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AB-2100 Medi-Cal: pharmacy benefits.(2019-2020)

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Date Published: 09/01/2020 09:00 PM
AB2100:v93#DOCUMENT

Enrolled  September 01, 2020
Passed  IN  Senate  August 28, 2020
Passed  IN  Assembly  August 30, 2020
Amended  IN  Senate  August 20, 2020
Amended  IN  Senate  July 07, 2020
Amended  IN  Assembly  June 04, 2020
Amended  IN  Assembly  May 05, 2020
Amended  IN  Assembly  March 09, 2020

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 2100


Introduced by Assembly Member Wood
(Coauthors: Assembly Members Diep, Fong, Gloria, Mayes, Quirk, and Waldron)
(Coauthor: Senator Wiener)

February 05, 2020


An act to amend Section 14100.5 of, and to add Sections 14132.969 and 14133.06 to, and to add Article 6.05 (commencing with Section 14194.1) to Chapter 7 of Part 3 of Division 9 of, the Welfare and Institutions Code, relating to Medi-Cal.


LEGISLATIVE COUNSEL'S DIGEST


AB 2100, Wood. Medi-Cal: pharmacy benefits.
(1) Existing law establishes the Medi-Cal program, administered by the State Department of Health Care Services and under which health care services are provided to qualified low-income persons pursuant to a schedule of benefits, which includes pharmacy benefits, through various health care delivery systems, including fee-for-service and managed care. The Medi-Cal program is, in part, governed and funded by federal Medicaid program provisions.
Existing law authorizes the department to enter into various types of contracts for the provision of services to beneficiaries, including contracts with a managed care plan. Existing law generally requires Medi-Cal managed care plan contractors to be licensed pursuant to the Knox-Keene Health Care Service Plan Act of 1975. The Knox-Keene Health Care Service Plan Act provides for the licensure and regulation of health care service plans by the Department of Managed Health Care. Under this act, a health care service plan is required to provide an external, independent review process, which meets prescribed standards, to examine the plan’s coverage decisions on experimental or investigational therapies for an enrollee who meets specified criteria, including that the enrollee was denied coverage by the plan for a drug, device, procedure, or other therapy recommended or requested. Existing law requires the Department of Managed Health Care to establish the Independent Medical Review System, which generally serves to address grievances involving disputed health care services.
By executive order, the Governor directed the department to transition pharmacy services for Medi-Cal managed care to a fee-for-service benefit by January 1, 2021. Existing law requires the department to convene an advisory group to receive feedback on the changes, modifications, and operational timeframes on the implementation of pharmacy benefits offered in the Medi-Cal program, and to provide regular updates on the pharmacy transition, including a description of changes in the division of responsibilities between the department and managed care plans relating to the transition of the outpatient pharmacy benefit to fee-for-service.
This bill would require the department to establish the Independent Prescription Drug Medical Review System (IPDMRS), commencing on January 1, 2021, which generally models the above-described requirements of the Knox-Keene Health Care Service Plan Act. The bill would provide that any Medi-Cal beneficiary grievance involving a disputed health care service is eligible for review under the IPDMRS, and would define “disputed health care service” as any outpatient prescription drug eligible for coverage and payment by the Medi-Cal program that has been denied, modified, or delayed by a decision of the department, or by one of its contracting fiscal intermediaries for the administration of the prescription drug benefit if that entity makes a final decision, in whole or in part, due to a finding that the service is not medically necessary. The bill would require information on the IPDMRS to be included in specified material, including the “my Medi-Cal: How to Get the Health Care You Need” publication, on the department’s internet website, and various documents prepared by Medi-Cal managed care plans, including plan member handbooks, beneficiary evidence coverage forms, and letters of denial or notice of adverse benefits. The bill would authorize a beneficiary to apply to the department for an Independent Prescription Drug Medical Review (IPDMR) of a decision involving a disputed health care service within 6 months of receipt of the notice of adverse action, and would prohibit a beneficiary from paying any application or processing fee. The bill would require the department to provide a beneficiary with an application form and an addressed envelope, which the beneficiary may return to initiate an IPDMR, as part of the department’s notification to the beneficiary on a disposition of the beneficiary’s grievance involving a disputed health care service, and would require the form to include specified information, such as a statement indicating the beneficiary’s consent to obtain necessary medical records from the Medi-Cal managed care plan and the beneficiary’s providers. Upon notice from the department that the beneficiary has applied for an IPDMR, the bill would require the department and its contracting fiscal intermediaries for the administration of the prescription drug benefit to provide to the IPDMR organization designated by the department specified information, including a copy of any outpatient drugs dispensed to the Medi-Cal beneficiary, for purposes of the IPDMR organization’s evaluation of the request.
This bill would require the department to contract with one or more IPDMR organizations to conduct IPDMRs, and would require those organizations to be independent of any Medi-Cal managed care plan or the department’s contracting fiscal intermediary for the administration of the prescription drug benefit in California. The bill would also authorize the department to enter into an intra-agency agreement with the Department of Managed Health Care to perform some or all of the department’s duties, as specified. The bill would impose various requirements on the IPDMR organization, including that the organization is not affiliated or a subsidiary of a pharmaceutical manufacturer and that the organization submit to the department specified information, such as the name of any stockholder and owner of more than 5% of any stock or options, if a publicly held organization. The bill would require the medical professional reviewer or reviewers selected to conduct the IPDMR by the organization to perform specified duties, including reviewing pertinent medical records of the beneficiary. The bill would require the IPDMR organization to complete its review and make a written determination within 30 days of receipt of the application for review and supporting documentation, or less time as prescribed by the director, and to provide specified information, such as the analyses and determinations of the medical professionals reviewing the case, to identified individuals, including the director and the beneficiary. The bill would require the director to immediately adopt the determination of the IPDMR organization, promptly issue a written decision to the parties, and implement that decision. The bill would provide that the director’s decision adopting a determination of an IPDMR organization be made publicly available, as prescribed, including in a searchable database on the department’s internet website. The bill would require the director to perform an annual audit of IPDMR cases for education and determination of whether any denials, modifications, or delays in the coverage of outpatient prescription drugs necessitate an evaluation of the department’s coverage policies. The bill would require the department to establish a reasonable, per-case reimbursement schedule to pay the costs of IPDMR organization review. The bill would require the department to provide an external, independent review process to examine itself and contracting fiscal intermediaries on experimental or investigational outpatient prescription drugs for specified individuals, including a beneficiary who has a life-threatening or seriously debilitating condition, and would provide that a disputed health care service involving experimental or investigational therapies is subject to the above-specified review process, including additional identified criteria.
This bill would require the department to permit a Medi-Cal beneficiary to continue use of a drug that was covered by a Medi-Cal managed care plan and is part of a prescribed therapy in effect for the beneficiary immediately before the date of receipt of coverage through the department, irrespective of whether the drug is on the Medi-Cal contract drug list, for a prescribed period of time.
(2) Existing law authorizes the department to contract with a vendor for the purposes of surveying drug price information, collecting data from providers, wholesalers, or drug manufacturers, and calculating a proposed actual acquisition cost. Existing law authorizes the department to establish a list of maximum allowable ingredient cost for generically equivalent drugs, and to establish the actual acquisition cost based on 3 specified factors, including the volume weighted actual acquisition cost adjusted by the department to verify that the actual acquisition cost represents the average purchase price paid by retail pharmacies in California, or the proposed actual acquisition cost as calculated by a vendor, as specified. Existing law requires the department to establish a fee schedule for the list of pharmacist services. Existing law specifies the pharmacist services that may be provided to a Medi-Cal beneficiary.
This bill would authorize the department to provide a disease management or similar payment to a pharmacy that the department has contracted with to dispense a specialty drug to Medi-Cal beneficiaries in an amount necessary to ensure beneficiary access, as determined by the department based on the results of the survey completed during the 2020 calendar year.
(3) Existing law requires the department to prepare and submit assumptions and estimates, as prescribed, relating to the Medi-Cal program to the Department of Finance on a semiannual basis. Existing law requires the department to include in the Governor’s proposed budget the fiscal assumptions for the transition of the outpatient pharmacy benefit to a fee-for-service benefit.
This bill would require the department to include specified information in the Medi-Cal program assumptions and estimates, such as the percentage of pharmacies actively billing the Medi-Cal program for outpatient prescription drugs and the average expenditure and net expenditure for outpatient prescription drugs per Medi-Cal beneficiary.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 14100.5 of the Welfare and Institutions Code is amended to read:

14100.5.
 (a) The department shall prepare and submit Medi-Cal program assumptions and estimates to the Department of Finance. The purpose of the assumptions and estimates shall be to clearly identify changes within the Medi-Cal program which have policy or fiscal implications, and to produce reliable forecasts of Medi-Cal expenditures.
(b) Medi-Cal program assumptions and estimates shall be organized by and correspond to Budget Act or Budget Bill item numbers, separately identifying expenditures for all of the following:
(1) Purchase of medical care and services.
(2) Rate increases.
(3) County administration.
(4) Fiscal intermediary services.
(c) Estimates and assumptions shall indicate state and federal, as well as total, funds expended.
(d) The department shall submit, by September 10 and March 1 of each year, to the Department of Finance for its approval, all assumptions underlying all Medi-Cal program estimates. The Department of Finance shall approve or modify, in writing, the assumptions underlying all estimates within 15 working days of their receipt. If the Department of Finance does not approve or modify the assumptions by that date, the assumptions, as presented by the department, shall be deemed to be approved by the Department of Finance as of that date.
(e) The department shall submit an estimate of Medi-Cal program expenditures to the Department of Finance by November 1 of each year, and April 20 of each year. All approved estimates and supporting data provided by the department or developed independently by the Department of Finance, shall be made available to the legislative fiscal committees following approval by the Department of Finance. However, departmental estimates with supporting data shall be forwarded to the legislative fiscal committees on or about January 10 and May 15 of each year if this information has not been released earlier.
(f) A Medi-Cal assumption shall contain a clear narrative description of the statutory, regulatory, or policy change, or other change, that has occurred or will occur which affects Medi-Cal program expenditures or that is of policy importance. An assumption shall include a cost estimate that contains relevant workload, caseload, unit cost, and other data or information needed to support the estimate.
(g) The assumptions related to purchase of medical care and services shall include a section with a nontechnical description of the major variables used to produce a base projection. This section shall further contain an estimate of the fiscal impact of the use of these variables. The estimates related to purchase of medical care and services shall include current and budget year base projections of eligibles, users, expenditures, and cost per user by quarter with sufficient past actual data to permit evaluation of the projections. The projections shall be prepared by service category and aid category. The Department of Finance shall identify a high, mid, and low range of Medi-Cal service expenditures, which shall be accompanied by assumptions, when the estimates are released to the Legislature.
(h) The assumptions or estimates related to fiscal intermediary services shall contain a narrative description on how the forecasts are prepared. Sufficient historical workload by claim type and expenditure data shall accompany the forecasts to permit evaluation. Change orders to the fiscal intermediary contract shall be fully described and costs estimated. In addition, important modifications to the Medi-Cal claims processing system not associated with change orders shall be described and, if appropriate, costs or savings, estimated.
(i) Assumptions or estimates related to Medi-Cal county administration costs shall contain a narrative description on how the forecast was prepared. Current and budget year estimates by county shall be prepared. The estimates shall compare past actual and projected workload and expenditures in a format that permits evaluation of forecasts. Changes in expenditure estimates for individual counties resulting from allocation of funds or other factors shall be identified in subsequent estimates. Unallocated funds and funds for special projects or special problems shall be separately identified. The department shall compare budgeted and actual expenditures by county as soon as the information from county quarterly costs reports becomes available.
(j) The estimates shall compare budgeted to implemented rate increases for the current year. The comparisons shall be by provider category and shall compare budgeted to implemented increases in terms of percentage increases, date of implementation, and revised estimated cost.
(k) The department shall include all of the following in the Medi-Cal program assumptions and estimates:
(1) The percentage of pharmacies actively billing the Medi-Cal program. For purposes of this paragraph, “actively billing” means a pharmacy has submitted a claim for reimbursement in the previous six months for an outpatient prescription drug.
(2) The number of outpatient prescription drugs dispensed, identified by the generic and brand name drug.
(3) The overall average net expenditure for outpatient prescription drugs dispensed, and identified by all of the following:
(A) An estimate of overall expenditure and net expenditures for outpatient prescription drugs for the 2019–20 fiscal year as a baseline year, and actual overall expenditures and net expenditures for each fiscal year thereafter.
(B) Generic and brand name outpatient prescription drug.
(C) The 25 most commonly dispensed outpatient prescription drugs.
(4) The average expenditure and net expenditure for outpatient prescription drugs per Medi-Cal beneficiary.
(5) Aggregate federal rebates and state supplemental rebates, identified by federal and state fund source.
(6) For the 2021–22 fiscal year, the number of beneficiaries receiving continuity of care for outpatient prescription drug coverage pursuant to subdivision (a) of Section 14133.06.
(7) Department administrative costs, including, but not limited to, costs related to pharmacy staffing for rebate negotiation, the determination of the contract drug list, and treatment authorization reviews for the 2019–20 fiscal year and each fiscal year thereafter.
(8) Contract costs for any contractor that administers the prescription drug benefit on behalf of the department.
(9) Change in 340B program drug utilization and expenditures, beginning with the 2019–20 fiscal year and each fiscal year thereafter.
(10) For outpatient prescription drugs, all of the following information on treatment authorization requests (TARS) for each fiscal year:
(A) The number of TARS.
(B) The percentage of TARS approved, deferred, modified, or denied.
(C) The mean and median TAR processing times.
(11) The number of requests for fair hearings involving outpatient prescription drugs and the number of requests for independent prescription drug medical reviews (IPDMRs), categorized by IPDMRs for medical necessity and experimental and investigational IPDMRs.
(l) For purposes of subdivision (k), “net expenditure for outpatient prescription drug” means the dispensing fee and ingredient cost reimbursement minus the state supplemental and federal drug rebate amounts.

SEC. 2.

 Section 14132.969 is added to the Welfare and Institutions Code, to read:

14132.969.
 (a) In addition to the pharmacist services in subdivision (b) of Section 14132.968 and the requirements of Section 14105.45, the department may provide a disease management or similar payment to a pharmacy pursuant to a contract with the department for the costs and activities described in paragraph (13) of subdivision (a) of Section 14105.45 that are associated with dispensing specialty drugs in an amount necessary to ensure beneficiary access, as determined by the department based on the results of the survey completed during the 2020 calendar year.
(b) Covered pharmacist services shall be subject to department protocols and utilization controls.
(c) (1) The director shall seek any necessary federal approvals to implement this section. This section shall not be implemented until the necessary federal approvals are obtained and shall be implemented only to the extent that federal financial participation is available.
(2) This section neither restricts nor prohibits any services currently provided by pharmacists as authorized by law, including, but not limited to, this chapter, or the Medicaid state plan.
(d) Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement, interpret, or make specific this section, and any applicable federal waivers and state plan amendments, by means of all-county letters, plan letters, plan or provider bulletins, or similar instructions, without taking regulatory action. By July 1, 2023, the department shall adopt regulations in accordance with the requirements of Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code. Commencing July 1, 2021, the department shall provide a status report to the Legislature on a semiannual basis, in compliance with Section 9795 of the Government Code, until regulations have been adopted.

SEC. 3.

 Section 14133.06 is added to the Welfare and Institutions Code, immediately following Section 14133.05, to read:

14133.06.
 (a) To ensure continuity of care, the department shall permit a Medi-Cal beneficiary to continue use of a drug that was covered by a Medi-Cal managed care plan and is part of a prescribed therapy in effect for the beneficiary immediately before the date of receipt of coverage through the department, whether or not the drug is on the Medi-Cal contract drug list, for a minimum of 180 days or until the prescribed therapy is no longer prescribed by the contracting prescriber, whichever is shorter.
(b) The requirements of this section apply to any contractor that administers the prescription drug benefit on behalf of the department.

SEC. 4.

 Article 6.05 (commencing with Section 14194.1) is added to Chapter 7 of Part 3 of Division 9 of the Welfare and Institutions Code, to read:
Article  6.05. Independent Prescription Drug Medical Review System

14194.1.
 (a) Commencing January 1, 2021, the department shall establish the Independent Prescription Drug Medical Review System.
(b) For the purposes of this article, “disputed health care service” means any outpatient prescription drug eligible for coverage and payment by the Medi-Cal program that has been denied, modified, or delayed by a decision of the department, or by one of its contracting fiscal intermediaries for the administration of the prescription drug benefit if that entity makes a final decision, in whole or in part, due to a finding that the service is not medically necessary.
(c) (1) Any Medi-Cal beneficiary grievance involving a disputed health care service is eligible for review under the Independent Prescription Drug Medical Review System if the requirements of this article are met. If the department finds that a beneficiary grievance involving a disputed health care service does not meet the requirements of this article for review under the Independent Prescription Drug Medical Review System, the beneficiary’s request for review shall be treated as a request for a fair hearing pursuant to Chapter 7 (commencing with Section 10950) of Part 2.
(2) If there appears to be any denial, modification, or delay based on medical necessity involving a disputed health care service, the denial, modification, or delay of coverage for the outpatient prescription drug shall be eligible for resolution pursuant to an Independent Prescription Drug Medical Review.
(d) (1) The department and its contracting fiscal intermediary for the administration of the prescription drug benefit shall provide a beneficiary with the opportunity to seek an Independent Prescription Drug Medical Review whenever coverage for an outpatient prescription drug has been denied, modified, or delayed by the department, or by its contracting fiscal intermediary for the administration of the prescription drug benefit, if the decision was based, in whole or in part, on a finding that the proposed health care service is not medically necessary. For purposes of this article, a beneficiary may designate an authorized representative to act on their behalf. For purposes of this article, “authorized representative” has the same meaning as paragraph (1) of subdivision (g) of Section 14014.5. The beneficiary’s provider may join with or otherwise assist the beneficiary in seeking an Independent Prescription Drug Medical Review, and may advocate on behalf of the beneficiary.
(2) The requirement to provide a beneficiary with the opportunity to seek an Independent Prescription Drug Medical Review whenever coverage for an outpatient prescription drug has been denied, modified, or delayed by the contracting fiscal intermediary for the administration of the prescription drug benefit, if the decision was based, in whole or in part, on a finding that the proposed health care service is not medically necessary shall, be available to the beneficiary only if the contractor is making a final decision on the denial, modification, or delay.
(e) The Independent Prescription Drug Medical Review process authorized by this article shall be in addition to any other procedures or remedies that may be available, including the fair hearing process established pursuant to Chapter 7 (commencing with Section 10950) of Part 2.
(f) (1) The availability of the Independent Prescription Drug Medical Review System shall be included in the “myMedi-Cal: How to Get the Health Care You Need” publication, on the department’s internet website, and on any notice of action involving a disputed health care service, as described in subdivision (b), denying, modifying, or delaying coverage for an outpatient prescription drug on the basis of medical necessity.
(2) A Medi-Cal managed care plan shall prominently display information on the right of a beneficiary to request an Independent Prescription Drug Medical Review in any case that the beneficiary believes that a disputed health care service have been improperly denied, modified, or delayed by the department, or by one of its contracting fiscal intermediaries for the administration of the prescription drug benefits. This information shall be displayed in its plan member handbook or relevant informational brochure, in its plan contract, on beneficiary evidence of coverage forms, on any copy of plan procedures for resolving grievances, on any letter of denial or notice of adverse benefits determinations issued by the plan or its contracting organization, on the grievance forms required under Section 1368 of the Health and Safety Code or pursuant to Medi-Cal managed care plan contracts, and on all written responses to grievances.
(g) A beneficiary may apply to the department for an Independent Prescription Drug Medical Review when the Medi-Cal beneficiary’s provider has recommended an outpatient prescription drug as medically necessary and the disputed health care service has been denied, modified, or delayed by the department, or its contracting prescription drug fiscal intermediaries, based in whole or in part on a decision that the health care service is not medically necessary. The option to apply for an Independent Prescription Drug Medical Review whenever coverage for an outpatient prescription drug has been denied, modified, or delayed by the contracting fiscal intermediary for the administration of the prescription drug benefit, if the decision was based in whole or in part on a finding that the proposed health care services are not medically necessary, shall be available to the beneficiary only if the contractor is making a final decision on the denial, modification, or delay.
(h) A beneficiary may apply to the department for an Independent Prescription Drug Medical Review of a decision taken pursuant to subdivision (b) to deny, modify, or delay any health care service based, in whole or in part, on a finding that the disputed health care service is not medically necessary, within six months of receipt of the notice of action. The director may extend the application deadline beyond six months if the circumstances of a case warrant the extension.
(i) The beneficiary shall not pay any application or processing fee of any kind.
(j) As part of its notification to the beneficiary on a disposition of the beneficiary’s grievance that denies, modifies, or delays any health care service, the department shall provide the beneficiary with a one- or two-page application form and an addressed envelope, which the beneficiary may return to initiate an Independent Prescription Drug Medical Review. The department shall include on the form any information required by the department to facilitate the completion of the Independent Prescription Drug Medical Review, such as the beneficiary’s diagnosis or condition, the nature of the disputed health care service sought by the beneficiary, a means to identify the beneficiary’s case, and any other material information. The form shall also be available on the department’s public internet website, and shall include all of the following:
(1) A statement indicating the beneficiary’s consent to obtain any necessary medical records from the Medi-Cal managed care plan and the beneficiary’s providers, which shall be signed by the beneficiary.
(2) Notice of the beneficiary’s right to provide information or documentation, either directly or through the beneficiary’s provider, on any of the following:
(A) A provider recommendation indicating that the disputed health care service is medically necessary for the beneficiary’s medical condition.
(B) Medical information or justification that a disputed health care service, on an urgent care or emergency basis, was medically necessary for the beneficiary’s medical condition.
(C) Reasonable information supporting the beneficiary’s position that the disputed health care service is or was medically necessary for the beneficiary’s medical condition, including all information provided to the beneficiary by the Medi-Cal managed care plan or the beneficiary’s provider, which remains in possession of the beneficiary, concerning either the department or fiscal intermediary for the administration of the prescription drug benefit decision on any disputed health care service, and a copy of any material the beneficiary submitted to the Medi-Cal managed care plan, which remains in possession of the beneficiary, in support of the grievance, and any additional material that the beneficiary believes is relevant.
(3) A section designed to collect information on the beneficiary’s ethnicity, race, and primary language spoken that includes both of the following:
(A) A statement of intent indicating that the information is used only for statistics in order to ensure that each beneficiary has access to the best care possible.
(B) A statement indicating that providing this information is optional and will not affect the Independent Prescription Drug Medical Review process in any way.
(k) Upon notice from the department that the beneficiary has applied for an Independent Prescription Drug Medical Review, the department and its contracting fiscal intermediaries for the administration of the prescription drug benefit shall provide to the Independent Prescription Drug Medical Review organization designated by the department a copy of any outpatient drugs dispensed to the Medi-Cal beneficiary. In addition, upon notice from the department that the beneficiary has applied for an Independent Prescription Drug Medical Review, the Medi-Cal managed care plan and the beneficiary’s providers shall provide to the Independent Prescription Drug Medical Review organization designated by the department a copy of all of the following documents within three business days of the receipt of the department’s notice of a request by a beneficiary for an independent review:
(1) (A) A copy of all of the beneficiary’s medical records in the possession of the Medi-Cal managed care plan or providers relevant to each of the following:
(i) The beneficiary’s medical condition.
(ii) Any health care service being provided by the Medi-Cal managed care plan or providers for the condition, and any outpatient prescription medication covered by the department.
(iii) Any disputed health care service requested by the beneficiary for the condition.
(B) Any newly developed or discovered relevant medical records in the possession of the beneficiary’s assigned Medi-Cal managed care plan or providers after the initial documents are provided to the Independent Prescription Drug Medical Review organization shall be forwarded immediately to the Independent Prescription Drug Medical Review organization. The confidentiality of all medical record information shall be maintained pursuant to applicable state and federal laws.
(2) A copy of all information provided to the beneficiary by the Medi-Cal managed care plan and providers concerning any decision by the plan or any provider on the beneficiary’s condition and care, and a copy of any materials the beneficiary or the beneficiary’s provider submitted to the Medi-Cal managed care plan and to the providers in support of the beneficiary’s request for disputed health care services. The confidentiality of any beneficiary medical information shall be maintained pursuant to applicable state and federal laws.
(3) A copy of any other relevant documents or information used by the department and its contracting fiscal intermediary for the administration of the prescription drug benefit in determining whether any disputed health care service should have been provided, and any statements by the department and its contracting fiscal intermediaries for the administration of the prescription drug benefit explaining the reasons for the decision to deny, modify, or delay disputed health care services on the basis of medical necessity. The department shall concurrently provide a copy of documents required by this paragraph, except for any information found by the director to be legally privileged information, to the beneficiary and the beneficiary’s provider.

14194.2.
 (a) If there is an imminent and serious threat to the health of the beneficiary, as specified in subdivision (c) of Section 14194.4, all necessary information and documents shall be delivered to an Independent Prescription Drug Medical Review organization within 24 hours of approval of the request for review.
(b) The department shall expeditiously review requests and immediately notify the beneficiary in writing as to whether the request for an Independent Prescription Drug Medical Review has been approved, in whole or in part, and, if not approved, the reasons therefor. The department, after submitting all of the required material to the Independent Prescription Drug Medical Review organization, shall promptly issue a notification to the beneficiary that includes an annotated list of documents submitted and offer the beneficiary the opportunity to request copies of those documents.
(c) An Independent Prescription Drug Medical Review organization, as specified in Section 14194.4, shall conduct the review in accordance with Section 14194.3 and any regulations or orders of the director adopted pursuant thereto. The organization’s review shall be limited to an examination of the medical necessity of the disputed health care service.

14194.3.
 (a) The department shall contract with one or more Independent Prescription Drug Medical Review organization in the state to conduct reviews for purposes of this article. The department may enter into an intra-agency agreement with the Department of Managed Health Care to perform some or all of the department’s activities specified in this article. The Independent Prescription Drug Medical Review organization shall be independent of any Medi-Cal managed care plan or the department’s contracting fiscal intermediary for the administration of the prescription drug benefit doing business in this state. The director may establish additional requirements, including conflict-of-interest standards, consistent with the purposes of this article, which an organization shall be required to meet to qualify for participation in the Independent Prescription Drug Medical Review System and to assist the department in carrying out its responsibilities.
(b) The Independent Prescription Drug Medical Review organization and the medical professionals retained to conduct reviews shall be deemed to be medical consultants for purposes of Section 43.98 of the Civil Code.
(c) The Independent Prescription Drug Medical Review organization, any experts it designates to conduct a review, or any officer, director, or employee of the Independent Prescription Drug Medical Review organization shall not have any material professional, familial, or financial affiliation, as determined by the director, with any of the following:
(1) Any of the department’s contractors that support the administration of the Medi-Cal pharmacy benefit.
(2) A physician, the physician’s medical group, or the independent practice association involved in the health care service in dispute.
(3) The development or manufacture of the principal drug, device, procedure, or other therapy proposed by the beneficiary whose treatment is under review, or the alternative therapy, if any, recommended by the plan.
(4) The beneficiary or the beneficiary’s immediate family.
(d) In order to contract with the department for purposes of this article, an Independent Prescription Drug Medical Review organization shall meet all of the following requirements:
(1) The organization shall not be an affiliate or a subsidiary of, nor in any way be owned or controlled by, a pharmaceutical manufacturer. A board member, director, or officer of a pharmaceutical manufacturer or a trade association of pharmaceutical manufacturers shall not serve as a board member, director, officer, or employee of an Independent Prescription Drug Medical Review organization.
(2) The organization shall submit to the department all of the following information upon initial application to contract for purposes of this article, and, except as otherwise provided, annually thereafter upon any change to any of the following information:
(A) The name of any stockholder and owner of more than 5 percent of any stock or options, if a publicly held organization.
(B) The name of any holder of a bond or note in excess of one hundred thousand dollars ($100,000), if any.
(C) The name of any corporation and organization that the Independent Prescription Drug Medical Review organization controls or is affiliated with, and the nature and extent of any ownership or control, including the affiliated organization’s type of business.
(D) The name and biographical sketch of any director, officer, and executive of the Independent Prescription Drug Medical Review organization, and a statement on any past or present relationship that a director, officer, or executive may have with any Medi-Cal managed care plan, disability insurer, managed care organization, provider group, or board or committee of a managed care plan, managed care organization, or provider group.
(E) (i) The percentage of revenue the Independent Prescription Drug Medical Review organization receives from expert reviews, including, but not limited to, external medical reviews, quality assurance reviews, and utilization reviews.
(ii) The name of any Medi-Cal managed care plan or provider group for which the Independent Prescription Drug Medical Review organization provides review services, including, but not limited to, utilization review, quality assurance review, and external medical review. Any change in this information shall be reported to the department within five business days of the change.
(F) A description of the review process, including, but not limited to, the method of selecting expert reviewers and matching the expert reviewers to specific cases.
(G) A description of the system the Independent Prescription Drug Medical Review organization uses to identify and recruit medical professionals to review treatment and treatment recommendation decisions, the number of medical professionals credentialed, and the types of cases and areas of expertise that the medical professionals are credentialed to review.
(H) A description of how the Independent Prescription Drug Medical Review organization ensures compliance with the conflict-of-interest provisions of this section.
(3) The Independent Prescription Drug Medical Review organization shall demonstrate that it has a quality assurance mechanism in place that does all of the following:
(A) Ensures that any medical professional retained is appropriately credentialed and privileged.
(B) Ensures that any review provided by any medical professional is timely, clear, and credible, and that those reviews are monitored for quality on an ongoing basis.
(C) Ensures that the method of selecting any medical professional for an individual case achieves a fair and impartial panel of medical professionals who are qualified to render recommendations on the clinical conditions and the medical necessity of treatments or therapies in question.
(D) Ensures the confidentiality of medical records and the review materials, consistent with the requirements of this section and applicable state and federal laws.
(E) Ensures the independence of any medical professional retained to perform the reviews through conflict-of-interest policies and prohibitions, and ensures adequate screening for conflicts of interest.
(4) Any medical professional selected by an Independent Prescription Drug Medical Review organization to review any medical treatment decision shall meet the requirements of and be subject to the restrictions in subdivision (d) of Section 1374.32 of the Health and Safety Code.
(e) The department, upon the request of any interested person, shall provide a copy of all nonproprietary information, as determined by the director, filed with the department by an Independent Prescription Drug Medical Review organization seeking to contract under this article. The department may charge a nominal fee to the interested person for photocopying the requested information.

14194.4.
 (a) Upon receipt of information and documents related to a case, the medical professional reviewer or reviewers selected to conduct the review by the Independent Prescription Drug Medical Review organization shall promptly review all pertinent medical records of the beneficiary, provider reports, and any other information submitted to the organization as authorized by the department or requested from any of the parties to the dispute by the reviewers. If any reviewer request information from any of the parties, a copy of the request and the response shall be provided to all of the parties. The reviewer or reviewers shall also review relevant information related to the criteria set forth in subdivision (b).
(b) Following their review, the reviewer or reviewers shall determine whether the disputed health care service was medically necessary based on the specific medical needs of the beneficiary and any of the information in subdivision (b) of Section 1374.33 of the Health and Safety Code.
(c) The Independent Prescription Drug Medical Review organization shall complete its review and make its determination in writing, and in layperson’s terms to the maximum extent practicable, within 30 days of the receipt of the application for review and supporting documentation, or within less time as prescribed by the director. If the disputed health care service has not been provided and the beneficiary’s provider or the department certifies in writing that an imminent and serious threat to the health of the beneficiary may exist, including, but not limited to, serious pain, the potential loss of life, limb, or major bodily function, or the immediate and serious deterioration of the health of the beneficiary, the analyses and determinations of the reviewers shall be expedited and rendered within three days of the receipt of the information. Subject to the approval of the department, the deadlines for analyses and determinations involving both regular and expedited reviews may be extended by the director for up to three days in extraordinary circumstances or for good cause.
(d) The medical professionals’ analyses and determinations shall state whether the disputed health care service is medically necessary. An analysis shall cite the beneficiary’s medical condition, the relevant documents in the record, and the relevant findings associated with the provisions of subdivision (b) to support the determination. If more than one medical professional reviews the case, the recommendation of the majority shall prevail. If the medical professionals reviewing the case are evenly split as to whether the disputed health care service should be provided, the decision shall be in favor of providing the service.
(e) The Independent Prescription Drug Medical Review organization shall provide the director, the fiscal intermediary for the administration of the prescription drug benefit, the beneficiary, and the beneficiary’s provider with the analyses and determinations of the medical professionals reviewing the case, and a description of the qualifications of the medical professionals. The Independent Prescription Drug Medical Review organization shall keep the names of the reviewers confidential in all communications with entities or individuals outside the Independent Prescription Drug Medical Review organization, except in any case that the reviewer is called to testify and in response to court orders. If more than one medical professional reviewed the case and the result was differing determinations, the Independent Prescription Drug Medical Review organization shall provide each of the separate reviewer’s analyses and determinations.
(f) The director shall immediately adopt the determination of the Independent Prescription Drug Medical Review organization, and shall promptly issue a written decision to the parties that shall be binding on the department and its contracting fiscal intermediaries for the administration of the prescription drug benefit.
(g) After removing the names of the parties, including, but not limited to, the beneficiary and all medical providers, the director’s decision adopting a determination of an Independent Prescription Drug Medical Review organization shall be made available by the department to the public in a searchable database on the department’s internet website in a similar format to the database used by the Department of Managed Health Care for a similar purpose, upon considering applicable laws governing disclosure of public records, confidentiality, and personal privacy.
(h) (1) Information on each director decision provided by the database specified in subdivision (g) shall include all of the following:
(A) Beneficiary demographic profile information, including age and gender.
(B) The beneficiary diagnosis and disputed health care service.
(C) Whether the Independent Prescription Drug Medical Review was for medically necessary services pursuant to this article or for experimental or investigational therapies pursuant to Section 14194.7.
(D) Whether the Independent Prescription Drug Medical Review was standard or expedited.
(E) Length of time from the receipt by the Independent Prescription Drug Medical Review organization of the application for review and supporting documentation to the rendering of a determination by the Independent Prescription Drug Medical Review organization in writing.
(F) Length of time from receipt by the department of the Independent Prescription Drug Medical Review application to the issuance of the director’s determination in writing to the parties that is binding on the department and its contracted fiscal intermediaries for the administration of the prescription drug benefit.
(G) Credentials and qualifications of the reviewer or reviewers.
(H) The nature of the criteria set forth in subdivision (b) that the reviewer or reviewers used to make the case decision.
(I) The final result of the determination.
(J) The year the determination was made.
(K) A detailed case summary that includes the specific standards, criteria, and medical and scientific evidence, if any, that led to the case decision.
(2) The database referenced in subdivision (g) shall be accompanied by all of the following:
(A) The annual rate of Independent Prescription Drug Medical Review among the total number of Medi-Cal beneficiaries receiving outpatient prescription drug coverage through the Medi-Cal program.
(B) The number, type, and resolution of Independent Prescription Drug Medical Review cases by ethnicity, race, and primary language spoken.

14194.5.
 (a) Upon receiving a decision adopted by the director pursuant to Section 14194.4 that a disputed health care service is medically necessary, the department and its contracting fiscal intermediaries for the administration of the prescription drug benefit shall promptly implement the decision. In the case of reimbursement for services already rendered, the department shall reimburse the provider or the beneficiary, whichever applies, within five working days. In the case of any service not yet rendered, the department and its contracting fiscal intermediaries shall authorize the services within five working days of receipt of the written decision from the director, or sooner if appropriate for the nature of the beneficiary’s medical condition, and shall inform the beneficiary and the provider of the authorization.
(b) The department and its contracting fiscal intermediaries for the administration of the prescription drug benefit shall not engage in any conduct that has the effect of prolonging the independent review process. A beneficiary may bring a writ of mandate under Section 1085 of the Code of Civil Procedure if the department or its contracting fiscal intermediaries engage in that conduct or fail to promptly implement the decision.
(c) The director shall perform an annual audit of Independent Prescription Drug Medical Review cases for the dual purposes of education and the opportunity to determine if any denials, modifications, or delays in the coverage of outpatient prescription drugs necessitate an evaluation of the department’s coverage policies.
(d) This article does not limit the department’s responsibility to provide any medically necessary health care service pursuant to federal Medicaid program requirements.

14194.6.
 After considering the results of a competitive bidding process and any other relevant information on program costs, the director shall establish a reasonable, per-case reimbursement schedule to pay the costs of Independent Prescription Drug Medical Review organization reviews, which may vary depending on the type of medical condition under review and on other relevant factors.

14194.7.
 (a) The department shall provide an external, independent review process to examine the department and its contracting fiscal intermediaries for the administration of the prescription drug benefit’s coverage decisions on experimental or investigational outpatient prescription drugs for any beneficiary who meets all of the following criteria:
(1) The beneficiary has a life-threatening or seriously debilitating condition, as defined in subdivision (a) of Section 1370.4 of the Health and Safety Code.
(2) The beneficiary’s prescriber certifies that the beneficiary has a condition, as defined in paragraph (1), for which standard therapies have not been effective in improving the condition of the beneficiary, for which standard therapies would not be medically appropriate for the beneficiary, or for which there is no more beneficial standard therapy covered by the department than the therapy proposed pursuant to paragraph (3).
(3) The beneficiary’s prescriber has recommended an outpatient prescription drug that the prescriber certifies in writing is likely to be more beneficial to the beneficiary than any available outpatient prescription drug.
(4) The beneficiary has been denied coverage by the department or its contracting fiscal intermediaries for the administration of the prescription drug benefit for an outpatient prescription drug recommended or requested pursuant to paragraph (3).
(5) The specific outpatient prescription drug recommended pursuant to paragraph (3) would be a covered service, except for the department or its contracting fiscal intermediaries for the administration of the prescription drug benefit’s determination that the therapy is experimental or investigational.
(b) The department and its contracting fiscal intermediaries for the administration of the prescription drug benefit’s decision to delay, deny, or modify experimental or investigational therapies shall be subject to the independent medical review process under this article, except that, in lieu of the information specified in subdivision (b) of Section 1374.33 of the Health and Safety Code, an independent medical reviewer shall base their determination on relevant medical and scientific evidence, including, but not limited to, the medical and scientific evidence as defined in subdivision (d).
(c) The independent medical review process shall also meet all of the following criteria:
(1) The department and its contracting fiscal intermediaries for the administration of the prescription drug benefit shall notify any eligible beneficiary in writing of the opportunity to request the external independent review within five business days of the decision to deny coverage.
(2) If the beneficiary’s physician determines that the proposed therapy would be significantly less effective if not promptly initiated, the analyses and recommendations of the experts on the panel shall be rendered within seven days of the request for expedited review. At the request of an expert, the deadline shall be extended by up to three days for a delay in providing the documents required. The timeframes specified in this paragraph shall be in addition to any otherwise applicable timeframes contained in subdivision (c) of Section 14194.4.
(3) Each expert’s analysis and recommendation shall be in written form and state the reasons the requested outpatient prescription drug is or is not likely to be more beneficial for the beneficiary than any available standard outpatient prescription drug, the reasons that the expert recommends that the outpatient prescription drug should or should not be provided by the department, citing the beneficiary’s specific medical condition, the relevant documents provided, and the relevant medical and scientific evidence, including, but not limited to, the medical and scientific evidence to support the expert’s recommendation.
(d) For the purposes of this section, “medical and scientific evidence” shall have the same meaning as in subdivision (d) of Section 1370.4 of the Health and Safety Code.