Bill specifying criteria for health plans’ evaluation of utilization management denial appeals moves to Newsom’s desk


Soraya Marashi


A bill to ensure that a patient or physician’s appeal of a step therapy or prior authorization denial is reviewed by a specified clinical peer was enrolled and sent to Gov. Gavin Newsom’s desk on Aug. 31st. 


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Assembly Bill 1880, sponsored by Asm. Joaquin Arambula (D – Fresno), requires a health plan’s utilization management (UM) process to ensure that an appeal of the health plan’s denial to bypass UM for a medication is reviewed by 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.”

The bill requires health plans with UM protocols to maintain certain information regarding these protocols, including the number of exception requests received by the health plan. The bill also requires health plans to report this information, upon request, to the Department of Managed Health Care (DMHC) or the California Department of Insurance (CDI) commissioner. 

Senate amendments that were adopted just before the bill was signed include an amendment to clarify that every health plan requiring prior authorization or step therapy is required to maintain this specified information for at least 10 years, at minimum, to be made available to the DMHC or CDI upon request. 

According to Arambula, this bill will help improve the clinical peer review process and promote immediate access to lifesaving medication.

“UM protocols, like step therapy, allow insurance plans to dictate covered medications based solely on cost without taking into consideration patients’ unique needs,” the author’s position reads. “Without proper guidelines, UM limits a health care provider’s ability to tailor care to individual patient needs. For patients living with serious or chronic illnesses, prolonging ineffective treatment and delaying access to the right treatment may result in increased disease activity, loss of function, and possible irreversible progression of disability.”

The California Rheumatology Alliance (CRA), cosponsor of the bill, says the bill will promote positive health outcomes for patients by requiring that a patient or physician appealing a denial of a UM exception request is reviewed by an equally qualified physician as the physician treating the patient.

“Many times rheumatologists are having their denials reviewed by physicians who have no experience in treating rheumatology patients,” the legislative summary of CRA’s supporting position reads. “It is critical when a physician is reviewing a denial, they understand the patient’s condition in order to make an educated determination over whether the appeal should be granted.”

Crohn’s & Colitis Foundation, another cosponsor of the bill, says the bill will help reduce costs to the state health system.

“… Without this specialized experience, patients could be at risk of developing dangerous complications and requiring new medical interventions that will ultimately lead to additional costs to the system. The clinical peer review process, as used today, is hurting patient outcomes and ultimately adding cost to the system.”

Opposing organizations include the California Association of Health Plans (CAHP), the Association of California Life and Health Insurance Companies (ACLHIC), and America’s Health Insurance Plans (AHIP). They argue that prior authorization and step therapy protocols promote patient safety.

“It requires drug therapy for a medical condition to begin with the safest and most cost-effective drug before progressing to other more costly or risky therapies,” the legislative summary of the organizations’ opposing positions read. “Step therapy encourages providers and patients to undertake a more evidence-based, measured approach to treatment that is tailored to the individual by gauging a patient’s response to less harmful medications before graduating to the more potent and high-risk drugs.”

The opposing organizations contend that the bill will drive up health care costs for consumers by favoring expensive name-brand drugs, even when a generic brand that is also clinically appropriate is available. 

Opponents also criticize the requirement to report information to DMHC and CDI, stating that the maintaining of this specified information creates administrative burdens, and that “robust regulations” are already in place.