At first glance, step therapy may seem like a reasonable approach to control expenses in healthcare. By encouraging the use of less expensive medications before advancing to costlier alternatives, insurers claim to contain costs while ostensibly ensuring that patients receive effective treatment. However, the reality is far more complex. Step therapy protocols and other utilization management tools are often implemented by health insurers and Pharmacy Benefit Managers without regard for individual patient needs, medical histories, or the expertise of healthcare providers. Consequently, patients are forced to navigate a convoluted system that prioritizes financial considerations over their health.

One of the most glaring harms of step therapy is the delay in receiving appropriate treatment. For patients with chronic or life-threatening conditions such as cancer, autoimmune diseases, or mental health disorders, every moment counts. Moreover, step therapy undermines the doctor-patient relationship, eroding trust and mutual respect. Healthcare providers, who possess specialized knowledge of their patients’ conditions and medical histories, are often overruled by insurers who dictate the treatment pathway based solely on cost considerations. Patients and providers may feel frustrated, disempowered, and abandoned by a system prioritizing financial interests when they are dealing with crises.

Step therapy can also impose significant financial burdens on patients. While insurers may tout step therapy as a cost-saving measure, patients are often left to bear the brunt of its financial consequences. The repeated trials of ineffective medications, coupled with copayments, deductibles, and other out-of-pocket expenses, can impose a heavy financial strain on individuals and families already grappling with the challenges of managing a chronic illness or medical condition.

In California, utilization management protocols have been a subject of scrutiny and legislative action due to their significant impact on patient health and well-being. Those legislative patient protection measures are welcome and meaningful but still leave some opportunity for ongoing use of step therapy and other utilization management barriers.

California Legislation and Regulation:

California Health and Safety Code Section 1367.01 requires health care service plans to establish and maintain a system for the utilization review of healthcare services. It outlines requirements for prior authorization processes and ensures that they are conducted within accepted standards of medical practice.

SB 866 of 2011 required the Department of Managed Health Care (DMHC) and the Department of Insurance (CDI) to jointly develop a uniform prior authorization form that health plans and insurers must accept when prescribing providers seek authorization for prescription drug benefits.

SB 282 of 2015 required DMHC and CDI to develop a uniform prior authorization form for medications and authorized the use of electronic prior authorization. The law states that a prior authorization request for a prescription medication is granted if a DMHC-regulated health plan or CDI-regulated health insurers fails to respond to a request within 72 hours for nonurgent requests, and within 24 hours under exigent circumstances. Urgent care appointments for services that require prior authorization must be made available within 96 hours of the request.

AB 374 of 2015 requires health plans to have a clear and transparent process for step therapy, including criteria for when step therapy can be required and mechanisms for healthcare providers to request exceptions.

SB 855 of 2020 requires DMHC-regulated health plans and CDI-regulated use clinical criteria and guidelines consistent with generally accepted standards of mental health and substance use disorder care developed by nonprofit professional associations when conducting utilization review for medical necessity of care and services.

AB 347 of 2021 requires health plans and insurers to grant step therapy exceptions if specified criteria are met, authorized an enrollee or insured an appeal of a denial by filing a grievance and deems a prior authorization request or step therapy exception request approved for the duration of the prescription, including refills, if a health plan, health insurer, or contracted physician group, or utilization review organization fails to notify a prescribing provider of its coverage determination within a specified timeframe.

While legislative efforts have sought to mitigate the negative impact of step therapy and other utilization management protocols on patient health and well-being in California, challenges persist in ensuring timely access to appropriate treatments. Continued advocacy for patient-centered policies and ongoing evaluation of the effectiveness of step therapy regulations are essential to safeguarding the health and well-being of individuals across the state. You can follow the bills the California Chronic Care Coalition is watching HERE.