Navigating Prior Authorization Reform in NC

What HR Managers and Business Executives Need to Know

In North Carolina, the landscape of healthcare regulation is on the brink of significant change. Two Triad N.C. House Republicans are set to reintroduce legislation aimed at reforming prior authorization policies, a move that could have substantial implications for HR managers and business executives. This proposed legislation seeks to limit health insurers’ ability to require advance approval before covering medical care—a process that has long been a pain point for employees and providers alike.

The Impact of Prior Authorization on Employers and Employees

Prior authorization was initially designed to manage complex medical cases, ensuring that treatments align with clinical best practices and cost-effectiveness. However, over time, insurers have expanded these requirements to include routine procedures, scans, and even some generic medications. This has led to unnecessary delays in patient care, increased administrative burdens on healthcare providers, and, ultimately, higher costs for employers offering health benefits.

For instance, major insurers like Aetna, Blue Cross Blue Shield of N.C., Cigna, and Humana impose prior authorization for procedures such as CTs, MRIs, and PET scans, depending on the type of coverage. In many cases, these requests are eventually approved—more than 95% of the time—but not without creating hurdles for employees who need timely medical attention.

Legislative Efforts and Potential Changes

During the 2023 session, House Bill 649 aimed to streamline the prior authorization process to ensure that medical decisions are made by healthcare providers rather than insurance companies. The bill passed the House with unanimous bipartisan support (112-0) but stalled in the Senate. Now, with increasing public frustration over rising healthcare costs and administrative barriers, lawmakers—including Rep. Timothy Reeder and Rep. Donny Lambeth—are determined to revive this discussion.

Lambeth has gone as far as advocating for a full ban on prior authorizations, stating that patients should not be forced to navigate unnecessary pre-certification processes when their doctors deem medical tests necessary. Although no bill has been filed yet, it is expected to be one of the first priorities when lawmakers reconvene.

Why This Matters to Employers

North Carolina ranks as the most expensive state for healthcare, with employer-sponsored health insurance premiums and deductibles significantly higher than the national average:

• Highest average premium for “plus-one” employer-sponsored health insurance ($4,781 annually)

• Second-highest average premium for family employer-sponsored health insurance ($7,180 annually)

• Fifth-highest average deductible for single coverage ($2,267.67 annually)

• 11th-highest average deductible for family coverage ($4,061.67 annually)

These costs place a significant strain on both employers and employees, making it critical for HR managers and business leaders to stay informed about policy changes that could influence health plan administration and financial planning.

What Employers Can Do

1. Monitor Legislative Updates – We will continue to post updates on this blog, be sure to subscribe to receive the latest updates and stay engaged with your local trade associations such as National Association of Benefits and Insurance Professionals North Carolina (NABIPNC), to understand how potential reforms could affect your employee health benefits.

2. Evaluate Current Benefits Offerings – Assess whether your health insurance provider’s prior authorization requirements are causing delays in care or increased administrative burdens. Share your experiences with NABIPNC representative (who may be your broker)

3. Advocate for Employee Well-Being – Consider writing a statement/testimonial and providing it to your NABIPNC representative to be shared with Rep. Lambeth and Sen. Jim Burgin. joining coalitions or supporting advocacy efforts that push for streamlined healthcare access and reduced barriers for employees.

4. Educate Your Workforce – Keep employees informed about changes in healthcare policies that may impact their access to medical treatments and encourage them to provide feedback on their experiences with insurance approvals.

   
   

The Road Ahead

With North Carolina’s healthcare costs ranking among the highest in the country, the debate over prior authorization reform is more relevant than ever. If the proposed legislation gains traction, it could mean a significant shift in how insurers regulate medical approvals—potentially reducing administrative burdens, expediting medical care, and lowering costs for businesses and employees alike.

HR professionals and business executives should keep a close watch on this legislative session, as any changes could influence corporate healthcare strategies and benefits planning in the years to come.