SB1449 SD1

SECTION 1. The legislature finds that prior authorization is a health plan cost-control process that requires physicians and other health care professionals to obtain advance approval from a health plan before a specific service is delivered to a patient to qualify for payment coverage. Each health plan has its own policies and procedures that health care providers are forced to navigate.

The legislature further finds that there is emerging consensus among health care providers that prior authorization increases administrative burdens. In the 2023 physician workforce report published by the university of Hawaii John A. Burns school of medicine, physicians voted prior authorization their top concern regarding administrative burden. Furthermore, a 2023 physician survey conducted by the American Medical Association reported that ninety-five per cent of physicians attribute prior authorization to somewhat or significantly increased physician burnout, and that more than one-in-three physicians have staff who work exclusively on prior authorization.

Other findings from the American Medical Association prior authorization physician survey questioning the value and impact to patient care are that:

(1) Ninety-four per cent of respondents said that the prior authorization process always, often, or sometimes delays care;

(2) Nineteen per cent of respondents said prior authorization resulted in a serious adverse event leading to a patient being hospitalized;

(3) Thirteen per cent of respondents said prior authorization resulted in a serious adverse event leading to a life-threatening event or requiring intervention to prevent permanent impairment or damage; and

(4) Seven per cent of respondents said prior authorization resulted in a serious adverse event leading to a patient's disability, permanent bodily damage, congenital anomaly, birth defect, or death.

Yet despite the time and resources dedicated to the prior authorization process, and the risk to patient safety, an analysis by the Kaiser Family Foundation, "Use of Prior Authorization in Medicare Advantage Exceeded 46 Million Requests in 2022," published in August 2024, reveals that the vast majority of appeals, or eighty-three per cent, resulted in overturning the initial prior authorization denial.

Accordingly, the purpose of this Act is to examine prior authorization practices in Hawaii by requiring reporting of certain data to the state health planning and development agency.

SECTION 2. Chapter 323D, Hawaii Revised Statutes, is amended by adding a new section to part II to be appropriately designated and to read as follows:

"§323D- Prior authorization; reporting. (a) Any utilization review entity doing business in the State shall submit data to the state agency relating to prior authorization of health care services, in a format specified by the state agency. Reporting shall be annual for the preceding calendar year and shall be submitted no later than January 31 of the subsequent calendar year. The state agency shall post the reporting format on its website no later than three months before the start of the reporting period.

(b) Protected health information as defined in title 45 Code of Federal Regulations section 160.103 shall not be submitted to the state agency unless:

(1) The individual to whom the information relates authorizes the disclosure; or

(2) Authorization is not required pursuant to title 45 Code of Federal Regulations section 164.512.

(c) The state agency shall compile the data by provider of health insurance, health care setting, and line of business, and shall post a report of findings, including recommendations, on its website no later than March 1 of the year after the reporting period. If the state agency is unable to post the report of findings by March 1, the state agency shall notify the legislature in writing within ten days and include an estimated date of posting, reasons for the delay, and if applicable, a corrective action plan.

(d) For the purposes of this section:

"Prior authorization" means the process by which a utilization review entity determines the medical necessity or medical appropriateness of otherwise covered health care services prior to the rendering of the health care services. Prior authorization includes any health insurer's or utilization review entity's requirement that an enrollee or health care provider notify the health insurer or utilization review entity prior to providing health care services.

"Prior authorization data" means data requested by the state agency that relates to the prior authorization of health care services. These data include but are not limited to:

(1) Patient demographics such as sex, age, residential ZIP code, and primary insurance plan;

(2) Procedure codes, revenue codes, diagnosis-related group codes, brand name drugs, generic drug names, or durable medical equipment type;

(3) Diagnosis codes;

(4) Specialty of the health care provider requesting prior authorization for a health care service;

(5) Setting, such as inpatient, outpatient, observation, or other;

(6) Date of initial provider request for prior authorization, date of health plan response, and the status of the prior authorization request by date, such as pending, approved, denied, appealed, or overturned; and

(7) Any other data identified by the state agency.

"Utilization review entity" means an individual or entity that performs prior authorization for one or more of the following entities:

(1) An insurer that writes health insurance policies;

(2) An accident and health or sickness insurance plan licensed pursuant to chapter 431, mutual benefit society or fraternal benefit society licensed pursuant to chapter 432, or health maintenance organization licensed pursuant to chapter 432D; or

(3) Any other individual or entity that provides, offers to provide, or administers hospital, outpatient, medical, prescription drug, or other health benefits to a person treated by a health care provider the State under a policy, plan, or contract."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on December 31, 2050.

THE SENATE	S.B. NO.	1449
THIRTY-THIRD LEGISLATURE, 2025		S.D. 1
STATE OF HAWAII