SHB 1566
In CommitteeHouse
Prior authorization/health
Making improvements to transparency and accountability in the prior authorization determination process.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill improves transparency and accountability in the prior authorization process by setting strict response time limits, requiring human oversight of coverage decisions (especially when using artificial intelligence), and mandating new electronic reporting and communication systems. It applies to health insurers, managed care organizations, and public employee health plans.
- Set strict time limits for prior authorization decisions: 3 days for electronic standard requests, 1 day for electronic expedited requests, and longer for paper-based requests.
- Require that medical necessity decisions be made by licensed physicians or health professionals, not solely by artificial intelligence tools.
- If artificial intelligence is used, it must be based on individual patient data (not just group data), be auditable, and meet fairness and transparency standards.
- Mandate that insurers and managed care organizations provide unique identifiers and physician credentials in coverage decision notices, and offer peer-to-peer review for denied requests.
- Require new electronic systems (application programming interfaces) to automate prior authorization checks for services and prescriptions, starting January 1, 2025 (services) and January 1, 2027 (drugs).
- Require annual reporting of prior authorization data—including denial rates, AI use, and turnaround times—to the Office of the Insurance Commissioner and Health Care Authority, with public disclosure.
Who is affected
- Health insurance carriers and managed care organizations — Health insurers (including managed care organizations and health plans for public employees) must follow new rules about how quickly they respond to prior authorization requests, who makes coverage decisions, and how they use artificial intelligence tools.
- Health care providers — Providers (doctors, hospitals, clinics) must follow new timelines for submitting prior authorization requests and will receive more detailed information about decisions, including who reviewed them and how.
- Health plan enrollees (patients) — Patients may experience faster decisions on needed care, more transparency about why coverage is approved or denied, and stronger protections against AI tools making decisions without human oversight.
- State regulatory agencies — State agencies like the Office of the Insurance Commissioner and Health Care Authority gain new authority to monitor and enforce prior authorization rules, including auditing AI use and requiring reporting.
Pro/Con Analysis
Potential Benefits (5)
Shorter prior authorization timeframes (3 days for standard electronic, 1 day for expedited) reduce administrative delays in care delivery, improving timeliness of treatment for patients.
HealthcareRef: Sec. 2(1)(a)-(b), Sec. 3(1)(a)-(b), Sec. 4(1)(a)-(b)Prohibiting AI from being the sole basis for coverage denials and requiring licensed professionals to make medical necessity determinations strengthens patient safety and reduces risk of algorithmic bias or error in care decisions.
HealthcarePeopleRef: Sec. 2(3)(a), Sec. 3(3)(a), Sec. 4(3)(a)Mandating disclosure of decision-maker credentials and unique identifiers in denial notices increases transparency and enables patients and providers to challenge decisions more effectively, supporting equitable access to care.
HealthcarePeopleRef: Sec. 2(1)(e), Sec. 3(1)(e), Sec. 4(1)(e)Implementation of application programming interfaces (APIs) for prior authorization automation will reduce paperwork and administrative burden for providers, especially smaller practices with limited staff.
HealthcareRef: Sec. 2(4)(a), Sec. 3(4)(a), Sec. 4(4)(a)Annual reporting of prior authorization data—including denial rates, AI use, and turnaround times—with public disclosure increases accountability and enables public oversight of insurer practices.
HealthcareRef: Sec. 2(5), Sec. 3(5), Sec. 4(5)
Potential Concerns (5)
Shorter prior authorization timeframes (3 days for standard electronic, 1 day for expedited) reduce administrative delays in care delivery, improving timeliness of treatment for patients.
HealthcareRef: Sec. 2(1)(a)-(b), Sec. 3(1)(a)-(b), Sec. 4(1)(a)-(b)Prohibiting AI from being the sole basis for coverage denials and requiring licensed professionals to make medical necessity determinations strengthens patient safety and reduces risk of algorithmic bias or error in care decisions.
HealthcarePeopleRef: Sec. 2(3)(a), Sec. 3(3)(a), Sec. 4(3)(a)Mandating disclosure of decision-maker credentials and unique identifiers in denial notices increases transparency and enables patients and providers to challenge decisions more effectively, supporting equitable access to care.
HealthcarePeopleRef: Sec. 2(1)(e), Sec. 3(1)(e), Sec. 4(1)(e)Implementation of application programming interfaces (APIs) for prior authorization automation will reduce paperwork and administrative burden for providers, especially smaller practices with limited staff.
HealthcareRef: Sec. 2(4)(a), Sec. 3(4)(a), Sec. 4(4)(a)Annual reporting of prior authorization data—including denial rates, AI use, and turnaround times—with public disclosure increases accountability and enables public oversight of insurer practices.
HealthcareRef: Sec. 2(5), Sec. 3(5), Sec. 4(5)
Who Is Most Affected
Insurers and MCOs will face increased administrative costs to implement new timelines, APIs, and AI oversight requirements. While some may pass costs to providers or patients, the burden is primarily on insurers as they must invest in technology and staffing.
Providers benefit from faster decisions, more transparent rationales, and reduced administrative friction via APIs. However, they may face new documentation burdens and must adapt to new reporting requirements.
Patients gain faster access to care, stronger protections against algorithmic denials, and better transparency—especially those with time-sensitive or complex conditions.
State agencies gain new authority to monitor and enforce prior authorization rules, but costs are modest and no new appropriation is required.