Title HSC — California Health & Safety Code

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…

(a) It is the intent of the Legislature in enacting this section to ensure that enrollees and subscribers benefit from reductions in the rate of growth in health care costs as a result of the establishment of the Office of Health Care Affordability. (b) In submitting rates for re…

(a) For large group health care service plan contracts, all health plans shall file with the department at least 60 days prior to implementing any rate change all required rate information for unreasonable rate increases. This filing shall be concurrent with the written notice de…

(a) A health care service plan, not including a specialized health care service plan, shall annually report to the department the information described in subdivision (c) for all grandfathered and nongrandfathered products that the plan offers and sells in the individual market, …

(a) For large group health care service plan contracts, a health care service plan shall file with the department the weighted average rate increase for all large group benefit designs during the 12-month period ending January 1 of the following calendar year. The average shall b…

(a) Upon receiving notice of a rate change, a large group contractholder that has coverage that is experience rated in whole or blended and that meets the criteria in subdivision (e) may apply within 60 days to have the department review the rate change to determine whether the r…

Notwithstanding any provision in a contract between a health care service plan and a provider, the department may request from a health care service plan any information required under this article or PPACA.

(a) A filing submitted under this article shall be actuarially sound. (b) (1) The plan shall contract with an independent actuary or actuaries consistent with this section. (2) A filing submitted under this article shall include a certification by an independent actuary or actuar…

(a) Notwithstanding Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code, all information submitted under this article shall be made publicly available by the department except as provided in subdivision (b). (b) (1) The contracted rates between a heal…

(a) On or before July 1, 2012, the director may issue guidance to health care service plans regarding compliance with this article. This guidance shall not be subject to the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title…

A health care service plan contract subject to Section 1385.03 or 1385.04 shall file a separate schedule documenting the cost savings associated with Section 1367.016 and the impact on rates.

(a) (1) A health care service plan shall annually provide claims data at no charge to a large group purchaser if the large group purchaser requests the information and otherwise meets the requirements of this section. (2) The health care service plan shall provide claims data tha…

(a) Whenever it appears to the department that any person has engaged, or is about to engage, in any act or practice constituting a violation of this article, including the filing of inaccurate or unjustified rates or inaccurate or unjustified rate information, the department may…

The department shall do all of the following in a manner consistent with applicable federal laws, rules, and regulations: (a) Provide data to the United States Secretary of Health and Human Services on health care service plan rate trends in premium rating areas. (b) Commencing w…

(a) This section shall apply only to a health care service plan covering dental services and a specialized health care service plan covering dental services, as defined in Section 1374.194. (b) On or after January 1, 2025, and at least annually thereafter, a plan shall file with …

(a) The director may, after appropriate notice and opportunity for a hearing, by order suspend or revoke any license issued under this chapter to a health care service plan or assess administrative penalties if the director determines that the licensee has committed any of the ac…

(a) (1) A person who violates a provision of this chapter, or who violates a rule or order adopted or issued pursuant to this chapter, shall be liable for a civil penalty of not more than twenty-five thousand dollars ($25,000) for each violation, which shall be assessed and recov…

(a) The director may, after appropriate notice and opportunity for hearing, by order, censure a person acting as a solicitor or solicitor firm, or suspend for a period not exceeding 24 months or bar a person from operating as a solicitor or solicitor firm, or assess administrativ…

(a) A person 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. No petition may be considered if the petitioner is under criminal sentence for a violation of …

(a) The director shall not approve any plan contract unless the director finds that the application conforms to both of the following requirements: (1) All applications for coverage which include health-related questions shall contain clear and unambiguous questions designed to a…

At the request of the director, a health care service plan shall provide a written statement of the actuarial basis for any medical underwriting decision on any application form, or contract issued or delivered to, or denied a resident of this state.

(a) A health care service plan shall not rescind a plan contract, or limit any provisions of a plan contract, once an enrollee is covered under the contract unless the plan can demonstrate that the enrollee has performed an act or practice constituting fraud or made an intentiona…

(a) (1) This section shall apply only to a full service health care service plan offering health coverage in the individual market in California and shall not apply to a specialized health care service plan, a health care service plan contract in the Medi-Cal program (Chapter 7 (…

No health care service plan shall engage in the practice of postclaims underwriting. For purposes of this section, “postclaims underwriting” means the rescinding, canceling, or limiting of a plan contract due to the plan’s failure to complete medical underwriting and resolve all …

(a) A full service health care service plan that renews individual grandfathered health benefit plans shall be subject to this section. (b) A health care service plan subject to this section shall have written policies, procedures, or underwriting guidelines establishing the crit…

(a) This section applies to a health care service plan that provides coverage under an individual plan contract that is issued, amended, delivered, or renewed on or after January 1, 2007. (b) At least once each year, the health care service plan shall permit an individual who has…

Compensation of a person or entity employed by, or contracted with, a health care service plan shall not be based on, or related in any way to, the number of contracts that the person or entity has caused or recommended to be rescinded, canceled, or limited, or the resulting cost…

(a) Every health care service plan that offers, issues, or renews individual plan contracts shall offer to any individual, who was covered by the plan under an individual plan contract that was rescinded, a new individual plan contract that provides the most equivalent benefits. …

(a) Notwithstanding any other provision of law, an agent, broker, solicitor, solicitor firm, or representative who assists an applicant in submitting an application to a health care service plan has the duty to assist the applicant in providing answers to health questions accurat…