Health insurance bill looks to remake the dreaded 'prior authorization' process

A bill in the House Insurance Committee could remake aspects of the Indiana health-care system. 

Senate Bill 480 attracted a large audience for the committee's last meeting on March 25. All the seats in the room were filled, and multiple individuals had to find space against the wall or in other rooms just to hear the testimony. 

SB 480 addresses issues with prior authorization from health insurers. The bill would establish a “utilization review entity” to replace an insurance providers' role in approving or denying prior authorization. This new entity will regulate and manage prior authorization claims. Most importantly, the bill makes it so a claim for reimbursement for a covered service or item may not be denied on the sole basis that the referring provider is an out-of-network provider.   

TheStatehouseFile.com spoke with Cody Mullen, director of the Master of Health Administration Program at Purdue University, who explained the issues people face when they deal with prior authorization. 

“There are countless articles of individuals who prolong the length of time to get care or have their care denied and cause adverse outcomes on behalf of these things,” he said. 

“Let’s say someone needs a really expensive drug for their chemotherapy cocktail. Delaying that by five to 10 days to initiate treatment, allowing the tumor and cancer cells to spread, can cause irreparable harm to the patient.” 

One of the provisions of SB 480 is to reduce the time for a prior authorization claim to be processed from at most five business days down to 48 hours.   

The bill saw rousing bipartisan support in the Senate, with the majority of the Democratic caucus joining as co-authors on the bill. One of those lawmakers, Sen. Rodney Pol, D-Indianapolis, spoke with TheStatehouseFile.com after the meeting about why this piece of legislation garnered such broad support. 

“There is so much bureaucratic tape put around getting people the care they need,” he said. “This bill is making it a much more straightforward process, so when a doctor says this is actually what a patient needs, they can bypass some of the red tape.”

During the committee hearing, the author of the bill, Sen. Tyler Johnson, R-Leo, who is a practicing emergency room physician, presented his bill. 

“There is gonna be a lot of discussion about companies and insurers and hospitals, but I want you to think as we move forward with this bill, how does this impact the patients?” said Johnson. “How does it affect your family members? Because I could go through this one by one and you all have a story about a family member, a friend, who is negatively affected by prior authorization.”

Johnson pointed to two areas where he said his bill would reform prior authorization: first by reducing the time that it takes for communication between medical professionals, hospitals and insurance companies. Secondly, he said it would reduce patients being denied care. 

Johnson also explained the "utilization review entity" aspect of the bill. 

“The utilization review entity is the entity performing the prior authorization. It can be part of any public or private company, such as an insurer or contracted service like a third-party administrator. It could also be part of a public entity like Medicaid.” 

The Statehouse File reached out to the state's fiscal office for information on funding for the bill but did not receive a comment by press time Monday. 

The bill remains in the House Insurance Committee, which does not yet have another meeting scheduled.