The Arkansas General Assembly is considering companion bills (House Bill 1271 – HB1271 and Senate Bill 143 – SB143) that would eliminate current prior authorization processes (a proven means of reducing wasteful medical spending) for all fully insured individual and group health plans, and nonfederal government-sponsored self-funded health plans (including ARHome, Arkansas State Employees/Public School Employees, Arkansas State Police, state-supported colleges and universities, county and municipal governments, etc.). These bills will dramatically escalate healthcare costs – and health insurance costs.
URGENT OPPOSITION REQUESTED
The bills apply to entities that are subject to state insurance regulation, including:
- Insurance companies
- Health maintenance organizations
- Hospital and medical service corporations
- Risk-based provider organizations
- Sponsors of nonfederal self-funded governmental health plans (state, county, municipal, etc.)
Prior authorization of certain medical and pharmacy services is one of several checks and balances health plan administrators like Arkansas Blue Cross and Blue Shield and its family of affiliates use to limit wasteful healthcare spending and ensure that its members receive high-quality and cost-effective healthcare.
The rationale of HB1271/SB143’s sponsors is that 90% of prior authorization requests are approved.
Our estimates suggest the adverse financial impact could be $32 million or more in increased medical costs alone (not including pharmacy costs).
HB1271/SB143 would:
- Completely suspend prior authorization for the first six months of 2024
- Require health plans to conduct a utilization analysis of claims submitted for the first 6 months of 2024 with historical claims data and historical prior authorization approval and denial rates
- Give providers who meet certain thresholds an ongoing exemption from prior authorization requirements – a “Gold Card” status
Studies show that, even with existing prior authorization controls, roughly:
- 25% of medical spending is wasteful (https://pubmed.ncbi.nlm.nih.gov/31589283/)
- 20.6% of overall medical care is unnecessary (https://pubmed.ncbi.nlm.nih.gov/28877170/)
In 2021, Arkansas Blue Cross paid $1.55 billion in claims for medical services (not including pharmacy claims).
Using the rationale put forth by HB1271/SB143’s sponsors, we can assume the bill potentially affects 10% of our $1.55 billion medical services spend – or $155 million.
Applying the 20.6% unnecessary medical care estimate to that amount yields a potential adverse cost impact of more than $31.9 million.
HB1271/SB143 runs counter to best-practices of time-tested, evidence-based quality and cost-containment strategies employed by health plans who are working toward high-quality, affordable healthcare and coverage.
REQUESTED ACTION: Please contact Senate Insurance and Commerce Committee members to educate members and make our concerns known. Please ask the committee members to oppose HB1271 and SB143 in their current forms because of their potentially adverse impact on healthcare costs and quality.
2023 Senate Insurance and Commerce Committee members:
| Member | Phone | |
| Sen. Ricky Hill (Chair) | 501-286-2285 | Ricky.Hill@senate.ar.gov |
| Sen. Reginald Murdock (Vice-Chair) | 501-940-5157 | Reginald.Murdock@senate.ar.gov |
| Sen. Jonathan Dismang | 501-766-8220 | Dismang49@hotmail.com |
| Sen. Jimmy Hickey | 903-824-8861 | Jimmy.Hickey@senate.ar.gov |
| Sen. Mark Johnson | 501-347-5337 | Mark.Johnson@senate.ar.gov |
| Sen. Clint Penzo | 479-466-6681 | Clint.Penzo@senate.ar.gov |
| Sen. Justin Boyd | 479-221-5864 | Justin.Boyd@senate.ar.gov |
| Sen. Missy Irvin | 870-740-9694 | Missy.Irvin@senate.ar.gov |