California could soon reduce prior authorization requirements for physicians

A bill that would significantly reduce administrative burdens in physician practices may be close to passing the Assembly. 

 

Get the latest state-specific policy intelligence for the health care sector delivered to your inbox.

 

Senate Bill 250, sponsored by Sen. Richard Pan (D–Sacramento) and Scott Wiener (D–San Francisco), would prohibit a health plan or insurer from requiring a health professional to obtain a prior authorization for any health care services if the health plan or insurer approved at least 90% of prior authorization requests that a provider submitted in the most recent 1 year contracted period. 

The bill also requires health plans or insurers to acquire physician representation in developing criteria for prior authorization, allows a physician to appeal a prior authorization decision by a physician of the same specialty, and prohibits a health plan or insurer from requiring a physician to file an appeal of a prior authorization request before filing an independent medical review. 

The bill also requires health plans and insurers to reimburse a contracting health professional the entire contracted rate, including patient cost-sharing, for services provided to a plan member. 

According to the sponsors, this bill will help ease both the administrative and financial burden on physicians’ practices in the state so more resources can be dedicated to ensuring the highest quality of care for patients, especially as physicians’ practices have struggled to stay open in many California communities during the COVID-19 pandemic.

“It is critical that California act now to give providers the tools that are required in order to efficiently and effectively operate a practice, increase care coordination, improve access to care and reduce costs,” the bill’s authors said.

The bill has been supported by organizations like the California Medical Association (CMA), the California Academy of Family Physicians, and the American Academy of Pediatrics, California. The bill has been opposed by organizations like California Association of Health Plans (CAHP), America’s Physician Groups, and the Pharmaceutical Care Management Association.

The CMA says that physicians’ administrative burdens, especially related to prior authorization, are often responsible for poor patient outcomes. 

“Surveys of physicians have consistently found that excessive authorization controls required by health insurers are persistently responsible for serious harm when necessary medical care is delayed, denied or disrupted in an attempt to increase profits,” the association stated. “In a 2021 AMA survey, 34% of physicians reported that prior authorization led to a serious adverse event for a patient in their care such as hospitalization, medical intervention to prevent permanent impairment, or even disability or death. Moreover, physicians and their staff spend nearly two days per week on prior authorizations creating costly administrative burdens.”

CMA also says that involving physicians in the development of prior authorization criteria will allow physicians to provide care for their patients to the best of their ability, without unnecessary interference from health plans.

“This bill will ensure that a health plan’s utilization criteria are grounded in science and medical practice by involving physicians in developing those criteria from the beginning,” reads the legislative summary of CMA’s supporting position. “By including physicians in the development of a plan’s prior authorization criteria, the criteria will more accurately reflect evidence-based medical practice standards and guidelines. The result will be fewer prior authorizations attached to standard of care treatments and services.”

The CAHP says the bill would allow providers to bypass accountability and create a “major patient safety issue.”

“This bill will remove the common sense checks and balances that our health care system relies on and will inevitably lead to adverse outcomes,” reads the legislative summary of CAHP’s opposing position. “This bill gives specified providers a free pass from any oversight of their clinical decisions for a period of two years. Plans and insurers cannot audit these providers during the two years to ensure that enrollees and insureds are receiving the appropriate care they both need and deserve.”

The bill currently sits in the legislative suspense file.