The National Health Insurance Company agrees to pay the state more than $1 million in compensation

SACRAMENTO, Calif. (KTXL) — The National Health Insurance Company has agreed to pay more than $1 million to the California Department of Insurance as part of a settlement over its prescription drug practices, Insurance Commissioner Ricardo Lara announced Tuesday.

The department is being fined $1.995 million over the insurance company’s prescription drug and patient information practices that state officials say are unfair and discriminatory, according to a news release.

Insurance officials say the state’s insurance division alleges National Health violated California law by failing to post a list of covered prescription drugs online and charging higher prices for certain drugs since 2015. The department alleges that National Health denied consumers the right information vital to their coverage decisions.

Starting Dec. 31, 2021, National Health will no longer offer health coverage in small and large employer group markets, according to state officials.

If the company decides to re-enter the medical health insurance market, there is an agreement with the state that requires National Health to maintain a compliance program in accordance with industry standards.

“This settlement is a win for consumers and a notice to other insurance companies that we will continue to follow California law, protect consumers and ensure that companies conduct business in a fair and transparent manner,” Lara said in a news release. “California law is clear. Insurance companies cannot create drug formularies that discriminate against consumers with serious medical conditions.

“Patients should have a correct, up-to-date list of drugs that are covered and have the freedom to make medical decisions based on accurate information,” Lara said.

In its review of National Health, the insurance division said the company committed a number of violations in its small and large employer group coverage.

“When National Health finally posted its drug formulary online in 2019, it was not the current list of prescription drugs, but an outdated list of previously covered drugs,” the insurance department said in the release. “The department claims that this practice discourages enrollment for individuals with certain health conditions. The incorrect form created the appearance of reduced benefits for consumers with specific conditions, potentially dissuading policyholders from filing claims or persuading those looking for a policy to seek coverage elsewhere.

According to officials, the department argued that National Health placed nearly all immunosuppressants for transplant rejection, all covered drugs for multiple sclerosis, HIV, hepatitis B and hepatitis C in the higher cost-sharing tier, regardless of brand.

By putting all those prescription drugs at a higher cost, the department said, “chronically ill individuals may have been discouraged” from enrolling in coverage because of the cost.

Insurance officials said National Health illegally requires prior authorization for all HIV drugs. According to the department, prior authorization allows an insurer to determine whether a drug is needed before it is covered, rather than leaving that decision up to the patient’s doctor.

“The requirement to obtain prior authorization may result in delays and denials of drug coverage for a consumer whose physician has determined that the prescribed drug is medically necessary,” insurance officials said.

Preventive drugs, contraceptives and other pharmacy items were placed in a tier where they must be covered at no cost in tiers subject to patient cost-sharing, officials said.

According to the insurance division, health insurance companies cannot offer coverage that unreasonably discriminates against chronically ill individuals in California. Companies must provide coverage that “ensures the availability of outpatient prescription drugs,” the department said.

State health insurance laws also require copayments, coinsurance, and other prescription drug cost-sharing to be reasonable for patients so that they can have medically necessary access to prescription drugs for outpatient settings.

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