Michigan Passes Legislation to Improve Prior Authorization Process

For decades, both health professionals and patients alike have suffered from the consequences of prior authorization requirements. Important treatments and procedures are often put on pause for the sake of the finances or administrative inefficiencies of insurance companies. These treatment delays could even cause treatment abandonment after long periods of time. Michigan legislators sought to resolve this issue by approving a law that tightens the standards of authorization for insurance providers and accelerates the approval process, saving time, money, and even lives.

On March 23, 2022, the Michigan House of Representatives passed Senate Bill 247 by a vote of 103-2. The bill states that starting June 2023, health insurers must act on urgent prior authorization requests within 72 hours and non-urgent prior authorization requests within nine days, which will be narrowed to seven days by 2024. If the insurer fails to act within this nine- or seven-day period, the non-urgent prior authorization will be considered automatically granted. The decision on these prior authorization requirements must also now be based on peer-reviewed clinical review criteria.

In addition to these time and material restrictions, the law also requires insurers to implement an electronic process for prior authorization requests, making them more efficient. If any changes or additions arise on the existing requirements for health care providers, insurers must give notice.

Finally, this law will reward high-performing healthcare providers by promoting the modification of certain prior authorization requirements. These modifications will be based on the health care providers’ adherence to nationally recognized evidence-based medical guidelines and other quality guidelines.

Though Michigan has sought to address the issues of prior authorizations through legislation, this is quite uncommon for most states. For states that have not attempted to improve the prior authorization process through legislation, the next best available option will likely be technological innovation. In a recent prior authorization pilot project, submitting these requests electronically resulted in a 69% reduction in the decision time. Until these technological innovations are implemented, however, healthcare professionals and patients are reliant on the power of legislation.

Overall, the passage of this new Michigan legislation has brought hope for a quicker and more effective prior authorization process. After decades of frustration, healthcare professionals in Michigan may begin to receive informed decisions on their authorization requests in a timely manner. If the legislation also succeeds upon implementation, the hope is that other states will follow suit.

For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters. If you or your healthcare entity has any questions about prior authorizations or healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com.