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 disability insurers by the Department of Insurance. Existing law generally authorizes a health care service plan or disability 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 disability insurer to include in a response regarding decisions to deny, delay, or modify health care services, among other things, information on how the provider, enrollee, or insured may file a grievance or appeal with the plan or insurer. Existing law requires a health care service plans grievance system to resolve grievances within 30 days, except as specified. Existing law requires a contract between a health insurer and a provider to contain provisions requiring a dispute resolution mechanism, and requires an insurer to resolve each provider dispute within 45 working days, as specified.

This bill would, upon request, require that an appeal or grievance regarding bill, upon communication of a decision by a health care service plan or health insurer delaying, denying, or modifying a health care service based in whole or in part on medical necessity, be reviewed by would authorize a provider to request review of the decision by a licensed physician, or a licensed health care professional under specified circumstances, who is competent to evaluate the specific clinical issues involved in the health care service being requested, and is of the same or similar specialty as the requesting provider. The bill would authorize review of a grievance or appeal by a licensed health care professional to be the reviewer if the provider requesting peer-to-peer review is not a physician. The bill, notwithstanding the above-described timelines, any other law, would require these reviews to occur within 2 business days, or if an enrollee or insured faces an imminent and serious threat to their health, within a timely fashion appropriate for the nature of the enrollees or insureds condition, as specified. If a health care service plan or health insurer fails to meet those timelines, the bill would deem the request for the health care service as approved and supersede any prior delay, denial, or modification. The bill would make conforming changes to related provisions.

Because a violation of these provisions by a health care service plan would be a crime, this 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, 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 disability insurers by the Department of Insurance. Existing law generally authorizes a health care service plan or disability 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 disability insurer to include in a response regarding decisions to deny, delay, or modify health care services, among other things, information on how the provider, enrollee, or insured may file a grievance or appeal with the plan or insurer. Existing law requires a health care service plans grievance system to resolve grievances within 30 days, except as specified. Existing law requires a contract between a health insurer and a provider to contain provisions requiring a dispute resolution mechanism, and requires an insurer to resolve each provider dispute within 45 working days, as specified.

This bill would, upon request, require that an appeal or grievance regarding a decision by a health care service plan or disability health insurer delaying, denying, or modifying a health care service based in whole or in part on medical necessity, be reviewed by a licensed physician physician, or a licensed health care professional under specified circumstances, who is competent to evaluate the specific clinical issues involved in the health care service being requested, and of the same or similar specialty as the requesting provider. The bill would authorize review of a grievance or appeal by a licensed health care professional if the provider requesting review is not a physician. The bill, notwithstanding the above-described timelines, would require these reviews to occur within 2 business days, or if an enrollee or insured faces an imminent and serious threat to their health, within a timely fashion appropriate for the nature of the enrollees or insureds condition, as specified. If a health care service plan or disability health insurer fails to meet those timelines, the bill would deem the prior authorization request for the health care service as approved and supersede any prior delay, denial, or modification. The bill would make conforming changes to related provisions.

Because a violation of these provisions by a health care service plan would be a crime, this 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, 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 disability insurers by the Department of Insurance. Existing law generally authorizes a health care service plan or disability 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 disability insurer to include in a response regarding decisions to deny, delay, or modify health care services, among other things, information on how the provider, enrollee, or insured may file a grievance or appeal with the plan or insurer. Existing law requires a health care service plans grievance system to resolve grievances within 30 days, except as specified. Existing law requires a contract between a health insurer and a provider to contain provisions requiring a dispute resolution mechanism, and requires an insurer to resolve each provider dispute within 45 working days, as specified.

This bill would, upon request, require that an appeal or grievance regarding a decision by a health care service plan or disability insurer delaying, denying, or modifying a health care service based in whole or in part on medical necessity, be reviewed by a licensed physician who is competent to evaluate the specific clinical issues involved in the health care service being requested, and of the same or similar specialty as the requesting provider. The bill, notwithstanding the above-described timelines, would require these reviews to occur within 2 business days, or if an enrollee or insured faces an imminent and serious threat to their health, within a timely fashion appropriate for the nature of the enrollees or insureds condition, as specified. If a health care service plan or disability insurer fails to meet those timelines, the bill would deem the prior authorization request as approved and supersede any prior delay, denial, or modification. The bill would make conforming changes to related provisions.

Because a violation of these provisions by a health care service plan would be a crime, this 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.

Date of Hearing: May 7, 2025

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

ABPCA Bill Id:AB 510

Author:(Addis) – As Amended Ver:April 28, 2025

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill authorizes a health care provider, upon a decision by a health plan or health insurer delaying, denying, or modifying a health service based on medical necessity, to request a review by a peer physician or health care professional of the same or similar specialty as the requesting provider. The bill requires a health plan or insurer to directly and expeditiously connect the requesting health care provider with a peer physician or other health care professional, as specified.

Specifically, this bill:

1. Authorizes a non-physician licensed health care professional to be the reviewer if the provider requesting peer-to-peer review is not a physician.
2. Requires the health plan or insurer to provide the peer-to-peer review within two business days, or sooner if the enrollee faces an imminent and serious threat to their health, as specified. Deems a request for peer-to-peer review as approved if the health plan or insurer fails to provide the requested review within the required timelines.

FISCAL EFFECT:

The Department of Insurance estimates one-time costs of $9,000 in fiscal year (FY) 2025-26 and $30,000 in FY 2026-27 to ensure compliance, including review of policy forms and utilization policies and procedures (Insurance Fund).

The Department of Managed Health Care (DMHC) anticipates significant costs to manage an increased volume of consumer and provider complaints, assess plan compliance, take enforcement actions, provide administrative and information technology services. DMHC estimates total costs to be $3.2 million in FY 2025-26, $6.8 million in FY 2026-27, $8.7 million in FY 2027-28, and $8.9 million in FY 2028-29 and annually thereafter (Managed Care Fund).

COMMENTS:

1. Purpose. This bill is sponsored by the California Medical Association. According to the author:

It is vital that health care decisions be made by professionals who understand the complexities of a patient’s condition. AB 510 will require that appeals of prior authorization denials be performed by a provider of the same or similar specialty. This will protect patient rights and ensure access to a fair, transparent process that prioritizes health over profits.

1. Background. In 2023, the California Health Benefits Review Program (CHBRP) published a report to help the Legislature better understand the ways in which prior authorization, which results in the denials, delays, or modifications addressed in this bill, is used in California. CHBRP noted that prior authorization is generally intended to decrease costs and waste, but it may also contribute to delays in treatment and additional barriers to care. Health plans and insurers commonly assert that prior authorization is also intended to ensure patient safety and appropriate use of treatments. Both patients and providers are frustrated with prior authorization practices. According to CHBRP, complaints include the time required to complete the initial authorization request and pursue denials, and delays in care. CHBRP reported 40% to 82% of prior authorization denials were overturned, suggesting a high frequency of inappropriate denials, which may delay treatment and, in the case of prescription medications, decrease patient adherence. CHBRP further notes people with disabilities, younger patients, African Americans, and people with lower incomes are more likely to report administrative burdens, including delays in care, due to prior authorization.
   
   The American Medical Association (AMA) asserts prior authorization leads to substantial administrative burdens for physicians, taking time away from direct patient care while costing practices money. AMA’s 2024 physician survey found that, on average, physicians and their staff spend 13 hours each week completing prior authorizations and 40% of physicians have staff who work exclusively on prior authorization. 89% of physicians reported that prior authorization increases physician burnout.
2. Oppose Unless Amended. The California Association of Health Plans (CAHP) and Association of California Life and Health Insurance Companies (ACLHIC) argue the specialty matching requirement is problematic and the review timelines are unrealistic and unworkable, and they are concerned with the potential for compromised quality of review, and unintended consequences with automatic approvals. CAHP and ACLHIC request amendments that: (a) mandate all appeals be submitted electronically by providers, (b) require all necessary clinical information be included in the appeal, (c) limit the specialty matching requirement to services that are requested outside the standard of care, (d) remove the timeframes, approval mandate, and communication restrictions in the bill, (e) specify that if a plan makes a “good faith effort” to schedule a peer-to-peer review it is not automatically out of compliance, and (f) delay the implementation date of the bill.
   
3. Related and Prior Legislation. Numerous bills currently under consideration, including AB 384 (Connolly), AB 512 (Harabedian), AB 539 (Schiavo), AB 574 (Mark González), AB 669 (Haney), and SB 306 (Becker) address prior authorization. Several bills introduced in previous legislative sessions attempted to make larger, more systematic changes, but were not enacted. These bills include SB 516 (Skinner) and SB 598 (Skinner), of the 2023-24 Legislative Session, and SB 250 (Pan) and AB 1880 (Arambula), of the 2021-22 Legislative Session.

Analysis Prepared by: Allegra Kim / APPR. / (916) 319-2081

Date of Hearing: April 22, 2025

ASSEMBLY COMMITTEE ON HEALTH

Mia Bonta, Chair

ABPCA Bill Id:AB 510

Author:(Addis) – As Amended Ver:April 10, 2025

SUBJECT: Health care coverage: utilization review: appeals and grievances.

SUMMARY: Requires, upon request, an appeal or grievance regarding a decision by a health care service plan (health plan) or health insurer delaying, denying, or modifying a health care service based in whole or in part on medical necessity, to be reviewed by a peer physician or health care professional of the same or similar specialty as the requesting provider. Specifically, this bill:

1. Requires, upon request, an appeal or grievance regarding a decision by a health plan or health insurer delaying, denying, or modifying a health care service based in whole or in part on medical necessity, to be reviewed by a peer physician or peer health care professional.
2. Requires, upon a request for review, a health plan or health insurer to directly and expeditiously connect the requesting health care provider with a peer physician or peer health care professional, without requiring the requesting provider to communicate with any additional employees or individuals acting on behalf of the health plan or health insurer.
3. Requires a review to occur within two business days of the request. Requires, if the enrollee faces an imminent and serious threat to their health, a review to occur in a timely fashion appropriate for the nature of the enrollee’s condition, not to exceed 24 hours after the request.
4. Requires a prior authorization request to be deemed approved and supersede any prior delay, denial, or modification if a health plan or insurer fails to meet the review timelines in 2) and 3) above.
5. Permits an appeal or grievance review to be performed by a contracted specialist reviewer, provided the reviewer is a peer physician or peer health care professional.
6. Permits, if the provider requesting review is not a physician, the appeal or grievance to be reviewed by a peer health care professional.
7. Defines “peer health care professional” as a licensed health care professional who is competent to evaluate the specific clinical issues involved in the health care service being requested, and of the same or similar specialty as the requesting provider.
8. Defines “peer physician” as a licensed physician who is competent to evaluate the specific clinical issues involved in the health care service being requested, and of the same or similar specialty as the requesting provider.

EXISTING LAW:

1. Establishes the Department of Managed Health Care (DMHC) to regulate health plans under the Knox-Keene Health Care Service Plan Act of 1975 and the California Department of Insurance (CDI) to regulate health insurance under the Insurance Code. [Health and Safety Code (HSC) § 1340, et seq., Insurance Code (INS) § 106, et seq.]
2. Requires the criteria or guidelines used by health plans and insurers, or any entities with which plans or insurers contract for utilization review (UR) or utilization management (UM) functions, to determine whether to authorize, modify, or deny health care services to:
   1. Be developed with involvement from actively practicing health care providers;
   2. Be consistent with sound clinical principles and processes;
   3. Be evaluated, and updated if necessary, at least annually;
   4. If used as the basis of a decision to modify, delay, or deny services in a specified case under review, be disclosed to the provider and the enrollee or insured in that specified case; and,
   5. Be available to the public upon request. [HSC § 1363.5 and INS § 10123.135]
3. Requires health plans to demonstrate that medical decisions are rendered by qualified medical providers, unhindered by fiscal and administrative management. [HSC § 1367]
4. Requires health plans and disability insurers and any contracted entity that performs UR or UM functions, prospectively, retrospectively, or concurrently, based on medical necessity requests to comply with specified requirements. [HSC § 1367.01 and INS § 10123.135]
5. Prohibits any individual, other than a licensed physician or a licensed health care professional who is competent to evaluate the specific clinical issues involved in the health care services requested by the provider, from denying or modifying requests for authorization of health care services for an enrollee or insured for reasons of medical necessity. Requires the decision to be communicated to the provider within 24 hours of the decision, and the enrollee (in writing) within two business days of the decision. Prohibits, in the case of concurrent review, discontinuance of care until the treating provider has been notified and has agreed to a care plan that is appropriate for the medical needs of the patient. [HSC § 1367.01 and INS § 10123.135]
6. Requires, if a health plan or health insurer that provides coverage for prescription drugs or a contracted physicians group fails to respond to a prior authorization, or step therapy exception request, as specified, within 72 hours for nonurgent requests, and within 24 hours if exigent circumstances exist, upon the receipt of a completed request form, that the request be deemed granted. [HSC § 1367.241 and INS § 10123.191]
7. Allows for appeal of a denial of an exception request for coverage of a nonformulary drug, prior authorization request, or step therapy exception request by filing an internal appeal pursuant to federal law and any subsequent rules or regulations issued thereunder. [INS § 10123.201]
8. Establishes, in DMHC and CDI, the Independent Medical Review System (IMR) which reviews disputed health care services that a plan, or one of its contracting entities, or insurer determines is not medically necessary or is experimental or investigational. [HSC §§ 1374.30 - 1374.36 and INS § 10169]
9. Requires every health plan to establish and maintain a grievance system approved by DMHC under which enrollees may submit their grievances and complaints to the plan. Permits enrollees to submit those grievances to DMHC after undergoing the plan’s internal process for at least 30 days, unless the case involves imminent and serious threat, severe pain, potential loss of life, limb, or major bodily function, cancellations, rescissions, or the nonrenewal of a contract or any other case where DMHC determines early review is warranted. Requires to the extent required by federal law and any subsequent rules or regulations, an independent external review pursuant to the standards required by the United States Secretary of Health and Human Services of a health plan’s cancellation, rescission, or nonrenewal of an enrollee’s or subscriber’s coverage. [HSC § 1368]
10. Requires under federal law a group health plan and a health insurance issuer offering group or individual health insurance coverage to implement an effective appeals process for appeals of coverage determinations and claims, including an internal claims appeal process with notices in a culturally and linguistically appropriate manner, of available internal and external appeals process. Establishes processes for internal and external reviews. [42 U.S.C. § 300gg-19]

FISCAL EFFECT: Unknown. This bill has not yet been analyzed by a fiscal committee.

COMMENTS:

1. PURPOSE OF THIS BILL. According to the author, it is vital that health care decisions be made by professionals who understand the complexities of a patient’s condition. The author continues that this bill will require that appeals of prior authorization denials be performed by a provider of the same or similar specialty. The author concludes that this will protect patient rights and ensure access to a fair, transparent process that prioritizes health over profits.
2. BACKGROUND. UM and UR are processes used by health plans to evaluate and manage the use of health care services. UR can occur prospectively, retrospectively, or concurrently and a plan can approve, modify, delay or deny in whole or in part a request based on its medical necessity. Prior authorization is a UR technique used by health plans that requires patients to obtain approval of a service or medication before care is provided. Prior authorization is intended to allow plans to evaluate whether care that has been prescribed is medically necessary for purposes of coverage. Prior authorization is one type of UM tool that’s used by health plans, along with others such as concurrent review and step therapy, to control costs, limit unnecessary care, and evaluate safety and appropriateness of a service.
   1. Overall impact of prior authorization. In 2023, the California Health Benefits Review Program (CHBRP) published a report to help the Legislature better understand the ways in which prior authorization is used in California. CHBRP noted that prior authorization is an imperfect instrument that’s utilized in a myriad of ways. This poses a challenge for policymakers, payers, patients, and providers since prior authorization is generally intended to decrease costs and waste, but it may also contribute to delays in treatment and additional barriers to care. Currently, evidence is limited as to the extent to which health insurance uses prior authorization and its impact on the performance of the health care system, patient access to appropriate care, and the health and financial interests of the general public. Despite the limited evidence, there is clear frustration from both patients and providers regarding prior authorization practices. According to CHBRP, complaints range from the time required to complete the initial authorization request and pursue denials, to delays in care, to a general lack of transparency regarding the process and criteria used to evaluate prior authorization requests. CHBRP further notes that people with disabilities, younger patients, African Americans, and people with lower incomes are more likely to report administrative burdens, including delays in care, due to prior authorization.
   2. Cost impacts. One common reason prior authorization is used is to reduce and control health care spending. Total national health expenditures as a share of the gross domestic product have increased steadily over time. While the overall increase in health care spending can be largely attributed to increased cost of services and increased utilization, there is another important piece that drives both increased utilization and cost of services. Unnecessary medical care or wasteful health care spending, such as administrative complexities and fraud, are additional drivers. CHBRP cites recent study estimates that between 20% and 25% of all health care spending in the United States is a result of wasteful and unnecessary spending, as well as missed opportunities to provide appropriate care. Health plans and insurers operating in California responding to CHBRP’s query on areas of highest fraud and abuse noted that waste and abuse may occur more frequently when low value or medically unnecessary care is delivered. Behavioral health, particularly applied behavioral analysis, was identified by health plans/insurers as a leading fraud risk.
   3. Access to and utilization of care. Across state-regulated commercial plans and policies, 100% of enrollees are subject to some sort of prior authorization in their benefits. Plans reported that between five to 15% of all covered medical services and 16% to 25% of pharmacy services were subject to prior authorization. Evidence regarding whether prior authorization improves patient safety and ensures medically appropriate care is provided is mixed. Across studies reviewed by CHBRP, a sizable share of prior authorization denials were overturned upon appeal, ranging from 40% to 82% of denials being overturned. In instances when prior authorization is initially denied, a patient may need to pay out of pocket for services or may delay treatment due to lack of coverage. Much of the published literature regarding the impact of prior authorization focuses on prescription medications, finding that prior authorization requirements result in lower utilization of medications and decreases medication adherence.
   4. Administrative burden. According to the American Medical Association (AMA), prior authorization leads to substantial administrative burdens for physicians, taking time away from direct patient care while costing practices money. AMA’s 2024 physician survey on prior authorization found that on average, physicians and their staff spend 13 hours each week completing prior authorizations and 40% of physicians have staff who work exclusively on prior authorization. One in three physicians reported that prior authorization requests are often or always denied and 93% reported that prior authorization leads to care delays for their patients. 89% of physicians reported that prior authorization somewhat or significantly increases physician burnout.
   5. Antiquated systems. According to CHBRP, many aspects of prior authorization workflow still rely on the resource-intense use of paper forms, telephone calls, facsimile communications, and portal access. Contributing to the resource intense process is the type of technology (or lack of) used by providers and plans. Although many providers have transitioned to electronic health records (EHRs), for some providers, the cost to do so is prohibitive. Additionally, not all EHRs easily communicate with other EHRs, thereby still requiring a person to manually transfer information from one system to another. In light of these challenges, there are ongoing state and federal efforts to improve data sharing across health care entities to improve processes like prior authorization.

In January of 2024, the federal Centers for Medicare & Medicaid Services (CMS) released the CMS Interoperability and Prior Authorization Final Rule. This rule emphasizes the need to improve health information exchange to achieve appropriate and necessary access to health records for patients, healthcare providers, and payers. The rule also focuses on efforts to improve prior authorization processes through policies and technology, to help ensure that patients remain at the center of their own care. Impacted payers are required to implement certain provisions by January 1, 2026 and meet remaining requirements by January 1, 2027.

AB 133 (Committee on Budget), Chapter 143, Statutes of 2021, establishes the California Health and Human Services (CalHHS) Data Exchange Framework (DxF) and required CalHHS to finalize a data sharing agreement by July 1, 2022. The DxF defines the entities that will be subject to these new data exchange rules and sets forth a common set of terms, conditions, and obligations to support secure, real-time access to and exchange of health and social services information, in compliance with applicable federal, state, and local laws, regulations, and policies. DxF is not a new technology or centralized data repository, it is an agreement across health and human services systems and providers to share information safely. Many health care entities were required to participate beginning January 2024. Remaining entities are required to participate by January 2026.

1. SUPPORT. The California Medical Association (CMA), sponsor of this bill, states that too often, health plans deny a physician’s treatment request, and the individuals reviewing these decisions and appeals lack the requisite clinical expertise to assess the physician’s recommendation properly. CMA continues that when a health plan representative lacks the appropriate specialization, physicians must spend even more time seeking to educate health plan representatives on basic medical details regarding the underlying condition and fighting for their recommended treatment. CMA states that as a result, physicians report that their patient care and appointments are disrupted. CMA argues that this bill would ensure that treating physicians have the right to have their appeals of prior authorization denials, delays, or modifications expeditiously reviewed by a peer of the same or similar specialty, upon request. CMA continues that this bill would state that if a health plan is unable to satisfy this requirement, then after two days the prior authorization request being appealed is approved. CMA concludes that this common-sense change to the prior authorization process will help ensure that patients can more swiftly receive the care they need and help physicians spend more time treating patients and less time navigating inefficient administrative hurdles.
2. OPPOSSED UNLESS AMENDED. The California Association of Health Plans (CAHP) and Association of California Life and Health Insurance Companies (ACLHIC), are opposed to this bill unless amended. CAHP and ACLHIC state they share the goal of ensuring timely access to necessary health care services for patients, but believe the current language of this bill creates significant operational challenges and unintended consequences that could ultimately hinder, rather than help, the efficient delivery of quality care. CAHP and ACLHIC continue that their primary concerns include a problematic specialty matching requirement, unrealistic and unworkable review timelines, the potential for compromised quality of review, and unintended consequences with automatic approvals. CAHP and ACLHIC request amendments that: mandate all appeals be submitted electronically by providers, require all necessary clinical information be included in the appeal, limit the specialty matching requirement to services that are requested outside the standard of care, remove the timeframes, approval mandate, and communication restrictions in the bill, specify that if a plan makes a “good faith effort” to schedule a peer-to-peer review they are not automatically out of compliance, and delay the implementation date of the bill.
3. RELATED LEGISLATION.
   1. AB 384 (Connolly) would prohibit a health plan, health insurer, or Medi-Cal from requiring prior authorization for an individual to be admitted to medically necessary 24-hour inpatient settings for mental health and substance use disorders (SUDs) and for any medically necessary health care services provided to an individual while admitted for that care. AB 384 is currently pending in the Assembly Health Committee.
   2. AB 512 (Harabedian) would shorten the timeline for prior authorization requests to be no longer than 48 hours for standard requests or 24 hours for urgent requests. AB 512 is currently pending in the Assembly Health Committee.
   3. AB 539 (Schiavo) would require a prior authorization for a health care service to remain valid for a period of at least one year from the date of approval. AB 539 is currently pending in the Assembly Health Committee.
   4. AB 574 (Mark González) would prohibit a health plan or health insurer that provides coverage for physical therapy (PT) from requiring prior authorization for the initial 12 treatment visits for a new episode of care for PT.
   5. AB 669 (Haney) would prohibit concurrent or retrospective review of medical necessity for the first 28 days of in-network inpatient SUD stay. Would prohibit concurrent or retrospective review of medical necessity of in-network outpatient SUD visits. Would prohibit retrospective review of medical necessity for the first 28 days of in-network intensive outpatient or partial hospitalization SUD services, as specified. Would prohibit prior authorization for in-network coverage of medically necessary outpatient prescription drugs to treat SUD. AB 669 is currently pending in the Assembly Health Committee.
   6. SB 306 (Becker) would prohibit a health plan or health insurer, or an entity with which the plan or insurer contracts, from imposing prior authorization or prior notification for one calendar year on a covered service that was approved 90% or more of the time in the prior calendar year. SB 306 is currently pending in the Senate Health Committee.
4. PREVIOUS LEGISLATION.
   1. SB 999 (Cortese) of 2024 would have required a health plan or disability insurer to comply with UR determination requirements related to mental health and substance use disorder treatment. SB 999 was held on suspense in the Assembly Appropriations Committee.
   2. SB 516 (Skinner) of 2024 would have required DMHC and CDI, by July 1, 2025, to issue instructions, including a standard reporting template, to health plans and insurers to report specified information, including all covered health care services, items, and supplies subject to prior authorization. SB 516 was not heard in the Assembly Health Committee.
   3. SB 598 (Skinner) of 2023 would have prohibited a health plan or insurer from requiring a contracted health professional to complete or obtain a prior authorization for any covered health care services if the plan or insurer approved or would have approved not less than 90% of the prior authorization requests they submitted in the most recent completed one-year contracted period. SB 598 was held on suspense in the Assembly Appropriations Committee.
   4. SB 250 (Pan) of 2022 was similar to SB 598 and was held on suspense in the Assembly Appropriations Committee.
   5. SB 999 (Cortese) of 2022 was similar to this bill. SB 999 was vetoed by Governor Newsom who stated in part:

“I share the author's goal of ensuring that patients are able to receive the behavioral health care they need, when they need it. Two years ago, I signed SB 855 (Wiener), Chapter 151, Statutes of 2020, a landmark update to California's MH parity statutes. SB 855 and forthcoming regulations implementing the law seek to address the issues targeted by this bill by requiring the use of unbiased MH and SUD clinical standards in coverage reviews and mandating the appropriate training and oversight of staff performing those reviews. Implementation of SB 855 is underway, and the industry is in the process of adapting to California's stringent new requirements. As such, this bill is premature and unnecessary at this time.”

• 1. AB 1880 (Arambula) of 2022 would have required a health plan or insurer's UM process to ensure that an appeal of a denial, is reviewed by a clinical peer, as specified. Would have defined clinical peer as a physician or other health professional who holds an unrestricted license or certification from any state and whose practice is in the same or a similar specialty as the medical condition, procedures, or treatment under review. AB 1880 was vetoed by Governor Newsom who stated in part:

“Health plans and health insurers should make every effort to streamline UM processes and reduce barriers to all medically necessary care. However, the bill's requirements, which are limited to denied authorizations for prescription drugs, are duplicative of California's existing IMR requirements, which provide enrollees, insureds, and their designated representatives with the opportunity to request an external review from an independent provider. I encourage the Legislature to pursue options that leverage existing requirements and resources, rather than creating duplicative new processes.”

• 1. AB 1268 (Rodriguez) of 2019 would have required a health plan or health insurer, on or before July 1, 2020, and annually on July 1 thereafter, to report to the appropriate department the number of times in the preceding calendar year that it approved or denied each of the 30 health care services for which prospective review was most frequently requested. AB 1268 was held on suspense in the Assembly Appropriations Committee.

1. TECHNICAL AMENDMENTS. The committee may wish to amend this bill to make technical, clarifying changes.
2. POLICY COMMENTS.
   1. Alignment with data solutions. As noted in the background of this analysis, many aspects of the UR workflow still rely on the resource-intense use of paper forms, telephone calls, facsimile communications, and portal access. The peer-to-peer review timelines in this bill will be difficult to meet if providers and plans are still relying on outdated information sharing systems. The author and sponsors may wish to work with stakeholders to ensure that this bill is aligned with ongoing state and federal efforts to improve data sharing and technological connectivity between patients, providers, and payers to ensure that the timelines it is setting can be met.
   2. Best approach for addressing issues with UR and UM. This committee is reviewing a number of bills aiming to address the problems that current UR and UM processes create in terms of access to care and physician burden. The volume of bills introduced on the topic demonstrate the level of Legislative determination to improve UR and UM processes for Californians. However, there is a divide on how to best approach such improvements. Some bills aim to address UR and UM processes at the systemic level by speeding up processing times, reducing the overall volume of services that require prior authorization, or extending authorization periods. Others aim to tackle problems at a more individual level by removing or altering UM and UR processes for specific services or conditions. While there is a clear need and desire for progress on improving the UR and UM experience, the Legislature will need to consider what the best approach is for all Californians. Altering structural processes? Or removing barriers for priority services and conditions?

REGISTERED SUPPORT / OPPOSITION:

Support

California Medical Association (sponsor)

AARP

Alliance of Catholic Health Care, Inc.

ALS Association

American Academy of Pediatrics, California

American College of Obstetricians & Gynecologists - District IX

Association for Clinical Oncology

Association of Northern California Oncologists

California Academy of Child and Adolescent Psychiatry

California Advocates for Nursing Home Reform

California Association for Health Services At Home

California Chapter American College of Cardiology

California Chapter of the American College of Emergency Physicians

California Chronic Care Coalition

California Hospital Association

California Nurses Association

California Orthopedic Association

California Podiatric Medical Association

California Psychological Association

California Radiological Society

California Retired Teachers Association

California Rheumatology Alliance

California Society of Pathologists

California Society of Plastic Surgeons

California State Association of Psychiatrists (CSAP)

Crohns and Colitis Foundation

District Hospital Leadership Forum

Medical Oncology Association of Southern California

Mental Health America of California

Saint Agnes Medical Center

Stanford Health Care

Steinberg Institute

The Kennedy Forum

U.S. Pain Foundation

United Hospital Association

Western Center on Law & Poverty

Opposition

None on file

Analysis Prepared by: Riana King / HEALTH / (916) 319-2097