The Massachusetts Senate has approved a bill to create a health insurance bureau. The new entity will be part of the Massachusetts Department of Insurance and will focus on vital functions such as conducting price reviews, overseeing individual and small group health insurance markets, ensuring affordable plans, and educating consumers about their health coverage options.

Funded by an assessment imposed on state-licensed health insurance companies, the office is set to receive $1 million to begin operations. This funding mechanism, designed by the Insurance Commissioner, is designed to cover the full range of operating costs associated with the office’s activities, including direct and indirect expenses as well as fringe benefits for its employees.

The creation of this office is one component of a broader health care bill that includes several important measures. If passed into law, the bill would require insurers to honor prior authorizations granted by a policyholder’s previous insurer for at least 90 days. In cases involving chronic disease management, such authorizations for medications and treatments would remain valid for the duration of the prescription, up to a maximum of 12 months.

Additionally, the legislation includes several provisions aimed at strengthening oversight across various aspects of the health care industry. It introduces stricter regulations for private equity firms, real estate investment trusts, and management service organizations that are deeply involved in health care operations in Massachusetts. The bill also calls for comprehensive studies to address the state’s primary care provider shortage, proposes changes to the timeline for setting health care cost benchmarks, and updates notification requirements for any changes in the operation or governance of health care providers.

One of the most significant aspects of the bill comes in response to the bankruptcy of the for-profit Steward Health Care System, an event that has spurred calls for greater transparency in how health care costs relate to services provided.

“Because Massachusetts is recognized worldwide for its first-rate health care, this legislation aims to maintain that standard while making such care more accessible and affordable,” said Senator Michael J. Rodriguez, chairman of the Senate Ways and Means Committee.

In a related development, the Massachusetts Insurance Commissioner announced a massive 14.6% cut in workers’ compensation rates, a move that nearly doubles the cut previously recommended by the Massachusetts Bureau of Workers’ Compensation and Assessment.

Do you have any thoughts on this new legislation? We welcome your comments below.