Prior Authorization—Challenges and Best Practices

Prior authorizations pose an administrative burden for managed care organizations, physicians’ offices, and patients. They can also delay needed care. First Report Managed Care asked an expert panel of clinicians and other authorities about the challenges, as well as best practices to help minimize the headaches.

Our Expert Panel: 

• Catherine Cooke, PharmD, research associate professor, University of Maryland School of Pharmacy; and president, PosiHealth, Inc, Baltimore, MD

• Mitch DeKoven, MHSA, principal, health economics and outcomes research, IMS Health, Danbury, CT 

• Norm Smith, president, Viewpoint Consulting, Inc, Langhorne, PA

• John Watkins, PharmD, MPH, BCPS, formulary manager, Premera Blue Cross, Mountlake Terrace, WA

• Michael White, PharmD, director, clinical pharmacy, BlueCross BlueShield of Tennessee, Chattanooga, TN

FRMC: It seems the biggest challenge with prior authorizations (PAs) is the administrative burden. Would you agree? 

Smith: Definitely. There’s a 10-point scale for the degree of “onerousness” of a PA. The least onerous is a “1,” where a patient must have tried a generic within a period before a brand can be approved. This is common with statins. In the middle of the scale, a patient must have certain studies done before a drug is approved. For example, a patient with osteoporosis will need to get a bone density test done before a biologic is approved. Plus, they may also have to try a bisphosphonate first.  A “10” means multiple tests must be conducted and read. Then a written justification must be sent to the plan. Some endocrine drugs fall into this category. 

Dr Cooke: For me, the biggest challenge is that health and quality of care may be affected. The administrative process incurs a lot of time, affecting health care provider workflow, as well as MCO [managed care organizations] resources. 

DeKoven: Yes, they are a burden, and recent literature indicates that oftentimes PAs and the associated cost/burden may not even be necessary, since such a large proportion of the inquiries are allowed or not re-directed. 

Dr White: PA is a key component in managing the health care costs of a population. We strive to make the process as efficient as possible. Our PAs and appeals are generally turned around in less than 24 hours.

Dr Watkins: The challenge for us is to reduce administrative burden for providers and ourselves. As my executive VP likes to say, the best UM [utilization management] is no UM at all, because providers are ideally already doing the right thing. But that doesn’t always happen. Sometimes when a patient sees their doctor, they get care that they don’t need; other times, they don’t get care they really do need. Both of these concern us, and we want our providers to do the right thing, even when it may cost more in the short run. Members are also impacted, and good member communication is critical if they are to have a good member experience.

Dr Cooke: There are important unanswered questions. How much time is spent on the process? How much money is saved? Most importantly, how is patient care affected? It is difficult to quantify these aspects. Research on the impact of formulary restrictions show savings on the pharmacy budget, but medical costs may go up. On the other hand, PAs have value in that they may prevent wasteful use of therapies and decrease risk of toxicity, which can have a positive impact on medical costs as well as pharmacy costs. The balance of ensuring appropriateness and quality is difficult to implement and to measure.

FRMC: What can be done to ease the burden? 

Dr Watkins: At least once a year, we review every PA edit to determine whether it is still necessary. If we are approving almost all the requests, we will consider retiring the edit. When a new drug is approved by the FDA [US Food and Drug Administration], we ascertain the likelihood of appropriate use without our managing it through PA. If we believe that to be the case, we will track the drug’s uptake and wait to see whether a PA is needed. “Gold carding” network providers that have a good track record is another way of reducing burden by applying a “trust and verify” approach instead of prospectively reviewing each case.

DeKoven: Additionally, you could see PAs being reserved for certain categories where payers need to more aggressively manage products—for instance, where products are easily interchanged. 

Dr Cooke: These kinds of strategies certainly help. And new software may decrease the manpower burden for review. What about thinking outside the box? If physicians work with MCOs to develop standards—and agree to those standards—perhaps there would not be a need for PA in those instances. I think something like that is worth considering.

Smith: Some pharmaceutical and biotech companies “contract” their way out of a PA, whereas others help providers with them. This is often done by hiring a group of field-based reimbursement specialists to focus on a specific drug or condition. They know how to overcome the hurdles. Also, organizations like ours work with providers to improve the “payer value proposition” through new clinical work or by fleshing out new advantages of a drug.

Dr White: Electronic PAs for medications, covered under either the pharmacy benefit or the medical benefit, have been around for a while. We continue streamlining that process so the various operating systems interface most effectively. Educating members and providers about formulary requirements is also key to making PAs a smoother process.

FRMC: What other challenges do you see? 

Smith: Two trends are changing this environment. One is a commitment by MCOs to full integration of EMRs [electronic medical records], which can speed communication between providers, payers, and
patients. There is also pressure on MCOs to provide a better patient/member experience by removing some of the burden involved in the PA process.

Dr Cooke: There are delays in care, and the impact of that is not always fully appreciated. Patients may not follow-up. I have seen instances where patients with hepatitis C approved for therapy did not obtain the medication because the PA process took so long. Also, patients encounter stress from not being able to get their medications at the pharmacy; it requires more resources of them.

FRMC: How can these challenges be overcome, or at least minimized?

Dr White: MCOs must continue to communicate effectively with provider networks and members so that both have a better understanding of the overall utilization management process.

Dr Watkins: Maintaining a positive relationship with physicians is always important, and we are trained as pharmacists to exercise influence without authority. We may know more about the drugs in question, but we have to give the provider that information in a way that does not interfere with the patient-provider relationship or reduce the patient’s confidence in them. 

One way we do that is by supporting educational outreach programs. For example, the Project ECHO model provides education and guidance to providers treating patients with hepatitis C and HIV. We encourage providers to tap into those resources to make sure that the latest clinical practice guidelines are followed.

FRMC: What other best practices do you recommend?

Dr White: MCOs need to proactively inform networks about changes to the formulary, which gives providers time to adjust their processes. When
appropriate, communicating with members before a change takes effect is also helpful.

Dr Watkins: It’s important to make medical necessity guidelines as clear and concise as possible, and also easily accessible to providers and patients. Base these policies on sound clinical evidence and make that evidence available when providers ask for rationale. 

All of our drug criteria are approved by an independent P&T [pharmacy and therapeutics] committee consisting of outside experts. No one employed by our company has a vote. While a provider may not always agree with our reasoning, I want to at least reach a point in the conversation where we can respectfully agree to disagree. Of course we should be aware of clinical practice guidelines, though some are more evidence-based than others. If we disagree with external experts, we should be prepared to defend our position scientifically.

DeKoven: For providers, think about modeling the process, assigning responsibilities accordingly, and developing management reports to monitor staff productivity. If you find yourself providing the same information each time, construct a form for each drug to simplify the data collection process.

Smith: As long as insurers have the ability to implement true, fair actuarial premium rates, we’ll have tools to manage members’ health. But my concern is the low medical literacy of the population. Lack of compliance, particularly with regards to lifestyle, makes population health management difficult. 

FRMC: What about instances where data is unclear or guidelines conflict? 

Smith: Data, especially in cutting edge areas, will always be unclear. That’s why medicine is art and not just science!

Dr White: Every PA decision is based on evidence and thoughtful consideration, and every appeal is individually reviewed by a pharmacist. It is important that the process leave room for clinical judgment. This should be based not only on guidelines and FDA approvals, but on clinical trials and clinical justification for the request.

Dr Watkins: Often there are big gaps in the available evidence, and that’s where experts will disagree. We must acknowledge the evidence gap, use expert opinion to fill it, and be respectful of those who have reached a different conclusion. We also have a responsibility to cut through the advertising claims to get to the hard evidence. Be skeptical but not cynical.

In the end, make sure to obtain the best clinical science that is available and follow the evidence. Doing the right thing may not always be the lowest cost, short-term option, but it usually pays off in the long run. That’s the underlying assumption of evidence-based medicine.