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

The department is getting paid a $1.995 million penalty for prescription drug and patient information practices from the insurance company that state officials claimed were unfair and discriminatory, according to a press release.

Insurance officials say the state’s insurance department alleged that National Health violated California law by failing to post a list online of covered prescription drugs and charging certain drugs at a higher price since 2015. The department alleged that National Health denied consumers the proper information for them vital decisions on coverage.

As of Dec. 31, 2021, National Health is no longer offering health coverage in small and large employer group markets, according to state officials. 

If the company does decide to reenter the medical health insurance market, there is an agreement with the state requiring National Health to maintain a compliance program consistent industry standards,.

“This settlement is a victory for consumers and a notice to other insurance companies that we will continue to uphold California law, to protect consumers, and to ensure companies are conducting business in a fair and transparent manner,” Lara said in a press release. “California law is clear. Insurance companies cannot design drug formularies that discriminate against consumers with serious medical conditions. 

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

When reviewing National Health, the insurance department said the company committed a number of violations in its small and large employer group coverage. 

“When National Health did finally post its drug formulary online in 2019, it was not the current list of prescription drugs covered, but an outdated list of previously covered drugs,” the insurance department said in the release. “The department alleged this practice discouraged the enrollment of individuals with certain health conditions. The incorrect formulary gave the appearance of reduced benefits for consumers with particular conditions, potentially dissuading policyholders from submitting claims or persuading those who were looking for a policy to seek coverage elsewhere.” 

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

By placing all those prescription drugs at a higher cost, the department said“chronically ill individuals may have been discouraged” from enrolling in coverage due to the price.

Insurance officials said National Health illegally required prior authorization for all HIV drugs. According to the department, prior authorization allows the insurer to determine whether a drug is necessary before it will be covered, rather than leave that decision to the patient’s doctor. 

“The requirement to obtain prior authorization can result in delay and denial of coverage of a drug for a consumer whose doctor determined a prescribed drug was medically necessary,” insurance officials said.

Preventive drugs, contraceptives, and other pharmacy items were placed in a tier where they must be covered without cost into tiers subject to patient cost-sharing, officials said. 

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

Health insurance state laws also require copayments, coinsurance, and other patient cost-sharing prescription drugs to be reasonable for patients so they can have necessary medical access to outpatient prescription drugs.