Illinois Bans Step Therapy for Emergency Mental Health

Dive Brief

An Illinois law signed last week brings significant changes to health insurance practices. Governor J.B. Pritzker signed House Bill 5395 into law on July 10, which will take effect on January 1, 2025. This new legislation prohibits health insurers from enforcing “step therapy,” a policy that forces physicians to try less expensive treatments before moving to more costly options. Additionally, the law bans the requirement for prior authorization for certain emergency mental health treatments.

During the signing ceremony, Governor Pritzker emphasized that this bill would restore medical decision-making power to patients and their healthcare providers, aiming to tackle practices that make care less affordable and more difficult to access.

However, it’s important to note that this law does not apply to self-insured health plans regulated under the Employee Retirement Income Security Act (ERISA).

Dive Insight

Among the two key elements of Illinois’ recent legislation, the state’s ban on step therapy stands out as particularly noteworthy, according to David Shillcutt, an attorney with Epstein Becker Green. While many health systems have already eliminated prior authorization requirements for emergency mental health admissions, Shillcutt points out that Illinois is making significant strides by addressing the practice of step therapy.

Step therapy requires patients to first try and fail less expensive treatments before moving on to more costly or specialized options. Shillcutt notes that Illinois is at the forefront of implementing restrictions on such utilization management practices, which have historically posed barriers to timely and effective care. By banning step therapy, Illinois aims to streamline treatment options and improve patient access to necessary therapies without the added delay and administrative burden of trying multiple treatments first. This legislative move positions Illinois as a leader in advancing patient-centered care and reducing obstacles created by stringent utilization management protocols.

Shillcutt noted that patients often face choices between medications that treat similar conditions, and step therapy has been employed to control costs by requiring the use of cheaper drugs that may be just as effective as more expensive alternatives. However, he pointed out that it is difficult to predict the precise outcomes of banning such a practice, as Illinois has done.

“I think Illinois employers may see an increase in spending on prescription drug benefits and might consider employing navigators or additional services to help patients evaluate their treatment options,” Shillcutt said.

He also noted a potential shift: health plans affected by the state’s ban on step therapy might introduce prior authorization requirements for certain treatments instead. The law includes provisions mandating that covered plans publicly disclose information about prior authorization controls for each drug they cover.

A December 2021 survey by the American Medical Association revealed that over half of practicing U.S. physicians believe prior authorization requirements hinder a patient’s ability to perform their job responsibilities.

These state reforms come at a time when mental health issues continue to impact the U.S. workforce. According to a recent report by Eagle Hill Consulting, employers may have reached a standstill in addressing employee burnout, as noted by the firm’s President and CEO, Melissa Jezior, in a press release.

Moreover, mental health benefit utilization remains a challenge for employers. A report from telemedicine company Amwell last year found that 85% of surveyed employees did not use their mental health benefits, with access issues and time constraints being major barriers.

Achieving mental health parity in insurance coverage has been a significant challenge. In response to concerns about patient outcomes, the Biden administration proposed a 2023 rule requiring health insurers to evaluate patient outcomes and banning the use of prior authorization and similar techniques for mental health and substance use disorder providers, as reported by Healthcare Dive. A final rule is anticipated to be released later this month, according to the White House Office of Information and Regulatory Affairs.