PRIOR AUTHORIZATION & PRESCRIPTION DRUGS, the official text

SENATE BILL 20

57th legislature - STATE OF NEW MEXICO - second session, 2026

INTRODUCED BY

Elizabeth "Liz" Stefanics and Martin Hickey and Linda M. López
and Reena Szczepanski and Elizabeth "Liz" Thomson

AN ACT

RELATING TO INSURANCE; APPLYING THE REQUIREMENTS OF THE PRIOR
AUTHORIZATION ACT TO PHARMACY BENEFITS MANAGERS; PROHIBITING
PRIOR AUTHORIZATION FOR CERTAIN PRESCRIPTION DRUGS PRESCRIBED
TO TREAT SERIOUS MENTAL ILLNESS; REQUIRING PRIOR AUTHORIZATION
TO OCCUR ONCE EVERY THREE YEARS FOR DRUGS THAT TREAT CHRONIC
HEALTH CONDITIONS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. Section 59A-22B-2 NMSA 1978 (being Laws 2019,
Chapter 187, Section 4, as amended) is amended to read:

"59A-22B-2. DEFINITIONS.--As used in the Prior
Authorization Act:

A. "adjudicate" means to approve or deny a request
for prior authorization;

B. "auto-adjudicate" means to use technology and
automation to make a near-real-time determination to approve,
deny or pend a request for prior authorization;

C. "chronic maintenance drug" means a medication
approved by the federal food and drug administration to be
taken regularly for the treatment of chronic health conditions;

[C.] D. "covered person" means an individual who is
insured under a health benefits plan;

[D.] E. "emergency care" means medical care,
pharmaceutical benefits or related benefits to a covered person
after the sudden onset of what reasonably appears to be a
medical condition that manifests itself by symptoms of
sufficient severity, including severe pain, that the absence of
immediate medical attention could be reasonably expected by a
reasonable layperson to result in jeopardy to a person's
health, serious impairment of bodily functions, serious
dysfunction of a bodily organ or part or disfigurement to a
person;

[E.] F. "health benefits plan" means a policy,
contract, certificate or agreement, entered into, offered or
issued by a health insurer to provide, deliver, arrange for,
pay for or reimburse any of the costs of medical care,
pharmaceutical benefits or related benefits;

[F.] G. "health care professional" means an
individual who is licensed or otherwise authorized by the state
to provide health care services;

[G.] H. "health care provider" means a health care
professional, corporation, organization, facility or
institution licensed or otherwise authorized by the state to
provide health care services;

[H.] I. "health insurer" means a health maintenance
organization, nonprofit health care plan, provider service
network, medicaid managed care organization or third-party
payer or its agent;

[I.] J. "medical care, pharmaceutical benefits or
related benefits" means medical, behavioral, hospital,
surgical, physical rehabilitation and home health services, and
includes pharmaceuticals, durable medical equipment,
prosthetics, orthotics and supplies;

[J.] K. "medical necessity" means health care
services determined by a health care provider, in consultation

with the health insurer, to be appropriate or necessary
according to:

(1) applicable, generally accepted principles
and practices of good medical care;

(2) practice guidelines developed by the
federal government or national or professional medical
societies, boards or associations; or

(3) applicable clinical protocols or practice
guidelines developed by the health insurer consistent with
federal, national and professional practice guidelines, which
shall apply to the diagnosis, direct care and treatment of a
physical or behavioral health condition, illness, injury or
disease;

[K.] L. "medical peer review" means review by a
health care professional from the same or similar practice
specialty that typically manages the medical condition,
procedure or treatment under review for prior authorization;

[L.] M. "off-label" means a federal food and drug
administration-approved medication that does not have a federal
food and drug administration-approved indication for a specific
condition or disease but is prescribed to a covered person
because there is sufficient clinical evidence for a prescribing
clinician to reasonably consider the medication to be medically
necessary to treat the covered person's condition or disease;

[M.] N. "office" means the office of superintendent
of insurance;

[N.] O. "pend" means to hold a prior authorization
request for further clinical review;

[O.] P. "pharmacy benefits manager" means [an agent
responsible for handling prescription drug benefits for a
health insurer] a person licensed by the superintendent as a
pharmacy benefits manager pursuant to the provisions of the
Pharmacy Benefits Manager Regulation Act;

[P.] Q. "prior authorization" means a voluntary or
mandatory pre-service determination, including a recommended
clinical review, that a health insurer makes regarding a
covered person's eligibility for health care services, based on
medical necessity, the appropriateness of the site of services
and the terms of the covered person's health benefits plan;
[and

Q.] R. "rare disease or condition" means a disease
or condition that affects fewer than two hundred thousand
people in the United States; and

S. "serious mental illness" means a mental
condition that significantly impairs daily functioning and
requires comprehensive treatment. "Serious mental illness"
includes major depression, schizophrenia, schizoaffective
disorder, bipolar disorder, obsessive-compulsive disorder,
panic disorder, posttraumatic stress disorder, borderline
personality disorder, attention deficit hyperactivity disorder,
eating disorders, psychotic disorders, severe anxiety
disorders, autism spectrum disorder, co-occurring disorders,
seasonal affective disorder and reactive attachment disorder."

SECTION 2. Section 59A-22B-4 NMSA 1978 (being Laws 2019,
Chapter 187, Section 6) is amended to read:

"59A-22B-4. DUTIES OF OFFICE--PRESCRIBING PENALTIES.--

A. The office shall standardize and streamline the
prior authorization process across all health insurers.

B. On or before September 1, 2019, the office
shall, in collaboration with health insurers and health care
providers, promulgate a uniform prior authorization form for
medical care, pharmaceutical benefits or related benefits to be
used by every health insurer and health care provider after
January 1, 2020; provided that the uniform prior authorization
form shall conform to the requirements established for medicare
and medicaid medical and pharmacy prior authorization requests.

C. The office shall maintain a log of complaints
against health insurers for failure to comply with the Prior
Authorization Act. After two warnings issued by the
superintendent of insurance, the office may levy a fine of not
more than five thousand dollars ($5,000) on a health insurer
that fails to comply with the provisions of the Prior
Authorization Act.

D. By September 1, 2019, and each September 1
thereafter, the office shall provide an annual written report
to the governor and the legislature to include, at a minimum:

(1) prior authorization data for each health
insurer and pharmacy benefits manager individually and for
health insurers collectively;

(2) the number and nature of complaints
against individual health insurers and pharmacy benefits
managers for failure to follow the Prior Authorization Act; and

(3) actions taken by the office, including the
imposition of fines, against individual health insurers and
pharmacy benefits managers to enforce compliance with the Prior
Authorization Act.

E. The annual written report shall be posted on the
office's website."

SECTION 3. Section 59A-22B-5 NMSA 1978 (being Laws 2019,
Chapter 187, Section 7, as amended) is amended to read:

"59A-22B-5. PRIOR AUTHORIZATION REQUIREMENTS.--

A. A health insurer or pharmacy benefits manager
that offers prior authorization shall:

(1) use the uniform prior authorization forms
developed by the office for medical care, for pharmaceutical
benefits or related benefits pursuant to Section 59A-22B-4 NMSA
1978 and for prescription drugs pursuant to Section 59A-2-9.8
NMSA 1978;

(2) establish and maintain an electronic
portal system for:

(a) the secure electronic transmission
of prior authorization requests on a twenty-four-hour, seven-day-a-week basis, for medical care, pharmaceutical benefits or
related benefits; and

(b) auto-adjudication of prior
authorization requests;

(3) provide an electronic receipt to the
health care provider and assign a tracking number to the health
care provider for the health care provider's use in tracking
the status of the prior authorization request, regardless of
whether or not the request is tracked electronically, through a
call center or by facsimile;

(4) auto-adjudicate all electronically
transmitted prior authorization requests to approve or pend a
request for benefits; and

(5) accept requests for medical care,
pharmaceutical benefits or related benefits that are not
electronically transmitted.

B. Prior authorization shall be deemed granted for
determinations not made within seven days; provided that:

(1) an adjudication shall be made within
twenty-four hours, or shall be deemed granted if not made
within twenty-four hours, when a covered person's health care
professional requests an expedited prior authorization and
submits to the health insurer or pharmacy benefits manager a
statement that, in the health care professional's opinion that
is based on reasonable medical probability, delay in the
treatment for which prior authorization is requested could:

(a) seriously jeopardize the covered
person's life or overall health;

(b) affect the covered person's ability
to regain maximum function; or

(c) subject the covered person to severe
and intolerable pain; and

(2) the adjudication time line shall commence
only when the health insurer or pharmacy benefits manager
receives all necessary and relevant documentation supporting
the prior authorization request.

C. [After December 31, 2020] An insurer or a
pharmacy benefits manager may automatically deny a covered
person's prior authorization request that is electronically
submitted and that relates to a prescription drug that is not
on the covered person's health benefits plan formulary;
provided that the insurer or pharmacy benefits manager shall
accompany the denial with a list of alternative drugs that are
on the covered person's health benefits plan formulary.

D. Upon denial of a covered person's prior
authorization request based on a finding that a prescription
drug is not on the covered person's health benefits plan
formulary, a health insurer or pharmacy benefits manager shall
notify the person of the denial and include in a conspicuous
manner information regarding the person's right to initiate a
drug formulary exception request and the process to file a
request for an exception to the denial.

E. An auto-adjudicated prior authorization request
based on medical necessity that is pended or denied shall be
reviewed by a health care professional who has knowledge or
consults with a specialist who has knowledge of the medical
condition or disease of the covered person for whom the
authorization is requested. The health care professional shall
make a final determination of the request. If the request is
denied after review by a health care professional, notice of
the denial shall be provided to the covered person and covered
person's provider with the grounds for the denial and a notice
of the right to appeal and describing the process to file an
appeal.

F. A health insurer or pharmacy benefits manager
shall establish a process by which a health care provider or
covered person may initiate an electronic appeal of a denial of
a prior authorization request.

G. A health insurer or pharmacy benefits manager
shall have in place policies and procedures for annual review
of its prior authorization practices to validate that the prior
authorization requirements advance the principles of lower cost
and improved quality, safety and service.

H. The office shall establish by rule protocols and
criteria pursuant to which a covered person or a covered
person's health care professional may request expedited
independent review of an expedited prior authorization request
made pursuant to Subsection B of this section following medical
peer review of a prior authorization request pursuant to the
Prior Authorization Act."

SECTION 4. Section 59A-22B-8 NMSA 1978 (being Laws 2023,
Chapter 114, Section 13, as amended) is amended to read:

"59A-22B-8. PRIOR AUTHORIZATION FOR PRESCRIPTION DRUGS OR
STEP THERAPY FOR CERTAIN CONDITIONS PROHIBITED.--

A. Coverage for medication approved by the federal
food and drug administration that is prescribed for the
treatment of an autoimmune disorder, cancer, a rare disease or
condition, a serious mental illness or a substance use
disorder, pursuant to a medical necessity determination made by
a health care professional from the same or similar practice
specialty that typically manages the medical condition,
procedure or treatment under review, shall not be subject to
prior authorization, except in cases in which a biosimilar,
interchangeable biologic or generic version is available.
Medical necessity determinations shall be automatically
approved within seven days for standard determinations and
twenty-four hours for emergency determinations when a delay in
treatment could:

(1) seriously jeopardize a covered person's
life or overall health;

(2) affect a covered person's ability to
regain maximum function; or

(3) subject a covered person to severe and
intolerable pain.

B. A health insurer or pharmacy benefits manager
shall not impose step therapy requirements before authorizing
coverage for medication approved by the federal food and drug
administration that is prescribed for the treatment of an
autoimmune disorder, cancer, a serious mental illness or a
substance use disorder, pursuant to a medical necessity
determination made by a health care professional from the same
or similar practice specialty that typically manages the
medical condition, procedure or treatment under review, except
in cases in which a biosimilar, interchangeable biologic or
generic version is available.

C. A health insurer or pharmacy benefits manager
shall not impose step therapy requirements before authorizing
coverage for an off-label medication that is prescribed for the
treatment of a rare disease or condition, pursuant to a medical
necessity determination made by a health care professional from
the same or similar practice specialty that typically manages
the medical condition, procedure or treatment under review,
except in cases in which a biosimilar, interchangeable biologic
or generic version is available. Medical necessity
determinations shall be automatically approved within seven
days for standard determinations and twenty-four hours for
emergency determinations when a delay in treatment could:

(1) seriously jeopardize a covered person's
life or overall health;

(2) affect a covered person's ability to
regain maximum function; or

(3) subject a covered person to severe and
intolerable pain.

D. After a health insurer or pharmacy benefits
manager approves prior authorization for a chronic maintenance
drug, the health insurer or pharmacy benefits manager shall not
require subsequent prior authorization more than once every
three years, unless:

(1) the prior authorization was obtained based
on fraud or misrepresentation;

(2) final action by the federal food and drug
administration, other regulatory agencies or the drug
manufacturer:

(a) removes the chronic maintenance drug
from the market;

(b) limits use of the chronic
maintenance drug in a manner that affects the prior
authorization; or

(c) communicates a patient safety issue
that would affect the prior authorization; or

(3) a generic equivalent or drug that is
biosimilar to the chronic maintenance drug is added to the
health insurer's or pharmacy benefits manager's drug
formulary."

SECTION 5. APPLICABILITY.--The provisions of this act

apply to an individual or group policy, contract, certificate

or agreement to provide, deliver, arrange for, pay for or

reimburse any of the costs of medical care, pharmaceutical

benefits or related benefits that is entered into, offered or

issued by a health insurer or pharmacy benefits manager on or
after July 1, 2026, pursuant to any of the following:

A. Chapter 59A, Article 22 NMSA 1978;

B. Chapter 59A, Article 23 NMSA 1978;

C. the Health Maintenance Organization Law;

D. the Nonprofit Health Care Plan Law; or

E. the Health Care Purchasing Act.

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