Background:

Health carriers enter into contracts with health care providers under which the providers agree to accept a specified reimbursement rate for their services. Health carriers may require prior authorization for certain health procedures. Prior authorization is the requirement that a health care provider seek approval of a drug, procedure, or test before seeking reimbursement from an insurer. A health carrier may not retrospectively deny coverage for care that had prior authorization unless the prior authorization was based upon a material misrepresentation by the provider.

A health carrier may not require a provider to extend the carrier's Medicaid rates, or some percentage above the carrier's Medicaid rates, to a commercial plan or line of business, unless the provider has expressly agreed in writing to the extension. The requirement that the provider expressly agree to the extension does not prohibit the carrier from using its Medicaid rates, or some percentage above its Medicaid rates, as a base when negotiating payment rates with a provider.

A health carrier must provide at least 60 days' notice to a health care provider of any proposed material amendments to the provider's contract. A material amendment is an amendment to a contract that would result in requiring the provider to participate in a health plan, product, or line of business with a lower fee schedule in order to continue to participate in a health plan, product, or line of business with a higher fee schedule. During the 60-day period, the provider may reject the material amendment without affecting the terms of the existing contract. The material amendment must be clearly defined in a notice to the provider before the notice period begins. The notice must inform the provider that he or she may choose to reject the terms of the material amendment through written or electronic means at any time during the notice period and that such rejection will not affect the terms of the existing contract. The health carrier's failure to comply with the notice requirements voids the effectiveness of the material amendment.

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Summary of Substitute Bill:

A health carrier may not:

require prior authorization for an evaluation and management visit or an initial treatment visit with a contracting provider in a new episode of habilitative, rehabilitative, East Asian medicine, or chiropractic care;
require a provider to provide a discount from his or her usual and customary rates for non-covered services; or
impose a cost-sharing requirement for habilitative, rehabilitative, East Asian medicine, or chiropractic care that exceeds the carrier's requirements for primary care.

The health carrier must:

post on its website and disclose upon request the prior authorization standards, criteria, and information the carrier uses for prior authorization decisions;
base its prior authorization standards and criteria on the carrier's medical necessity standards; and
honor a representation by its subcontractor that a health care service will be covered by the carrier's health plan.

A health carrier that imposes different prior authorization standards and criteria for a covered service among tiers of contracting providers of the same licensed profession in the same health plan must, upon request, inform an enrollee which tier an individual provider or group of providers is in.

A provider with whom the carrier consults regarding decisions to deny, limit, or terminate a person's coverage must hold a license, certification, or registration in good standing and must be in the same or related field as the health care provider being reviewed.

An entity that sells access to a network of health providers to other entities (rental network) must give a contracted health provider 60 days' notice prior to adding a new entity purchasing access to the network (new product). The rental network may not require the contracted provider to accept the new product as a condition for continued participation in the in-force contract. This requirement is inapplicable to entities within the same insurance holding company system.

Substitute Bill Compared to Original Bill:

The substitute bill:

removes the prohibition against a health carrier imposing different prior authorization standards among tiers of like providers, and instead requires a health carrier to inform an enrollee upon request which tier a provider or group of providers is in;
prohibits prior authorization for an evaluation and management visit or an initial treatment visit (instead of any initial visit) with a contracting provider in a new episode of habilitative, rehabilitative, East Asian medicine, or chiropractic care (instead of any kind of care);
removes an objective or subjective worsening of an existing condition from the definition of "new episode of care;"
requires prior authorization decisions to be based on a carrier's medical necessity standards, instead of generally accepted standards of clinical practice;
requires a carrier to post its prior authorization standards on its website;
removes the requirement that a carrier respond to prior authorization requests within 24 hours;
removes the requirement that the provider with whom a carrier consults when making coverage decisions be licensed in Washington or be actively practicing and allows the provider to be in a related field to the provider being reviewed;
removes provisions regarding consultations in coverage decisions involving more than one treating provider;
removes the prohibition against requiring a provider to participate in one plan as a condition for participating in another plan, and instead requires a "rental network" to provide 60 days' notice to a provider prior to adding a product to its contract with the provider and prohibits the rental network from requiring a provider to accept the additional product as a condition for continued participation in an in-force contract (entities within the same insurance holding company are exempt from this requirement);
removes provisions requiring carriers to be responsible for the activities delegated to a subcontractor and provisions requiring carriers to be bound by inaccurate benefit information a subcontractor provides an enrollee, and instead requires a health carrier to honor a representation by its subcontractor that a health care service will be covered by the health plan; and
adds East Asian medicine care to the services for which a covered person's cost sharing may not exceed the cost sharing for primary care.

Staff Summary of Public Testimony:

(In support) Care should be based on patient needs. Prior authorization is not objectionable in and of itself, but it can be an administrative nightmare for providers, be stressful and confusing to patients, and cause treatment delays. The system is short-sighted and will increase patients' risk of injuries and hospitalizations. Carriers often place providers into tiers without their knowledge. Tiering is an administrative burden to providers, adversely affects patient care, and can be based on inaccurate data. Most patients are unaware of tiering; they have no idea that their benefits are limited based on the provider they choose. The number of visits that is authorized is often too few to adequately treat the patient. Copays for covered services are often excessive, exceeding the allowed amount of the service itself. The cost of copays is causing patients to delay needed care, which can result in disability, chronic pain, and the loss of work. If patients are unable to access their benefits because of copays, they are not getting the benefit for which they pay. Most providers are unable to negotiate their contracts with carriers. There should be a global fix to these problems. East Asian medicine practitioners should be included in this bill.

(Opposed) Requiring the carrier to consult with medical professionals licensed in every state when making coverage decisions would result in national carriers needing 50 different practitioners, one for each state. Much of this bill is already covered under current law; this bill will increase costs because of administrative burdens and will have no added value for enrollees. Providers are currently informed of tiering criteria and are given tools to measure themselves against their peers in order to improve themselves. Tiering is a way to reward efficiency and high quality. The reason copays are high for specialty services is to encourage the evaluation of care to be performed in primary care for better care coordination. Prior authorization timing is already specified in current law; a 24-hour turnaround is already required for emergency services. Many carriers are using evidence-based managed care; this bill would make it impossible for carriers to require prior authorization. It is unclear what this bill is trying to do about rental networks. This bill will conflict with current law.

Persons Testifying: (In support) Lori Grassi and David Butters, Washington State Chiropractic Association; Melissa Johnson, Physical Therapy Association of Washington and Washington Speech and Hearing Association; Robin Schoenfeld and Emilie Jones, Physical Therapy Association of Washington; Leslie Emerick, Washington East Asian Medicine Association; Kim Wilson, Medical Massage and Acupuncture; and Jeff Gombosky, MultiCare Health System.

(Opposed) Mel Sorensen, America's Health Insurance Plans and CareCore National; Mark Tate and Todd Nakatsuka, CareCore-MedSolutions; Chris Bandoli, Regence Blue Shield; Len Sorrin, Premera Blue Cross; Sydney Smith Zvara, Association of Washington Healthcare Plans; and Chris Marr, Group Health Cooperative.