Mounting public anger over health insurance is leading more state legislatures to eye tighter oversight of the industry, starting with its use of AI to screen claims and issue denials
(See bottom for statement from NCMS)
(Axios, Tina Reed) — Mounting public anger over health insurance is leading more state legislatures to eye tighter oversight of the industry, starting with its use of AI to screen claims and issue denials.
Why it matters: While congressional scrutiny of the industry picked up following the killing of UnitedHealthcare CEO Brian Thompson last month, states remain the primary regulators of health insurance and are best positioned to address access to and adequacy of care.
The big picture: Even before Thompson’s killing revealed widespread anger over insurer decisions, states were targeting prior authorization and other tools health plans use to manage health care use, with more than 90 different bills proposed nationwide last year, according to Georgetown University’s Center on Health Insurance Reforms.
- “States were already primed to scrutinize insurers more closely,” Larry Levitt, executive vice president for health policy at KFF, told Axios. “The backlash in the aftermath of the killing of Brian Thompson will likely only accelerate state action.”
- The calls for action are being amplified by physicians and other longtime insurer antagonists.
- “With both sort of pressures pushing on [state] legislators to take some action, I do think we’re likely to see more bills advance in the 2025 legislative session,” said Sabrina Corlette, co-director of Georgetown University’s Center on Health Insurance Reforms.
Zoom in: California last week began prohibiting the use of AI for coverage denials, and lawmakers in Georgia, New York and Pennsylvania are vowing to bring up the issue this year, Bloomberg Law reports.
- In New Jersey, state-regulated health insurance companies will have to decide more quickly — within 24 hours and 72 hours — whether they will cover a test or treatment recommended by a patient’s doctor.
- A slew of health insurance reforms took effect at the start of the year in Illinois, including a ban on “step therapy,” where patients have to use cheaper drugs before being approved for more expensive ones.
Between the lines: The state efforts are expected to outpace those in the new Congress, in part because legislators tend to face less pressure covering the costs of changes in insurance law.
- The incoming Trump administration and Republican Congress also aren’t expected to make insurance reforms key parts of their early policy agenda.
- States generally approach consumer protections in a more bipartisan way than federal policymakers and there is generally far more expertise in insurance in the state capitals than in Washington because health insurance still is largely regulated at the state level, Levitt said.
Yes, but: While more laws could score political points, they’d come with potential tradeoffs.
- “States just don’t really control that much as the market,” Katherine Hempstead, a senior policy officer at the Robert Wood Johnson Foundation, told Axios, noting the majority of plans are regulated under the federal ERISA law.
- Any moves states make that limit insurers’ ability to cut costs could result in price increases that are passed on in the form of premium hikes.
The other side: The insurance industry has said the use of AI can improve customer experiences, speed up the claims process and detect fraud.
- The Washington lobby America’s Health Insurance Plans said in a statement that in a fragmented and heavily regulated health care system, “health plans are working to protect patients from the full impact of rising costs while connecting them to care that is safe, evidence-based and coordinated.”
What to watch: Levitt said there’s bipartisan support for scrutinizing prior authorization that could amp up, “particularly with the backlash against insurers we’re seeing now.”
- Lawmakers have also broached forcing insurers with pharmacy benefit managers like UnitedHealthcare’s parent, UnitedHealth Group, to sell off their pharmacies.
- Some experts point to similarities between the current moment and the backlash against HMOs in the 1990s and said it may at the very least, push insurers to make changes to build trust with consumers.
- “It’ll be interesting to see whether the backlash against insurers really has legs, and whether there’s any kind of sustained policy response,” Levitt said.
The North Carolina Medical Society is committed to Prior Authorization reform in 2025. NCMS VP of Advocacy John Thompson says “It is past time that elected officials hold insurance companies accountable for their bad behavior.” He and the entire Advocacy Team have a long list of legislative priorities to support the NCMS members. Read more by clicking here.
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