Prior Authorization

Defining Prior Authorization for Health Care

The Centers for Medicare and Medicaid Services (CMS) defines prior authorization as “approval from a health plan that may be required before you get a service or fill a prescription in order for the service or prescription to be covered by your plan.”

Kansas Administrative Regulations define prior authorization to mean the approval of a request to provide a specific service before the provision of the service (KAR 30-5-58).

Model Legislation

In 2014, the American Medical Association created the American Prior Authorization Model Bill (Model Bill) to assist states in reforming their prior authorization processes. The Model Bill is titled the Ensuring Transparency in Prior Authorization Act and includes stated purposes regarding the protection of the patient-physician relationship and optimal patient care and provisions to limit or place requirements on the use of prior authorization in health care. Information regarding states’ introduction of legislation with Model Bill provisions follows.

Recent Kansas Legislation

In the 2023-2024 biennium, the Kansas Legislature considered three bills pertaining to prior authorization: HB 2283 (2023), SB 148 (2023), and HB 2713 (2024). These bills would have enacted the Ensuring Transparency in Prior Authorization Act.

The House Committee on Insurance held a hearing on HB 2283 on February 20, 2023. No committee action was taken on the bills, and the bills died in committee at the end of the legislative biennium.

Recent Prior Authorization Reform Legislation in Other States

In 2023, nine states and the District of Columbia passed legislation addressing their prior authorization processes. (Arkansas, Louisiana, Montana, New Jersey, Rhode Island, Tennessee, Texas, Washington, West Virginia)

As of September 2024, an additional ten states have passed legislation to address their prior authorization processes. (Colorado, Illinois, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Oklahoma, Vermont, and Wyoming)

Prior Authorization Reform Example

The Model Bill establishes provisions addressing the usage of prior authorization in health care. A common limitation made by states is to establish clearer and shorter response times: 38 states, including Kansas, and the District of Columbia, have legislation referencing the response timeline between a health care provider, patient, and health plan provider.

30 states and the District of Columbia reference that non-urgent or standard medical services will have an approval response from a patient’s health plan provider ranging from 2 to 15 days after the request is received.

States’ legislation may also prohibit retroactive denials if the health care service has been preauthorized and require a new health plan to honor a patient’s prior authorization for at least 90 days.

Why Do Health Plans Require Prior Authorization?

The National Association of Insurance Commissioners identifies two general purposes for the use of prior authorization: It serves as a check that your health plan covers the proposed care; and it provides the health plan the opportunity to decide if the care is medically necessary, safe, and cost effective.

Common Uses of Prior Authorization in Health Care

Some services, medications, procedures, and tests are more commonly subject to prior authorization, such as:

• Diagnostic imaging (e.g., MRIs, CTs, and PET scans);
• Durable medical equipment (e.g., wheelchairs, oxygen equipment, and crutches);
• Rehabilitation services (i.e., physical or occupational therapy);
• Home health services;
• Elective surgeries; and
• Drugs with serious risks or side effects.

Medicare, Medicaid, and Children’s Health Insurance Program

CMS is a federal agency that provides health coverage through Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP). CMS has listed specific procedures, services, and medications that require prior authorization if utilizing federal health insurance. The Kansas Department of Health and Environment has established general clinical prior authorization indexes and criteria for individuals utilizing Medicaid, Medicare, or CHIP within Kansas.