A growing number of states is imposing new limitations on prior authorization requirements to address provider and patient complaints that health insurance companies are delaying and denying care.
Some of these legislative efforts go further than what the Centers for Medicare and Medicaid Services proposed last month for insurers participating in federal programs such as Medicare, Medicaid and the health insurance exchanges.
New Jersey became the latest state to tackle prior authorizations when Gov. Phil Murphy (D) signed legislation last month that mandates insurance companies render decisions within 24 hours for urgent cases and 72 hours for routine matters. A similar Washington state law took effect last month.
According to a National Conference of State Legislatures database, states enacted more than 20 prior authorization bills in 2023. The American Medical Association reports that about 70 more measure are pending in state capitals. They vary in scope but, combined with federal actions and voluntary steps several health insurance companies undertook last year, these state bills highlight a deepening controversy about precertification practices.
"A lot of elected officials are hearing about it and trying to respond," said Elisabeth Benjamin, vice president of health initiatives at the Community Service Society of New York. Benjamin served on the New York Health Care Administrative Simplification Workgroup, which presented state legislators with recommendations that included new rules governing prior authorizations in 2021.
Health insurance companies use prior authorizations as part of broader utilization management efforts. Preapproval requirements are intended to discourage unnecessary testing and treatments that drive up healthcare spending and premiums.
"From the carriers' perspective, they think that this is one of the ways to hold down costs," Benjamin said. Whatever fiscal benefits prior authorizations may offer, however, "they're increasing exponentially the amount of agita for consumers and providers," she said.
Health insurance companies such as UnitedHealth Group and Cigna have scaled back prior authorization policies, but these efforts have been limited. The health insurance trade association AHIP did not respond to requests for comment.
Data are scarce, but anecdotes are replete and complaints may have grown more common because a greater share of U.S. residents than ever has health insurance, said Kaye Pestaina, director of the patient and consumer protection program at KFF.
"Now we have more insured Americans," Pestaina said. "The question is: How is the insurance working for you? And when you ask patients, this is one of the big issues."
There has also been a surge in technological developments and innovations that may be more likely to be subject to authorizations, she said.
Advocates for limits on prior authorizations, such as the AMA, pressed state legislatures to act. The AMA drafted model legislation to shorten prior authorization timelines to 24 hours for urgent care and 48 hours for other requests, which New Jersey and Washington largely adopted.
The New Jersey and Washington statutes are among the most extensive of the recent measures. In addition to deadlines, the laws set standards that insurers must follow, such as abiding by established clinical guidelines, sharing data on denials and disclosing their requirements to providers and policyholders in plain English.
The proposed federal rule is less stringent but still would require covered health plans to deliver verdicts on non-urgent preapproval requests within seven days and on urgent requests within 72 hours.
States have enacted or considered legislation targeting different aspects of the preapproval process. Arkansas has been particularly active and its efforts may serve as examples for other states.
For instance, Arkansas established "gold cards" for providers who historically have seen more than 90% of their prior authorization requests approved. The state also banned prior authorizations for many substance use disorder treatments, HIV prevention and certain ambulance services.
Some states advanced narrower measures. New Mexico limited prior authorization for some dental services and Maine for breast pumps, for example. Louisiana, Oregon and other states have restricted precertification requirements for cancer care.
The New York State Legislature is considering about a dozen prior authorization bills this session. "There is a lot of frustration around preauthorization in New York state, from the provider community as well as consumers," Benjamin said.