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Round Two of Testimony on Senate Bill 612

The Senate Health and Human Services Committee continued testimony February 6th on Committee Chair Curt VANDERWALL’s (R-Ludington) legislation to require insurance companies create a standard prior authorization procedure and then post it on a website with annual statistics on approvals and denials.

As was the case with the first hearing, the bulk of the testimony today was in favor of  SB 0612. Folks claimed prior authorization rules, as applied by health insurance companies in Michigan, were wasteful, frustrating and the opposite of good practice. However, those opposing the bill got in their licks as well.

"I've always believed the most important job of a physician is to advocate for his or her patients," said Dennis RAMUS, a Macomb County physician and member of "Healthcare Can't Wait." "Prior authorizations and step policies in Michigan are coming between patients and their physicians and the medical care they need.  SB 0612 would reform these policies."

Ramus talked about a late 57-year-old named Steven who died in 2018. The physician described how the insurance company's step therapy requirement delayed a test he would have preferred to have Steven take, and by the time he could have taken the test it was too late.

"He had not lived a healthy lifestyle," Ramus said of Steven. "But he had quit smoking and drinking. That Monday night (after examining Steven) I knew clinically he had cardiac disease until proven otherwise. I also knew the insurance company would not allow me to order a stress valium test. It would require me to call for a stat-echo stress test, and even though I knew it wouldn't tell us everything we needed to know, the echo test was ordered.

"It was approved in 24 hours and he had the test the day after that," Ramus continued. "I received the results and they were indeterminate. So, I called for the stress valium test, which I'd originally wanted. But before Steven had that test, he had his heart attack. He died."

Ramus said he wasn't claiming that if he had been able to immediately order the test he believed was needed Steven would still be alive. But what he was saying was that no one will ever know if it would have saved his life or not.

"This is the process of medicine right now, and that process is broken," Ramus claimed. "This legislation does not eliminate prior authorizations, it provides an appropriate structure around high-cost tests, procedures and prescriptions."

However, Matt COOK of Blue Cross Blue Shield of Michigan, which opposes the bill, told the committee prior authorizations are money-savers when the entire health care system is taken into account -- and cost containment is related to health care access.

"The goals are the same, which is making sure patients get the care they need when they need it," Cook asserted. "But also, that it's the appropriate level of care and it's delivered in an appropriate way.

"Yes, there is a quality focus and a cost focus," Cook continued. "We've talked about access. One thing I'd remind the committee is that cost and access have a relationship. If the cost is too much, folks can't afford it; or employers will drive higher employee cost-sharing."

After pointing out that 90% of prior authorizations are eventually granted, Sen. John BIZON (R-Battle Creek) asked why insurance companies don't focus on the 10% that were apparently problematic and loosen up on the 90% that were apparently OK.

The answer was an example of Nexium vs Omeprazole, in which a PPO that didn't have prior authorization saw costs zoom to $432, while in an HMO, which was using prior authorization, saw the cost of what was virtually the same drug at just $23.

Bizon followed up by asking if it wouldn't be simpler to just let people know what the rules are to begin with and if all the rules were consistent from one organization to the next.

"Anything we have a prior authorization for we post on our website," Cook said.

Bizon then asked why there seems to be so many different sets of standards for prior authorizations.

"The broadest segment of the market uses one of two basic standards and they (the standards) are very similar," Cook said.

But that's not what Kathy Jo UECKER of the Michigan/National Medical Group Managers told the committee.

"Prior authorizations and step therapy place an oversized and unnecessary burden on the health care system as a whole," said Uecker, who provides practice management services and medical billing services for several physicians. "Up to 14% of U.S. health care spending goes to administrative costs incurred by private and public insurance.

"A large hospital system in Wayne County spent millions of dollars each year on the prior authorization process and that doesn't include the investment they now have with 100 full-time staff members whose only responsibility is to process prior authorizations."

According to Uecker, on average, physicians and their staffs spend two full business days a week completing prior authorizations, according to a 2018 study by the American Medical Association. She also said the prior authorization processes of health insurance companies are time-wasters that vary widely.

"Each insurance plan has its own requirements for prior authorizations," Uecker stressed. "At one large health provider here in Michigan there are 12 different departments, or vendors, that manage prior authorizations and 99 different prior authorizations programs. And this doesn't include pharmacies. One plan requires the prior authorization request be done by fax, another by phone -- which can take three hours of being on hold. Two plans require the prior authorization to be completed online. One plan requires it online with certain clinical documentation faxed."

She listed several other variations of different requirements for how to ask for a prior authorization.

"The average wait time is running into 14 business days for the initial," she said. "It's not unusual for routine testing and surgeries to be delayed for weeks."

To view the hearing in its entirety, CLICK HERE.

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