Analysis by Telus Health found specialty drugs have grown from 11 per cent of total private drug plan claims costs in 2008 to 30 per cent in 2019 and require effective management to ensure sustainability of health benefits plans, said Suzanne Lepage, private health plan strategist, during a session at Benefits Canada’s Face to Face Drug Plan Management Forum on Dec. 9, 2020.
“Although prior authorization can be an effective tool to manage drug plans, not all programs are created equal and plan sponsors need to ensure they understand their prior authorization program to mitigate potential financial and/or legal risks.”
Prior authorization is a tool to facilitate formulary decision at the plan-member level. When a payer drug review can’t easily determine whether to cover or not cover a new drug, prior authorization can be used to gather additional plan-member medical information that can’t be transmitted via the pay-direct drug-adjudication process. “Prior authorization should be an outcome of the drug review process that sets a standardized, unbiased criteria to determine individual coverage eligibility,” said Lepage.
Drug plan reviews should be driven by guiding principles that include a standardized process to assess value of a new medication. “Plan sponsors should ensure they understand and support processes and outcomes of drug reviews for their plan,” she said. “It’s important to ensure that the review is relevant to an employer-sponsored plan, which includes a cost-effectiveness evaluation using a private-payer perspective, rather than a public payer.”
Although not all payers provide criteria on their prior-authorization forms, physicians have said if they could assess right away if a patient would be eligible or ineligible, they could save time and avoid paperwork, said Lepage.
Prior authorization can prove challenging when a plan moves between insurance carriers, though. Although the intent is to match coverage, there are often differences in the prior-authorization criteria, which “need to be addressed proactively before it causes major disruption,” she cautioned.
While some prior-authorization requests can simply be assessed by claims reviewers who compare plan-member medical information to pre-set criteria, “in some conditions, drugs may not be used the same in all patients and require medical-specialist expertise to determine eligibility,” said Lepage.
Prior authorization is not a stand-alone process, but rather part of a comprehensive toolbox of payer-designed drug-plan management tools designed to work together. When prior authorization is outsourced to a third-party provider, they might not have insight on the plan member’s drug claims history, the plan’s financial risk, such as underwriting or pooling arrangement with their insurer, or a potential confidential lower-drug price the payer negotiated with the pharmaceutical manufacturer. “All of these are important factors that should be taken into consideration when assessing cost and value of a drug and determining individual prior-authorization eligibility,” said Lepage.
Some organizations reference the Canadian Agency for Drugs and Technologies in Health drug reviews to inform prior-authorization decisions. Unfortunately, this may not be a best practice, because not only does CADTH consider the value of drugs based on costs and outcomes that are not relevant to private payers, but, according to Lepage, the review may be outdated and not reference important, updated, post-review information, such as new clinical data, real-world evidence or lowered price.
“CADTH reviews are a great place to start, however prior authorization reviews for private plans need to include current information and cost-effectiveness analysis relevant for employer-sponsored plans.”
Private plans should also consider the return on investment of prior-authorization programs and look beyond plan savings versus the cost to administer. An assessment should also include the percentage of prior authorizations that are approved versus those declined, as well as plan member friction and the potential impact on plan member health and disability.
“If a prior authorization is delayed or declined, the plan member’s condition could worsen and lead to reduced productivity, absenteeism or long-term disability,” noted Lepage. “Whereas if a prior authorization is approved, the plan member has access to the treatment they need, which could improve health outcomes and productivity and absenteeism and long-term disability could be avoided.”
Read more stories from the 2020 Face to Face Drug Plan Management Forum.