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

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.

In a major announcement, America’s Health Insurance Plans (AHIP) said that more than 50 major insurers — including UnitedHealthcare, Aetna, Cigna and various regional Blue Cross Blue Shield plans — have pledged to significantly streamline the prior authorization process and improve the patient care experience.

This shift could bring relief to more than 250 million Americans enrolled in commercial, Medicare Advantage and Medicaid managed care plans.

What’s changing?

The insurers committed to a six-part plan to reduce the administrative burden of prior authorization, modernize approval processes and improve the speed of care. Key changes include:

• Standardized electronic prior authorization submissions, targeted for 2027.
• Reduced prior authorization requirements for certain services, effective in 2026.
• Continuity of care protections for patients switching plans mid-treatment, ensuring prior approvals are honored for 90 days.
• Clearer communication about authorization decisions and appeals, set for implementation in 2026.
• Real-time approvals for at least 80% of electronic requests by 2027.
• Mandatory medical review of any denial based on clinical grounds, which is already in effect.

Evolution of prior authorization

Prior authorization was originally intended as a cost-control measure to ensure treatments are medically necessary and cost-effective. But for many patients and businesses, it has become a bureaucratic nightmare.

According to the American Medical Association’s (AMA) 2024 survey of practicing physicians:

• 93% reported that prior authorization delays access to necessary care.
• 82% said it sometimes causes patients to abandon treatment altogether.
• 88% believe it increases overall health care costs through ER visits, extra office appointments and hospitalizations.
• Nearly one in three reported that the process led to a serious adverse event, including hospitalization or even permanent harm.

While these delays have real consequences for health plan enrollees, for businesses that provide group health insurance, they can translate into reduced employee productivity, higher out-of-pocket costs for workers and lower satisfaction with benefit plans.

In recent years, there’s been a growing backlash against prior authorization and the toll it takes on time-sensitive care. Until now, insurers have been slow to change. But as dissatisfaction has grown, insurers like UnitedHealthcare and Aetna have started to make moves — such as eliminating requirements for certain medications or bundling approvals for cancer-related imaging tests.

AHIP’s new industrywide pledge is the most sweeping effort yet and signals that insurers recognize the pressure to act.

Will it work?

While the commitment marks a major policy shift, questions remain about how fast and how fully these changes will be implemented. As the AMA notes, similar voluntary pledges in the past haven’t produced substantial results. In fact, only 10% of physicians surveyed said they currently work with insurers offering programs that exempt “trusted” providers from repeated approvals.

Still, the promise to move toward real-time decisions and reduced authorization burdens — especially for high-performing doctors and common procedures — could ease friction and improve patient experience.

The takeaway for employers and health plan buyers

If AHIP’s reforms are implemented as promised, the impact on enrollees could be significant:

• Faster care: Less waiting for approvals could reduce time off work and lower stress.
• Lower costs: Fewer delays can prevent complications that lead to higher downstream medical bills.
• Simplified processes: Standardization and real-time digital systems will cut down on paperwork and confusion.