Senators move prior authorization, PBM regulations

Yahoo

21-02-2025

Sen. Tyler Johnson, R-Leo, listens to his colleagues on Thursday, Feb. 20, 2025. (Leslie Bonilla Muñiz/Indiana Capital Chronicle)
Senators greenlit two health bills on Thursday ahead of a critical deadline with near-unanimous support — one limiting insurer's powers over prior authorization and another restricting pharmacy benefit managers.
Nearly every senator voted to restrict prior authorization requirements in the state, though the bill is much weaker than its original version to avoid a fiscal cost.
For author Sen. Tyler Johnson, an emergency physician, the proposal is a culmination of a two-year effort to limit the practice.
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'Hoosiers deserve access to treatments they've already paid for; treatments their doctors have deemed medically necessary,' said Johnson, R-Leo. 'Far too often, bureaucratic hurdles in the form of prior authorization stand between patients and the care they need.'
He disputed the original $1.2 billion price tag calculated by fiscal analysts, pointing to a pilot program prohibiting prior authorization for select claims under the state employee health plan which Johnson said 'saw no increase in utilization. Zero.'
That same cost sunk the bill when it moved to the House in 2024.
According to the American Medical Association, 94% of physicians reported care delays due to prior authorization, including 24% who reported that such delays had led to a serious adverse event.
The initial version of Senate Bill 480 would have taken a much more aggressive approach to reigning in the use of prior authorization but was weakened in an appropriations committee. As introduced, the bill would have capped prior authorization denials at 1% and prohibited the use of prior authorization for drugs under $100.
Both portions were struck, retaining provisions that require reviews and denials to be issued by doctors of the same specialty — rather than algorithms, artificial intelligence or non-specialty health care providers. However, Johnson vowed to 'keep fighting' to identify a 'meaningful cap on prior authorization for services.'
The bill also tightens definitions for 'medically necessary' so it can't be disputed between insurers and providers.
Nearly every senator signed onto the bill as either an author or co-author, as the practice has long been a target for health care reform.
Just two Republican Senators — Aaron Freeman of Indianapolis and Mike Gaskill of Pendleton — voted against the measure. Neither publicly shared their reasoning.
A bill pitched as 'the most aggressive piece of PBM legislation' would target pharmacy benefit managers, the middle man tasked with negotiating drug prices between manufacturers, distributors and pharmacies.
Senate Bill 140 would require data collection from PBMs — some of which has been withheld by the entities in the past for being 'proprietary,' according to committee testimony. Information related to state employees would be explicitly state property under the bill and PBMs could be penalized for discriminatory reimbursement practices that independent pharmacies say hurts their bottom line.
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But the most ground-breaking provision would be a prohibition for insurers and PBMs to contract together if they share ownership. The ban also applies to pharmacies.
The three PBMs that account for 80% of U.S. prescriptions — Caremark, Express Scripts and OptumRX — are all owned by major health care players, as spelled out by Healthcare Dive. Pharmacy giant CVS owns Caremark while insurers Cigna and United Health own Express Scripts and OptumRX, respectively.
Johnson authored the ownership language and pitched it as a 'firewall' between entities. However, it's less certain if the language will apply to self-insured plans, which make up the majority of health care coverage in Indiana. Plus, it will only apply to policies enacted after June 30, 2026.
The bill advanced on a 47-2 vote.
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