States Are Tackling Prior Authorization Reform

While progress at the federal level is slow, state legislatures are passing bills aimed at improving the prior authorizations process for healthcare providers.

State legislatures are taking action to alleviate providers’ prior authorization struggles.

So far this year, Vermont, Minnesota, Wyoming, Colorado, Illinois, Mississippi, Maine, Maryland, Oklahoma, and Virgina have passed legislation addressing persistent issues with prior authorization. These include reducing the volume of prior authorization requirements and care delays, increasing the data that has to be publicly reported, and improving transparency about which services need prior authorization.

In addition to the administrative burden of appealing denied claims, the delay in care means that hospitals and health systems don’t get paid, further exacerbating their financial health.

“We’re in a crisis. We’re delaying care because we can’t get prior authorization, so therefore we have to get something in place,” Shanda Richards, revenue cycle director of Central Peninsula Hospital in Alaska, previously told HealthLeaders.

This issue isn’t new. In 2023, nine states, along with the District of Columbia, passed legislation for prior authorization reform.

In Minnesota, all insurers and utilization-review organizations are required to report how often they use prior authorization and the frequency at which they’re approved or denied each year.

“This standardizes the data and allows it to be analyzed,” Dave Renner, the Minnesota Medical Association’s director of advocacy, said in a statement. “We will have a better understanding of how and when prior authorization is being used and whether that makes sense.”

The state has also passed legislation preventing the use of prior authorization for nonmedication services related to cancer care and mental healthcare, which will go into effect in January 2026.

At the federal level, meanwhile, progress has been slow.

In January, the Centers for Medicare and Medicaid Services (CMS) finalized the Interoperability and Prior Authorization Final Rule. The increased transparency provisions, similar to Minnesota’s, will require insurers to explain the reasoning for a denial and publicly report prior authorization data annually.

According to the U.S. Department of Health and Human Services, the rule will result in $15 billion in savings over ten years.