Senate Commerce Committee Statement to Senate, No. 1794 — State of New Jersey (June 9, 2022)

Summary

A Senate Commerce Committee statement to the Senate on Senate Bill No. 1794 with committee amendments, State of New Jersey, dated June 9, 2022, reporting the bill favorably. As amended, the bill sets prior authorization requirements for carriers and utilization review entities, including published approval and denial statistics and adverse determinations made only by a physician. Entities must decide within one calendar day of obtaining all necessary information, or within 24 hours for an urgent health care service, and medications for opioid use disorder need no prior authorization. An authorization stays valid for one year, an entity may honor a previous one for the initial 60 days of a new health plan, and any missed deadline means the services are automatically deemed authorized.

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SENATE COMMERCE COMMITTEE

STATEMENT TO

SENATE, No.
1794

with
committee amendments

STATE
OF NEW JERSEY

DATED: JUNE 9,
2022

The
Senate Commerce Committee reports favorably and with committee amendments
Senate Bill No. 1794.

As
amended, the bill places certain requirements regarding the use of prior
authorization of health benefits on carriers and utilization review entities
acting on behalf of carriers. The bill defines “carrier” to include insurance
companies, health, hospital, and medical service corporations, health
maintenance organizations, and the State Health Benefits Program and School
Employees’ Health Benefits Program. The bill also adds a definition of
“enrollee” and “medications for opioid use disorder” and adds mental health
services and behavioral health services to the definition of “urgent health
care service.”

The
bill requires a utilization review entity to make certain disclosures regarding
its prior authorization requirements and restrictions, on its website and in
writing, including certain statistics concerning approvals and denials, as set
forth in the bill. This includes data on whether prior authorization
determinations were appealed, approved or denied on appeal, and the time
between submission of prior authorization requests and the determination.

The
bill also requires that a utilization review entity ensure that a physician
make any adverse determination and specifies the qualifications the physician
is to meet to make the determination. Additionally, questions over the medical
necessity of a health care service are to be conveyed from the utilization
review entity to the physician of the enrollee who is to receive the health
care service and that physician is granted the opportunity to discuss the
service with the physician who will determine its authorization for the review
entity. The utilization review entity is to also ensure that a physician who
is to review an appeal of an adverse determination meets certain requirements
delineated in the bill.

The
bill provides that if a utilization review entity requires prior authorization
of a covered service, the utilization review entity shall make a prior
authorization or adverse determination and notify the subscriber (also commonly
known as a “policyholder”) and the subscriber’s health care provider of the
prior authorization or adverse determination within one calendar day of
obtaining all necessary information to make the prior authorization or adverse
determination. Necessary information is considered received if it is
transmitted to the utilization review entity after being sent by electronic
portal, e-mail, facsimile, telephone or other means of communication.

The
bill provides that a utilization review entity is to render a prior
authorization or adverse determination concerning an urgent health care
service, and notify the subscriber and the subscriber’s health care provider of
that prior authorization or adverse determination, not later than 24 hours
after receiving all information needed to complete the review of the requested
service. The bill further adds that medications for opioid use disorder do not
require prior authorization.

The
bill requires a utilization review entity to adhere to certain practices with
respect to authorization of emergency health care services, establishes a
presumption that these services are medically necessary in some situations, and
deems certain services to be approved under certain circumstances.

The
bill also prohibits a utilization review entity from:

(1) Requiring
a health care provider offering services to a covered person to participate in
a step therapy protocol if the provider deems that the step therapy protocol is
not in the covered person’s best interests;

(2) Requiring
that a health care provider first obtain a waiver, exception, or other override
when deeming a step therapy protocol to not be in a covered person’s best
interests; or

(3) Sanctioning
or otherwise penalizing a health care provider for recommending or issuing a
prescription, performing or recommending a procedure, or performing a test that
may conflict with the step therapy protocol of the carrier.

Additionally,
the bill establishes requirements regarding the prior authorization of certain
medications.

The
bill further provides that a utilization review entity is not to revoke, limit,
condition, or restrict a prior authorization if care is provided within 45
business days from the date the health care provider received the prior authorization.
A prior authorization is to be valid for purposes of authorizing the health
care provider to provide care for a period of one year from the date the health
care provider receives the prior authorization. The bill also includes a
provision authorizing a utilization review entity to honor a previous prior
authorization for the initial 60 days of coverage under a new health plan of an
enrollee, grant the entity the right to review the prior authorization during
the initial 60 days, and prohibit any change in coverage or approval criteria
for prior authorization from impacting an enrollee’s access to the service
authorized previously if the service was authorized before the effective date
of the change for the remainder of the enrollee’s plan year.

Any
failure by a utilization review entity to comply with a deadline or other
requirement under the provisions of the bill is to result in any health care
services subject to review being automatically deemed authorized.

Finally,
the Commissioner of Banking and Insurance is to promulgate rules and
regulations, pursuant to the “Administrative Procedure Act,” P.L.1968, c.410
(C.52:14B-1 et seq.), including any penalties or enforcement provisions, that
the commissioner deems necessary to effectuate the purposes of the bill.

COMMITTEE AMENDMENTS

The committee amended the bill to:

(1) add the State Health Benefits Program and School
Employees’ Health Benefits Program to the definition of “carrier;”

(2) add definitions for “clinical laboratory,” “enrollee,”
and “medications for opioid use disorder;”

(3) update the version of the NCPDP SCRIPT Standard
to be used for prior authorization for medication coverage and remove the
reference to the date in the provision that a carrier accept and reply to prior
authorization requests on medication coverage through the NCPDP SCRIPT
Standard;

(4) stipulate that the definition of “urgent health
care service” includes mental health services and behavioral health services;

(5) require a utilization review entity to collect
data on whether prior authorization determinations were appealed, approved or
denied on appeal, and the time between submission of prior authorization
requests and the determination;

(6) stipulate that a physician is to make adverse
determinations and add criteria a physician is to meet to qualify for making
adverse determinations;

(7) incorporate language requiring a utilization
review entity to notify the physician of the enrollee if the entity is
questioning the medical necessity of a health care service and requiring the
physician of the enrollee to discuss medical necessity of a health care service
with the physician who will determine the authorization of the health care
service;

(8) establish criteria of the review of an adverse
determination on appeal and of the physician who is to review an adverse
determination on appeal;

(9) adjust the time a utilization review entity takes
to determine if a covered service requiring prior authorization is approved or
denied from two business days to one calendar day of receipt of all necessary
information and clarify that necessary information is considered transmitted to
the review entity if sent electronically, by facsimile, phone, or other means
of communication;

(10) require a utilization review entity to render a
decision on prior authorization for an urgent health care service and notify
the subscriber and the subscriber’s health care provider of that decision
within 24 hours of receiving all information needed to complete the review;

(11) add medication for opioid use disorder to the
items that do not need prior authorization by a utilization review entity;

(12) specify that prior authorization granted for a
health care service for the treatment of a chronic or long-term care condition
is to remain valid for the length of the treatment and the review entity may
not require the enrollee to obtain prior authorization again for the rendering
of the health care service;

(13) create parameters within which to use a step
therapy protocol;

(14) prohibit prior authorization of certain
medications and of testing performed by clinical laboratories; and

(15) add language authorizing a utilization review
entity to honor a previous prior authorization for the initial 60 days of
coverage under a new health plan of an enrollee, grant the entity the right to
review the prior authorization during the initial 60 days, and prohibit any
change in coverage or approval criteria for prior authorization from impacting
an enrollee’s access to the service authorized previously if the service was
authorized before the effective date of the change for the remainder of the
enrollee’s plan year.

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