
Existing law provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and the regulation of health insurers by the Department of Insurance. Existing law requires a health care service plan contract or health insurance policy that provides coverage for outpatient prescription drugs to cover medically necessary prescription drugs.
This bill would prohibit a health care service plan or a health insurer, including a self-insured employer plan, or the agent of a health care service plan or health insurer from engaging in patient steering. The bill would define patient steering to mean communicating to an enrollee or insured that they are required to have a prescription dispensed at, or pharmacy services provided by, a particular pharmacy, as specified, or offering group health care coverage contracts or policies that include provisions that limit access to only pharmacy providers that are owned or operated by the health care service plan, health insurer, or plans or insurers agent. The bill would also make related findings and declarations.
Existing law, the Pharmacy Law, establishes the California State Board of Pharmacy in the Department of Consumer Affairs for the licensure and regulation of pharmacists and pharmacies. A violation of the Pharmacy Law is a crime. Existing law also imposes requirements on audits of pharmacy services provided to beneficiaries of a health benefit plan, as specified, and prohibits those audit provisions from being construed to suggest or imply that the department or the board has any jurisdiction or authority over those provisions.
This bill would recast those audit provisions within the Pharmacy Law thereby vesting the board with administration and enforcement authority over those provisions. Because a violation of these provisions under the Pharmacy Law 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.
## Digest Key
## Bill Text
The people of the State of California do enact as follows:SECTION 1. The Legislature finds and declares all of the following:(a) When a health care service plan, health insurer, or pharmacy benefit manager requires a patient to use a specific pharmacy provider for services that otherwise could be provided by any pharmacy in the provider network, it unjustifiably limits patient choice and may put the patients health at risk.(b) Evidence shows that limiting access to pharmacy providers is designed to eliminate competition and can result in higher costs for the patient and for the health care system as a whole. It can result in patients losing connection with trusted providers and being unable to get the advice and consultation they need.(c) Therefore, it is necessary to limit the practice of patient steering, used by some health care service plans and health insurers, and their contracted pharmacy benefit managers, to those situations when it is used for established clinical or logistical reasons, and not for financial benefit to the plan or insurer, or their agents.SEC. 2. Chapter 9.6 (commencing with Section 4450) is added to Division 2 of the Business and Professions Code, to read: CHAPTER 9.6. Patient Steering4450. (a) A health care service plan or a health insurer, including a self-insured employer plan, or the agent of a health care service plan or health insurer shall not engage in patient steering.(b) Patient steering means either of the following:(1) Communicating to an enrollee or insured, verbally, electronically, or in writing, that they are required to have a prescription dispensed at, or pharmacy services provided by, a particular pharmacy or pharmacies if there are other pharmacies in the network that have the ability to dispense the medication or provide the services.(2) Offering or including in contract or policy designs for purchasers of group health care coverage provisions that limit enrollees or insureds access to only those pharmacy providers that are owned or operated by the health care service plan, health insurer, or plans or insurers agent, or owned or operated by a corporate affiliate of the health care service plan, health insurer, or plans or insurers agent.(c) Patient steering does not include directing an enrollee or insured to a specific pharmacy for a specific prescription due to the need for special handling or clinical requirements that cannot be performed by other pharmacies in the provider network of the health care service plan, health insurer, or plans or insurers agent.SECTION 1.The heading of Chapter 9.5 (commencing with Section 4430) of Division 2 of the Business and Professions Code is repealed.SEC. 2.The heading of Article 26 (commencing with Section 4430) is added to Chapter 9 of Division 2 of the Business and Professions Code, to read:26.Audits of Pharmacy BenefitsSEC. 3.Section 4430 of the Business and Professions Code is amended to read:4430.For purposes of this article, the following definitions shall apply:(a)Carrier means a health care service plan, as defined in Section 1345 of the Health and Safety Code, or a health insurer that issues policies of health insurance, as defined in Section 106 of the Insurance Code.(b)Clerical or recordkeeping error includes a typographical error, scriveners error, or computer error in a required document or record.(c)Extrapolation means the practice of inferring a frequency or dollar amount of overpayments, underpayments, nonvalid claims, or other errors on any portion of claims submitted, based on the frequency or dollar amount of overpayments, underpayments, nonvalid claims, or other errors actually measured in a sample of claims.(d)Health benefit plan means any plan or program that provides, arranges, pays for, or reimburses the cost of health benefits. Health benefit plan includes, but is not limited to, a health care service plan contract issued by a health care service plan, as defined in Section 1345 of the Health and Safety Code, and a policy of health insurance, as defined in Section 106 of the Insurance Code, issued by a health insurer.(e)Maximum allowable cost means the maximum amount that a pharmacy benefit manager will reimburse a pharmacy for the cost of a drug.(f)Maximum allowable cost list means a list of drugs for which a maximum allowable cost has been established by a pharmacy benefit manager.(g)Obsolete means a drug that may be listed in national drug pricing compendia but is no longer available to be dispensed based on the expiration date of the last lot manufactured.(h)Pharmacy has the same meaning as provided in Section 4037.(i)Pharmacy audit means an audit, either onsite or remotely, of any records of a pharmacy conducted by or on behalf of a carrier or a pharmacy benefits manager, or a representative thereof, for prescription drugs that were dispensed by that pharmacy to beneficiaries of a health benefit plan pursuant to a contract with the health benefit plan or the issuer or administrator thereof. Pharmacy audit does not include a concurrent review or desk audit that occurs within three business days of transmission of a claim, or a concurrent review or desk audit if a chargeback or recoupment is not demanded.(j)Pharmacy benefit manager means a person, business, or other entity that, pursuant to a contract or under an employment relationship with a carrier, health benefit plan sponsor, or other third-party payer, either directly or through an intermediary, manages the prescription drug coverage provided by the carrier, plan sponsor, or other third-party payer, including, but not limited to, the processing and payment of claims for prescription drugs, the performance of drug utilization review, the processing of drug prior authorization requests, the adjudication of appeals or grievances related to prescription drug coverage, contracting with network pharmacies, and controlling the cost of covered prescription drugs.SEC. 4.Section 4431 of the Business and Professions Code is amended to read:4431.(a)This article does not apply to an audit conducted because a pharmacy benefit manager, carrier, health benefit plan sponsor, or other third-party payer has indications that support a reasonable suspicion that criminal wrongdoing, willful misrepresentation, fraud, or abuse has occurred.(b)This article does not apply to an audit conducted by, or at the direction of, the California State Board of Pharmacy, the State Department of Health Care Services, the State Department of Public Health, or the Medicare program.SEC. 5.Section 4432 of the Business and Professions Code is amended to read:4432.Notwithstanding any other law, a contract that is issued, amended, or renewed on or after January 1, 2013, between a pharmacy and a carrier or a pharmacy benefit manager to provide pharmacy services to beneficiaries of a health benefit plan shall comply with the provisions of this article. This article does not apply to contracts authorized by Section 4600.2 of the Labor Code.SEC. 6.Section 4439 of the Business and Professions Code is amended to read:4439.This article shall not be construed to suggest or imply that the Department of Consumer Affairs has any jurisdiction or authority over the provisions of this article.SEC. 7.No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.
The people of the State of California do enact as follows:
## The people of the State of California do enact as follows:
SECTION 1. The Legislature finds and declares all of the following:(a) When a health care service plan, health insurer, or pharmacy benefit manager requires a patient to use a specific pharmacy provider for services that otherwise could be provided by any pharmacy in the provider network, it unjustifiably limits patient choice and may put the patients health at risk.(b) Evidence shows that limiting access to pharmacy providers is designed to eliminate competition and can result in higher costs for the patient and for the health care system as a whole. It can result in patients losing connection with trusted providers and being unable to get the advice and consultation they need.(c) Therefore, it is necessary to limit the practice of patient steering, used by some health care service plans and health insurers, and their contracted pharmacy benefit managers, to those situations when it is used for established clinical or logistical reasons, and not for financial benefit to the plan or insurer, or their agents.
SECTION 1. The Legislature finds and declares all of the following:(a) When a health care service plan, health insurer, or pharmacy benefit manager requires a patient to use a specific pharmacy provider for services that otherwise could be provided by any pharmacy in the provider network, it unjustifiably limits patient choice and may put the patients health at risk.(b) Evidence shows that limiting access to pharmacy providers is designed to eliminate competition and can result in higher costs for the patient and for the health care system as a whole. It can result in patients losing connection with trusted providers and being unable to get the advice and consultation they need.(c) Therefore, it is necessary to limit the practice of patient steering, used by some health care service plans and health insurers, and their contracted pharmacy benefit managers, to those situations when it is used for established clinical or logistical reasons, and not for financial benefit to the plan or insurer, or their agents.
SECTION 1. The Legislature finds and declares all of the following:
### SECTION 1.
(a) When a health care service plan, health insurer, or pharmacy benefit manager requires a patient to use a specific pharmacy provider for services that otherwise could be provided by any pharmacy in the provider network, it unjustifiably limits patient choice and may put the patients health at risk.
(b) Evidence shows that limiting access to pharmacy providers is designed to eliminate competition and can result in higher costs for the patient and for the health care system as a whole. It can result in patients losing connection with trusted providers and being unable to get the advice and consultation they need.
(c) Therefore, it is necessary to limit the practice of patient steering, used by some health care service plans and health insurers, and their contracted pharmacy benefit managers, to those situations when it is used for established clinical or logistical reasons, and not for financial benefit to the plan or insurer, or their agents.
SEC. 2. Chapter 9.6 (commencing with Section 4450) is added to Division 2 of the Business and Professions Code, to read: CHAPTER 9.6. Patient Steering4450. (a) A health care service plan or a health insurer, including a self-insured employer plan, or the agent of a health care service plan or health insurer shall not engage in patient steering.(b) Patient steering means either of the following:(1) Communicating to an enrollee or insured, verbally, electronically, or in writing, that they are required to have a prescription dispensed at, or pharmacy services provided by, a particular pharmacy or pharmacies if there are other pharmacies in the network that have the ability to dispense the medication or provide the services.(2) Offering or including in contract or policy designs for purchasers of group health care coverage provisions that limit enrollees or insureds access to only those pharmacy providers that are owned or operated by the health care service plan, health insurer, or plans or insurers agent, or owned or operated by a corporate affiliate of the health care service plan, health insurer, or plans or insurers agent.(c) Patient steering does not include directing an enrollee or insured to a specific pharmacy for a specific prescription due to the need for special handling or clinical requirements that cannot be performed by other pharmacies in the provider network of the health care service plan, health insurer, or plans or insurers agent.
SEC. 2. Chapter 9.6 (commencing with Section 4450) is added to Division 2 of the Business and Professions Code, to read:
### SEC. 2.
CHAPTER 9.6. Patient Steering4450. (a) A health care service plan or a health insurer, including a self-insured employer plan, or the agent of a health care service plan or health insurer shall not engage in patient steering.(b) Patient steering means either of the following:(1) Communicating to an enrollee or insured, verbally, electronically, or in writing, that they are required to have a prescription dispensed at, or pharmacy services provided by, a particular pharmacy or pharmacies if there are other pharmacies in the network that have the ability to dispense the medication or provide the services.(2) Offering or including in contract or policy designs for purchasers of group health care coverage provisions that limit enrollees or insureds access to only those pharmacy providers that are owned or operated by the health care service plan, health insurer, or plans or insurers agent, or owned or operated by a corporate affiliate of the health care service plan, health insurer, or plans or insurers agent.(c) Patient steering does not include directing an enrollee or insured to a specific pharmacy for a specific prescription due to the need for special handling or clinical requirements that cannot be performed by other pharmacies in the provider network of the health care service plan, health insurer, or plans or insurers agent.
CHAPTER 9.6. Patient Steering4450. (a) A health care service plan or a health insurer, including a self-insured employer plan, or the agent of a health care service plan or health insurer shall not engage in patient steering.(b) Patient steering means either of the following:(1) Communicating to an enrollee or insured, verbally, electronically, or in writing, that they are required to have a prescription dispensed at, or pharmacy services provided by, a particular pharmacy or pharmacies if there are other pharmacies in the network that have the ability to dispense the medication or provide the services.(2) Offering or including in contract or policy designs for purchasers of group health care coverage provisions that limit enrollees or insureds access to only those pharmacy providers that are owned or operated by the health care service plan, health insurer, or plans or insurers agent, or owned or operated by a corporate affiliate of the health care service plan, health insurer, or plans or insurers agent.(c) Patient steering does not include directing an enrollee or insured to a specific pharmacy for a specific prescription due to the need for special handling or clinical requirements that cannot be performed by other pharmacies in the provider network of the health care service plan, health insurer, or plans or insurers agent.
CHAPTER 9.6. Patient Steering
CHAPTER 9.6. Patient Steering
4450. (a) A health care service plan or a health insurer, including a self-insured employer plan, or the agent of a health care service plan or health insurer shall not engage in patient steering.(b) Patient steering means either of the following:(1) Communicating to an enrollee or insured, verbally, electronically, or in writing, that they are required to have a prescription dispensed at, or pharmacy services provided by, a particular pharmacy or pharmacies if there are other pharmacies in the network that have the ability to dispense the medication or provide the services.(2) Offering or including in contract or policy designs for purchasers of group health care coverage provisions that limit enrollees or insureds access to only those pharmacy providers that are owned or operated by the health care service plan, health insurer, or plans or insurers agent, or owned or operated by a corporate affiliate of the health care service plan, health insurer, or plans or insurers agent.(c) Patient steering does not include directing an enrollee or insured to a specific pharmacy for a specific prescription due to the need for special handling or clinical requirements that cannot be performed by other pharmacies in the provider network of the health care service plan, health insurer, or plans or insurers agent.
4450. (a) A health care service plan or a health insurer, including a self-insured employer plan, or the agent of a health care service plan or health insurer shall not engage in patient steering.
(b) Patient steering means either of the following:
(1) Communicating to an enrollee or insured, verbally, electronically, or in writing, that they are required to have a prescription dispensed at, or pharmacy services provided by, a particular pharmacy or pharmacies if there are other pharmacies in the network that have the ability to dispense the medication or provide the services.
(2) Offering or including in contract or policy designs for purchasers of group health care coverage provisions that limit enrollees or insureds access to only those pharmacy providers that are owned or operated by the health care service plan, health insurer, or plans or insurers agent, or owned or operated by a corporate affiliate of the health care service plan, health insurer, or plans or insurers agent.
(c) Patient steering does not include directing an enrollee or insured to a specific pharmacy for a specific prescription due to the need for special handling or clinical requirements that cannot be performed by other pharmacies in the provider network of the health care service plan, health insurer, or plans or insurers agent.
For purposes of this article, the following definitions shall apply:
(a)Carrier means a health care service plan, as defined in Section 1345 of the Health and Safety Code, or a health insurer that issues policies of health insurance, as defined in Section 106 of the Insurance Code.
(b)Clerical or recordkeeping error includes a typographical error, scriveners error, or computer error in a required document or record.
(c)Extrapolation means the practice of inferring a frequency or dollar amount of overpayments, underpayments, nonvalid claims, or other errors on any portion of claims submitted, based on the frequency or dollar amount of overpayments, underpayments, nonvalid claims, or other errors actually measured in a sample of claims.
(d)Health benefit plan means any plan or program that provides, arranges, pays for, or reimburses the cost of health benefits. Health benefit plan includes, but is not limited to, a health care service plan contract issued by a health care service plan, as defined in Section 1345 of the Health and Safety Code, and a policy of health insurance, as defined in Section 106 of the Insurance Code, issued by a health insurer.
(e)Maximum allowable cost means the maximum amount that a pharmacy benefit manager will reimburse a pharmacy for the cost of a drug.
(f)Maximum allowable cost list means a list of drugs for which a maximum allowable cost has been established by a pharmacy benefit manager.
(g)Obsolete means a drug that may be listed in national drug pricing compendia but is no longer available to be dispensed based on the expiration date of the last lot manufactured.
(h)Pharmacy has the same meaning as provided in Section 4037.
(i)Pharmacy audit means an audit, either onsite or remotely, of any records of a pharmacy conducted by or on behalf of a carrier or a pharmacy benefits manager, or a representative thereof, for prescription drugs that were dispensed by that pharmacy to beneficiaries of a health benefit plan pursuant to a contract with the health benefit plan or the issuer or administrator thereof. Pharmacy audit does not include a concurrent review or desk audit that occurs within three business days of transmission of a claim, or a concurrent review or desk audit if a chargeback or recoupment is not demanded.
(j)Pharmacy benefit manager means a person, business, or other entity that, pursuant to a contract or under an employment relationship with a carrier, health benefit plan sponsor, or other third-party payer, either directly or through an intermediary, manages the prescription drug coverage provided by the carrier, plan sponsor, or other third-party payer, including, but not limited to, the processing and payment of claims for prescription drugs, the performance of drug utilization review, the processing of drug prior authorization requests, the adjudication of appeals or grievances related to prescription drug coverage, contracting with network pharmacies, and controlling the cost of covered prescription drugs.
(a)This article does not apply to an audit conducted because a pharmacy benefit manager, carrier, health benefit plan sponsor, or other third-party payer has indications that support a reasonable suspicion that criminal wrongdoing, willful misrepresentation, fraud, or abuse has occurred.
(b)This article does not apply to an audit conducted by, or at the direction of, the California State Board of Pharmacy, the State Department of Health Care Services, the State Department of Public Health, or the Medicare program.
Notwithstanding any other law, a contract that is issued, amended, or renewed on or after January 1, 2013, between a pharmacy and a carrier or a pharmacy benefit manager to provide pharmacy services to beneficiaries of a health benefit plan shall comply with the provisions of this article. This article does not apply to contracts authorized by Section 4600.2 of the Labor Code.
This article shall not be construed to suggest or imply that the Department of Consumer Affairs has any jurisdiction or authority over the provisions of this article.
No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.