A new model law adopted by the executive committee of the National Council of Insurance Legislators (NCOIL) could spur more states to adopt legislation to regulate health insurers’ use of prior authorization.
While prior authorization remains an important tool for managing utilization and costs, insurers’ rules are often opaque, which leads to confusion and frustration among patients who have been denied or experienced delayed care.
As a result, lawmakers in many states are looking for guardrails that improve transparency and predictability without dismantling the process altogether. NCOIL’s model act draws heavily from reforms enacted in Mississippi and influenced by similar efforts in Minnesota. The organization does not regulate insurance itself, but its model laws often serve as starting points for state legislation, particularly on complex insurance issues.
What the Model Act Does
If adopted by states, the model law would establish several baseline requirements for health insurers and health plans, including:
- Publicly posting a complete list of services subject to prior authorization, along with applicable requirements and clinical review criteria.
- Publishing prior authorization approval and denial statistics in an accessible format.
- Completing expedited prior authorization reviews within 24 hours after all necessary information is received.
- Ensuring that appeals are reviewed by physicians with appropriate training or experience relevant to the service under review.
- Reporting aggregated annual data on prior authorization activity to state insurance regulators.
These steps are designed to reduce administrative friction and make the process more predictable for providers and patients, while still allowing insurers to manage care.
The model preserves insurers’ ability to require prior authorization for certain services — such as advanced imaging or surgical procedures — while setting clearer expectations for how those programs operate. This is important for employers since prior authorization can help rein in unnecessary spending, while unpredictable delays can disrupt employees’ care and productivity.
Minnesota’s Experience with the Model Law
NCOIL leaders have pointed to Minnesota as an example of how structured prior authorization rules can work in practice.
Reforms there emphasized transparency, timeliness and accountability, and are widely viewed by policymakers as having improved the process without driving up costs or undermining insurers’ role in utilization management.
That track record gives the model act additional credibility as states consider whether and how to intervene. For employers operating in multiple states, it also raises the prospect of more consistent rules across jurisdictions over time, rather than a patchwork of sharply different requirements.
What Employers Should Watch
For now, the model act does not change any existing laws. Each state would need to introduce and pass its own legislation, and lawmakers may adopt the model in full or only in part. Still, prior authorization has become a bipartisan priority at the state level, particularly as concerns grow about access to care and administrative burden.
Employers that purchase fully insured health plans should pay attention to legislative activity in the states where they operate, as new requirements could affect plan administration, reporting and vendor relationships. Even employers with self-funded plans may see indirect effects as insurers and third-party administrators adjust processes to align with emerging state standards.
