Lindsi Franklin鈥檚 son, Isaac, was 9 years old in June 2024 when doctors found an abscess in his stomach and a section of diseased bowel. He was diagnosed with 鈥� Isaac鈥檚 immune system had decided that his own intestines were an enemy.
Franklin鈥檚 insurance company required prior approval before covering the medications Isaac needed 鈥� a process that took months, Franklin said. She spent hours on the phone between the company, pharmacy and the physician.
鈥淭ime was not on our side,鈥� said Franklin, who鈥檚 from Wake County. 鈥淚saac鈥檚 immune system was on high alert and could continue to attack his intestines.鈥�
Eventually, Isaac was able to get both doses of the medication he needed and two surgeries. He鈥檚 now 10 years old and back to playing soccer, she said.
But the fight with insurance isn鈥檛 over. As Isaac grows older and gains weight, the dosage for his medications will change, and the insurance company will likely put the family through the entire rigamarole 鈥� a process known as prior approval 鈥� again, she said at a news conference at the legislature held March 18.
The North Carolina Senate and the House of Representatives proposed separate legislation to reform the prior authorization process, where insurance companies require patients and doctors to follow specific and sometimes lengthy procedures before they鈥檒l approve some treatments, tests or doctor visits.
For people like Isaac, it can mean delays in lifesaving care.
The proposed reforms are part of a larger debate between the legislative chambers over how to make the health care system more affordable and accessible for consumers.
But the two chambers of the General Assembly differ in how to go about changing prior authorization. The House bill takes more steps to restrict the process, while the Senate鈥檚 bill also targets billing and price transparency for consumers.
NC Health News talked to seven health economists and one policy expert about what they think of the proposed reforms and the impact on consumer costs.
The battle begins
Several North Carolina House members started discussing prior authorization reforms early in the legislative session, which began in January. A news conference at the on Jan. 28 , where Reps. Tim Reeder (R-Ayden) and Grant Campbell (R-Concord) 鈥� both physicians 鈥� spoke about the harms of prior authorization and pledged to file proposals for reform.
In response, the Senate . The legislation would make it so that such as prior authorization would be considered an unfunded mandate, which Senate members argue raise prices for consumers.
In the Senate bill, any new mandate passed would require the elimination of an existing one.
According to Senate Leader Phil Berger鈥檚 office (R-Eden), the bill was a message to the House that drastic reforms to prior authorization would not be accepted in his chamber.
In mid-March, Sens. Jim Burgin (R-Angier), Amy Galey (R-Burlington) and Benton Sawrey (R-Clayton) co-sponsored Senate Bills 315 and 316, which together aim to tackle health care costs in the state. The two bills were and passed the Senate almost unanimously on March 27.
, filed March 18, was the House鈥檚 response to improving prior authorization.
The bills from the two chambers have some similarities: they each would require insurers to approve or deny covering urgently needed care within 24 hours 鈥� previously, they had three business days to make the decision.
Both bills would also require companies to keep a list online of the procedures, tests and medications that require prior authorization so that patients and providers can review it.
And both chambers鈥� bills also require that physicians hired by insurers to review requests for coverage should be in the same or similar medical specialty as the treatment in question. For example, if the approval is for a knee replacement, the insurer physician鈥檚 specialty should be in orthopedics.
The House bill goes further to say the physician must be licensed to practice in North Carolina and could be subject to discipline by the state Medical Board.
The House bill also limits insurers鈥� ability to change prior authorization decisions after the care is provided and prevents insurers from requiring prior approval for a particular service if the provider was approved for that same service 80 percent of the time in the last year.
The Senate bill specified that appeals for mental health services should be reviewed by a licensed mental health professional rather than any medical doctor.
How would these changes affect consumer costs?
When it comes to whether changing prior authorization affects costs for patients, the answer isn鈥檛 as clear as lawmakers say it would be. We reached out to 16 health economists and spoke to seven of them.
They expressed a lot less certainty about what the outcome would be than lawmakers do.
Prior authorization is designed to reduce claims and ostensibly contribute to reducing premium expenses, but it also leads to demoralization in the health care workforce, explained Dave Anderson, an assistant professor in the University of South Carolina鈥檚 Department of Health Services Policy and Management.
In other words, it鈥檚 a tradeoff, he said.
Requiring higher qualifications for the insurers鈥� physicians will increase the cost of prior authorization for the insurers, Anderson said. That means insurance companies will likely require prior approval for fewer things since it will no longer be cost-effective to go through the process as often 鈥� so if people get more care as a result, that could lead to higher premiums, he said.
The question is whether that鈥檚 worth it, Anderson said.
Brad Wright, professor and chair of the Department of Health Services Policy and Management at University of South Carolina, gave the example of car insurance 鈥� if one plan only covers his car being stolen but another also covers collisions, the second policy will likely be more expensive, but well worth it.
But in all of this, there鈥檚 a question of whether insurers pass along savings they achieve from prior authorization in the form of things like lower premiums, said Dustin Tracy, assistant professor of health economics at Augusta University School of Public Health. It鈥檚 unclear whether that actually happens.
Prior authorization can also help the health insurance company potentially negotiate with drug manufacturers for better prices on drugs in exchange for making that drug more accessible to beneficiaries, said Joseph Levy, assistant professor in the Health Policy and Management Department at John Hopkins University.
鈥淎 lot of people make pretty bold claims about [prior authorization being] all good or all bad, and it鈥檚 somewhere in the middle,鈥� he argued.
Reforming prior authorization has merits, said Kevin Schulman, professor of medicine and business at Stanford University. He notes the process takes up provider time and worsens workforce shortages.
Rep. Grant Campbell (R-Concord), a practicing obstetrician-gynecologist, can attest to that. He said he had to hire staff dedicated solely to handling prior authorization requests with insurance companies.
But the reforms are unlikely to affect health care costs for the consumer, because prior authorization doesn鈥檛 actually save insurers that much money, Schulman argued.
Reforming prior authorization could control costs in the short term, said Meng-Yun Lin, assistant professor of social sciences and health policy at Wake Forest University. But in the long term, the outcomes are more complicated.
Targeting bad apples
Anderson said while most prior authorization claims are eventually approved, the data doesn鈥檛 show how the process changes physician behavior. If a doctor knows one treatment option will require more back and forth with insurance, they may try a cheaper one first, he explained.
This phenomenon is known as the 鈥�,鈥� where people change their behavior if they think they鈥檙e being watched.
But doctors often don't know why a particular insurance plan requires prior approval for one treatment versus another, said Schulman, who鈥檚 also a physician. He said most physicians feel they鈥檙e just doing their job.
Physicians should be the ones to make decisions without insurers getting in the way, Campbell said.
鈥淧rior authorization is an incredibly crude approach to this problem,鈥� Schulman said.
Instead, Schulman said, companies should move away from the analog methods of billing and prior approval. Filling out paperwork and making calls is a very expensive way to monitor waste and abuse.
Instead, he argued, insurers should use machine learning to monitor patterns, which is what credit card companies do to monitor transactions with greater effectiveness and lower cost.
Researchers have also discussed 鈥済old card鈥� systems, in which physicians with good records don鈥檛 have to go through prior authorization as often as those who are brand new or who have made mistakes, Anderson said.
Texas created a system that went into effect in 2022, but there鈥檚 not enough evidence yet of what impact that鈥檚 had, said Levy from Johns Hopkins.
Schulman pointed out that if one insurance company says a physician is 鈥済old card鈥� approved and another company says they aren鈥檛, they still would have to go through prior authorization for the patients of those other insurers 鈥� so it won鈥檛 save much money.
Other states are tinkering with prior authorization: 10 states in 2024, according to the American Medical Association, including Mississippi, Wyoming and Virginia.
The , an industry group, supports on reforming prior authorization, as it鈥檚 less restrictive than the House version, said Peter Daniel, executive director of the association.
One sticking point for Daniel is the House has stricter timelines around prior authorization decisions. Also, the requirement for the insurer鈥檚 physician to be licensed in North Carolina raises questions about whether physicians would be pulled away from seeing patients to manage prior authorizations, Daniel told NC Health News.
The association was invited to take part in the discussion around language in the Senate bill, but not in the House, he said. He also said that Reeder has subsequently offered to sit down and talk through the insurers鈥� concerns.
Discouraging health insurance mandates
A different bill 鈥� 鈥� passed Feb. 12, and would make enacting reforms to prior authorization more difficult by discouraging government mandates on insurance companies. An has not moved.
Those two bills as regulations on health insurance plans, including things like requiring coverage for hearing aids and prescription contraceptive drugs or devices 鈥� and prior authorization.
These mandates drive up premiums, Burgin argued. He said preventing future mandates will keep costs from rising.
But mandates can be useful for preventive services that pay off decades later, argued Anderson, one of the health economists. He explained, for example, that the led to a drastic decrease in cervical cancer rates. Requiring the cost to vaccinate young people, and therefore prevent cervical cancer, saves money on expensive cancer treatments down the road.
But in the U.S. system, where insurance is tied to employment and frequently changes as people change jobs, that means that employers and their insurers aren鈥檛 incentivized to look at possible long-term savings.
鈥淚n that case, mandates are really effective about making it so that a high value, high payoff intervention happens,鈥� he said.
High prices
In addition to addressing prior authorization, targets hospital billing and price transparency by pushing hospitals to disclose more about price. The bill also requires facilities to provide an itemized list of charges to a patient before their bill is
Hospitals would also have to provide a good faith estimate of the total cost for the types of services that patients shop around for 鈥� such as knee surgery 鈥� and provide the estimate to patients on request. Then they need to stick within 5 percent of that quoted price. The bill also places restrictions on when hospitals can charge ,鈥� an expense the hospital can add to your bill when you visit one of its off-campus clinics.
Those facility fees are also a source of debate. found that the average ultrasound bill in North Carolina jumped from $191 to $460 when it included a facility fee. The study found that the cost of a physician office visit surged 43 percent when a facility fee was tacked on.
This provision was a point of concern for Sen. Gale Adcock (D-Raleigh) and Sen. Gladys Robinson (D-Greensboro). Robinson said during the bill鈥檚 hearing on the chamber floor that the facility fees help cover staff and equipment costs.
Frank Sloan, a professor emeritus of Health Policy and Management at Duke University, said he believed that passing the bill will likely have 鈥渁 minimal effect on the rising cost of health care.鈥� He said the bigger issue is at the federal level.
The effects of consolidation聽
Many have argued that creating hospital price transparency would help people shop around for the best deal. Lin, the health economist from Wake Forest University, explained that in places like North Carolina, that doesn鈥檛 always happen. With a health system dominated by a few large, consolidated health systems, there鈥檚 sometimes no other choice for patients.
That consolidation is what鈥檚 really driving up health care prices, said Schulman, the Stanford professor who spent years at Duke University and knows the North Carolina landscape well. Years of consolidation means that systems have built up their leverage. Now, when they sit down across the table from insurance companies to negotiate prices, they have plenty of leverage.
He explained the hospitals essentially become local monopolies, and that gives them the ability to raise prices for hospital and outpatient care well above the payment rates set by the Medicare program, which are supposed to cover the costs of clinical services for an efficient provider.
鈥淚f the legislature is interested in controlling health care costs, they have to control consolidation,鈥� he said.
The , a powerful lobbying group for the state鈥檚 hospitals, said there are more effective ways to reduce health care costs than the reforms laid out in the Senate bill.
Negotiations ahead
The two chambers have yet to agree on overarching health care reforms this session. The proposals are likely to become a bargaining chip in future budget negotiations.
Industry interests ride on these decisions as well. Seven major insurance companies and the NC Association of Health Plans have 38 total lobbyists registered this year at the state legislature.
Their frequent opponents, six of the state鈥檚 health systems and the NC Healthcare Association, have 35 lobbyists registered this year.
This first appeared on and is republished here under a .
