Electronic prior authorization and payers: Lessons from BCBS

Prior authorization (PA) is a cost-savings feature that ensures the safe and appropriate use of selected prescription drugs and medical procedures. A number of drivers soon will start moving payers away from using the inefficient, old-fashioned PA process-based on paper, phone, and fax-to electronic prior authorization (ePA). However, making that shift is easier said than done. Lessons learned from a project at Blue Cross and Blue Shield of Michigan can help other payers pave the way for ePA. 

Five reasons ePA is gaining momentum

Payer interest in ePA is a somewhat recent development. It is fueled by the convergence of several drivers:

1.     Specialty drug costs and use. Specialty drugs-which usually require PA-are used to treat the tens of millions of patients with chronic illnesses such as cancer, rheumatoid arthritis and multiple sclerosis. Specialty drug spending represents the fastest growing segment among healthcare expenditures. Outlays are expected to quadruple to $402 billion by 2020, and account for 50% of overall drug costs by 2018 for commercially insured individuals, according to a UnitedHealth Center for Health Reform & Modernization issue brief, “The growth of specialty pharmacy: Current trends and future opportunities.” These drugs are expensive, with costs per month generally ranging from $2,500 to $50,000 per patient. A year’s treatment with a specialty drug can exceed $100,000. Reports of million-dollar regimens are creating sticker shock for payers and patients alike.  That is why payers use PA as a tool to balance the costs and use of specialty drugs with therapeutic needs.

2.     Adverse impact on care. The antiquated paper-phone-fax methods for PA create a number of hassles for all stakeholders, which adversely affect care. The back-and-forth among payers, prescribers and pharmacies to initiate and complete a PA is time consuming, often taking 48 hours or more. This delays treatment for days and often results in abandoned prescriptions or problems with medication adherence. These in turn result in unnecessary doctor and emergency department visits, adverse reactions and even deaths-all of which affect everyone’s healthcare costs.

3.     Significant overhead costs. Manually processing each PA is time-consuming and expensive. It takes five hours per week at the pharmacy and up to an hour per PA for prescribers. Eliminating manual PA processing could save payers as much as $25 per submission-which is significant because each PA involves many submissions of forms, medical records and other relevant information that must be reviewed and processed.  

4.     State mandates. Several states are taking legislative and regulatory actions to reform and standardize PA processes. They should increase during the next legislative session.

5.     Growing industry involvement. The industry has recognized the needs for changing PAs, which are being translated into action. For example, there is expansion of health plan involvement in medical drug spend and the development of health plan portals to support medical drug PAs.

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