Senate committee substitute to the 1st edition replaces the previous edition with the following. Makes conforming changes to the act’s long and short titles.

Contains whereas clauses.

Section 1.

Makes the following changes to Article 11B of GS Chapter 131E. Organizes the Article into two parts, Part I, consisting of the Health Care Cost Reduction and Transparency Act of 2013 (2013 Act) and Part II, pertaining to Transparency in Healthcare Provider Billing Practices (discussed in Section 2 below). Makes clarifying, technical, and conforming changes.

Makes the following changes to the 2013 Act. Adds terms CPT (current procedural terminology), HCPCS (the Healthcare Common Procedure Coding System), DRG, and statewide data processor to the definitions pertaining to the 2013 Act. Requires hospitals to submit quarterly reports (currently, annual report) on the most frequently reported admissions by DRG’s (diagnostic related groups) for inpatients, to the statewide data processor (currently, DHHS), as described, and adds new calculation required by the act on how to determine the amount that will be charged to each patient for each DRG. Removes outdated language. Requires quarterly reports (currently, annual reports) to the statewide data processor (currently, DHHS) by hospitals and ambulatory surgical facilities as described on the total costs for the most common surgical and imaging procedures as described and including costs of each billable item and service regardless of whether it was performed by a physician or non-physician practitioner. 

Requires the NC Medical Care Commission (Commission) to adopt rules to accomplish the four listed directives, including: (1) establishing and defining no fewer than ten quality measures for licensed hospitals and licensed ambulatory surgical facilities; (2) providing the methodology that hospitals or ambulatory surgical facilities should use to determine the most common DRG’s for inpatients or common surgical and imaging procedures, as appropriate; and (3) establishing procedures for the statewide data processor to receive the quarterly data required by GS 131E-214.13 for publication on DHHS’s website.

Enacts new GS 131E-214.18 imposing a civil penalty for failure to comply with the Act, including penalties to be assessed for each violation day in the amounts described. Requires DHHS to remit the clear proceeds of any civil penalty to the Civil Penalty and Forfeiture Fund (Fund).

Makes conforming changes to GS 131E-214.4 (duties of the statewide data processor).

Effective on the later of January 1, 2026, or the date the rules adopted by the Commission take effect. Directs that GS 131E-214.18, as enacted by the act, applies to acts occurring on or after that date. Requires the Commission to notify the Revisor of Statutes (Revisor) when the rules required under GS 131E-214.13 take effect.  

Section 2.

Enacts GS 131E-214.30, as follows. Requires at the time a health service facility participating in an insurer's healthcare provider network (1) treats an insured individual for anything other than screening and stabilization; (2) admits an insured individual to receive emergency services; (3) schedules a procedure for non-emergency services for an insured individual; or (4) seeks prior authorization from an insurer for the provision of nonemergency services to an insured individual, to provide the insured individual with a written disclosure pertaining to billing, out-of-network services, and consumer protections, as described.  Requires emergency services facilities to disclose to an insured individual if it does not have a contract for services with the insured’s insurer, and to provide information about consumer protections, as described, as soon as practicable after the facility begins providing emergency services.

Enacts GS 131E-214.31, as follows. Requires at the time a healthcare provider not participating in the insured’s network (1) treats an insured individual for anything other than screening and stabilization; (2) schedules a procedure for non-emergency services for an insured individual; or (3) seeks prior authorization from an insurer for the provision of non-emergency services to an insured individual, to provide the insured individual with a written disclosure that warns the insured that the healthcare provider is not in the insured’s healthcare provider network and provides consumer protection information, as described.

Designates failure to comply with the above requirements as an unfair and deceptive trade practice. Clarifies that nothing in Article 11B of GS Chapter 131E forecloses other remedies available under law or equity.

Repeals the definition of health benefit plan in GS 58-3-200(a)(1) and insurer in GS 58-3-200(a)(2) (definitions section of provisions pertaining to miscellaneous insurance and managed care coverages and networks). Adds definition of terms clinical laboratory, and healthcare provider.

Requires an insurer upon request under GS 58-3-200(d) (services outside provider networks), to determine whether a healthcare provider able to meet the needs of the insured is available to the insured without unreasonable delay by reference to the insured's location and the specific medical needs of the insured.

Applies to healthcare services provided on or after October 1, 2026, and to contracts issued, renewed, or amended or after that date.

Section 3.

Adds new Article 11C to GS Chapter 131E, entitled “Fair Billing and Collection Practices for Hospitals and Ambulatory Surgical Facilities," as follows. Recodifies GS 131E-91(fair billing and collections practices for hospitals and ambulatory surgical facilities) as GS 131E-214.50, and reorganizes that provision into new Article 11C. Requires a hospital or ambulatory surgical facility to first present an itemized list of charges to the patient detailing the specific nature of the charges or expenses incurred by the patient before referring the bill to collection as another required collections practice under new GS 131E-214.50. Enacts new GS 131E-214.52 (patient’s right to a good faith estimate) as part of new Article 11C, as follows. Defines CMS, facility (licensed hospital or ambulatory surgical facility), items and services, service package, and shoppable service (a non-urgent service that can be scheduled by the patient in advance). Requires a facility to provide, upon a patient's request, a good faith estimate for a shoppable service as described. Limits a patient’s final bill from exceeding more than 5% of the good faith estimate. Requires DHHS to adopt rules to implement the statute. Directs DHHS to notify the Revisor when the rules required under GS 131A-214.52 take effect.

Effective on the later of January 1, 2026, or the date the rules adopted by DHHS become effect. Applies to acts occurring after the effective date. 

Section 4.

Adds new GS 131E-214.54 (concerning facility fees) to Article 11C, as follows. Defines ambulatory surgical facility, campus, facility fee (any fee charged or billed by a health care provider for outpatient services provided in a hospital-based facility that is (i) intended to compensate the health care provider for the operational expenses of the health care provider, (ii) separate and distinct from a professional fee, and (iii) charged regardless of the modality through which the health care services were provided), health care provider, health systems, hospital, hospital-based facility, professional fee, and remote location of a hospital.

Places the following limits on facility fees: (1) prevents a health care provider from assessing a charge, bill, or collecting a facility fee unless the services are provided on a hospital's main campus, at a remote location of a hospital, or at a facility that includes an emergency department or ambulatory surgical center and (2) regardless of where the services are provided, no health care provider can assess a charge, bill, or collect a facility fee for outpatient evaluation and management services, or any other outpatient, diagnostic, or imaging services identified by DHHS. Requires DHHS to annually identify those services. 

Requires each hospital and health system to submit a report annually to DHHS by July 1st on the six specified matters. Specifies that all violations of the statute are an unfair trade practice. Subjects health care providers that violate the statute to a civil penalty of not more than $1,000 per occurrence.

Requires DHHS to adopt rules to implement new GS 131E-214.54. Effective on the later of January 1, 2026, or the date DHHS adopts the rules discussed above. Requires DHHS to notify the Revisor when the rules adopted under GS 131E-214.54 take effect.

Section 5.

Expands the State Auditor’s responsibilities under GS 147-64.6 to include a periodic review of health service facilities that: (1) receive State funds and (2) are licensed under GS Chapter 122C that are recipients of State funds for information on the prices these facilities charge out-of-network or uninsured patients and their transparency about those prices. Requires that the State Auditor report findings to the specified NCGA committee by April 1, 2026, and periodically thereafter as specified.

Part 6.

Expands the obligations pertaining to non-expedited appeals under GS 58-50-61(k) to include utilization review organizations (currently just insurers). Requires providing contact information for the insurer instead of the coordinator. Makes clarifying and technical changes. Requires an insurer to provide their contact information as part of the written information they `must provide as part of a first-level grievance review (currently have to provide review contact information for the coordinator) and makes technical changes to GS 58-50-62(e) (concerning first-level grievance reviews). Requires the insurer to provide information on how and where to submit written material for a second-level grievance review and contact information for the insurer (currently, just have to provide the coordinator's contact information) in GS 58-50-62(f) (second-level grievance reviews).

Section 7.

Amends GS 131E-176 (the definitions pertaining to certificates of need) so that rehabilitative health services; rehabilitation health service facilities; rehabilitation health service facility beds; rehabilitation facility hospitals for rehabilitation of injured, disabled, or sick persons and nursing provided at a non-inpatient rehabilitation facility for the rehabilitation of sick, injured, or disabled individuals are no longer included in the definitions. Amends term rehabilitation facility so that it means a facility that has been classified and designated as an inpatient rehabilitation facility by the Centers for Medicare and Medicaid Services (currently, means a public or private inpatient facility which is operated for the primary purpose of assisting in the rehabilitation of individuals with disabilities through an integrated program of medical and other services which are provided under competent, professional supervision).

Section 8.

Amends GS 58-50-61 (concerning utilization reviews), as follows. Defines an urgent health care service to mean a health care service (including mental or behavioral health services) with respect to which the application of the time periods for making an urgent care determination that, in the opinion of a healthcare provider with knowledge of the covered person's medical condition, either: (1) could seriously jeopardize the person's life or health or their ability to regain maximum function or (2) would subject the person to severe pain that can't be adequately managed without the care or treatment that is subject to utilization review. Defines prior authorization (process by which insurers and utilization review organizations (URO) determine coverage on the basis of medical necessity and/or covered benefits prior to the rendering of those services) and course of treatment. Now defines health care provider as it defined in GS 90-410.

Creates two different timelines for prospective and concurrent utilization reviews based on the urgency of the healthcare service. Specifies that the current three-business day deadline is for nonurgent healthcare services. For urgent healthcare services, requires the insurer or its utilization review organization (URO) to conduct the review and make the determination or noncertification by not later than 24 hours after receiving the necessary information to conduct the review, unless the reviewer does not have access to the electronic health records of the covered person. Extends the notice obligations pertaining to utilization reviews to URO’s that conduct utilization reviews.   

Sets forth three requirements that apply to an appeals review, including that any appeal not involving a mental health matter be reviewed by a licensed physician meeting the specified criteria, that appeals initiated by a licensed mental health professional be reviewed by a licensed mental health professional rather than a licensed physician and the licensed physician or licensed mental health professional consider all known clinical aspects of the healthcare service under review.  

Requires an insurer to make any current utilization review requirements and restrictions available on its website. Specifies that any new prior authorization requirements or restrictions amendments thereof are not in effect unless and until the insurer’s website has been updated to reflect the new/amended requirements or restrictions. Directs that a claim cannot be denied for failure to obtain a prior authorization if the prior authorization requirement or amended requirement was not in effect on the date of service of the claim.

Sets forth the following requirements that apply to the length of time an approved prior authorization remains valid in certain circumstances:

• If a covered person enrolls in a new health benefit plan offered by the same insurer under which the prior authorization was approved, then the previously approved prior authorization remains valid for the initial 90 days of coverage under the new heath benefit plan. Clarifies that this does not require coverage of a service if it is not a covered service under the new health benefit plan.
• If a healthcare service, other than for in-patient care, requires prior authorization and is for the treatment of a covered person's chronic condition, then the prior authorization shall remain valid for no less than six months from the date the healthcare provider receives notification of the prior authorization approval.

Requires, by January 1, 2028, insurers offering a health benefit plan or a utilization review agent acting on behalf of an insurer offering a health benefit plan, to implement and maintain a prior authorization application programming interface meeting the requirements under 45 C.F.R. § 156.223(b) as it existed on January 1, 2025.

Extends liability for violations of GS 58-50-61 to agents of the insurer. Prevents an insurer from using an artificial intelligence-based algorithm as the sole basis for a utilization review determination.

Applies to insurance contracts, including contracts with URO’s, issued, renewed, or amended on or after October 1, 2026.

Directs the State Treasurer and the Executive Administrator of the State Health Plan to review all practices of the State Health Plan and all contracts with, and practices of, any third party conducting any utilization review on behalf of the State Health Plan to ensure compliance with GS 58-50-61, as amended by the act. 

Section 9.

Specifies that the act is effective when it becomes law, except as otherwise provided.