H.F. _____ Section 1. LEGISLATIVE FINDINGS. The general assembly 1 finds and declares the following: 2 1. Health carriers, health benefit plans, and utilization 3 review organizations are increasingly making use of step 4 therapy protocols under which covered persons are required to 5 try one or more prescription drugs before coverage is provided 6 for another prescription drug selected by the covered person’s 7 health care professional. 8 2. Such step therapy protocols, where they are based on 9 well-developed scientific standards and administered in a 10 flexible manner that takes into account the individual needs 11 of covered persons, can play an important part in controlling 12 health care costs. 13 3. In some cases, requiring a covered person to follow 14 a step therapy protocol may have adverse and even dangerous 15 consequences for the covered person, who may either not realize 16 a benefit from taking a particular prescription drug or may 17 suffer harm from taking an inappropriate prescription drug. 18 4. Without uniform policies in the state for step therapy 19 protocols, all covered persons may not receive equivalent or 20 the most appropriate treatment. 21 5. It is imperative that step therapy protocols in the state 22 preserve the health care professional’s right to make treatment 23 decisions that are in the best interest of the covered person. 24 6. It is a matter of public interest that the general 25 assembly require health carriers, health benefit plans, and 26 utilization review organizations to base step therapy protocols 27 on appropriate clinical practice guidelines or published peer 28 review data developed by independent experts with knowledge 29 of the condition or conditions under consideration; that 30 covered persons be excepted from step therapy protocols when 31 inappropriate or otherwise not in the best interest of the 32 covered persons; and that covered persons have access to a 33 fair, transparent, and independent process for allowing a 34 covered person or a health care professional to request an 35 -1- LSB 1420YC (4) 87 av/nh 1/ 11

H.F. _____ exception to a step therapy protocol when the covered person’s 1 health care professional deems appropriate. 2 Sec. 2. NEW SECTION . 514F.7 Use of step therapy protocols. 3 1. Definitions. For the purposes of this section: 4 a. “Authorized representative” means the same as defined in 5 section 514J.102. 6 b. “Clinical practice guidelines” means a systematically 7 developed statement to assist health care professionals and 8 covered persons in making decisions about appropriate health 9 care for specific clinical circumstances and conditions. 10 c. “Clinical review criteria” means the same as defined in 11 section 514J.102. 12 d. “Commissioner” means the commissioner of insurance. 13 e. “Covered person” means the same as defined in section 14 514J.102. 15 f. “Health benefit plan” means the same as defined in 16 section 514J.102. 17 g. “Health care professional” means the same as defined in 18 section 514J.102. 19 h. “Health care services” means the same as defined in 20 section 514J.102. 21 i. “Health carrier” means the same as defined in section 22 514J.102. 23 j. “Medical necessity” means accepted health care services 24 and supplies that, under the applicable standard of care, are 25 appropriate to the evaluation, diagnosis, or treatment of a 26 disease, condition, illness, or injury. 27 k. “Step therapy override exception determination” means 28 a determination as to whether a step therapy protocol should 29 apply in a particular situation, or whether the step therapy 30 protocol should be overridden in favor of immediate coverage of 31 the prescription drug selected by a health care professional. 32 This determination is based on a review of the covered person’s 33 or health care professional’s request for an override, along 34 with supporting rationale and documentation. 35 -2- LSB 1420YC (4) 87 av/nh 2/ 11

H.F. _____ l. “Step therapy protocol” means a protocol or program that 1 establishes a specific sequence in which prescription drugs for 2 a specified medical condition and medically appropriate for a 3 particular covered person are covered by a health carrier, a 4 health benefit plan, or a utilization review organization. 5 m. “Utilization review” means a program or process by which 6 an evaluation is made of the necessity, appropriateness, and 7 efficiency of the use of health care services, procedures, or 8 facilities given or proposed to be given to an individual. 9 Such evaluation does not apply to requests by an individual or 10 provider for a clarification, guarantee, or statement of an 11 individual’s health insurance coverage or benefits provided 12 under a health benefit plan, nor to claims adjudication. 13 Unless it is specifically stated, verification of benefits, 14 preauthorization, or a prospective or concurrent utilization 15 review program or process shall not be construed as a guarantee 16 or statement of insurance coverage or benefits for any 17 individual under a health benefit plan. 18 n. “Utilization review organization” means an entity 19 subject to the jurisdiction of the commissioner that performs 20 utilization review, other than a health carrier performing 21 utilization review for its own health benefit plans. 22 2. Establishment of step therapy protocols. 23 a. A health carrier, health benefit plan, or utilization 24 review organization shall do all of the following when 25 establishing a step therapy protocol: 26 (1) Use clinical review criteria based on clinical practice 27 guidelines that meet all of the following requirements: 28 (a) Recommend that particular prescription drugs be taken 29 in the specific sequence required by the step therapy protocol. 30 (b) Are developed and endorsed by a multidisciplinary panel 31 of experts that manages conflicts of interest among members 32 of the panel’s writing and review groups by doing all of the 33 following: 34 (i) Requiring members to disclose any potential conflicts 35 -3- LSB 1420YC (4) 87 av/nh 3/ 11

H.F. _____ of interest with entities, including health carriers, 1 health benefit plans, utilization review organizations, and 2 pharmaceutical manufacturers, and requiring members to recuse 3 themselves from voting if there is a conflict of interest. 4 (ii) Using a methodologist to work with the panel’s writing 5 groups to provide objectivity in data analysis and ranking of 6 evidence through the preparation of evidence tables and by 7 facilitating consensus. 8 (iii) Offering opportunities for public review and 9 comments. 10 (c) Are based on high-quality studies, research, and 11 medical practice. 12 (d) Are created through an explicit and transparent process 13 that does all of the following: 14 (i) Minimizes biases and conflicts of interest. 15 (ii) Explains the relationship between treatment options 16 and outcomes. 17 (iii) Rates the quality of the evidence supporting the 18 recommendations. 19 (iv) Considers relevant patient subgroups and preferences. 20 (e) Are continually updated through a review of new 21 evidence, research, and newly developed treatments. 22 (2) Take into account the needs of atypical covered person 23 populations and diagnoses when establishing clinical review 24 criteria. 25 (3) Notwithstanding subparagraph (1), reviewed publications 26 may be substituted for the use of clinical practice guidelines 27 in establishing a step therapy protocol. 28 b. This subsection shall not be construed to require 29 health carriers, health benefit plans, utilization review 30 organizations, or the state to establish a new entity to 31 develop clinical review criteria for step therapy protocols. 32 c. A health carrier, health benefit plan, or utilization 33 review organization shall submit proposed clinical review 34 criteria to the commissioner for review as required by the 35 -4- LSB 1420YC (4) 87 av/nh 4/ 11

H.F. _____ commissioner by rules adopted under chapter 17A, and shall not 1 utilize the clinical review criteria in establishing a step 2 therapy protocol without prior approval or accreditation by the 3 commissioner. 4 d. A health carrier, health benefit plan, or utilization 5 review organization shall certify annually in rate filing 6 documents or other certifications, as required by the 7 commissioner by rules adopted pursuant to chapter 17A, that 8 the clinical review criteria used to establish a step therapy 9 protocol meet the requirements set forth in this section. 10 3. Exceptions process transparency. 11 a. When coverage of a prescription drug for the treatment 12 of any medical condition is restricted for use by a health 13 carrier, health benefit plan, or utilization review 14 organization through the use of a step therapy protocol, the 15 covered person and the prescribing health care professional 16 shall have access to a clear, readily accessible, and 17 convenient process to request a step therapy override exception 18 determination. A health carrier, health benefit plan, or 19 utilization review organization may use its existing medical 20 exceptions process to satisfy this requirement. The process 21 used shall be easily accessible on the internet site of the 22 health carrier, health benefit plan, or utilization review 23 organization. 24 b. A request for a step therapy override exception shall be 25 approved expeditiously if any of the following circumstances 26 are determined to apply: 27 (1) The prescription drug required under the step therapy 28 protocol is contraindicated or is likely to cause an adverse 29 reaction or physical or mental harm to the covered person. 30 (2) The prescription drug required under the step therapy 31 protocol is expected to be ineffective based on the known 32 clinical characteristics of the covered person and the known 33 characteristics of the prescription drug regimen. 34 (3) The covered person has tried the prescription drug 35 -5- LSB 1420YC (4) 87 av/nh 5/ 11

H.F. _____ required under the step therapy protocol while under the 1 covered person’s current or a previous health benefit plan, 2 or another prescription drug in the same pharmacologic class 3 or with the same mechanism of action, and such prescription 4 drug was discontinued due to lack of efficacy or effectiveness, 5 diminished effect, or an adverse event. 6 (4) The prescription drug required under the step therapy 7 protocol is not in the best interest of the covered person, 8 based on medical necessity. 9 (5) The covered person is stable on a prescription drug 10 selected by the covered person’s health care professional for 11 the medical condition under consideration while on the current 12 or a previous health benefit plan. 13 c. Upon making a determination to approve a request 14 for a step therapy override exception, the health carrier, 15 health benefit plan, or utilization review organization shall 16 expeditiously authorize coverage for the prescription drug 17 selected by the covered person’s prescribing health care 18 professional. 19 d. A health carrier, health benefit plan, or utilization 20 review organization shall make a determination to approve 21 or deny a request for a step therapy override exception 22 within seventy-two hours of receipt of the request. In cases 23 where exigent circumstances exist, a health carrier, health 24 benefit plan, or utilization review organization shall make a 25 determination to approve or deny the request within twenty-four 26 hours of receipt of the request. If a determination to approve 27 or deny the request is not made within the applicable time 28 period, the request shall be deemed to be approved. 29 e. If a determination is made to deny a request for 30 a step therapy override exception, the health carrier, 31 health benefit plan, or utilization review organization 32 shall provide the covered person or the covered person’s 33 authorized representative and the covered person’s prescribing 34 health care professional with the reason for the denial and 35 -6- LSB 1420YC (4) 87 av/nh 6/ 11

H.F. _____ information regarding the procedure to appeal the denial. Any 1 determination to deny a request for a step therapy override 2 exception may be appealed by a covered person or the covered 3 person’s authorized representative. 4 f. A health carrier, health benefit plan, or utilization 5 review organization shall uphold or reverse a denial of 6 a request for a step therapy override exception within 7 seventy-two hours of receipt of an appeal of the denial. 8 In cases where exigent circumstances exist as provided in 9 paragraph “d” , a health carrier, health benefit plan, or 10 utilization review organization shall make a determination to 11 uphold or reverse a denial of such request within twenty-four 12 hours of receipt of an appeal of the denial. If the denial of 13 a request for a step therapy override exception is not upheld 14 or reversed on appeal within the applicable time period, the 15 denial shall be deemed to be reversed and the request for an 16 override exception shall be deemed to be approved. 17 g. If a denial of a request for a step therapy override 18 exception is upheld on appeal, the health carrier, health 19 benefit plan, or utilization review organization shall 20 provide the covered person or the covered person’s authorized 21 representative and the patient’s prescribing health care 22 professional with the reason for upholding the denial on appeal 23 and information regarding the procedure to request external 24 review of the denial pursuant to chapter 514J. Any denial of a 25 request for a step therapy override exception that is upheld 26 on appeal shall be considered a final adverse determination 27 for purposes of chapter 514J and is eligible for a request for 28 external review by a covered person or the covered person’s 29 authorized representative pursuant to chapter 514J. 30 4. Limitations. This section shall not be construed to do 31 either of the following: 32 a. Prevent a health carrier, health benefit plan, or 33 utilization review organization from requiring a covered person 34 to try an AB-rated generic equivalent prescription drug prior 35 -7- LSB 1420YC (4) 87 av/nh 7/ 11

H.F. _____ to providing coverage for the equivalent branded prescription 1 drug. 2 b. Prevent a health care professional from prescribing 3 a prescription drug that is determined to be medically 4 appropriate. 5 5. Rules. The commissioner of insurance shall adopt rules 6 pursuant to chapter 17A to administer this section. 7 Sec. 3. APPLICABILITY. This Act is applicable to a health 8 benefit plan that is delivered, issued for delivery, continued, 9 or renewed in this state on or after January 1, 2018. 10 EXPLANATION 11 The inclusion of this explanation does not constitute agreement with 12 the explanation’s substance by the members of the general assembly. 13 This bill relates to the use of step therapy protocols 14 for prescription drugs by health carriers, health benefit 15 plans, and utilization review organizations, and includes 16 applicability provisions. 17 The bill includes legislative findings that step therapy 18 protocols are increasingly being used by health carriers, 19 health benefit plans, and utilization review organizations to 20 control health care costs, that step therapy protocols that 21 are based on well-developed scientific standards and flexibly 22 administered can play an important role in controlling health 23 care costs, but that in some cases use of such protocols can 24 have adverse or dangerous consequences for the person for whom 25 the drugs are prescribed. The bill includes findings that 26 uniform policies for the use of such protocols that preserve a 27 health care professional’s right to make treatment decisions 28 and that provide for exceptions to the use of such protocols 29 are in the public interest. 30 The bill defines a “step therapy protocol” as a protocol 31 or program that establishes a specific sequence in which 32 prescription drugs for a specified medical condition and 33 medically appropriate for a particular covered person are 34 covered by a health carrier, a health benefit plan, or a 35 -8- LSB 1420YC (4) 87 av/nh 8/ 11

H.F. _____ utilization review organization. 1 The bill requires that a step therapy protocol be 2 established using clinical review criteria that are based 3 on specified clinical practice guidelines. A step therapy 4 protocol should take into account the needs of atypical 5 populations and diagnoses. The bill does not require a 6 health carrier, health benefit plan, utilization review 7 organization, or the state to establish a new entity to develop 8 clinical review criteria for such protocols. As required by 9 rules adopted by the commissioner of insurance pursuant to 10 Code chapter 17A, proposed clinical review criteria must be 11 submitted to the commissioner for approval prior to being 12 utilized, and a health carrier, health benefit plan, or 13 utilization review organization must certify annually in rate 14 filings with the commissioner that clinical review criteria 15 being used meet the requirements of the bill. 16 The bill also provides that when a step therapy protocol is 17 in use, the person participating in a health benefit plan or 18 the person’s prescribing health care professional must have 19 access to a clear, readily accessible, and convenient process 20 to request a step therapy override exception determination. 21 A “step therapy override exception determination” is a 22 determination made by a health carrier, a health benefit 23 plan, or a utilization review organization as to whether a 24 step therapy protocol should apply in a particular situation, 25 or whether the protocol should be overridden in favor of 26 immediate coverage of the prescription drug selected by the 27 prescribing health care professional, based on a review of the 28 request along with supporting rationale and documentation. 29 The bill provides that the request for an exception shall be 30 granted if specified circumstances are determined to exist and 31 coverage for the drug selected by the prescribing health care 32 professional shall be authorized. 33 A request for a step therapy override exception must be 34 approved or denied by the health carrier, health benefit plan, 35 -9- LSB 1420YC (4) 87 av/nh 9/ 11

H.F. _____ or utilization review organization utilizing the step therapy 1 protocol within 72 hours of receipt of the request, or within 2 24 hours of receipt of the request where exigent circumstances 3 exist. The health carrier, health benefit plan, or utilization 4 review organization can use its existing medical exceptions 5 procedure in making the determination. If a determination to 6 approve or deny the request is not made within the applicable 7 time period, the request is deemed to be approved. 8 If a determination is made to deny the request for a step 9 therapy override exception, the health carrier, health benefit 10 plan, or utilization review organization shall provide the 11 person making the request with the reason for the denial and 12 information about the procedure to appeal the denial. Any 13 denial of such a request is eligible for appeal. 14 Upon appeal, the health carrier, health benefit plan, or 15 utilization review organization shall make a determination to 16 uphold or reverse the denial within 72 hours, or within 24 17 hours in the case of exigent circumstances, of receiving the 18 appeal. If the denial is not upheld or reversed on appeal 19 within the applicable time period, the denial is deemed to 20 be reversed and the request for an exception is deemed to be 21 approved. 22 If a denial of a request for a step therapy override 23 exception is upheld on appeal, the person making the appeal 24 shall be provided with the reason for upholding the denial 25 on appeal and information regarding the procedure to request 26 external review of the denial pursuant to Code chapter 514J. 27 A denial of a request for such an exception that is upheld on 28 appeal shall be considered a final adverse determination for 29 purposes of Code chapter 514J and is eligible for a request for 30 external review pursuant to Code chapter 514J. 31 The bill shall not be construed to prevent a health carrier, 32 health benefit plan, or utilization review organization from 33 requiring a person to try an AB-rated generic equivalent 34 prescription drug prior to providing coverage for the 35 -10- LSB 1420YC (4) 87 av/nh 10/ 11

H.F. _____ equivalent branded prescription drug, or to prevent a health 1 care professional from prescribing a prescription drug that is 2 determined to be medically appropriate. 3 The commissioner of insurance is required to adopt rules 4 pursuant to Code chapter 17A to administer the provisions of 5 the bill. 6 The bill is applicable to a health benefit plan that is 7 delivered, issued for delivery, continued, or renewed in this 8 state on or after January 1, 2018. 9 -11- LSB 1420YC (4) 87 av/nh 11/ 11