Health care coverage: prior authorizations.

Plain English Breakdown

The bill does not specify a date by which plans must cease requiring prior authorization, only that it should happen no later than January 1, 2028.

Health Care Coverage: Prior Authorizations

The bill requires health care service plans and insurers to report statistics on prior authorization approvals, identify services with high approval rates, and eventually stop requiring prior authorizations for these services.

What This Bill Does

• Requires the Department of Managed Health Care and the Department of Insurance to issue instructions by July 1, 2026, for health care service plans and insurers to report statistics on covered health care services subject to prior authorization.
• Requires health care service plans and insurers to submit these reports by December 31, 2026, including information from entities they delegate responsibility to.
• Requires the departments to publish a list of health care services approved at a rate of 90% or higher on July 1, 2027.
• Requires plans and insurers to stop requiring prior authorization for these high-approval-rate services starting January 1, 2028.
• Allows plans and insurers to reinstate prior authorization if they find fraudulent activity or inappropriate care from specific providers.

Who It Names or Affects

• Health care service plans
• Health insurers
• Medical groups and independent practice associations that handle prior authorizations

Terms To Know

Prior Authorization

A process where a health plan or insurer must approve certain medical services before they are provided.

Utilization Review

An evaluation of the necessity, appropriateness, and efficiency of health care services.

Limits and Unknowns

• The bill does not specify what happens if a service is approved at exactly 90%.
• It's unclear how plans will handle high-approval-rate services that are new or rare.
• The impact on patients and providers after the cessation of prior authorization requirements remains to be seen.

Official Summary Text

SB 306, Becker.
Health care coverage: prior authorizations.
Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care, and makes a willful violation of the act a crime. Existing law provides for the regulation of health insurers by the Department of Insurance. Existing law generally authorizes a health care service plan or health insurer to use prior authorization and other utilization review or utilization management functions, under which a licensed physician or a licensed health care professional who is competent to evaluate specific clinical issues may approve, modify, delay, or deny requests for health care services based on medical necessity. Existing law requires a health care service plan or health insurer, including those plans or insurers that delegate utilization review or utilization management functions to
medical groups, independent practice associations, or to other contracting providers, to comply with specified requirements and limitations on their utilization review or utilization management functions.
This bill would require the departments to issue instructions on or before July 1, 2026, to health care service plans and health insurers to report statistics regarding covered health care services subject to prior authorization and the percentage rate at which they are approved or modified, among other things. The bill would require a health care service plan or health insurer to report those statistics, including information from another entity to which the plan or insurer delegates responsibility for prior authorization decisions, to the appropriate department on or before December 31, 2026. The bill would require the departments to evaluate these reports, identify the health care services
approved at a rate that meets or exceeds the threshold rate of 90%, and, on or before July 1, 2027, publish a list of the services identified. Beginning on the date specified by the relevant department, but no later than January 1, 2028, the bill would require a plan or insurer, or its delegated entities, to cease requiring prior authorization for the most frequently approved covered health care services. The bill would authorize a plan or insurer to reinstate prior authorization for a specific health care provider if it determines that the provider has engaged in fraudulent activity or clinically inappropriate care, as specified. No later than 4 years after the cessation of prior authorization requirements, the bill would require the departments to publish reports regarding the impact of that cessation using information reported by plans and insurers, including data on reinstatements of prior authorization for specific providers. The bill would repeal these provisions on January 1,
2034. Because a willful violation of the bill’s requirements relative to health care service plans would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.

Current Bill Text

Download Bill PDF