Reform or ban? Prior authorization for health insurance is under negotiation in NC

Luciana Perez Uribe Guinassi, The Charlotte ObserverCharlotte Observer

Many people, at one time or another, have needed to get approval from their insurance company before receiving certain treatments, medications, or procedures to ensure they’re covered.

Prior authorization requirements are a hallmark of American health care — and for some, they’re long overdue for reform.

In North Carolina, a bill to restrict prior authorization — or even ban it — is in the works.

That’s according to two Republican lawmakers: Rep. Timothy Reeder, who works as an emergency physician at East Carolina University, and Rep. Donny Lambeth, a lawmaker heavily involved in health care policy and a former hospital executive.

While no bill has yet been filed, Reeder and Lambeth both said they would sponsor any legislation that emerges. Lambeth also said a bill on prior authorization requirements would be one of the bills filed early in this year’s session. Lawmakers return Wednesday.

However, details are still being worked out, both said.

The argument for reform of prior authorization

Reeder said all insurance companies use prior authorization and claim it helps control costs by avoiding unapproved or less cost-effective treatments. However, he said the process is often burdensome for physicians and patients, requiring significant time, money and effort, which can delay care.

“What I see showing up in my clinical practice is people who have gotten sicker while they’re waiting for tests to be done, and I know that that’s bad for patients. And so I see that firsthand,” he said.

“We really need to solve this problem. And the insurance companies will say that this is the only way that they have to limit costs. And I would say back to them, this process, this program, costs both the insurance company and the physicians and the patients, time, money and energy and emotional capacity, and we need to fix this in a very meaningful way,” he said.

Reeder, alongside other lawmakers, was a primary sponsor in 2023 of a bill aimed at reforming the prior authorization process in the state, which passed the House but stalled in the Senate. It proposed several changes, including:

Setting time limits for reviews to determine whether care will be covered.

Mandating that insurance companies ensure physicians responsible for approvals or denials of care are licensed in North Carolina, actively practicing, and experienced in treating patients with conditions or diseases related to services requested.

Implementing rules to ensure prior authorizations are honored for a certain period, keeping coverage for related services. For example, under that bill, an insurer can’t revoke or limit a decision if care is provided within 45 business days from when the provider received the review decision.

Reeder said “a lot of the same principles” from that bill would likely be included in a future bill.

But also being considered is a full prohibition of prior authorization requirements, Reeder said, adding he was “willing to consider completely banning it.”

“That would go further than any state in the country, so I think there’s room to work on the issue,” he said.

He also said more than one bill could be filed, depending on how negotiations proceed.

Eliminating prior authorization requirements?

Lambeth favors a full ban. He said he would sponsor a bill this session to “eliminate pre-certification.”

Under such a bill, patients would not have to go through the prior authorization process when their doctor orders a test they believe is appropriate and necessary, Lambeth said.

Lambeth shared a personal experience of going for routine tests, only to be told after the test had been completed that the insurance would not cover it. The insurer used an out-of-state company to review the claim, he said. After weeks, and after his doctor provided justification for the tests, the claim was approved, Lambeth said.

“The amount of time I spent, the amount of time the hospital and the doctor spent explaining why they ordered a certain test on me — that goes on all over the state,” he said.

He also said he had reviewed data from some hospitals showing that a high percentage of denials are eventually approved.

On whether the Senate would support such a bill this session, Lambeth said, “That’s the million-dollar question.”

Republicans control both the House and Senate, but have often clashed over health care.

Providers’ and insurers’ views

Also getting involved is the North Carolina Medical Society (NCMS), an organization advocating for physicians, physician assistants, and other health care providers in North Carolina. The group announced Tuesday it would hold a press conference on prior authorization requirements.

“Every North Carolinian has felt the strain of the current prior authorization process. It is now an issue in the national spotlight. Public sentiment against health insurance companies is at an all-time high. It’s a system riddled with unnecessary bureaucracy that delays care and often prioritizes insurance company profits over patient lives,” the NCMS said in a news release.

Peter Daniel, executive director of the North Carolina Association of Health Plans, which represents companies providing health insurance in the state, said that according to Forbes magazine, North Carolina has the highest-cost health insurance premiums in the nation.

Prior authorization requirements are “a tool that is used to make sure that the procedures are appropriate, adequate, well thought through, reviewed by experts, and the companies have been making great strides in trying to improve the process for patients, for physicians,” he said.

Asked if there would be any sort of prior authorization reform that the association would back, Daniel said he “was not at liberty to say that now” but “we have ongoing discussions going on among the various companies and they would much rather see the private sector address this than have it addressed through legislation.”

The news conference will feature Dr. John Meier IV, president of the NCMS, and Amanda Watson, a metastatic breast cancer patient, as speakers.

House Speaker Destin Hall and several lawmakers from both the House and Senate have been invited to the conference, including Reeder, Lambeth and Rep. Larry Potts, who was also a primary sponsor of the 2023 bill.