PRIOR AUTHORIZATION & PRESCRIPTION DRUGS

STBTC/SHPAC/SB 20
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AN ACT
RELATING TO INSURANCE; APPLYING THE REQUIREMENTS OF THE PRIOR
AUTHORIZATION ACT TO PHARMACY BENEFITS MANAGERS CONTRACTED
WITH ENTITIES SUBJECT TO THE HEALTH CARE PURCHASING ACT;
PROHIBITING PRIOR AUTHORIZATION FOR CERTAIN PRESCRIPTION
DRUGS PRESCRIBED TO TREAT SERIOUS MENTAL ILLNESS; LIMITING
PRIOR AUTHORIZATION FOR DRUGS THAT TREAT CHRONIC HEALTH
CONDITIONS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 59A-22B-2 NMSA 1978 (being Laws
2019, Chapter 187, Section 4, as amended) is amended to read:
"59A-22B-2. DEFINITIONS.--As used in the Prior
Authorization Act:
A. "adjudicate" means to approve or deny a request
for prior authorization;
B. "auto-adjudicate" means to use technology and
automation to make a near-real-time determination to approve,
deny or pend a request for prior authorization;
C. "chronic health condition" means a condition
that lasts one or more years and requires ongoing medical
attention or limits activities of daily living;
D. "chronic maintenance drug" means a medication
approved by the federal food and drug administration to be
taken regularly for the treatment of chronic health
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conditions;
E. "covered person" means an individual who is
insured under a health benefits plan;
F. "emergency care" means medical care,
pharmaceutical benefits or related benefits to a covered
person after the sudden onset of what reasonably appears to
be a medical condition that manifests itself by symptoms of
sufficient severity, including severe pain, that the absence
of immediate medical attention could be reasonably expected
by a reasonable layperson to result in jeopardy to a person's
health, serious impairment of bodily functions, serious
dysfunction of a bodily organ or part or disfigurement to a
person;
G. "health benefits plan" means a policy,
contract, certificate or agreement, entered into, offered or
issued by a health insurer to provide, deliver, arrange for,
pay for or reimburse any of the costs of medical care,
pharmaceutical benefits or related benefits;
H. "health care professional" means an individual
who is licensed or otherwise authorized by the state to
provide health care services;
I. "health care provider" means a health care
professional, corporation, organization, facility or
institution licensed or otherwise authorized by the state to
provide health care services;
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J. "health insurer" means a health maintenance
organization, nonprofit health care plan, provider service
network, medicaid managed care organization or third-party
payer or its agent;
K. "medical care, pharmaceutical benefits or
related benefits" means medical, behavioral, hospital,
surgical, physical rehabilitation and home health services,
and includes pharmaceuticals, durable medical equipment,
prosthetics, orthotics and supplies;
L. "medical necessity" means health care services
determined by a health care provider, in consultation
with the health insurer, to be appropriate or necessary
according to:
(1) applicable, generally accepted
principles and practices of good medical care;
(2) practice guidelines developed by the
federal government or national or professional medical
societies, boards or associations; or
(3) applicable clinical protocols or
practice guidelines developed by the health insurer
consistent with federal, national and professional practice
guidelines, which shall apply to the diagnosis, direct care
and treatment of a physical or behavioral health condition,
illness, injury or disease;
M. "medical peer review" means review by a health
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care professional from the same or similar practice specialty
that typically manages the medical condition, procedure or
treatment under review for prior authorization;
N. "off-label" means a federal food and drug
administration-approved medication that does not have a
federal food and drug administration-approved indication for
a specific condition or disease but is prescribed to a
covered person because there is sufficient clinical evidence
for a prescribing clinician to reasonably consider the
medication to be medically necessary to treat the covered
person's condition or disease;
O. "office" means the office of superintendent of
insurance;
P. "pend" means to hold a prior authorization
request for further clinical review;
Q. "pharmacy benefits manager" means a person
licensed by the superintendent as a pharmacy benefits manager
pursuant to the provisions of the Pharmacy Benefits Manager
Regulation Act that has a direct contract with an entity
subject to the Health Care Purchasing Act;
R. "prior authorization" means a voluntary or
mandatory pre-service determination, including a recommended
clinical review, that a health insurer makes regarding a
covered person's eligibility for health care services, based
on medical necessity, the appropriateness of the site of
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services and the terms of the covered person's health
benefits plan;
S. "rare disease or condition" means a disease or
condition that affects fewer than two hundred thousand people
in the United States; and
T. "serious mental illness" means a mental
condition that significantly impairs daily functioning and
requires comprehensive treatment. "Serious mental illness"
includes major depression, schizophrenia, schizoaffective
disorder, bipolar disorder, obsessive-compulsive disorder,
panic disorder, posttraumatic stress disorder and borderline
personality disorder."
SECTION 2. Section 59A-22B-4 NMSA 1978 (being Laws
2019, Chapter 187, Section 6) is amended to read:
"59A-22B-4. DUTIES OF OFFICE--PRESCRIBING PENALTIES.--
A. The office shall standardize and streamline the
prior authorization process across all health insurers.
B. On or before September 1, 2019, the office
shall, in collaboration with health insurers and health care
providers, promulgate a uniform prior authorization form for
medical care, pharmaceutical benefits or related benefits to
be used by every health insurer and health care provider
after January 1, 2020; provided that the uniform prior
authorization form shall conform to the requirements
established for medicare and medicaid medical and pharmacy
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prior authorization requests.
C. The office shall maintain a log of complaints
against health insurers for failure to comply with the Prior
Authorization Act. After two warnings issued by the
superintendent of insurance, the office may levy a fine of
not more than five thousand dollars ($5,000) on a health
insurer that fails to comply with the provisions of the Prior
Authorization Act.
D. By September 1, 2019, and each September 1
thereafter, the office shall provide an annual written report
to the governor and the legislature to include, at a minimum:
(1) prior authorization data for each health
insurer and pharmacy benefits manager individually and for
health insurers collectively;
(2) the number and nature of complaints
against individual health insurers and pharmacy benefits
managers for failure to follow the Prior Authorization Act;
and
(3) actions taken by the office, including
the imposition of fines, against individual health insurers
and pharmacy benefits managers to enforce compliance with the
Prior Authorization Act.
E. The annual written report shall be posted on
the office's website."
SECTION 3. Section 59A-22B-5 NMSA 1978 (being Laws
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2019, Chapter 187, Section 7, as amended) is amended to read:
"59A-22B-5. PRIOR AUTHORIZATION REQUIREMENTS.--
A. A health insurer or pharmacy benefits manager
that offers prior authorization shall:
(1) use the uniform prior authorization
forms developed by the office for medical care, for
pharmaceutical benefits or related benefits pursuant to
Section 59A-22B-4 NMSA 1978 and for prescription drugs
pursuant to Section 59A-2-9.8 NMSA 1978;
(2) establish and maintain an electronic
portal system for:
(a) the secure electronic transmission
of prior authorization requests on a twenty-four-hour,
seven-day-a-week basis, for medical care, pharmaceutical
benefits or related benefits; and
(b) auto-adjudication of prior
authorization requests;
(3) provide an electronic receipt to the
health care provider and assign a tracking number to the
health care provider for the health care provider's use in
tracking the status of the prior authorization request,
regardless of whether or not the request is tracked
electronically, through a call center or by facsimile;
(4) auto-adjudicate all electronically
transmitted prior authorization requests to approve or pend a
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request for benefits; and
(5) accept requests for medical care,
pharmaceutical benefits or related benefits that are not
electronically transmitted.
B. Prior authorization shall be deemed granted for
prescription drug determinations not made within three
business days, and for all other determinations not made
within seven days; provided that:
(1) an adjudication shall be made within
twenty-four hours, or shall be deemed granted if not made
within twenty-four hours, when a covered person's health care
professional requests an expedited prior authorization and
submits to the health insurer or pharmacy benefits manager a
statement that, in the health care professional's opinion
that is based on reasonable medical probability, delay in the
treatment for which prior authorization is requested could:
(a) seriously jeopardize the covered
person's life or overall health;
(b) affect the covered person's ability
to regain maximum function; or
(c) subject the covered person to
severe and intolerable pain; and
(2) the adjudication time line shall
commence only when the health insurer or pharmacy benefits
manager receives all necessary and relevant documentation
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supporting the prior authorization request.
C. An insurer or a pharmacy benefits manager may
automatically deny a covered person's prior authorization
request that is electronically submitted and that relates to
a prescription drug that is not on the covered person's
health benefits plan formulary; provided that the insurer or
pharmacy benefits manager shall accompany the denial with a
list of alternative drugs that are on the covered person's
health benefits plan formulary.
D. Upon denial of a covered person's prior
authorization request based on a finding that a prescription
drug is not on the covered person's health benefits plan
formulary, a health insurer or pharmacy benefits manager
shall notify the person of the denial and include in a
conspicuous manner information regarding the person's right
to initiate a drug formulary exception request and the
process to file a request for an exception to the denial.
E. An auto-adjudicated prior authorization request
based on medical necessity that is pended or denied shall be
reviewed by a health care professional who has knowledge or
consults with a specialist who has knowledge of the medical
condition or disease of the covered person for whom the
authorization is requested. The health care professional
shall make a final determination of the request. If the
request is denied after review by a health care professional,
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notice of the denial shall be provided to the covered person
and covered person's provider with the grounds for the denial
and a notice of the right to appeal and describing the
process to file an appeal.
F. A health insurer or pharmacy benefits manager
shall establish a process by which a health care provider or
covered person may initiate an electronic appeal of a denial
of a prior authorization request.
G. A health insurer or pharmacy benefits manager
shall have in place policies and procedures for annual review
of its prior authorization practices to validate that the
prior authorization requirements advance the principles of
lower cost and improved quality, safety and service.
H. The office shall establish by rule protocols
and criteria pursuant to which a covered person or a covered
person's health care professional may request expedited
independent review of an expedited prior authorization
request made pursuant to Subsection B of this section
following medical peer review of a prior authorization
request pursuant to the Prior Authorization Act."
SECTION 4. Section 59A-22B-8 NMSA 1978 (being Laws
2023, Chapter 114, Section 13, as amended) is amended to
read:
"59A-22B-8. PRIOR AUTHORIZATION FOR PRESCRIPTION DRUGS
OR STEP THERAPY FOR CERTAIN CONDITIONS PROHIBITED.--
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A. Coverage for medication approved by the federal
food and drug administration that is prescribed for the
treatment of an autoimmune disorder, cancer, a rare disease
or condition, a serious mental illness or a substance use
disorder, pursuant to a medical necessity determination made
by a health care professional from the same or similar
practice specialty that typically manages the medical
condition, procedure or treatment under review, shall not be
subject to prior authorization, except in cases in which a
biosimilar, interchangeable biologic or generic version is
available. Medical necessity determinations shall be
automatically approved within three business days for
standard determinations and twenty-four hours for emergency
determinations when a delay in treatment could:
(1) seriously jeopardize a covered person's
life or overall health;
(2) affect a covered person's ability to
regain maximum function; or
(3) subject a covered person to severe and
intolerable pain.
B. A health insurer or pharmacy benefits manager
shall not impose step therapy requirements before authorizing
coverage for medication approved by the federal food and drug
administration that is prescribed for the treatment of an
autoimmune disorder, cancer, a serious mental illness or a
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substance use disorder, pursuant to a medical necessity
determination made by a health care professional from the
same or similar practice specialty that typically manages the
medical condition, procedure or treatment under review,
except in cases in which a biosimilar, interchangeable
biologic or generic version is available. Prior
authorization or step therapy requirements may be used when
necessary for the clinical safety of a person with a serious
mental illness if the person is:
(1) younger than eighteen years of age; or
(2) residing in an institutionalized
setting.
C. A health insurer or pharmacy benefits manager
shall not impose step therapy requirements before authorizing
coverage for an off-label medication that is prescribed for
the treatment of a rare disease or condition, pursuant to a
medical necessity determination made by a health care
professional from the same or similar practice specialty that
typically manages the medical condition, procedure or
treatment under review, except in cases in which a
biosimilar, interchangeable biologic or generic version is
available. Medical necessity determinations shall be
automatically approved within three business days for
standard determinations and twenty-four hours for emergency
determinations when a delay in treatment could:
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(1) seriously jeopardize a covered person's
life or overall health;
(2) affect a covered person's ability to
regain maximum function; or
(3) subject a covered person to severe and
intolerable pain.
D. After a health insurer or pharmacy benefits
manager approves prior authorization for a chronic
maintenance drug, the health insurer or pharmacy benefits
manager shall not require subsequent prior authorization more
than once every three years, unless:
(1) the prior authorization was obtained
based on fraud or misrepresentation;
(2) final action by the federal food and
drug administration, other regulatory agencies or the drug
manufacturer:
(a) removes the chronic maintenance
drug from the market;
(b) limits use of the chronic
maintenance drug in a manner that affects the prior
authorization; or
(c) communicates a patient safety issue
that would affect the prior authorization;
(3) a generic equivalent or drug that is
biosimilar to the chronic maintenance drug is added to the
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health insurer's or pharmacy benefits manager's drug
formulary; or
(4) the prescription is written for drugs
that may have a cosmetic use, including weight loss
medications."
SECTION 5. APPLICABILITY.--The provisions of this act
apply to an individual or group policy, contract, certificate
or agreement to provide, deliver, arrange for, pay for or
reimburse any of the costs of medical care, pharmaceutical
benefits or related benefits that is entered into, offered or
issued by a health insurer or pharmacy benefits manager on or
after January 1, 2027, pursuant to any of the following:
A. Chapter 59A, Article 22 NMSA 1978;
B. Chapter 59A, Article 23 NMSA 1978;
C. the Health Maintenance Organization Law;
D. the Nonprofit Health Care Plan Law; or
E. the Health Care Purchasing Act.