- Reform to prior authorization is expected to speed up healthcare delivery and streamline the request and appeal process. However, Governor Reeves notes the potential negative effects the new law will have on state employees’ premiums.
Thursday was the deadline for action by Governor Tate Reeves (R) on SB 2140, the Prior Authorization legislation passed in the Mississippi House and Senate. Reeves announced that the bill will become law without his signature.
The bill ultimately requires insurance companies to respond to requests for urgent and non-urgent medical care within a designated time frame. For non-urgent issues it allows the insurer up to seven days to approve a physician’s request, while for urgent matters that time span is 48 hours. The legislation also requires the creation of an online web portal, where requests and appeal applications can be submitted. The new law places the Mississippi Department of Insurance as the overseeing agency of the proposed web portal and includes Medicaid and the state’s health plan within the prior authorization process.
Since the passage of the measure in the Legislature, members have speculated on whether Reeves would attempt to veto the bill, sign it, or allow it to go into law without his signature.
Governor Reeves vetoed the 2023 version of the prior authorization legislation despite overwhelming support by both chambers. Reeves cited concerns over the operation of the web portal and regulations that would be placed on insurers as his motivation for the denial of the bill. At the time, lawmakers did not attempt to override his veto with a two-thirds vote.
“I’m glad we passed a law that will speed up the prior authorization process and result in quicker decisions for patients in need of urgent medical care,” said the author of the bill, State Senator Walter Michel (R).
RELATED: Senators concur on House prior authorization changes; bill heads to Governor Reeves
Thursday evening, Governor Reeves released a thorough explanation as to why he was choosing not to sign the legislation and instead allow it to become law without his signature. Chief among his concerns were the potential effects on the insurance premiums paid by state employees.
“State employees should not receive the equivalent of a pay cut as a result of the passage of Senate Bill 2140.,” Reeves wrote, adding, “Over the past couple of years, Mississippi has made significant gains in closing the pay gap between private and public sector employees. Senate Bill 2140, however, represents a step in the wrong direction and will have the likely unintended consequence of widening that pay gap again.”
Governor Reeves encouraged lawmakers to either remove the State Plan from the scope of the new law or provide an annual appropriation to the State Plan to cover the increased costs incurred as a result of Senate Bill 2140.
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The Governor’s full message on the legislation is shown below:
Today, Senate Bill 2140 – the Mississippi Prior Authorization Reform Act – will become law without my signature.
You may recall, last year, I vetoed Senate Bill 2622 – also named the Mississippi Prior Authorization Reform Act. I outlined in my veto message a few correctable flaws in the bill that had the potential to create significant negative unintended consequences. Over the Summer and Fall, I charged my staff with assembling a group of stakeholders to determine the best way to address these flaws, and recommendations were provided to members of the Legislature prior to the start of the 2024 Legislative Session. Through the legislative process, almost all of the flaws in the prior bill were addressed in Senate Bill 2140. I want to specifically thank Chairman Sam Creekmore, House leadership, and others for their efforts to amend Senate Bill 2140 to address these concerns.
The bill that is before me today is a significant improvement over last year’s bill. However, Senate Bill 2140 differs in one significant way from its predecessor – it adds the Mississippi State and School Employees’ Life and Health Insurance Plan (aka State Plan). The State Plan provides health insurance coverage for almost 190,000 state employees and their families. Currently, the State Plan is funded almost exclusively through the premiums paid by its insureds. This means that every dollar in increased administrative and benefits costs imposed on the State Plan as a result of Senate Bill 2140 will be passed on to state employees and their families through premium increases.
While the price of a medical procedure generally remains stable over a period of 60 to 180 days, the price of pharmaceuticals can fluctuate wildly during that same period. Senate Bill 2140 limits the ability of the State Plan to quickly adjust the pharmaceuticals covered under the State Plan. This means that the State Plan will be required to provide coverage for more costly drugs despite the fact that cheaper equivalent drugs may come to market or become available. Senate Bill 2140 also requires the State Plan to continue to provide coverage for pharmaceuticals taken by new state employees for a period of at least 90 days after beginning their employment with the state. This is despite the fact that such pharmaceuticals may not be covered under the State Plan and cheaper alternative equivalents are available.
Based on historical data, the cost increase for pharmaceuticals alone to the State Plan has been conservatively estimated to be between $30 million and $110 million per year, with one estimate coming in at $140 million per year. These cost estimates were provided to the Senate prior to its concurrence in the House’s amendments to Senate Bill 2140. Absent additional legislative action, such increased costs will be passed on to every state employee and their families. This includes every teacher, university professor, corrections officer, road crew member and social worker.
Assuming an increased cost to the State Plan of just $30 million annually, every person covered under the State Plan will see their premium increase by approximately $158 a year, or $632 for a family of four. Assuming an increased cost of $100 million annually, every person covered under the State Plan will see their premium increase by approximately $526 a year, or $2,104 for a family of four. State employees should not receive the equivalent of a pay cut as a result of the passage of Senate Bill 2140.
Over the past couple of years, Mississippi has made significant gains in closing the pay gap between private and public sector employees. Senate Bill 2140, however, represents a step in the wrong direction and will have the likely unintended consequence of widening that pay gap again.
The Legislature, of course, has several options to address this concern: 1) pass legislation this session before Senate Bill 2140 becomes effective to remove the State Plan from its scope, or 2) make a commitment to provide an annual appropriation to the State Plan to cover the increased costs to the State Plan as a result of Senate Bill 2140. I hope we can agree that such increased costs should not be borne by state employees and their families.
I am allowing Senate Bill 2140 to become law because I agree that it is a significant improvement over its predecessor and that reform of the prior authorization process is much needed. That being said, I cannot put my signature on this bill because of its potential effects on the premiums paid by state employees.
I strongly encourage the Legislature to address this one major issue before Senate Bill 2140 is fully enacted.
Sarah Ulmer
