More states crank up oversight of health insurers

 

Mounting public anger over health insurance is leading more state legislatures to eye tighter oversight of the industry, starting with its use of AI to screen claims and issue denials.

Why it matters: While congressional scrutiny of the industry picked up following the killing of UnitedHealthcare CEO Brian Thompson last month, states remain the primary regulators of health insurance and are best positioned to address access to and adequacy of care.

The big picture: Even before Thompson's killing revealed widespread anger over insurer decisions, states were targeting prior authorization and other tools health plans use to manage health care use, with more than 90 different bills proposed nationwide last year, according to Georgetown University's Center on Health Insurance Reforms.

• "States were already primed to scrutinize insurers more closely," Larry Levitt, executive vice president for health policy at KFF, told Axios. "The backlash in the aftermath of the killing of Brian Thompson will likely only accelerate state action."
• The calls for action are being amplified by physicians and other longtime insurer antagonists.
• "With both sort of pressures pushing on [state] legislators to take some action, I do think we're likely to see more bills advance in the 2025 legislative session," said Sabrina Corlette, co-director of Georgetown University's Center on Health Insurance Reforms.

Zoom in: California last week began prohibiting the use of AI for coverage denials, and lawmakers in Georgia, New York and Pennsylvania are vowing to bring up the issue this year, Bloomberg Law reports.

• In New Jersey, state-regulated health insurance companies will have to decide more quickly — within 24 hours and 72 hours — whether they will cover a test or treatment recommended by a patient's doctor.
• A slew of health insurance reforms took effect at the start of the year in Illinois, including a ban on "step therapy," where patients have to use cheaper drugs before being approved for more expensive ones.

Between the lines: The state efforts are expected to outpace those in the new Congress, in part because legislators tend to face less pressure covering the costs of changes in insurance law.

• The incoming Trump administration and Republican Congress also aren't expected to make insurance reforms key parts of their early policy agenda.
• States generally approach consumer protections in a more bipartisan way than federal policymakers and there is generally far more expertise in insurance in the state capitals than in Washington because health insurance still is largely regulated at the state level, Levitt said.

Yes, but: While more laws could score political points, they'd come with potential tradeoffs.

• "States just don't really control that much as the market," Katherine Hempstead, a senior policy officer at the Robert Wood Johnson Foundation, told Axios, noting the majority of plans are regulated under the federal ERISA law.
• Any moves states make that limit insurers' ability to cut costs could result in price increases that are passed on in the form of premium hikes.

The other side: The insurance industry has said the use of AI can improve customer experiences, speed up the claims process and detect fraud.

• The Washington lobby America's Health Insurance Plans said in a statement that in a fragmented and heavily regulated healthcare system, "health plans are working to protect patients from the full impact of rising costs while connecting them to care that is safe, evidence-based and coordinated."

What to watch: Levitt said there's bipartisan support for scrutinizing prior authorization that could amp up, "particularly with the backlash against insurers we're seeing now."

• Lawmakers have also broached forcing insurers with pharmacy benefit managers like UnitedHealthcare's parent, UnitedHealth Group, to sell off their pharmacies.
• Some experts point to similarities between the current moment and the backlash against HMOs in the 1990s and said it may at the very least, push insurers to make changes to build trust with consumers.
• "It'll be interesting to see whether the backlash against insurers really has legs and whether there's any kind of sustained policy response," Levitt said

Perhaps Elon Musk's watch DOGE should look into HHS's operations and more important the overall private health system. Our health payment system has become a Gordian knot.

“I am not afraid of an army of lions led by a sheep; I am afraid of an army of sheep led by a lion.” – Alexander the Great.

Can we unravel the knot?

or

Do we cut the knot?

The cutting of the Gordian Knot is an Ancient Greek legend associated with Alexander the Great in Gordium in Phrygia, regarding a complex knot that tied an oxcart. Reputedly, whoever could untie it would be destined to rule all of Asia. In 333 BCE, Alexander was challenged to untie the knot. Instead of untangling it laboriously as expected, he dramatically cut through it with his sword, thus exercising another form of mental genius. It is thus used as a metaphor for a seemingly intractable problem which is solved by exercising brute force.

Turn him to any cause of policy,
The Gordian Knot of it he will unloose,
Familiar as his garter

— Shakespeare, Henry V, Act 1 Scene 1. 45–47

"Remember upon the conduct of each depends on the fate of all." – Alexander the Great.

What else must be done to end the drug-overdose epidemic

 End The Epidemic

Outdated policies and health insurance barriers are preventing patients from accessing evidence-based care, said Bobby Mukkamala, MD, the AMA’s president-elect and chair of the AMA Substance Use and Pain Care Task Force. 

“With thousands of families and communities devastated by overdose deaths, the time for incremental change has passed. We need unwavering commitment to expand access to lifesaving medications, enforce parity laws, and address the glaring gaps in harm reduction,” he said.

What the data shows

Opioid prescriptions have fallen by 51.7% over 11 years, from 260.5 million in 2012 to 125.9 million in 2023. Yet reductions in prescribing have not led to huge drops in drug-related deaths. While 107,543 Americans died from overdose last year, according to provisional 12-month data from the Centers for Disease Control and Prevention (CDC), that was only a slight drop from 107,941 in 2022. The death figures continued to drop in 2024, with 12-month provisional figures showing a 17% decline.

Efforts have been made to increase access to medications for opioid use disorder for people who are pregnant or incarcerated. Nevertheless, “stigma and health insurance companies continue to impede access,” the AMA’s report says. 

Many payers do not comply with state and federal laws that require parity in coverage for mental health and substance use disorders—and state efforts to hold payers accountable need to be much stronger. Prior authorization for medications for opioid-use disorder remains a problem. On the federal side, the AMA supports legislation authorizing methadone prescriptions outside of opioid-treatment program settings. The U.S. Drug Enforcement Administration also should remove buprenorphine from its suspicious order reporting requirements until further notice. 

Patients with pain face challenges

Despite policies from the CDC and Federation of State Medical Boards calling for individualized pain care decision-making, state policies are largely focused on arbitrary, numeric thresholds for restricting access to opioid therapy. In addition to policies supporting the reductions in opioid prescribing, state policymakers also believed that mandates to use state prescription drug-monitoring programs (PDMPs) would end opioid-related mortality. 

State PDMPs were used more than 1.4 billion times in 2023, “a staggering increase since 2014, when they were used only 61 million times,” the AMA report says. While PDMPs contain helpful information, they are not treatment tools. At the same time, 39 states have opioid prescribing policies that restrict a patient’s ability to get tailored pain-care treatment options, and pharmacy chains and payers typically have highly restrictive prescribing and dispensing policies. 

“Many patients who rely on, or benefit from, opioid therapy have been harmed by these state laws and related policies from health insurers, pharmacy chains and pharmacy benefit managers,” the AMA report says.

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 AMA’s End the Epidemic website. 

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