On March 24, 2025, New Jersey enacted Assembly Bill A1825—an important law that reshapes how step therapy protocols are applied within state-regulated health plans, including Medicaid (NJ FamilyCare), the State Health Benefits Program (SHBP), and the School Employees’ Health Benefits Program (SEHBP). Taking effect on January 1, 2026, this legislation has direct implications for hospital operations, care coordination, and pharmacy management.
Key Provisions of A1825
Step therapy—commonly known as “fail first” protocols—requires patients to try and fail on lower-cost medications before accessing a treatment prescribed by their provider. A1825 places guardrails around this practice to better balance cost controls with clinical decision-making.
Here’s what the law mandates:
- Evidence-Based Clinical Guidelines
Insurers must base step therapy protocols on independent, peer-reviewed clinical practice guidelines tailored to specific medical conditions. - Standardized Exception Process
A clear, accessible process must be available by the plans for providers and patients to request an override of step therapy protocols. All related criteria must be disclosed by the insurer upon request. - Rapid Review Timelines
Insurers must respond to exception requests within 24 hours for urgent cases and 72 hours for non-urgent cases—minimizing delays to patient care. - Reporting Requirements
Insurers must track and report the number of step therapy exception requests submitted, approved, denied, and appealed—introducing new levels of transparency.
Why Hospital Leadership Should Take Note
- Operational Adjustments
Pharmacy, case management, and administrative teams will need to align internal workflows with the new law. Processes for requesting and tracking step therapy exceptions should be streamlined ahead of January 2026.
- Impact on Patient Flow and Outcomes
Delays in medication access often lead to avoidable readmissions or longer inpatient stays. With faster decisions and easier exceptions, A1825 may help reduce these disruptions — improving continuity of care and patient satisfaction.
- Provider Empowerment
Clinicians will have more authority to follow evidence-based treatment plans without being overruled by insurance-mandated sequencing. Hospitals should support providers in understanding and utilizing the new exceptions process.
- Compliance and Payer Relationships
Ensure staff are trained on the law’s requirements and know how to document all communications with payers. The law’s reporting and transparency mandates may also shift the dynamics of payer-provider relationships.
How Frier Levitt Can Help
Hospital leadership should begin reviewing current step therapy workflows, assessing where delays are most common, and developing internal guidelines that align with the new state standards. This may also be an opportunity to advocate for improved care delivery and reduced administrative waste.
Frier Levitt has extensive experience advising hospitals and healthcare organizations on regulatory compliance, operations, care coordination, and pharmacy management. We regularly assist clients in evaluating their current processes and implementing strategies to remain compliant in response to regulatory changes.
Frier Levitt provides strategic, industry-focused legal counsel tailored to your needs. Contact our team today to learn how we can help you.
