Background: Legislation passed in 2009 directed the Office of the Insurance Commissioner (OIC) to select a lead organization to focus on opportunities for administrative simplification in health insurance processes and offer recommendations on best practices. OIC and the lead organization, OneHealthPort, have facilitated a workgroup with broad participation of insurance carriers, state purchasers, and providers and they have recently developed recommendations on streamlining pre-authorization of insurance services. Currently, each insurance carrier or payor requires specific pre-authorization forms for specific services, with vast variation in numbers of forms and types of pre-authorization requirements.

The federal Affordable Care Act requires a number of changes in administrative simplification efforts. OneHealthPort and other workgroup participants have been actively engaged in the development of new national operating rules. For example, the Department of Health and Human Services (HHS) must adopt operating rules for several Health Insurance Portability and Accountability Act transactions, beginning with the eligibility and claims status transactions. HHS designated the Council on Affordable Quality Health Care (CAQH) and its Committee on Operating Rules for Information Exchange (CORE) as the lead for development of the initial operating rules. Operating rules required for 2016 will address some remaining transactions, including health claims or equivalent encounter information, enrollment and disenrollment in a health plan, health plan premium payments, referral certification and authorization, and claims attachment.

Under state law, the Insurance Commissioner convenes an executive level workgroup with broad payor and provider representation to advise the Commissioner.

Summary of Bill (Recommended Second Substitute): The administrative simplification requirements established within state insurance laws are modified with requirements for the lead organization – OneHealthPort and the workgroup – to streamline prior authorization for prescription drug benefits. The lead organization must present a plan to the Insurance Commissioner's executive oversight committee by December 31, 2013, for the implementation of a uniform electronic prior authorization form and data fields for prescription drug benefits. Carriers may submit an electronic prior authorization form that is already in use for the workgroup to consider. The executive oversight committee must review the plan and determine if it meets the criteria established in the bill. If the form and process meets the criteria then it must be released for use by payors. Payors must implement the form and process no later than January 1, 2015.

The form must be capable of being electronically accepted; be able to be submitted in real-time; have the option of pre-populating certain data fields with medication information; and be capable of attaching supporting documentation, chart notes, and files. The provider must receive an acknowledgment of receipt after the form is submitted, which must include standard data fields with member information, prescribing provider information, requested medication, strength and dosing schedule, diagnosis, prior medication tried, and supporting clinical information.

If a plan is not presented by the December 31, 2013 deadline, the Insurance Commissioner must establish a uniform prior authorization process that meets the criteria by January 1, 2015. There must be a defined response time for a prior authorization approval or denial that is consistent with requirements in the WAC for medical utilization review, that allows some variation in response times related to severity.

A carrier must be exempt from the requirements if the executive oversight committee finds they have implemented an electronic prior authorization by December 31, 2015, that meets the criteria.

The industrial insurance program and the crime victims' compensation program at the Department of Labor and Industries are exempt from the requirements in this bill.

EFFECT OF CHANGES MADE BY WAYS & MEANS COMMITTEE (Recommended Second Substitute): The lead organization, OneHealthPort, must work with the workgroup and present a plan for a uniform electronic prior authorization form or process for prescription drugs to the executive oversight committee by December 31, 2013 – instead of presenting a plan to the Commissioner by November 15, 2013. The executive oversight committee must review the plan and form – instead of the Commissioner – to see if it meets the criteria established in the bill. Carriers may submit an electronic form already in use or in development for consideration by the workgroup.

If the form or process meets the criteria, the form must be developed and must be implemented no later than January 1, 2015 – as opposed to May 15, 2014. The criteria for the form or process is modified. The form must be capable of being electronically accepted; be able to be submitted in real-time; have the option of pre-populating certain data fields with medication information; and be capable of attaching supporting documentation, chart notes and files. The provider must receive an acknowledgment of receipt after the form is submitted, which must include standard data fields with member information, prescribing provider information, requested medication, strength and dosing schedule, diagnosis, prior medication tried, and supporting clinical information.

If the lead organization does not present a plan that meets the criteria, the Commissioner must establish a process by January 1, 2015 – as opposed to May 15, 2014. A carrier must be exempt from the requirements if the executive oversight committee finds they have implemented an electronic prior authorization by December 31, 2015 that meets the criteria.

EFFECT OF CHANGES MADE BY HEALTH CARE COMMITTEE (Recommended First Substitute): Refocuses efforts on the administrative simplification lead organization – OneHealthPort and work group – to streamline the prior authorization for prescription drug benefits. The lead organization must present a plan by November 15, 2013, for the implementation of a uniform electronic prior authorization form and data fields for prescription drug benefits. The Commissioner must review the plan and if it meets criteria established in the bill, the Commissioner must implement the prior authorization process by May 15, 2014. The plan must include the following: a defined response time for prior authorization approval or denial that cannot exceed the time frames provided in WAC for health carriers utilization review – WAC allows a range of time corresponding to the severity of the condition; if there is not a response within the given timeframe, the prior authorization request is deemed approved; data elements, not to exceed the equivalent of two pages that are electronically submissible; capacity of being electronically accepted by the payor after being completed; and compliance with National Council for Prescription Drug Programs prior authorization transactions for the SCRIPT standard. If a plan is not presented by the deadline, the Commissioner must establish a uniform prior authorization process that meets the criteria by May 15, 2014. If the plan presented meets the criteria, the Commissioner must require all third-party payors or any entity acting on behalf of a payor to use and accept only the form developed. The bill exempts workers compensation and the crime victims programs from the provisions of this bill.

Staff Summary of Public Testimony on Original Bill (Health Care): PRO: Having worked in the medical industry for years, I am very familiar with the variety of forms and how much time is spent managing paper work and filling out forms. Having one uniform form would save a lot of time for provider's offices and get patients the care they need faster. We had a workgroup look at pharmacy prior authorization issues and we did produce a number of recommendations. One of them was to use a common form and we believe this will streamline pharmacy activities in community pharmacies. The workgroup with OneHealthPort has looked at pharmacy issues, but the focus has been on hospitals and clinics and they haven't really focused on community pharmacies. Our pharmacy hired two full-time employees just to manage the prior-authorization forms and that has sped up the process considerably but it can still take one day or 30 days to hear back on an approval. These are complex issues and we support the efforts of the workgroup, but the delays in getting a service authorized delay timely treatment for patients. The state should become the 19th state to use a uniform form. We support the step process used to manage care and expenses but we are concerned with the paperwork and hope we can have protocols for a quick path to the right care at the right time. The patient is impacted when there is a delay in treatment. Pharmacy pre-authorization is the most time consuming and has the broadest range of forms from carriers.

CON: We support the efforts of the workgroup lead by OneHealthPort and support their comments. Our plans were founding members of the WorkSmart Institute and OneHealthPort and we support the voluntary efforts being made by all participants. Regence uses only three forms now and they are also used by the Uniform Medical Plan. The collaborative effort with the workgroup is the best place to bring stakeholders together. We believe a web-based process will be more efficient than producing paper forms. The pharmacy issues are more complicated and may need a special workgroup.

OTHER: The 2009 legislation initiated the formal administrative simplification efforts and the workgroup has been making good progress, including a report of best practice recommendations on prior authorization. The workgroup believes the best practices are based in using an application with a web browser, not going backward to paper forms. The two-day turnaround in the bill is a concern since different levels of severity require different levels of response. For example, a process now for immediate response requires response within 60 minutes and you would be delaying that two days, while some others require much more time to process and gather the appropriate documentation. A range of timing is more appropriate. The workgroup recommendations are in the process of being implemented now – that is the hard part. Adoption takes time and requires process change from payors and providers.

Persons Testifying (Health Care): PRO: Senator Becker, prime sponsor; Jeff Rochon, WA State Pharmacy Assn.; Julie Akers, Everett Clinic; Susie Tracy, WA State Medical Assn.; Josh Halpin, Autoimmune Advocacy Alliance; Erin Dziedzic, American Cancer Society, Cancer Action Network; Helen Nilon, Mental Health Action.

CON: Sydney Zvara, Assn. of WA Healthcare Plans; Chris Bandoli, Regence Blue Shield; Len Sorrin, Premera Blue Cross; Mel Sorensen, America's Health Insurance Plans.

OTHER: Rick Rubin, OneHealthPort.

Staff Summary of Public Testimony on Substitute (Ways & Means): PRO: Current prior authorization processes are cumbersome, create waste, and cost money. There is too much variation from carriers ranging is several pages to only one. There is a large burden placed on pharmacists and doctors. We have staff dedicated to only managing prior authorization. Simplification of prior authorization processes will help reduce administrative burden and lower health care costs. The number of processes should be reduced but we do not want to pay more for doing the right thing already. We also want to continue to innovate beyond this point in time. We just want to make sure the exemption standards are clearer.