Existing law, the Knox-Keene Health Care Service Plan Act of 1975, 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 generally authorizes a health care service plan or health insurer to use prior authorization and other utilization review or utilization management functions, under which a licensed physician or a licensed health care professional who is competent to evaluate specific clinical issues may approve, modify, delay, or deny requests for health care services based on medical necessity. Existing law requires a health care service plan or health insurer, including those plans or insurers that delegate utilization review or utilization management functions to medical groups, independent practice associations, or to other contracting providers, to comply with specified requirements and limitations on their utilization review or utilization management functions. Existing law requires the criteria or guidelines used to determine whether or not to authorize, modify, or deny health care services to be developed with involvement from actively practicing health care providers.

This bill would require the Department of Managed Health Care, beginning Care and the Department of Insurance, by July 1, 2025, to issue instructions to health care service plans and health insurers to report specified information relating to prior authorization, as defined, including all covered designated health care services (services), items, and supplies subject to prior authorization and the percentage rate at which health care service plans approved plans, health insurers, or their delegated entities, approve or modify those services, items, and supplies. The bill would require health care service plans and health insurers to report that information to the department by December 31, 2025, and relevant department by December 31, 2025, or as otherwise specified. The bill would require the relevant department to evaluate the reports received from the health care service plans and health insurers, and identify the services, items, and supplies most frequently approved by health care service plans the plans or insurers or their delegated entities, as specified. The bill would require the each department, after evaluating the reports received from health care service plans, plans and health insurers, to identify, and by December 31, 2026, to publish a list of, the most frequently approved or modified services, items, and supplies. supplies, based on a prescribed threshold percentage rate. The bill would authorize the department to consider certain factors when determining the appropriateness of removing prior authorization for a specific health care service, item, or supply, regardless of its approval percentage rate. The bill would require the department to issue instructions to health care service plans and health insurers regarding, among other matters, the date by which the listed services, items, and supplies would no longer be subject to prior authorization, and how a health care service plan plan or insurer could reinstate prior authorization upon a showing of good cause, as prescribed. Within 4 years from the cessation date of the prior authorization requirements, the bill would require the each department to publish a report regarding the impact of the cessation of those requirements. The bill would authorize the department departments to contract with a consultant with expertise in prior authorization procedures to assist with implementation of the bill, as specified. These provisions The bill would provide that it would not apply with respect to specified types of health care service plans or to fully integrated delivery systems, as defined. plans including, but not limited to, specialized health care service plans, or to specialized health insurers, except as specified. The provisions would be repealed on January 1, 2032. 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.