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AN ACT relating to prior authorization. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
SECTION 1. A NEW SECTION OF KRS 304.17A-600 TO 304.17A-633 IS 3
CREATED TO READ AS FOLLOWS: 4
(1) As used in this section: 5
(a) "Covered health care service" means a health care service furnished or 6
proposed to be furnished to a covered person that is specifically available or 7
included as a covered benefit in the covered person's health benefit plan; 8
(b) "Electronic health record" has the same meaning as in 42 U.S.C. sec. 9
17921, as amended; 10
(c) "Evaluation period" means a twelve (12) month period of time for which a 11
health care provider's prior authorization experience is evaluated by an 12
insurer or private review agent; 13
(d) "Health care provider" has the same meaning as in KRS 304.17A-005, 14
except for purposes of this section the term includes, if practicing 15
independently, any: 16
1. Licensed clinical alcohol and drug counselor licensed under KRS 17
Chapter 309; 18
2. Licensed psychologist, licensed psychological practitioner, or certified 19
psychologist with autonomous functioning licensed or certified under 20
the provisions of KRS Chapter 319; 21
3. Licensed professional clinical counselor licensed under KRS Chapter 22
335; 23
4. Licensed marriage and family therapist licensed under KRS Chapter 24
335; 25
5. Licensed professional art therapist licensed under KRS Chapter 309; 26
and 27 UNOFFICIAL COPY 25 RS HB 423/GA
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6. Licensed clinical social worker licensed under KRS Chapter 335; 1
(e) "Health care provider group" means two (2) or more health care providers 2
that provide health care services within an entity that shares a common: 3
1. Group provider number; or 4
2. Tax identification number; 5
(f) "Health care service" has the same meaning as in KRS 304.17A-005, 6
except for purposes of this section the term: 7
1. Shall apply to health care providers as defined in this section; and 8
2. Does not include the provision of prescription drugs; 9
(g) "Interoperability standards" means the technical standards set forth in 45 10
C.F.R. sec. 170.215, as amended; 11
(h) "Participating provider": 12
1. Means a health care provider that has entered into a participating 13
provider contract; and 14
2. Includes a health care provider group if the insurer has elected to 15
offer an exemption to the health care provider group under subsection 16
(4)(b)2. of this section; 17
(i) "Participating provider contract" means a contract between a health care 18
provider, either directly or through a health care provider group, and an 19
insurer for the provision of health care services under a health benefit plan; 20
(j) "Utilization" means the number of claims submitted for a particular health 21
care service under a health benefit plan by a participating provider; and 22
(k) "Value-based care agreement" means a contractual agreement between a 23
health care provider, either directly or through a health care provider 24
group, and an insurer that: 25
1. Incentivizes or rewards providers based on one (1) or more of the 26
following: 27 UNOFFICIAL COPY 25 RS HB 423/GA
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a. Quality of care; 1
b. Safety; 2
c. Patient outcomes; 3
d. Efficiency; 4
e. Cost reduction; or 5
f. Other factors; and 6
2. May, but is not required to, include shared financial risk and rewards 7
based on performance metrics. 8
(2) An insurer or its private review agent shall not require a covered person, 9
authorized person, or participating provider to obtain a prior authorization for a 10
particular health care service under a health benefit plan if, at the time the health 11
care service was provided, the provider had a prior authorization exemption for 12
that particular health care service under a program offered under subsection (3) 13
of this section. 14
(3) Every insurer shall offer a program under which a participating provider may 15
qualify for an exemption from the requirement to obtain prior authorization for 16
any covered health care service that requires prior authorization. 17
(4) The program offered under subsection (3) of this section: 18
(a) Shall: 19
1. Provide that a participating provider, for an evaluation period 20
established by the insurer or private review agent, receive a prior 21
authorization exemption for a particular health care service if, during 22
the previous evaluation period, the provider met program terms and 23
conditions established by the insurer or private review agent that are 24
not in violation of this section; 25
2. Not condition a prior authorization exemption upon the provider 26
exceeding a ninety-three percent (93%) approval rate for prior 27 UNOFFICIAL COPY 25 RS HB 423/GA
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authorization requests submitted by the provider for that health care 1
service during an evaluation period; 2
3. Require the insurer or its private review agent to evaluate, on an 3
annual basis, whether a participating provider qualifies to receive a 4
prior authorization exemption for each covered health care service for 5
which the insurer requires prior authorization; 6
4. Require each annual evaluation required under subparagraph 3. of 7
this paragraph to be conducted on: 8
a. For participating provider contracts that have a performance 9
period of one (1) year, the contract's renewal date; or 10
b. For participating provider contracts that have a performance 11
period of greater than one (1) year, the annual anniversary date 12
of the contract renewal; 13
5. Require an insurer or its private review agent to notify each 14
participating provider that qualifies for a prior authorization 15
exemption within thirty (30) days after conducting the annual 16
evaluation required under subparagraph 3. of this paragraph; 17
6. Require an insurer or its private review agent to make available to a 18
health care provider during the contracting process the requirements 19
that the provider must meet to participate in the program; and 20
7. Comply with any administrative regulation promulgated under KRS 21
304.2-110 for, or as an aid to, the effectuation of this section; and 22
(b) May: 23
1. Offer a prior authorization exemption for any prescription drug; 24
2. Offer a prior authorization exemption to a health care provider group 25
in lieu of each participating provider practicing within a health care 26
provider group; 27 UNOFFICIAL COPY 25 RS HB 423/GA
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3. Condition a participating provider's eligibility to participate in the 1
program on the provider satisfying one (1) or more of the following: 2
a. The provider has entered into, either directly or through a health 3
care provider group, a value-based care agreement with the 4
insurer; 5
b. The provider has been a participating provider for a minimum 6
period of time established by the insurer or private review agent, 7
except an established minimum period of time shall not be more 8
than one (1) year; or 9
c. The provider: 10
i. Complies with interoperability standards; and 11
ii. Has entered into, either directly or through a health care 12
provider group, an electronic health record access 13
agreement with the insurer or private review agent; and 14
4. Provide that a participating provider shall not qualify for a prior 15
authorization exemption for any particular health care service unless 16
the provider's utilization for that health care service during the 17
previous evaluation period meets any utilization requirement 18
established by the insurer or private review agent, except an 19
established utilization requirement shall not: 20
a. Require a minimum utilization of more than twenty-four (24); or 21
b. Impose a maximum utilization of less than one hundred ten 22
percent (110%) of the participating provider's utilization for that 23
particular health care service during the previous evaluation 24
period; and 25
5. Provide that an insurer or its private review agent may revoke a 26
participating provider's prior authorization exemption for any 27 UNOFFICIAL COPY 25 RS HB 423/GA
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particular health care service, or suspend or revoke a participating 1
provider's participation in the program, if: 2
a. The insurer or private review agent has evidence that the 3
provider has engaged in fraud or abuse; or 4
b. The provider's utilization meets or exceeds a maximum 5
utilization imposed under subparagraph 4.b. of this paragraph. 6
(5) If an insurer or its private review agent determines that a participating provider is 7
eligible to participate in the program offered under subsection (3) of this section, 8
the insurer or private review agent shall send a notice to the provider that 9
includes: 10
(a) A statement that the provider is eligible to participate in the program; and 11
(b) A list of each health care service that is subject to the elimination of prior 12
authorization requirements under the program. 13
(6) For all forms and notices sent to a participating provider in accordance with this 14
section, or any administrative regulations promulgated under KRS 304.2-110 for, 15
or as an aid to, the effectuation of this section, the insurer or its private review 16
agent shall: 17
(a) Provide a process for the provider to designate and update the provider's 18
preferred manner for receiving the forms and notices; and 19
(b) Send the forms and notices to the provider in the manner designated under 20
paragraph (a) of this subsection. 21
(7) Nothing in this section shall be construed to: 22
(a) Prevent an insurer or its private review agent from requesting a health care 23
provider to provide additional information about a health care service 24
rendered to a covered person; or 25
(b) Require coverage of a noncovered health care service under a covered 26
person's health benefit plan. 27 UNOFFICIAL COPY 25 RS HB 423/GA
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SECTION 2. A NEW SECTION OF KRS 304.17A-600 TO 304.17A-633 IS 1
CREATED TO READ AS FOLLOWS: 2
The commissioner shall: 3
(1) (a) Submit a written report not later than September 30 of each year to the 4
Legislative Research Commission for referral to the Interim Joint 5
Committees on Banking and Insurance and Health Services relating to 6
prior authorization in the provision of health care benefits under this 7
chapter. 8
(b) The report required under paragraph (a) of this subsection shall include: 9
1. Information relating to the implementation and effectuation of 10
Section 1 of this Act; 11
2. The number of insurers and private review agents offering a program 12
required under Section 1 of this Act; 13
3. The number of providers, by provider group, specialty, and county, 14
participating in one (1) or more programs offered under Section 1 of 15
this Act; 16
4. A list of health care services, which shall include a description and 17
CPT code for each service, for which exemptions have been granted 18
under the programs required under Section 1 of this Act; 19
5. The number of programs offered under Section 1 of this Act, which 20
shall include: 21
a. The number of programs that grant exemptions for one (1) or 22
more prescription drugs; and 23
b. A list of the drugs for which exemptions are granted under a 24
program reported under subdivision a. of this subparagraph; and 25
6. With respect to any health insurance policy, certificate, plan, or 26
contract required to comply with KRS 304.17A-600 to 304.17A-633: 27 UNOFFICIAL COPY 25 RS HB 423/GA
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a. A list of all services, procedures, and other treatments, including 1
prescription drugs, that require prior authorization; 2
b. The percentage of prior authorization requests for nonurgent 3
health care services in aggregate and by specific service, 4
procedure, prescription drug, and other treatment: 5
i. That were approved without an extension; 6
ii. For which the review was extended and the request 7
approved; and 8
iii. That were denied; 9
c. The percentage of prior authorization requests for urgent health 10
care services that were: 11
i. Approved; and 12
ii. Denied; and 13
d. The average and median time between submission of prior 14
authorization requests and decisions for: 15
i. Nonurgent health care services; and 16
ii. Urgent health care services; 17
(2) Provide the Interim Joint Committees on Banking and Insurance and Health 18
Services with a detailed briefing, upon request, to discuss and explain any report 19
submitted under subsection (1) of this section; and 20
(3) Promulgate any administrative regulation, including an emergency 21
administrative regulation, in accordance with KRS Chapter 13A that the 22
commissioner deems necessary to implement the provisions of this section. 23
Section 3. KRS 304.17A-605 is amended to read as follows: 24
(1) (a) Except as provided in paragraph (b) of this subsection, KRS 304.17A-600, 25
304.17A-603, 304.17A-605, 304.17A-607, 304.17A-609, 304.17A-611, 26
304.17A-613, and 304.17A-615 set forth the requirements and procedures 27 UNOFFICIAL COPY 25 RS HB 423/GA
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regarding utilization review and shall apply to: 1
1.[(a)] Any insurer or its private review agent that provides or performs 2
utilization review in connection with a health benefit plan or a limited 3
health service benefit plan; and 4
2.[(b)] Any private review agent that performs utilization review 5
functions on behalf of any person providing or administering health 6
benefit plans or limited health service benefit plans. 7
(b) Section 1 of this Act sets forth additional requirements for prior 8
authorization and shall apply to: 9
1. Any insurer or its private review agent that provides or performs 10
utilization review in connection with a health benefit plan; and 11
2. Any private review agent that performs utilization review functions on 12
behalf of any person providing and administering health benefit plans. 13
(2) Where an insurer or its agent provides or performs utilization review, and in all 14
instances where internal appeals as set forth in KRS 304.17A-617 are involved, the 15
insurer or its agent shall be responsible for: 16
(a) Monitoring all utilization reviews and internal appeals carried out by or on 17
behalf of the insurer; 18
(b) Ensuring that all requirements of KRS 304.17A-600 to 304.17A-633 are met; 19
(c) Ensuring that all administrative regulations promulgated in accordance with 20
KRS 304.17A-609, 304.17A-613, and 304.17A-629 are complied with; and 21
(d) Ensuring that appropriate personnel have operational responsibility for the 22
performance of the insurer's utilization review plan. 23
(3) A private review agent that operates solely under contract with the federal 24
government for utilization review or patients eligible for hospital services under 25
Title XVIII of the Social Security Act shall not be subject to the registration 26
requirements set forth in KRS 304.17A-607, 304.17A-609, and 304.17A-613. 27 UNOFFICIAL COPY 25 RS HB 423/GA
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Section 4. KRS 304.17A-611 is amended to read as follows: 1
(1) A utilization review decision shall not retrospectively deny coverage for health care 2
services provided to a covered person when prior approval has been obtained from 3
the insurer or its designee for those services, unless the approval was based upon 4
fraudulent, materially inaccurate, or misrepresented information submitted by the 5
covered person, authorized person, or the provider. 6
(2) An insurer of a health benefit plan shall not require or conduct a prospective or 7
concurrent review for a prescription drug: 8
(a) That: 9
1. Is used in the treatment of alcohol or opioid use disorder; and 10
2. Contains Methadone, Buprenorphine, an opioid antagonist, or 11
Naltrexone; or 12
(b) That was approved before January 1, 2022, by the United States Food and 13
Drug Administration for the mitigation of opioid withdrawal symptoms. 14
(3) Notwithstanding any other law to the contrary: 15
(a) An insurer or its private review agent shall not conduct a retrospective 16
review that is based solely on a participating provider having a prior 17
authorization exemption under a program offered under subsection (3) of 18
Section 1 of this Act except to determine if the provider continues to qualify 19
for an exemption; and 20
(b) The timeframes for rendering a utilization review decision under KRS 21
304.17A-607 shall not apply to a retrospective review conducted for the 22
purpose of determining if a participating provider qualifies for an initial or 23
continuing prior authorization exemption under a program offered under 24
subsection (3) of Section 1 of this Act. 25
SECTION 5. A NEW SECTION OF KRS CHAPTER 205 IS CREATED TO 26
READ AS FOLLOWS: 27 UNOFFICIAL COPY 25 RS HB 423/GA
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The commissioner of the Department for Medicaid Services shall: 1
(1) (a) Submit a written report not later than September 30 of each year to the 2
Legislative Research Commission for referral to the Interim Joint 3
Committees on Banking and Insurance and Health Services relating to 4
prior authorization in the provision of Medicaid benefits in Kentucky. 5
(b) The report required under paragraph (a) of this subsection shall include the 6
following, categorized by Medicaid managed care organization and fee for 7
service: 8
1. A list of all services, procedures, and other treatments, including 9
prescription drugs, that require prior authorization; 10
2. The percentage of prior authorization requests for nonurgent health 11
care services in aggregate and by specific service, procedure, 12
prescription drug, and other treatment: 13
a. That were approved without an extension; 14
b. For which the review was extended and the request approved; 15
and 16
c. That were denied; 17
3. The percentage of prior authorization requests for urgent health care 18
services that were: 19
a. Approved; and 20
b. Denied; and 21
4. The average and median time between submission of prior 22
authorization requests and decisions for: 23
a. Nonurgent health care services; and 24
b. Urgent health care services; 25
(2) Provide the Interim Joint Committees on Banking and Insurance and Health 26
Services with a detailed briefing, upon request, to discuss and explain any report 27 UNOFFICIAL COPY 25 RS HB 423/GA
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submitted under subsection (1) of this section; and 1
(3) Promulgate any administrative regulation, including an emergency 2
administrative regulation, in accordance with KRS Chapter 13A that the 3
commissioner deems necessary to implement the provisions of this section. 4
Section 6. KRS 205.536 is amended to read as follows: 5
(1) Except as provided in subsection (4) of this section, a Medicaid managed care 6
organization shall have a utilization review plan, as defined in KRS 304.17A-600, 7
that meets the requirements established in 42 C.F.R. pts. 431, 438, and 456. If the 8
Medicaid managed care organization utilizes a private review agent, as defined in 9
KRS 304.17A-600, the agent shall comply with all applicable requirements of KRS 10
304.17A-600 to 304.17A-633. 11
(2) In conducting utilization reviews for Medicaid benefits, each Medicaid managed 12
care organization shall use the medical necessity criteria selected by the Department 13
of Insurance pursuant to KRS 304.38-240, for making determinations of medical 14
necessity and clinical appropriateness pursuant to the utilization review plan 15
required by subsection (1) of this section. 16
(3) To the extent consistent with the federal regulations referenced in subsection (1) of 17
this section, the Department for Medicaid Services or any managed care 18
organization contracted to provide Medicaid benefits pursuant to KRS Chapter 205 19
shall not require or conduct a prospective or concurrent review, as defined in KRS 20
304.17A-600, for a prescription drug: 21
(a) That: 22
1. Is used in the treatment of alcohol or opioid use disorder; and 23
2. Contains Methadone, Buprenorphine, an opioid antagonist, or 24
Naltrexone; or 25
(b) That was approved before January 1, 2022, by the United States Food and 26
Drug Administration for the mitigation of opioid withdrawal symptoms. 27 UNOFFICIAL COPY 25 RS HB 423/GA
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(4) Nothing in this chapter shall be construed to require, with respect to the 1
administration and provision of Medicaid benefits pursuant to this chapter, the 2
Department for Medicaid Services, any managed care organization contracted to 3
provide Medicaid benefits pursuant to this chapter, including any private review 4
agent utilized by the Medicaid managed care organization, or the state's medical 5
assistance program to comply with Section 1 of this Act. 6
Section 7. Sections 1 to 4 of this Act apply to contracts delivered, entered, 7
renewed, extended, or amended on or after January 1, 2027. 8
Section 8. Section 5 of this Act takes effect January 1, 2026. 9
Section 9. Sections 1, 2, 3, 4, 6, and 7 of this Act take effect January 1, 2027. 10