Address preauthorization requirements for certain health care services and utilization review requirements for certain health benefit plans.
Summary
SB 158 revises South Dakota’s health insurance utilization review and preauthorization laws in chapter 58-17H. The bill adds a new process requiring utilization review organizations to give the ordering or treating health care professional a reasonable opportunity to discuss the patient’s treatment plan and the clinical basis for any adverse determination before a denial based on medical necessity, appropriateness, or experimental/investigational status is issued. It also applies the chapter’s preauthorization rules to certain health benefit plans and insurers, while expressly excluding the state Medicaid program.
A major feature of the bill is a “gold card”-style exemption system. Health maintenance organizations and insurers must evaluate, at least annually, whether a provider qualifies for exemption from preauthorization for a particular service, and they may not require preauthorization for that service if they approved or would have approved at least 90% of the provider’s requests in the prior evaluation period. The bill also sets detailed rules for rescinding, denying, appealing, and reviewing exemptions, including limits on retrospective review, notice requirements, independent review rights, and protections against retroactive denial of payment for services provided under an exemption.
Impact
The bill would amend existing insurance law in chapter 58-17H and add multiple new sections governing preauthorization and utilization review for health maintenance organizations, insurers, and related entities. It would create new procedural rights for providers, impose timelines and notice obligations on carriers, restrict when exemptions can be rescinded, and limit retrospective payment denials except in cases of misrepresentation or failure to substantially perform the service. The bill also clarifies that these provisions apply only to certain commercial health plans and do not apply to Medicaid, and that they do not authorize services outside a provider’s licensure or require payment for unlawful services.
Sentiment
The available voting history suggests the bill faced mixed to skeptical committee support. On February 19, 2025, a do-pass motion failed 3-4, and a subsequent motion deferred the bill to the 41st legislative day passed 4-3, indicating the proposal did not have clear consensus but also was not immediately rejected. With no committee transcript provided, the recorded votes are the main indicator of sentiment, and they show a closely divided committee rather than broad support or opposition.
Contention
The main points of contention likely center on the bill’s impact on insurer utilization management and provider autonomy. Supporters would view the exemption system and mandatory peer-to-peer discussion requirement as reducing administrative burden and delays for providers who consistently meet medical necessity standards. Opponents may be concerned that the bill limits carriers’ ability to control costs, manage inappropriate utilization, and conduct retrospective review, especially because it bars retroactive denial of payment in most circumstances and requires insurers to pay for independent review and related records. The 90% approval threshold, the sampling method for rescinding exemptions, and the restriction on internal appeals before independent review are likely the most debated provisions.