Prior authorizations focus of testimony on health care bill

Bill banning physician noncompete agreements also draws fire

By: - January 26, 2023 6:00 am

Maddie Augustus, with the Insurance Institute of Indiana, shares concerns about prior authorizations with a Senate health committee. (Whitney Downard/Indiana Capital Chronicle.)

Health care providers, insurers and legislators agree: health care costs are expensive and reimbursements are confusing in Indiana. 

Lawmakers on the Senate Committee for Health and Provider Services considered a bill Wednesday that hopes to introduce a series of fixes to improve health care access for Hoosiers, but opted to continue working on the bill rather than pass it.

Rather than a large overhaul of the state’s health care system, Senate Bill 400 aims to make several small changes with the knowledge that the legislation may evolve as it advances.

“The reason for this is we are always in the legislature trying to tackle the problem of health care access… as well as keeping costs low,” said bill author Sen. Liz Brown, R-Fort Wayne. “Speaking to constituents, there are lots of small, incremental changes that will make vast improvements to some Hoosiers’ lives but maybe not all.”

The trouble with prior authorizations

Nearly all of the testimony presented voiced support for the underlying bill, which aims to simplify credentialing of physicians, pay for free dental care and redirect licensing fees as an ongoing appropriation for public health. 

But health care providers and insurers disagreed when it came to the bill’s provisions on prior authorizations, a process in which an insurer approves and pays for health care services.

Practicing physicians testified that the current process was burdensome and took them away from patients. According to a 2021 physician survey from the American Medical Association, physicians and their staff spend an average of 13 hours each week, nearly two business days, on completing prior authorizations.

“Prior authorization is a constant hurdle to delivering timely patient care,” Dr. Pardeep Kumar, the president of the Indiana State Medical Association, said. “(It) eats up a lot of time that could be used on patients… prior authorization is a major cause of physician burnout.”

Due to the workload, hospital administrators testified that they hired staff exclusively to work with insurers.

Sen. Ed Charbonneau, R-Valparaiso

In particular, proponents highlighted scenarios in which, mid-procedure, a physician found another issue and decided to address it. After submitting that information to the insurer, that entity retroactively denied that claim, or changed the preauthorization codes, sparking a yearlong fight between the hospitals and insurers.

But insurance lobbyists urged retooling the prior authorization language, saying it stripped out guardrails that prevented doctors from performing unnecessary procedures or prescribing unnecessary medication – both of which would increase overall health care costs.

“We, as health care insurers, also want to improve this process,” said Maddie Augustus, the director of government relations for the Insurance Institute of Indiana. “But we want to make sure it is done in a way that some of those guardrails can be maintained… and make sure there are not unintended consequences.”

Brown argued that these processes, rather than decreasing costs, increased them because it delayed care for the patient.

Sen. Ed Charbonneau, R-Valparaiso, authored an amendment to Brown’s bill adding language from another bill, SB 191, that allows graduating medical students who aren’t matched with a residency to practice as “associate physicians.” 

Charbonneau noted that Indiana had fewer residency slots than it graduated annually, meaning roughly 150 students left the state to pursue their education. He said he hoped the new licensing class would keep more students in Indiana, though Brown emphasized it would be a temporary measure. 

ISMA, through Kumar, opposed the amendment, saying students wanted to see the number of residencies increase instead.

Charbonneau, the committee chair, said the bill would stay in committee for further consideration.

Another proposal to reduce health care costs

The committee heard another contentious bill, one dividing physicians and the hospitals they work for: noncompete agreements. 

Sen. Justin Busch, R-Fort Wayne, said that 78 of 92 counties had a physician shortage, some of it exacerbated by noncompete agreements, in which a hospital (or other provider) bars a departing physician from working in a similar position within a certain timeframe and geographical range.

Sen. Justin Busch, R-Fort Wayne (Photo from Indiana Senate Republicans)

“Amid the shortage, can we afford to have physicians on the sidelines?” Busch said. 

Rural providers said noncompete agreements protected the financial investment they’d made into those health care workers. 

Dr. Eric Fish, the CEO of Schneck Medical Center in Seymour, said that noncompete agreements kept physicians in his community and ensured a continuity of care. The nearest hospital in his area was 30-35 miles away.

But Brown rebuffed Fish, saying that noncompetes also kept doctors from leaving other health systems and joining Schneck. 

Busch vowed to work more on the bill to resolve differences but said, “ten states already have this and the sky didn’t fall there.”

The bill passed on an 8-3 vote, garnering ‘no’ votes from one Democrat and two Republicans worried about their rural hospital providers.

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Whitney Downard
Whitney Downard

A native of upstate New York, Whitney previously covered statehouse politics for CNHI’s nine Indiana papers, focusing on long-term healthcare facilities and local government. Prior to her foray into Indiana politics, she worked as a general assignment reporter for The Meridian Star in Meridian, Mississippi. Whitney is a graduate of St. Bonaventure University (#GoBonnies!), a community theater enthusiast and cat mom.