Title HSC — California Health & Safety Code

No plan shall expend for administrative costs in any fiscal year an excessive amount of the aggregate dues, fees and other periodic payments received by the plan for providing health care services to its subscribers or enrollees. The term “administrative costs,” as used herein, i…

(a) Every contract between a plan and a provider of health care services shall be in writing, and shall set forth that in the event the plan fails to pay for health care services as set forth in the subscriber contract, the subscriber or enrollee shall not be liable to the provid…

(a) On and after July 1, 2008, every contract between a plan and a health care provider who provides health care services in Mexico to an enrollee of the plan shall require the health care provider knowing of, or in attendance on, a case or suspected case of any disease or condit…

(a) The department shall conduct periodically an onsite medical survey of the health delivery system of each plan. The survey shall include a review of the procedures for obtaining health services, the procedures for regulating utilization, peer review mechanisms, internal proced…

(a) The Legislature finds and declares as follows: (1) Multiple medical quality audits of health care providers, as many as 25 for some physician offices, increase costs for health care providers and health plans, and thus ultimately increase costs for the purchaser and the consu…

(a) (1) Notwithstanding any other law, except as provided in Section 1374.197, on and after January 1, 2028, a full service health care service plan or its delegate shall subscribe to and use the most recent version of the Council for Affordable Quality Healthcare (CAQH) credenti…

The department shall coordinate the surveys conducted pursuant to Section 1380 with the State Department of Health Care Services, to the extent possible, in order to allow for simultaneous oversight of Medi-Cal managed care plans by both departments, provided that this coordinati…

(a) All records, books, and papers of a plan, management company, solicitor, solicitor firm, and any provider or subcontractor providing health care or other services to a plan, management company, solicitor, or solicitor firm shall be open to inspection, including through electr…

(a) The director shall conduct an examination of the fiscal and administrative affairs of any health care service plan, and each person with whom the plan has made arrangements for administrative, management, or financial services, as often as deemed necessary to protect the inte…

Every plan that is a health maintenance organization qualified under Section 1310(d) of Title XIII of the federal Public Health Service Act, shall provide the department with a copy of the reports the plan files annually with the United States Department of Health, Education, and…

(a) On or before July 1, 1997, every health care service plan shall file with the department a written policy, which is not subject to approval or disapproval by the department, describing the manner in which the plan determines if a second medical opinion is medically necessary …

(a) When requested by an enrollee or participating health professional who is treating an enrollee, a health care service plan shall provide or authorize a second opinion by an appropriately qualified health care professional. Reasons for a second opinion to be provided or author…

(a) Within 90 days after receipt of a request from the director, a plan or other person subject to this chapter shall submit to the director an audit report containing audited financial statements covering the 12-calendar months next preceding the month of receipt of the request,…

Each plan, solicitor firm, and solicitor shall keep and maintain current such books of account and other records as the director may by rule require for the purposes of this chapter. Every plan shall require all providers who contract with the plan to report to the plan in writin…

For the purposes of this article: (a) “Affiliated entity” means any of the following: (1) An applicable group purchasing organization, drug manufacturer, distributor, wholesaler, rebate aggregator or other purchasing entity designed to aggregate rebates, or associated third party…

In addition to the requirements of Section 1385.009, and upon request of the director, an application shall be accompanied by authorization for disclosure to the director of financial records of each pharmacy benefit manager licensed under this chapter, pursuant to Section 7473 o…

(a) A pharmacy benefit manager shall submit to the department financial statements prepared as of the close of its fiscal year within 120 days after the close of the fiscal year. These financial statements shall be accompanied by a report, certificate, or opinion of an independen…

(a) A pharmacy benefit manager licensed pursuant to this article shall submit to the Department of Health Care Access and Information all information required to be reported pursuant to Chapter 8.5 (commencing with Section 127671) of Part 2 of Division 107. (b) The obligation of …

(a) (1) A licensed pharmacy benefit manager shall, within 30 days after a change in the information contained in its application, other than financial or statistical information, file an amendment to the application in the manner prescribed by rule by the director. (2) Notwithsta…

Upon denial of an application for licensure, or the issuance of an order pursuant to Section 1385.0013 disapproving, suspending, or postponing a material modification, the director shall notify the applicant in writing, stating the reason for the denial and that the applicant has…

A pharmacy benefit manager license issued under this article shall remain in effect until revoked or suspended by the director.

(a) A pharmacy benefit manager applying for licensure under this article shall reimburse the director for the actual cost of processing the application, including overhead, up to an amount not to exceed twenty-five thousand dollars ($25,000). The cost shall be billed not more fre…

(a) To support the department in the administration of this article and the effective regulation of pharmacy benefit managers under this chapter, and to support the Department of Health Care Access and Information as it pertains to data regarding pharmacy benefit managers and the…

(a) The director may, after appropriate notice and opportunity for a hearing, by order suspend or revoke a license issued under this article to a pharmacy benefit manager or assess administrative penalties if the director determines that the licensee has committed an act or omiss…

(a) A pharmacy benefit manager whose license has been revoked, or suspended for more than one year, may petition the director to reinstate the license as provided by Section 11522 of the Government Code. A petition shall not be considered if the petitioner is under criminal sente…

(a) The department has the authority to enforce the provisions of this article, including the authority to adopt, amend, or repeal any rules and regulations, not inconsistent with the laws of this state, as may be necessary for the protection of the public and to implement this a…

(a) Surrender of a pharmacy benefit manager license shall become effective 30 days after receipt of an application to surrender the license or within a shorter period of time as the director may determine to be in the public interest and not detrimental to the protection of subsc…

(a) Notwithstanding the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code), the director is not required to disclose any of the following records, or any portion thereof, that are filed by a pharmacy benefit manager wi…

A pharmacy benefit manager has a fiduciary duty to its payer client that includes a duty to be fair and truthful toward the payer, to act in the payer’s best interests, to avoid conflicts of interest, and to perform its duties with care, skill, prudence, and diligence. This secti…

(a) The department may conduct periodic routine and nonroutine surveys of a pharmacy benefit manager. These surveys shall be conducted in accordance with Section 1380, as applicable. (b) The department may conduct periodic routine and nonroutine examinations of the fiscal and adm…

(a) The Pharmacy Benefit Manager Administrative Fines and Penalties Fund is hereby created in the State Treasury. (b) On and after July 1, 2025, the fines and administrative penalties collected pursuant to Section 1385.0018 shall be deposited into the Pharmacy Benefit Manager Adm…

The provisions of this article are severable. If any provision of this article or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.

(a) A pharmacy benefit manager shall not impose any requirements, conditions, or exclusions that discriminate against a nonaffiliated pharmacy in connection with dispensing drugs. (b) Discrimination prohibited pursuant to subdivision (a) includes all of the following: (1) Terms o…

A pharmacy benefit manager shall not do any of the following: (a) Require a plan participant to use only an affiliated pharmacy if there are nonaffiliated pharmacies in the network. (b) Financially induce a plan participant to transfer a prescription only to an affiliated pharmac…

(a) A contract issued, amended, or renewed on or after January 1, 2026, between a nonaffiliated pharmacy and a pharmacy benefit manager shall not prohibit the pharmacy from offering either of the following as an ancillary service of the pharmacy: (1) The delivery of a prescriptio…

(a) A pharmacy benefit manager shall not derive income from pharmacy benefit management services provided to a payer in this state except for income derived from a pharmacy benefit management fee for pharmacy benefit management services provided. The amount of any pharmacy benefi…

(a) A health care service plan shall disclose to a contracted pharmacy provider or its contracting agent the prescription drug information contained in subdivision (a) of Section 1363.03, including, but not limited to, the telephone number pharmacy providers may call for assistan…

Commencing January 1, 2026, a pharmacy benefit manager shall not conduct spread pricing in this state. If a preexisting contract between a pharmacy benefit manager and a payer authorizes spread pricing, a subsequent amendment or renewal of that contract shall not contain that aut…

(a) Notwithstanding any other law, a pharmacy benefit manager shall not enter into, amend, enforce, or renew a contract on or after January 1, 2026, with manufacturers that do business in California that implement implicit or express exclusivity for those manufacturers’ drugs, un…

(a) A person that violates this article shall be subject to an injunction and liable for a civil penalty of not less than one thousand dollars ($1,000) or more than seven thousand five hundred dollars ($7,500) for each violation, which shall be assessed and recovered in a civil a…

This article does not apply to a collectively bargained Taft-Hartley self-insured prescription drug plan offered pursuant to the federal Employee Retirement Income Security Act of 1974 (29 U.S.C. Sec. 1001 et seq.) or to a pharmacy benefit manager’s provision of pharmacy benefit …

(a) A health care service plan that contracts with a pharmacy benefit manager for management of any or all of its prescription drug coverage shall require the pharmacy benefit manager to do all of the following: (1) Comply with the provisions of Section 1385.003. (2) Register wit…

(a) A pharmacy benefit manager required to register with the department pursuant to Section 1385.004 shall complete an application for registration with the department that shall include, but not be limited to, all of the information required by subdivision (c). (b) A pharmacy be…

The failure by a health care service plan to comply with the contractual requirements and to maintain appropriate oversight of a contracted pharmacy benefit manager to ensure the pharmacy benefit manager’s compliance pursuant to this article shall constitute grounds for disciplin…

On or after January 1, 2027, or the date on which the department has established the licensure process pursuant to Section 1385.009, whichever is later, a person shall not engage in business as a pharmacy benefit manager for a payer in this state unless that person has first secu…

An application for licensure as a pharmacy benefit manager under this article shall be verified by an authorized representative of the applicant and shall be in a form prescribed by the department. To the extent applicable, the department may direct licensure applicants to use th…

For purposes of this article, the following definitions shall apply: (a) (1) “Blended” means a rating method that combines community rating and experience rating methods. (2) “Community rated” means a rating method in the large group market that bases rates on the expected costs …

This article shall apply to a health care service plan contract offered in the individual or group market in California, including a health care service plan contract covering dental services and a specialized health care service plan contract covering dental services. However, t…

The Legislature finds and declares that Sections 19 and 29 of this act, which add Sections 1385.0011 and 1385.0021, respectively, to the Health and Safety Code, impose a limitation on the public’s right of access to the meetings of public bodies or the writings of public official…

(a) (1) A health care service plan shall file with the department all required rate information for grandfathered individual and grandfathered and nongrandfathered group health care service plan contracts at least 120 days before implementing any rate change. (2) A health care se…