Prior authorization is the requirement that a health care provider seek approval of a drug, procedure, or test before seeking reimbursement from a health carrier. Health carriers may impose different prior authorization standards and criteria for a covered service among tiers of contracting providers.
The Office of the Insurance Commissioner maintains rules regarding prior authorization practices for health carriers in the private health insurance market. Under the rules, health carriers must have a documented prior authorization program description and use evidence-based clinical review criteria. Health carriers must also maintain an online prior authorization process. In addition, health carriers must comply with specified time frames for making a prior authorization determination and for notifying a provider. The time frames are five calendar days for a standard prior authorization request and two calendar days for an expedited request.
The Health Care Authority requires prior authorization for medical assistance programs as specified in administrative rules, billing instructions, and memoranda for certain health care services, including treatment, equipment, related supplies, and drugs. For managed health care systems, standards are specified in contract and require that standard authorizations for health care determinations be made and notices of decisions sent within five calendar days and within two calendar days for expedited authorization decisions.
In 2020 legislation was passed to require health carriers to annually report to the Office of the Insurance Commissioner information about prior authorization requests received, approved requests, requests denied and then approved, and the average determination response time.
Prior Authorization Standards.
Beginning January 1, 2024, prior authorization standards are established for: health plans offered by health carriers; health plans offered to public or school employees, retirees, and their dependents; and medical assistance coverage offered through managed care organizations. The standards apply to prior authorization requests for health care services and prescription drugs, but do not apply to requests related to withdrawal management services or inpatient or resident substance use disorder services.
Timing of Review.
Beginning January 1, 2024, time frames are established for health carriers, health plans, and managed care organizations to make prior authorization determinations and notify a participating health care provider or health care facility. The time frames are established for both standard prior authorization requests and expedited prior authorization requests and differ depending on whether the request was made through an electronic prior authorization process or through a nonelectronic prior authorization process.
An expedited prior authorization request is a request by a health care provider or health care facility for approval of a health care service or prescription drug where the passage of time could either seriously jeopardize the life or health of the enrollee or the enrollee's ability to regain maximum function or subject the enrollee to severe pain that cannot be adequately managed without the requested health care service. The term also applies to approval for a prescription drug where the enrollee is undergoing a current course of treatment using a nonformulary drug. For an expedited prior authorization request that is submitted through:
A standard prior authorization request is a request by a health care provider or health care facility for advance approval of a health care service or prescription drug that does not include a condition requiring the request to be expedited. For a standard prior authorization request that is submitted through:
A health carrier, health plan, or managed care organization may establish specific reasonable time frames for a health care provider or health care facility to submit additional information when needed to make a prior authorization decision.
Communication of Criteria.
Health carriers, health plans, or managed care organizations must describe their prior authorization requirements in detailed, easily understandable language. Health carriers, health plans, or managed care organizations must make the most current prior authorization requirements and restrictions available upon request in an electronic format. The prior authorization requirements must be based on peer-reviewed, evidence-based clinical review criteria which is evaluated and updated at least annually. In addition, the clinical review criteria must accommodate new and emerging information related to the appropriateness of clinical criteria with respect to black and indigenous people, other people of color, gender, and underserved populations.
Electronic Standards for Prior Authorization Requests.
Health carriers, health plans, and managed care organizations must build and maintain a prior authorization application programming interface that automates the process for determining the necessity for a prior authorization, identifying information and documentation requirements, and facilitating the exchange of prior authorization requests and determinations. The application programming interface must use Fast Healthcare Interoperability Resources, automate the prior authorization determination process, allow providers to query prior authorization documentation requirements, support automated compiling and exchange of necessary data elements to populate the prior authorization requirements, and indicate that prior authorization denials or authorizations of less intensive services are adverse benefit determinations subject to grievance and appeal processes.
The application programming interface must support prior authorization requests and determinations for health care services beginning January 1, 2025, and for prescription drugs beginning January 1, 2027. If federal regulations on the application programming interface standards are not finalized by September 13, 2023, the commencement date for health care services will be delayed until January 1, 2026. If a health carrier, health plan, or managed care organization will not be able to meet the commencement dates, it may submit a request to the Office of the Insurance Commissioner or the Health Care Authority, as applicable, for a one-year delay. The request for a delay must describe the reasons for not meeting the requirements, the impact on providers and enrollees, how information will be provided to providers, and a timeline and implementation plan for compliance.
Prior Authorization Reporting.
Health carrier reporting requirements related to prior authorization information are expanded to apply to prior authorizations for prescription drugs. Specifically, health carriers must report to the Office of the Insurance Commissioner the 10 prescription drugs for the previous year with:
Null and Void.
The provisions of the bill are null and void if they are not specifically funded and referred to in the operating budget.
The Senate amendments divide the prior authorization electronic system requirements into two substantially similar standards for health care services and for prescription drugs. The requirements for prior authorization systems for prescription drugs may be in the form of either an application programming interface or an interoperable electronic process. The application programming interface for health care services must be compliant with existing and proposed federal regulations on application programming interfaces.
The Senate amendments require health carriers, health plans, and managed care organizations to communicate the time frame for submitting additional information to both the provider and the enrollee, rather than either of them.
The Senate amendments exempt coverage provided under the Medicare Part C or Part D programs from the prior authorization standards applicable to public employees, retirees, and covered dependents. The prior authorization standards do not apply to medication management requirements related to children with emotional or behavioral conditions who are enrolled in Medicaid.
The Senate amendments require the Office of the Insurance Commissioner to update the policy committees of the Legislature on the status of federal rules and guidance from the federal Centers for Medicare and Medicaid Services related to application programming interfaces and interoperable electronic processes for prior authorization functions. The updates are due by September 13, 2023, and at least every six months until September 13, 2026.
The Senate amendments require that health carriers, health plans, and managed care organizations that are seeking an extension to the application programming interface deadline submit their justifications for the extension to the Office of the Insurance Commissioner or the Health Care Authority by September 1, 2024.
(In support) Formularies and prior authorizations serve a purpose for managing health care costs, but they can also be an unnecessary system that drives up health care costs, delays care, and increases hurdles to access. This bill is about standardizing and modernizing the prior authorization process. This bill will establish timelines for prior authorization decisions and standardize processes across health carriers which will result in less burden and better outcomes for patients. This bill streamlines prior authorization and brings transparency to the process. Prior authorization causes an overwhelming administrative burden that can drive health care providers out of business. This bill will create greater transparency between the carrier, the providers, and the patients. The inefficient prior authorization process results in patients having their treatment delayed, finances impacted, and quality of life affected. When dealing with a disease like cancer where there are procedures occurring on very tight timelines, a delay can mean that a patient is missing a chemotherapy appointment.
Prior authorization used to only be applied to outlier services, but is now applied to routine practices which institutionalizes delay and inefficiencies in health care delivery. This bill seeks to reduce administrative burdens by removing those rarely denied, but still required prior authorizations that create a bottleneck. Prior authorizations that are required, but rarely denied, delay access to important medication for chronic illness.
It is important to have a real peer-to-peer review because it isn't appropriate for a physician in one specialty to have a review by another specialty that knows nothing about the specialty at issue. Naturopaths should be included in the list of providers identified in the bill because, as primary care providers, they face similar barriers when submitting prior authorization requests.
(Opposed) Prior authorization is a key step to assuring that patients receive needed, safe, quality care. Patient safety may be compromised by the bill's exceptionally fast turnaround times and its authorization to the Insurance Commissioner to waive prior authorization altogether. This bill will likely result in a post-claim review process that will not be popular with some providers and patients. This bill drastically and unnecessarily cuts the amount of time to complete a prior authorization review and the times will be very difficult for health plans to meet and would likely result in an increase in denials. This bill requires a specialty-matched peer review process that will be expensive and not be a good use of limited health care staff. When Texas considered this type of legislation, it was estimated to cost nearly $1 billion.
While prior authorization programs should be made more efficient, that can be done by moving to an electronic platform. This bill does not mention the availability of technology to improve the prior authorization process. Health care providers have not been using the electronic prior authorization systems offered by health carriers. The bill's prohibition on prior authorization for procedures based on approval rates is concerning because there should be a review for quality and safety elements.
(In Support) Prior authorization happens when a provider recommends a service for a patient that needs to be approved by the patient's insurance. Today, prior authorization often happens through fax machines. The focus of the bill is to modernize the prior authorization system and integrate electronic processes.
Delays with prior authorization lead to delays in care, creating a systematic issue. The fiscal analysis does not include the health care savings incurred by avoiding delays in care. It is impossible to put a dollar amount on the lives that will be saved with this bill.
Prior authorizations are supposed to eliminate unnecessary tests and treatments, except so many have high approval ratings already, so it just adds red tape. Reducing red tape will help providers with unnecessary paperwork and burnout.
(Opposed) None.
(Other) Technology can play a role in prior authorization and promote safe, evidence-based, affordable care. Increasing the adoption of electronic prior authorization is a major opportunity for improving prior authorization turnaround times. This bill will be an enormously complex technology lift for carriers as they need to build and maintain integrated prior authorization systems for prescriptions, which were excluded from pending federal standards and policy.