Smarter Decisions, Superior Outcomes

3 Common Myths about Prior Authorization Carve-Out

Posted by Kathleen Sabo on February 15, 2018 at 10:49 AM

There are three common myths circulating in the employer benefits marketplace regarding prior authorization (PA) iStock-488222997.jpgservices:

  1. All PA Programs are the same.
  2. My PBM won’t let me.
  3. It’s too confusing for members.

In this article, we’ll explore and dispel those myths and provide
a glance at the value of carving-out these programs from the pharma
cy benefit management contract. Successful PA programs, when managed effectively, are the gatekeeper to controlling soaring pharmacy expenditures while ensuring the right patient gets the right drug in the right dose at the right time.

Myth 1: All PA Programs are the same.

PA programs may elicit feelings of distaste, frustration, and administrative inefficiency, by prescribers and members. Historically, these programs are known to have lacking clinical rigor, narrow pharmaceutical focus, inconsistent turn-around times, unreliable notification processes, inadequate and restricted reporting, and painful drawn-out processes for members and providers. But, they don’t have to.

When meeting with employer group representatives over the past few years, we’ve consistently heard that most benefit managers believe all PA programs to be the same, regardless of the service provider. Perhaps the reason for this wide-spread fallacy is that the majority of PA programs are generic, inefficient, and non-transparent—the employer has little to no control or knowledge of the criteria and process being used.

There is a major lack of goal alignment between employer and their PBM which results in developing PA programs of varying success. Many PBMs make margin on the administrative fees they charge for PA services and when they approve a drug dispensed from their own pharmacy. This impartiality can hinder the PA process, both from an administrative perspective and from a cost management perspective.

Effective PA programs require systematic efficiency and clinical rigor which bring consistency and accuracy to the prior authorization (PA) process. PA services that are independent and objective with no relationship to pharmaceutical manufacturers broaden the value of the programs because coverage decisions are made using only evidence-based criteria and available medical and pharmacy claims data.   

Myth 2: My PBM won’t let me.

It may require the help of the benefit consultant and may be dependent upon your contract timeline. Employers, labor funds, and health plans across the country have successfully carved out a number of services, including specialty drug dispensing and prior authorizations, from contracts with CVS, Express Scripts, OptumRx, and other pharmacy benefit managers. If your PBM is resisting, get a new PBM. It’s your benefit plan.

Myth 3: It’s too confusing for members.

While we absolutely agree that member disruption is a consideration for any procurement/contracting decision, members are not commonly aware of who is making the decision on their prior authorization drug. There is no difference in process from a member’s perspective if a PBM or other third party is involved in the review. In many cases, third party reviewers are able to improve turn-around times and overall service associated with the prior authorization review process.  

Final Words for PA Carve-out

Carve-out of PA service is a viable, critical cost control method that is gaining momentum across the industry because ensuring appropriate use is an effective mechanism to prevent inappropriate drug spend. The expanding specialty drug market and the ever-growing cost of traditional brand and generic drugs highlight the need for more controls available to employers to help control increasing drug costs. The specialty drug horizon is substantial, and it will be critical for all employers and all payors to have as much control over the utilization of those medications as possible.

PBMs are good at negotiating rebate contracts with manufacturers and drug discounts with pharmacies—that should be their area of focus. Independent and objective clinical service organizations should be employed to oversee utilization management programs that focus on the goals of the benefit plan sponsor. The reality is that prescribers do not always have all the information necessary to write the best prescription for the member he or she is treating AND the benefit plan who is paying for the treatment. PA programs offer another set of eyes on prescriptions to ensure the right member is getting the right drug from the right provider, at the right time and dose, and at the right price. This critical review should not be handled by a PBM who has an interest in dispensing the medications that they approve.

So…what now?

Start asking questions about your current PA program and consider what might better serve your benefit plan and your members. You don’t have to settle for a PA program that approves most of the drugs that are reviewed. An independent and objective clinical services organization can provide an efficient, clinically-focused, transparent cost-management, program that meets your needs and allows you to have more control. After all, what could your plan do with the money saved from preventing just 1 inappropriate prescription for Harvoni? 


Learn more about Prior Authorization

Topics: rising drug costs,, drug costs,, patient outcomes,, data accessibility, population health, health plan management, pharmacy spend, High Cost Medications, Prior Authorization Processing, Controlling Pharmacy Expenditures, Specialty Drug Cost Control, Prior Authorization, Coverage Determination Process, healthIT

Independent & Objective

Clinical expertise without the noise

Getting the facts matters. Following our corporate mission, we're committed to using this blog to enhance your knowledge of evolutionary events and discussions in the pharmacy services and technology arena. 

Here's what we're focused on right now:

  • Lowering ingredient cost
  • Enhancing the coverage determination process
  • Creating robust prior authorization criteria
  • Producing actionable drug trend analyses
  • Enhancing prescription drug monitoring 
  • Implementing interoperability efforts

Subscribe to Email Updates

Recent Posts