Lower Healthcare Costs.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 2
HOUSE BILL 434
Senate Health Care Committee Substitute Adopted 5/22/25

Short Title: Lower Healthcare Costs. (Public)
Sponsors:
Referred to:
March 19, 2025
*H434-v-2*
A BILL TO BE ENTITLED 1
AN ACT LOWERING HEAL THCARE COSTS AND INC REASING PRICE 2
TRANSPARENCY. 3
Whereas, rising healthcare costs place a significant financial burden on individuals, 4
families, employers, and taxpayers, greatly contribute to inflation, and make it increasingly 5
difficult for residents to access essential healthcare services; and 6
Whereas, North Carolina has intolerably high healthcare costs, with recent studies 7
ranking the State 50th out of 50 in the United States; and 8
Whereas, skyrocketing healthcare costs have resulted in over 40 percent of Americans 9
reporting some type of healthcare debt, according to one study; and 10
Whereas, many patients face unexpected medical bills due to a lack of disclosure 11
about out-of-network providers and a general lack of transparency in healthcare pricing, resulting 12
in financial strain and hardship; and 13
Whereas, employers are burdened with the increasing costs of providing health 14
insurance for employees, leading to higher premiums, deductibles, and out -of-pocket expenses; 15
and 16
Whereas, patients and employers are often unable to compare the costs of medical 17
services due to a lack of clear and accessible pricing information, hindering their ability to make 18
informed decisions; and 19
Whereas, the absence of price transparency in the healthcare system leads to market 20
inefficiencies, less awareness of price difference, less competition, and higher prices, with 21
consumers often unable to identify the most cost-effective providers; and 22
Whereas, transparency in healthcare pricing allows consumers to shop for affordable 23
healthcare services and encourages competition among healthcare providers to offer more 24
competitive pricing; and 25
Whereas, providing consumers with clear, understandable, and accessible 26
information about the costs of healt hcare services will foster a more competitive and 27
patient-centered healthcare market; and 28
Whereas, requiring healthcare providers and insurers to disclose their prices in 29
advance, including all providers and services a patient may need, both in -network and 30
out-of-network, will enable consumers to make more informed choices about their care, leading 31
to better healthcare outcomes at lower costs; and 32
Whereas, price transparency will incentivize hospitals and healthcare providers to 33
improve the quality of care while reducing prices, to the benefit of patients and employers; and 34
Whereas, clear pricing and competition among healthcare providers will encourage 35
innovation in healthcare delivery and improve overall efficiency within the system; and 36
General Assembly Of North Carolina Session 2025
Page 2 House Bill 434-Second Edition
Whereas, empowerin g patients and employers with pricing information will help 1
create a healthcare system that prioritizes affordability, access, and choice; and 2
Whereas, President Trump recently signed an Executive Order to make healthcare 3
prices transparent, "empower[ing] patients with clear, accurate, and actionable healthcare pricing 4
information," also "ensur[ing] hospitals and insurers disclose actual prices, not estimates, and 5
take action to make prices comparable across hospitals and insurers, including prescription drug 6
prices"; Now, therefore, 7
The General Assembly of North Carolina enacts: 8
9
PART I. GREATER TRAN SPARENCY IN HOSPITAL AND AMBULATORY 10
SURGICAL FACILITY HEALTHCARE COSTS 11
SECTION 1.1. Article 11B of Chapter 131E of the General Statutes reads as 12
rewritten: 13
"Article 11B. 14
"Transparency in Health Care Costs. 15
"Part 1. Health Care Cost Reduction and Transparency Act of 2013. 16
"§ 131E-214.11. Title. 17
This article Part shall be known as the Health Care Cost Reduction and Transparency Act of 18
2013. 19
… 20
"§ 131E -214.13. Disclosure of prices for most frequently reported DRGs, CPTs, and 21
HCPCSs. 22
(a) Definitions. – The following definitions apply in this Article:Part: 23
(1) Ambulatory surgical facility. – A facility licensed under Part 4 of Article 6 of 24
this Chapter. 25
(2) Commission. – The North Carolina Medical Care Commission. 26
(2a) CPT. – Current Procedural Terminology. 27
(2b) DRG. – Diagnostic Related Group. 28
(2c) HCPCS. – The Healthcare Common Procedure Coding System. 29
(3) Health insurer. – An entity that writes a health benefit plan and is one of the 30
following: 31
a. An insurance company under Article 3 of Chapter 58 of the General 32
Statutes. 33
b. A service corporation under Article 65 of Chapter 58 of the General 34
Statutes. 35
c. A health maintenance organization under Article 67 of Chapt er 58 of 36
the General Statutes. 37
d. A third -party administrator of one or more group health plans, as 38
defined in section 607(1) of the Employee Retirement Income Security 39
Act of 1974 (29 U.S.C. § 1167(1)). 40
(4) Hospital. – A medical care facility licensed under Article 5 of this Chapter or 41
under Article 2 of Chapter 122C of the General Statutes. 42
(5) Public or private third party. – Includes the State, the federal government, 43
employers, health insurers, third -party administrators, and managed care 44
organizations. 45
(6) Statewide data processor. – As defined in G.S. 131E-214.1. 46
(b) Beginning with the reporting period ending September 30, 2015, and annually 47
thereafter, Quarterly Report on Most Frequently Reported DRGs for Inpatients. – On a quarterly 48
basis, each hospital shall provide to the Department of Health and Human Services statewide 49
data processor, utilizing electronic health records software, the following information about the 50
General Assembly Of North Carolina Session 2025
House Bill 434-Second Edition Page 3
100 most frequently reported admissions by DRG for inpatients as established by the 1
Department: 2
(1) The amount that will be charged to a patient for each DRG if all charges are 3
paid in full without a public or private third party paying for any portion of 4
the charges. In calculating this amount, each hospital shall include charges for 5
each billable item and service associated with the DRG regardless of whether 6
the health service is performed by a physician or nonphysician practitioner 7
employed by the hospital. 8
(2) The average negotiated settlement on the amount that will be charged to a 9
patient required to be provided in subdivision (1) of this subsection. 10
(3) The amount of Medicaid reimbursement for each DRG, including claims and 11
pro rata supplemental payments. 12
(4) The amount of Medicare reimbursement for each DRG. 13
(5) For each of the five largest health insurers providing payment to the hospital 14
on behalf of insureds and teachers and State employees, the range and the 15
average of the amount of payment made for each DRG. Prior to providing this 16
information to the Department statewide data processor , each hospital shall 17
redact the names of the health insurers and any other information that would 18
otherwise identify the health insurers. 19
A hospital shall not be required to report the information required by this subsection for any 20
of the 100 most frequently reported admissions where the reporting of that information 21
reasonably could lead to the identification of the person or persons admitted to the hospital in 22
violation of the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) or 23
other federal law. 24
(c) The Commission shall adopt rules on or before March 1, 2016, to ensure that 25
subsection (b) of this section is properly implemented and that hospitals report this information 26
to the Department in a uniform manner. The rules shall include all of the following: 27
(1) The method by which the Department shall determine the 100 most frequently 28
reported DRGs for inpatients for which hospitals must provide the data set out 29
in subsection (b) of this section. 30
(2) Specific categories by which hospitals shall be grouped for the purpose of 31
disclosing this information to the public on the Department's Internet Web 32
site. 33
(d) Beginning with the reporting period ending September 30, 2015, and annually 34
thereafter, Quarterly Report on Total Costs for the Most Common Surgical and Imaging 35
Procedures. – On a quarterly basis , each hospital and ambulatory surgical facility shall provide 36
to the Department, statewide data processor, utilizing electronic health records software, 37
information on the total costs for the 20 most common surgical procedures and the 20 most 38
common imaging procedures, by volume, performed in hospital outpatient settings or in 39
ambulatory surgical facilities, al ong with the related CPT and HCPCS codes. In providing 40
information on total costs, each hospital and ambulatory surgical facility shall include the costs 41
for each billable item and service associated with the procedure regardless of whether the health 42
service is performed by a physician or nonphysician practitioner employed by the hospital or 43
ambulatory surgical facility. Hospitals and ambulatory surgical facilities shall report this 44
information in the same manner as required by subdivisions (b)(1) thro ugh (5) of this section, 45
provided that hospitals and ambulatory surgical facilities shall not be required to report the 46
information required by this subsection where the reporting of that information reasonably could 47
lead to the identification of the perso n or persons admitted to the hospital in violation of the 48
federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) or other federal 49
law. 50
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(e) The Commission shall adopt rules on or before March 1, 2016, to ensure that 1
subsection (d) of this section is properly implemented and that hospitals and ambulatory surgical 2
facilities report this information to the Department in a uniform manner. The rules shall include 3
the method by which the Department shall determine the 20 most common surgical p rocedures 4
and the 20 most common imaging procedures for which the hospitals and ambulatory surgical 5
facilities must provide the data set out in subsection (d) of this section. 6
(e1) The Commission shall adopt rules to establish and define no fewer than 10 q uality 7
measures for licensed hospitals and licensed ambulatory surgical facilities. 8
(f) Upon request of a patient for a particular DRG, imaging procedure, or surgery 9
procedure reported in this section, a hospital or ambulatory surgical facility shall provi de the 10
information required by subsection (b) or subsection (d) of this section to the patient in writing, 11
either electronically or by mail, within three business days after receiving the request. 12
(f1) Commission Rules. – The Commission shall adopt rules to accomplish all of the 13
following: 14
(1) To ensure that subsection (b) of this section is properly implemented and that 15
hospitals report this information to the statewide data processor in a uniform 16
manner. The rules shall include the method by which the statewide data 17
processor shall determine the 100 most frequently reported DRGs for 18
inpatients for which hospitals must provide the data set out in subsection (b) 19
of this section and the specific categories by which hospitals shall be grouped 20
for the purpose of disclosing this information to the public on the Department's 21
website. 22
(2) To ensure that subsection (d) of this section is properly implemented and that 23
hospitals and ambulatory surgical facilities report this information to the 24
statewide data processo r in a uniform manner. The rules shall include the 25
method by which the statewide data processor shall determine the 20 most 26
common surgical procedures and the 20 most common imaging procedures 27
for which the hospitals and ambulatory surgical facilities must provide the 28
data set out in subsection (d) of this section. 29
(3) To establish and define no fewer tha n 10 quality measures for licensed 30
hospitals and licensed ambulatory surgical facilities. 31
(4) To establish procedures for the statewide data processor to receive the data 32
required by subsections (b) and (d) of this section and submit that data to the 33
Department for publication on the Department's website. 34
(g) G.S. 150B-21.3 does not apply to rules adopted under subsections (c) and (e) 35
subdivision (f1)(1) or subdivision (f1)(2) of this section. A rule adopted under subsections (c) 36
and (e) subdivision (f1)(1) or subdivision (f1)(2) of this section becomes effective on the last day 37
of the month following the month in which the rule is approved by the Rules Review 38
Commission. 39
… 40
"§ 131E-214.18. Penalty for noncompliance. 41
The Department may impose a civil penalty on any hospital or ambulatory surgical facility 42
that fails to comply with the requirements of this Part. For each day of violation, the amount of 43
the civil penalty shall not be (i) less than one hundredth of one percent (.01%) of the annual salary 44
of the chief executive officer of the noncompliant hospital or ambulatory surgical facility or (ii) 45
greater than two thousand dollars ($2,000). This civil penalty shall be in addition to any fine or 46
civil penalty that the Centers for Medicare and Medicaid Services or other federal agency may 47
choose to impose on the facility. The Department shall remit the clear proceeds of civil penalties 48
assessed pursuant to this section to the Civil Penalty and Forfeiture Fund in accordan ce with 49
G.S. 115C-457.2." 50
SECTION 1.1A. G.S. 131E-214.4(a) reads as rewritten: 51
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"(a) A statewide data processor shall perform the following duties: 1
… 2
(8) Receive data required to be submitted by hospitals under G.S. 131E-214.13(b) 3
and by hospitals and ambulatory surgical facilities under G.S. 131E-214.13(d) 4
and submit that data to the Department of Health and Human Services 5
(Department) for publication on the Department's website." 6
SECTION 1.2. This Part becomes effective on the later of January 1, 2026, or the 7
date the rules adopted by the North Carolina Medical Care Commission under 8
G.S. 131E-214.13(f1)(2) take effect, and G.S. 131E-214.18, as enacted by this Part, applies to 9
acts occurring on or after that date. The Commission shall notify the Revisor of Statutes when 10
the rules required under G.S. 131E-214.13(f1)(1) and (f1)(2) take effect. 11
12
PART II. GREATER TRA NSPARENCY IN HEALTHC ARE PROVIDER BILLING 13
PRACTICES 14
SECTION 2.1. Article 11B of Chapter 131E of the General Statutes, as amended by 15
Part I of this act, is amended by adding a new Part to read: 16
"Part 2. Transparency in Healthcare Provider Billing Practices. 17
"§ 131E-214.25. Definitions. 18
The following definitions apply in this Part: 19
(1) Health benefit plan. – As defined in G.S. 58-3-167, or under the laws of 20
another state or the federal government. 21
(2) Healthcare provider. – As defined in G.S. 90-410. 22
(3) Insurer. – As defined in G.S. 58-3-167. 23
"§ 131E-214.30. Fair notice requirements; heath service facilities. 24
(a) Services Provided at a Participating Health Service Facility. – At the time a health 25
service facility participating in an insurer 's healthcare provider network (i) treats an insured 26
individual for anything other than screening and stabilization in accordance with G.S. 58-3-190, 27
(ii) admits an insured individual to receive emergency services, (ii i) schedules a procedure for 28
nonemergency services for an insured individual, or (iv) seeks prior authorization from an insurer 29
for the provision of nonemergency services to an insured individual, the health service facility 30
shall provide the insured individual with a written disclosure containing all of the following 31
information: 32
(1) Services may be provided at the health service facility for which the insured 33
individual may receive a separate bill. 34
(2) Certain healthcare providers may be called upon to render care to the insured 35
individual during the course of treatment and those healthcare providers may 36
not have contracts with the insured 's insurer and are considered to be 37
nonparticipating healthcare providers in the insurer 's healthcare provider 38
network. Any nonparticipating healthcare providers shall be identified in the 39
written disclosure using the individual 's healthcare provider 's name and 40
practice name as used on the applicable health service facility 's or healthcare 41
provider's credentials or name badge. 42
(3) Text, using a bold or other distinguishable font, that states that certain 43
consumer protections a vailable to the insured individual when services are 44
rendered by a health service facility or healthcare provider participating in the 45
insurer's healthcare provider network may not be applicable when services are 46
rendered by a nonparticipating healthcare provider. 47
(b) Emergency Services Provided at Nonp articipating Health Service Facilities. – As 48
soon as practicable after a health service facility begins the provision of emergency services to 49
an insured individual, if the facility does not have a contract with the applicable insurer, then the 50
General Assembly Of North Carolina Session 2025
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health service facility shall provide the insured individual with a written disclosure containing 1
all of the following: 2
(1) A statement that the health service facility does not have a provider network 3
contract with the applicable insurer and is considered to be a nonparticipating 4
provider. 5
(2) Text, using a bold or other distinguishable font, that states that certain 6
consumer protections available to the insured individual wh en services are 7
rendered by a health service facility or healthcare provider participating in the 8
insurer's healthcare provider network may not be applicable when services are 9
rendered by a nonparticipating health service facility. 10
"§ 131E-214.31. Fair notice requirements; healthcare providers. 11
At the time a healthcare provider not participating in an insurer's healthcare provider network 12
(i) treats an insured individual for anything other than screening and stabilization in accordance 13
with G.S. 58-3-190, (ii) schedules an appointment or procedure for nonemergency services for 14
an insured individual, or (i ii) seeks prior authorization from an insurer for the provision of 15
nonemergency services to an insured individual, the healthcare provider shall provide the insured 16
individual with a written disclosure containing all of the following information: 17
(1) A statement that the healthcare provider is not in the insurer's healthcare 18
provider network applicable to the individual. 19
(2) Text, using a bold or other distinguishable font, that states that certain 20
consumer protections available to the insured individual when services are 21
rendered by a healthcare provider participating in the insurer 's healthcare 22
provider network may not be applicable when services are r endered by a 23
nonparticipating healthcare provider. 24
"§ 131E-214.35. Penalties. 25
A healthcare provider's repeated failure to comply with this Article shall indicate a general 26
business practice that is deemed an unfair and deceptive trade practice and is actionable under 27
Chapter 75 of the General Statutes. Nothing in this Article forecloses other remedies available 28
under law or equity." 29
SECTION 2.2.(a) G.S. 58-3-200(a)(1) and G.S. 58-3-200(a)(2) are repealed. 30
SECTION 2.2.(b) G.S. 58-3-200(a), as amended by subsection (a) of this section, 31
reads as rewritten: 32
"(a) Definitions. – As used The following definitions apply in this section: 33
… 34
(3) Clinical laboratory. – An entity in which services are performed to provide 35
information or materials for use in the d iagnosis, prevention, or treatment of 36
disease or assessment of a medical or physical condition. 37
(4) Healthcare provider. – As defined in G.S. 90-410." 38
SECTION 2.2.(c) G.S. 58-3-200(d) reads as rewritten: 39
"(d) Services Outside Provider Networks. – No insurer shall penalize an insured or subject 40
an insured to the out-of-network benefit levels offered under the insured's approved health benefit 41
plan, including an insured receiving an extended or standing referral under G.S. 58-3-223, unless 42
contracting health care healthcare providers able to meet health needs of the insured are 43
reasonably available to the insured without unreasonable delay. Upon notice or request from the 44
insured, the insurer shall determine whether a healthcare provider able to meet the needs of the 45
insured is available to the insured without unreasonable delay by reference to the insured 's 46
location and the specific medical needs of the insured." 47
SECTION 2.3. This Part becomes effective October 1, 2026, and applies to 48
healthcare services provided on or after that date and to contracts issued, renewed, or amended 49
on or after that date. 50
51
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PART III. GREATER FA IRNESS IN BILLING AN D COLLECTIONS PRACTI CES 1
FOR HOSPITALS AND AMBULATORY SURGICAL FACILITIES 2
SECTION 3.1.(a) Chapter 131E of the General Statutes is amended by adding a new 3
Article 11C to be entitled "Fair Billing and Collections Practices for Hospitals and Ambulatory 4
Surgical Facilities." 5
SECTION 3.1. (b) G.S. 131E-91 is recodified as G.S. 131E-214.50 under Article 6
11C of Chapter 131E of the General Statutes, as created by subsection (a) of this section. 7
SECTION 3.1.(c) G.S. 131E-214.50(d) reads as rewritten: 8
"(d) Hospitals and ambulatory surgical fac ilities shall abide by the following reasonable 9
collections practices: 10
… 11
(1a) A hospital or ambulatory surgical facility shall not refer a patient's unpaid bill 12
to a collections agency, entit y, or other assignee unless it has first presented 13
an itemized list of charges to the patient detailing, in language comprehensible 14
to an ordinary layperson, the specific nature of the charges or expenses 15
incurred by the patient. 16
…." 17
SECTION 3.2. Article 11C of Chapter 131E of the General Statutes, as created by 18
Section 3.1(a) of this act, is amended by adding a new section to read: 19
"§ 131E-214.52. Patient's right to a good-faith estimate. 20
(a) Definitions. – The following definitions apply in this section: 21
(1) CMS. – The federal Centers for Medicare and Medicaid Services. 22
(2) Facility. – A hospital or ambulatory surgical facility licensed under this 23
Chapter. 24
(3) Items and services. – All items and services, including individual items and 25
services and service packages, that could be provided by a facility to a patient 26
in connection with an inpatient admission or an outpatient visit for which the 27
facility has established a standard charge. Examples include, but are not 28
limited to, all of the following: 29
a. Supplies and procedures. 30
b. Room and board. 31
c. Fees for use of the facility or other items. 32
d. Professional charges for s ervices of physicians and nonphysician 33
practitioners who are employed by the facility. 34
e. Professional charges for services of physicians and nonphysician 35
practitioners who are not employed by the facility. 36
f. Any other items or services for which a facility has established a 37
standard charge. 38
(4) Service package. – An aggregation of individual items and services into a 39
single service with a single charge. 40
(5) Shoppable service. – A non-urgent service that can be scheduled by a patient 41
in advance. The term includes all CMS -specified shoppable services plus as 42
many additional facility -selected shoppable services as are necessary for a 43
combined total of at least 300 shoppable services. 44
(b) Good-Faith Estimate. – Upon request of any patient for a good -faith estimate for a 45
shoppable service, the facility shall provide to the patient, in writing, at least three business days 46
prior to the date the patient schedules the shoppable service, an itemized list of expected charges, 47
in language comprehensible to an ordinary layperson, that the patient will be obligated to pay for 48
all items and services related to the shoppable service. The good-faith estimate shall include the 49
Diagnostic Related Group (DRG ), Current Procedural Terminology (CPT), or Healthcare 50
Common Procedure Coding System (HCPCS) code for each expected charge. 51
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(c) In any case in which a patient has requested a good -faith estimate from a facility for 1
a shoppable service, the patient's final bill for that shoppable service shall not exceed more than 2
five percent (5%) of the good-faith estimate provided to the patient pursuant to this section. 3
(d) The Department shall adopt rules to implement this section." 4
SECTION 3.3. This Part becomes effective on the later of January 1, 2026, or the 5
date the rules adopted by the Department under G.S. 131E-214.52 take effect and applies to acts 6
occurring on or after that date. The Department shall notify the Revisor of Statutes when the rules 7
required under G.S. 131E-214.52 take effect. 8
9
PART IV. GREATER PRO TECTION FOR HEALTHCA RE CONSUMERS FROM 10
FACILITY FEES 11
SECTION 4.1.(a) Article 11C of Chapter 131E of the General Statutes, as created 12
by Section 3.1(a) of this act, is amended by adding a new section to read: 13
"§ 131E-214.54. Facility fees. 14
(a) Definitions. – The following definitions apply in this section: 15
(1) Ambulatory surgical facility. – As defined in G.S. 131E-176. 16
(2) Campus. – Any of the following: 17
a. The main building of a hospital. 18
b. The physical area immediately adjacent to a hospital's main building. 19
c. Other structures not contiguous to the main building of a hospital that 20
are within 250 yards of the main building. 21
d. Any other area that has been determined to be part o f a hospital 's 22
campus by the Centers for Medicare and Medicaid Services. 23
(3) Facility fee. – Any fee charged or billed by a health care provider for 24
outpatient services provided in a hospital-based facility that is (i) intended to 25
compensate the health care provider for the operational expenses of the health 26
care provider, (ii) separate and distinct from a professional fee , and (iii) 27
charged regardless of the modality through which the health care services 28
were provided. 29
(4) Health care provider. – As defined in G.S. 90-410. 30
(5) Health systems. – A parent corporation of one or more hospitals and any entity 31
affiliated with that parent corporation through ownership, governance, 32
membership, or other means, or a hospital and any entity affiliated with that 33
hospital through ownership, governance, membership, or other means. 34
(6) Hospital. – Any hospital as def ined in G.S. 90-176(13) and any facility 35
licensed under Chapter 122C of the General Statutes. 36
(7) Hospital-based facility. – A facility that is owned or operated, in whole or in 37
part, by a hospital and at which hospital or professional medical services are 38
provided. 39
(8) Professional fee. – Any fee charged or billed by a provider for hospital or 40
professional medical services provided in a hospital-based facility. 41
(9) Remote location of a hospital. – A hospital -based facility that is created , 42
acquired, or purchased by a hospital or health system for the purpose of 43
furnishing inpatient services under the name, o wnership, and financial and 44
administrative control of the hospital. 45
(b) Limits on Facility Fees. – The following limitations are applicable to facility fees: 46
(1) No health care provider shall charge, bill, or collect a faci lity fee unless the 47
services are provided on a hospital 's main campus, at a remote location of a 48
hospital, at a facility that includes a n emergency department , or at an 49
ambulatory surgical facility. 50
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(2) Regardless of where the services are provided, no health care provider shall 1
charge, bill, or collect a facility fee for outpatient evaluation and management 2
services, or any other outpatient, diagnostic, or imaging services identified by 3
the Department. 4
(c) Identification of Services. – The Department shall annually identify services subject 5
to the limitations on facility fees provided in subdivision (2) of subsection (b) of this section that 6
may reliably be provided safely and effectively in non-hospital settings. 7
(d) Reporting Requirements. – Each hospital and health system shall sub mit a report to 8
the Department annually on July 1 . The repor t shall be published on the Department 's website 9
and shall contain the following: 10
(1) The name and full address of each facility owned or operated by the hospital 11
or health system that provides services for which a facility fee is charged or 12
billed. 13
(2) The number of patient visits at each such hospital -based facility for which a 14
facility fee was charged or billed. 15
(3) The number, total amount, and range of allowable facility fees paid at each 16
facility by Medicare, Medicaid, and private insurance. 17
(4) For each hospital -based facility and for the hospital or health system as a 18
whole, the total amount billed , and the total revenue received from facility 19
fees. 20
(5) The top 10 procedures or services, i dentified by Current Procedural 21
Terminology (CPT) category I codes, provided by the hospital or health 22
system that generated the greatest amount of facility fee gross revenue ; the 23
number of each of these 10 procedures or services provided; the gross and net 24
revenue totals for each such procedure or service; and the total net amount of 25
revenue received by the hospital or health system derived from facility fees 26
for each procedure or service. 27
(6) Any other information the Department may require. 28
(e) Enforcement. – This section shall be enforced as follows: 29
(1) Any violation of this section constitutes an unfair or deceptive trade practice 30
in violation of G.S. 75-1.1 and is subject to all of the enforcement and penalty 31
provisions of an unfair or deceptive trade practice under Article 1 of Chapter 32
75 of the General Statutes. 33
(2) In addition to the remedies described in subdivision (1) of this subsection, any 34
health care provider who violates any provision of this section shall be subject 35
to an administrative penalty of not more than one thousand dollars ($1,000) 36
per occurrence." 37
SECTION 4.1.(b) No later than January 1, 2026, the Department of Health and 38
Human Services shall adopt rules necessary to implement G.S. 131E-214.54, as enacted by 39
subsection (a) of this section. 40
SECTION 4.2. G.S. 131E-214.54, as enacted by Section 4.1(a) of this Part, becomes 41
effective January 1, 2026, or on the date the rules adopted by the Department of Health and 42
Human Services pursuant to Section 4.1(b) of this Part become effective, whichever is later, and 43
applies to healthcare services provided on or after that date. The Department shall notify the 44
Revisor of Statutes when the rules required under Section 4.1(b) of this Part become effective. 45
46
PART V. STATE AUDITOR REVIEW OF HEALTH SERVICE FACILITY PRICES 47
SECTION 5.1. G.S. 147-64.6(c) reads as rewritten: 48
"(c) Responsibilities. – The Auditor is responsible for the following acts and activities: 49
… 50
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(24) The Auditor shall periodically examine (i) health service facilities, as defined 1
in G.S. 131E-176, that are recipients of State funds and (ii) facilities licensed 2
under Chapter 122C of the General Statutes that are recipients of State funds 3
and report findings to the Joint Legislative Oversight Committee on Health 4
and Human Services on April 1, 2026, and periodically thereafter. The report 5
must include at least the following: 6
a. The prices that the health service facility charges patients whose 7
insurance is out-of-network or who are uninsured. 8
b. To what extent the health service facility is transparent about the prices 9
described in sub-subdivision a. of this subdivision." 10
11
PART VI. ENHANCEMENT S TO EMPLOYEE SAFETY BY ALLOWING FOR THE 12
REMOVAL OF CERTAIN E MPLOYEE DETAILS FROM HEALTH INSURANCE 13
APPEALS AND GRIEVANCE REVIEWS 14
SECTION 6.1.(a) G.S. 58-50-61(k) reads as rewritten: 15
"(k) Nonexpedited Appeals. – Within three business days after receiving a request for a 16
standard, nonexpedited appeal, the insurer or its URO shall provide the covered person with the 17
name, address, and telephone number of the coordinator and information on how and where to 18
submit written material. material for the appeal , including contact information for the insurer . 19
For standard, nonexpedited appeals, the insurer or its URO shall give written notification of the 20
decision, in clear terms, to the covered person and the covered person's provider within 30 days 21
after the insurer receives the request for an appeal. If the decision is not in favor of the covered 22
person, the written decision shall contain:contain all of the following information: 23
(1) The professional qualifications and licensure of the person or persons 24
reviewing the appeal. 25
(2) A statement of the reviewers' understanding of the reason for the covered 26
person's basis of the appeal. 27
(3) The reviewers' insurer's or URO 's decision in clear terms and the medical 28
rationale in sufficient detail for the covered person to respond further to the 29
insurer's position. 30
…." 31
SECTION 6.1.(b) G.S. 58-50-62(e) reads as rewritten: 32
"(e) First-Level Grievance Review. – A covered person or a covered person's provider 33
acting on the covered person's behalf may submit a grievance. All of the following shall apply to 34
a first-level grievance review: 35
(1) The insurer does not have is not required to allow a covered person to attend 36
the first -level grievance review. A covered person may submit written 37
material. Except as provided in subdivision (3) of this subsection, within three 38
business days after receiving a grievance, the insurer shall provide the covered 39
person with the name, address, and telephone number of the coordinator and 40
information on where and how to submit written material.material for the 41
first-level grievance review, including contact information for the insurer. 42
(2) An insurer shall issue a written decision, in clear terms, to the covered person 43
and, if applicable, to the covered person's provider, within 30 days after 44
receiving a grievance. The person or persons reviewing the grievance shall not 45
be the same person o r persons who initially handled the matter that is the 46
subject of the grievance and, if the issue is a clinical one, at least one of whom 47
shall be a medical doctor with appropriate expertise to evaluate the matter. 48
Except as provided in subdivision (3) of this subsection, if the decision is not 49
in favor of the covered person, the written decision issued in a first -level 50
grievance review shall contain:contain all of the following information: 51
General Assembly Of North Carolina Session 2025
House Bill 434-Second Edition Page 11
a. The professional qualifications and licensure of the person or persons 1
reviewing the grievance. 2
b. A statement of the reviewers' understanding basis of the grievance. 3
c. The reviewers' insurer's decision in clear terms and the contractual 4
basis or medical rationale in sufficient detail for the covered person to 5
respond further to the insurer's position. 6
…." 7
SECTION 6.1.(c) G.S. 58-50-62(f) reads as rewritten: 8
"(f) Second-Level Grievance Review. – An insurer shall establish a second -level 9
grievance review process for covered persons who are dissatisfied with the first-level grievance 10
review decision or a utilization review appeal decision. A covered person or the covered person's 11
provider acting on the covered person's behalf may submit a second -level grievance. All of the 12
following shall apply to a second-level grievance review: 13
(1) An insurer shall, within 10 business days after receiving a request for a 14
second-level grievance review, make known to provide the covered 15
person:person all of the following information: 16
a. The name, address, and telephone number of a person designated to 17
coordinate the grievance review for the insurer. Information on how 18
and where to submit written material for the second -level grievance 19
review, including contact information for the insurer. 20
…." 21
SECTION 6.2. This Part is effective when it becomes law. 22
23
PART VII. ELIMINATION OF CERTIFICATE OF NEED REVIEW FOR INPATIENT 24
REHABILITATION SERVI CES, REHABILITATION FACILITIES, AND 25
REHABILITATION BEDS 26
SECTION 7.1. G.S. 131E-176 reads as rewritten: 27
"§ 131E-176. Definitions. 28
The following definitions apply in this Article: 29
… 30
(9a) Health service. – An organized, interrelated activity that is medical, 31
diagnostic, therapeutic, rehabilitative, or a combination thereof of these and 32
that is integral to the prevention of dise ase or the clinical management of an 33
individual who is sick or injured or who has a disability. "Health service" does 34
not include administrative and other activities that are not integral to clinical 35
management. 36
(9b) Health service facility. – A hospital; long-term care hospital; rehabilitation 37
facility; nursing home facility; adult care home; kidney disease treatment 38
center, including freestanding hemodialysis units; intermediate care facility 39
for individuals with intellectual disabilities; home health agency office; 40
diagnostic center; hospice office, hospice inpatient facility, hospice residential 41
care facility; and ambulatory surgical facility. 42
(9c) Health service facility bed. – A bed licensed for use in a health service facility 43
in the categories of (i) acute care beds; (iii) rehabilitation beds; (iv) (ii) nursing 44
home beds; (v) (iii) intermediate care beds for individuals with intellectual 45
disabilities; (vii) (iv) hospice inpatient facility beds; (viii) (v) hospice 46
residential care facility beds; (ix) (vi) adult care home beds; and (x) (vii) 47
long-term care hospital beds. 48
… 49
(13) Hospital. – A public or private institution which that is primarily engaged in 50
providing to inpatients, by or under supervision of physicians, diagnostic 51
General Assembly Of North Carolina Session 2025
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services and therapeutic services for medical diagnosis, treatment, and care of 1
injured, disabled, or sick persons, or rehabilitation services for the 2
rehabilitation of injured, disabled, or sick persons. The term includes all 3
facilities licensed pursuant to G.S. 131E-77, except rehabilitation facilities 4
and long-term care hospitals. 5
… 6
(17a) Nursing care. – Any of the following: 7
a. Skilled nursing care and rel ated services for residents who require 8
medical or nursing care. 9
b. Rehabilitation services services, other than those provided at an 10
inpatient rehabilitation facility, for the rehabilitation of individuals 11
who are injured or sick or who have disabilities. 12
c. Health-related care and services provided on a regular basis to 13
individuals who because of their mental or physical condition require 14
care and services above the level of room and board, which can be 15
made available to them only through institutional facilities. 16
These are services which are not primarily for the care and treatment of 17
mental diseases. 18
… 19
(22) Rehabilitation facility. – A public or private inpatient facility which is 20
operated for the primary purpose of assisting in the rehabilitation of 21
individuals with disabilities through an integrated program of medical and 22
other services which are provided under competent, professional 23
supervision.A facility that has been classified and designated as an inpatient 24
rehabilitation facility by the Centers fo r Medicare and Medicaid Services 25
pursuant to Part 412 of Subchapter B of Chapter IV of Title 42 of the Code of 26
Federal Regulations. 27
…." 28
29
PART VIII. UPDATED H EALTH INSURER PRIOR AUTHORIZATION 30
REQUIREMENTS 31
SECTION 8.(a) G.S. 58-50-61 reads as rewritten: 32
"§ 58-50-61. Utilization review. 33
(a) Definitions. – As used The following definitions apply in this section, in 34
G.S. 58-50-62, and in Part 4 of this Article, the term:Article: 35
… 36
(2a) Course of treatment. – A prescribed order or ordered treatment protocol for a 37
specific covered person with a specific condition that is outlined and decided 38
upon ahead of time with the covered person and healthcare provider and 39
approved by the insurer or utilization review organization when prospective 40
review is applicable. 41
… 42
(8) "Health care provider" means any person who is licensed, registered, or 43
certified under Chapter 90 of the General Statutes or the laws of another state 44
to provide health care services in the ordinary care of business or practice or 45
a profession or in an a pproved education or training program; a health care 46
facility as defined in G.S. 131E-176(9b) or the laws of another state to operate 47
as a health care facility; or a pharmacy. Healthcare provider. – As defined in 48
G.S. 90-410. 49
… 50
General Assembly Of North Carolina Session 2025
House Bill 434-Second Edition Page 13
(14a) Prior auth orization. – The process by which insurers and UROs determine 1
coverage on the basis of medical necessity and/or covered benefits prior to the 2
rendering of those services. 3
… 4
(16a) Urgent health care service. – A health care service, including mental and 5
behavioral health care services, with respect to which the application of the 6
time periods for making an urgent care determination that, in the opinion of a 7
healthcare provider with knowledge of the covered person 's medical 8
condition, meets either of the following criteria: 9
a. Could seriously jeopardize the life or health of the covered person or 10
the ability of the covered person to regain maximum function. 11
b. Would subject the covered person to severe pain that cannot be 12
adequately managed without the care or treatment that is the subject 13
of the utilization review. 14
… 15
(f) Time Lines for Prospective and Concurrent Reviews. Utilization Reviews Based 16
Upon Type of Health Care Service. – As used in this subsection, the term "necessary information" 17
includes the results of any patient examination, clinical evaluation, or second opinion that may 18
be required. Prospective and concurrent determinations shall be communicated to The time line 19
for completion of a prospective or concurrent utilization review is as follows: 20
(1) Non-urgent health care services. – If an insurer requires a prior authorization 21
review of a health care service, then the insurer or its URO shall both render a 22
prior authorization review determination or noncertification and notify the 23
covered person and the covered person's provider within three business days 24
after the insurer obtains all necessary information about the admission, 25
procedure, or health care service. to make the prior authorization review 26
determination or noncertification. 27
(2) Urgent health care service s. – An insurer or its URO shall both render a 28
utilization review determination or noncertification concerning urgent health 29
care services and notify the covered person and the covered person's provider 30
of that utilization review determination or noncertification not later than 24 31
hours after receiving all necessary information needed to complete the review 32
of the requested health care services. If the covered person's provider or the 33
insurer, or the entity conducting the review on behalf of the insurer, do not 34
both have access to the electronic health records of the co vered person, then 35
this subdivision shall not apply and the utilization review will be subject to 36
the time line under subdivision (1) of this subsection. 37
(f1) Prior Authorization Determination Notifications. – If an insurer or its URO certifies 38
a health care service, the insurer shall notify notification shall be sent to the covered person's 39
provider. For If an insurer or its URO issues a noncertification, the insurer shall notify the covered 40
person's provider and send then written or electronic confirmation of the non certification shall 41
be sent to the covered person's provider and covered person. In person that is in compliance with 42
subsection (h) of this section. 43
(f2) Concurrent Review Liability. – For concurrent reviews, the insurer shall remain liable 44
for health care services until the covered person has been notified of the noncertification. 45
… 46
(j1) Requirements Applicable to Appeals Reviews. – All of the following requirement s 47
apply to an appeals review: 48
(1) Except as otherwise provided, a ppeals shall be reviewed by a licensed 49
physician who meets all of the following criteria: 50
General Assembly Of North Carolina Session 2025
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a. Possesses a current and valid non -restricted license to practice 1
medicine in any United States jurisdiction. 2
b. Has practiced for a period of at least three consecutive years in the 3
same or similar specialty as a licensed physician who typically 4
manages the medical condition or disease for which prior 5
authorization review is required or whose training and exp erience 6
meets all of the following criteria: 7
1. Includes treatment of the same condition as the condition of 8
the covered person. 9
2. Includes treatment of complications that may result from the 10
service or procedure that is the subject of the appeal. 11
3. Is sufficient for the licensed physician to determine if t he 12
service or pr ocedure is medically necessary or clinically 13
appropriate. 14
c. Had no direct involvement in making the prior adverse determination 15
or noncertification that is the subject of the appeal. 16
d. Has no financial interest, or other conflict of interest, in the outcome 17
of the appeal. 18
(2) Appeals initiated by a licensed mental health professional for a service 19
provided by a licensed mental health professional may be reviewed by a 20
licensed mental health professional rather than a licensed physician. The 21
requirements of subdivision (1) of this subsection shall apply to the reviewing 22
licensed mental health professional in the same manner that they apply to a 23
licensed physician. 24
(3) The licensed physician or licensed mental health professional shall consider 25
all known clinical aspects of the health care service under review, including 26
all pertinent medical records and any medical literature that have been 27
provided by the covered person's provider or by a health care facility. 28
… 29
(m) Disclosure of Utilization Review Requirements. – All of the following apply to an 30
insurer's responsibility to disclose any utilization review procedures: 31
(1) Coverage and member handbook. – In the certificate of coverage and member 32
handbook provided to covered persons, an insurer shall include a clear and 33
comprehensive description of its utilization review procedures, including the 34
procedures for appealing noncertifications and a statement of the rights and 35
responsibilities of covered persons, including the voluntary nature of the 36
appeal process, with respect to those procedures. An insurer shall also include 37
in the certificate of coverage and the member handbook information about the 38
availability of assistance from the Department's Health Insurance Smart NC, 39
including the telephone number and address of the Program. program. 40
(2) Prospective materials. – An insurer shall include a summary of its utilization 41
review procedures in materials intended for prospective covered persons. 42
(3) Membership cards. – An insurer shall print on its membership cards a toll-free 43
telephone number to call for utilization review purposes. 44
(4) Website. – An insurer shall make any current prior authorization requirements 45
and restrictions readily accessible on its website. 46
(m1) Changes to Prior Authorization. – If an insurer intends either to implement a new 47
prior authorization review requirement or restriction or to amend an existing requirement or 48
restriction, then the new or amended requirement shall not be in effect unless and until the 49
insurer's website has been updated to reflect the new or amended requirement or restriction. A 50
General Assembly Of North Carolina Session 2025
House Bill 434-Second Edition Page 15
claim shall not be denied for failure to obtain a prior authorization if the prior authorization 1
requirement or amended requirement was not in effect on the date of service of the claim. 2
… 3
(n1) Prior Authorization Determination Validity. – All of the following apply to the length 4
of time an approved prior authorization shall remain valid under certain circumstances: 5
(1) If a covered person enrolls in a new health benefit plan offered by the same 6
insurer under which the prior authorization was approved, then the previously 7
approved prior authorization remains valid for the initial 90 days of coverage 8
under the new heath benefit plan. This section does not require coverage of a 9
service if it is not a covered service under the new health benefit plan. 10
(2) If a health care service , other than for in -patient care, requires prior 11
authorization and is for the treatment of a covered person's chronic condition, 12
then the prior authorization shall remain valid for no less than six months from 13
the date the healthcare provider receives notification of the prior authorization 14
approval. 15
(o) Violation. – A In accordance with this Chapter, a violation of this section subjects an 16
insurer and an agent of the insurer to G.S. 58-2-70. 17
(p) Federal Rule Alignment. – No later than January 1, 2028, an insurer offering a health 18
benefit plan or a utilization review agent acting on behalf of an insurer offering a health benefit 19
plan shall implement and maintain a prior authorization application programming interface 20
meeting the requirements under 45 C.F.R. § 156.223(b) as it existed on January 1, 2025. 21
(q) Reserved for future codification purposes. 22
(r) Reserved for future codification purposes. 23
(s) Artificial Intelligence. – An artificial intelligence-based algorithm shall not be used 24
as the sole basis to deny a utilization review determination." 25
SECTION 8.(b) In accordance with G.S. 135-48.24(b) and G.S. 135-48.30(a)(7) 26
which require the State Treasurer to implement procedures that are substantially similar to the 27
provisions of G.S. 58-50-61 for the North Carolina State Health Plan for Teachers and State 28
Employees (State Health Plan), the State Treasurer and the Executive Administrator of the State 29
Health Plan shall review all practices of the State Health Plan and all contracts with, and practices 30
of, any third party conducting any utilization review on behalf of the State Health Plan to ensure 31
compliance with subsection (a) of this section no later than the start of the next plan year. 32
SECTION 8.(c) Section 8(a) of this act becomes effective October 1, 2026, and 33
applies to insurance contracts, including contracts with utilization review organizations, issued, 34
renewed, or amended on or after that date. The remainder of this section is effective when it 35
becomes law. 36
37
PART IX. EFFECTIVE DATE 38
SECTION 9. Except as otherwise provided, this act is effective when it becomes 39
law. 40