Health care advocates are cautiously optimistic about proposed new
regulations that would require California HMOs to cover medically necessary
Last month the California Department of Managed Health Care (CDMHC) issued
the proposed regulations, which stipulate that prescription drug benefits be
designed by "qualified medical and pharmacy professionals."
If the regulations are finalized, the HMOs must establish and document a
process for "ongoing review by qualified medical and pharmacy
professionals of the safety, efficacy, and utilization of outpatient
Exclusions of prescription drugs from the list of those available must be
in "accordance with evidence-based outcomes and published, peer-reviewed
medical and pharmaceutical literature."
Jack Lewin, CEO of the California Medical Association, said, "This is
a very positive step forward. The new regulations allow a wide array of choice
and assure that the right medication is available for the right patient. At
the same time, there is no disincentive for the use of generics or a
lower-cost drug that has the same effectiveness."
Cindy Ehnes, CDMHC's director, said, "With these new regulations
there will be no doubt in a patient's mind as to which drugs are covered, and
the vast majority of drugs will be available to California HMO
A plan could require step therapy in which less-expensive medication or an
over-the-counter alternative is prescribed first. If that treatment is
ineffective, however, the medical practitioner would be able to prescribe a
more expensive medication.
Plans could exclude drugs that are prescribed for cosmetic reasons and for"
non-medical conditions" including hair growth and sexual
performance. Drugs for mental performance would be covered when they are used
to treat diagnosed mental illness, including dementia or symptoms of
According to the Los Angeles Times Web site on January 5 at<www.latimes.com>,
HMOs would be required to seek prior approval from the CDMHC to limit access
to a drug, as opposed to waiting to decide coverage disputes when a patient
complains. HMOs also would be required to list all drug exclusions and
limitations on their Web sites.
Randall Hagar, director of government affairs for the California
Psychiatric Association, said, "We are very pleased with the proposed
regulations. Patients should have the right to walk out of pharmacies with
medication that they and their doctors agree is medically necessary. We will
work to guarantee that copays and other issues do not impede accomplishment of
In fact, the only issue of the proposed regulations that raised major
concern among the advocates is the potential problem of high copays. Some
advocates argued that the regulations would allow insurers to limit access by
The regulations would require that the HMO have prior approval of the CDMHC
for the level of copayments and that they not exceed 50 percent of the HMO's
cost for the medication.
The impetus for the regulations was legislation passed in 2002 to clarify
the power of the state government to regulate coverage of prescription drugs
by insurance companies. The regulations would apply only to managed health
care plans that provide prescription drug coverage.
The Los Angeles Times Web site also reported on January 5 that
most of the 22 million Californians who belong to managed health care plans
have prescription drug coverage.
The proposed regulations were subject to a public comment period that ended
"Outpatient Prescription Drug Copayments, Coinsurance,
Deductibles, Limitations, and Exclusions" is posted at<www.dmc.ca.gov/library/regulations/proposed/2002_0019/4640.pdf>.▪