2023 California Code › Health and Safety Code - HSC › DIVISION 2 - LICENSING PROVISIONS › CHAPTER 2.2 - Health Care Service Plans › ARTICLE 5 - Standards › Section 1367.206.

1367.206. (a) If there is more than one drug that is clinically appropriate for the treatment of a medical condition, a health care service plan that provides coverage for prescription drugs may require step therapy.
(b) A health care service plan shall expeditiously grant a request for a step therapy exception within the applicable time limit required by Section 1367.241 if a prescribing provider submits necessary justification and supporting clinical documentation supporting the provider’s determination that the required prescription drug is inconsistent with good professional practice for provision of medically necessary covered services to the enrollee, taking into consideration the enrollee’s needs and medical history, along with the professional judgment of the enrollee’s provider. The basis of the provider’s determination may include, but is not limited to, any of the following criteria:
(1) The required prescription drug is contraindicated or is likely, or expected, to cause an adverse reaction or physical or mental harm to the enrollee in comparison to the requested prescription drug, based on the known clinical characteristics of the enrollee and the known characteristics and history of the enrollee’s prescription drug regimen.
(2) The required prescription drug is expected to be ineffective based on the known clinical characteristics of the enrollee and the known characteristics and history of the enrollee’s prescription drug regimen.
(3) The enrollee has tried the required prescription drug while covered by their current or previous health coverage or Medicaid, and that prescription drug was discontinued due to lack of efficacy or effectiveness, diminished effect, or an adverse reaction. The health care service plan may require the submission of documentation demonstrating that the enrollee tried the required prescription drug before it was discontinued.
(4) The required prescription drug is not clinically appropriate for the enrollee because the required drug is expected to do any of the following, as determined by the enrollee’s prescribing provider:
(A) Worsen a comorbid condition.
(B) Decrease the capacity to maintain a reasonable functional ability in performing daily activities.
(C) Pose a significant barrier to adherence to, or compliance with, the enrollee’s drug regimen or plan of care.
(5) The enrollee is stable on a prescription drug selected by the enrollee’s prescribing provider for the medical condition under consideration while covered by their current or previous health coverage or Medicaid.
(c) A health care provider or prescribing provider may appeal a denial of an exception request for coverage of a nonformulary drug, prior authorization request, or step therapy exception request consistent with the health care service plan’s current utilization management processes.
(d) An enrollee or the enrollee’s designee or guardian may appeal a denial of an exception request for coverage of a nonformulary drug, prior authorization request, or step therapy exception request by filing a grievance under Section 1368.
(e) (1) This section does not prohibit a health care provider from prescribing a prescription drug that is clinically appropriate.
(2) This section does not prohibit a health care service plan or utilization review organization from requiring an enrollee to try an AB-rated generic equivalent, biosimilar, as defined in Section 262(i)(2) of Title 42 of the United States Code, or interchangeable biological product, as defined in Section 262(i)(3) of Title 42 of the United States Code, before providing coverage for the equivalent branded prescription drug.
(3) Paragraph (2) does not prohibit or supersede a step therapy exception request as described in subdivision (b).
(f) This section does not require or authorize a health care service plan that contracts with the State Department of Health Care Services to provide services to Medi-Cal beneficiaries to provide coverage for prescription drugs that are not required pursuant to those programs or contracts, or to limit or exclude any prescription drugs that are required by those programs or contracts.
(g) For purposes of this section, “step therapy exception” means a decision to override a generally applicable step therapy protocol in favor of coverage of the prescription drug prescribed by a health care provider for an individual enrollee.
(h) Commencing January 1, 2022, a health care service plan contract with a utilization review organization, medical group, or other contracted entity that performs utilization review or utilization management functions on a health care service plan’s behalf shall include terms that require the contracted entity to comply with this section and Section 1367.241.
(Amended by Stats. 2023, Ch. 495, Sec. 1. (SB 621) Effective January 1, 2024.)