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.

Next:  BCBS pilot project and lessons learned

A pilot project is born

Recognizing the need for ePA, Blue Cross and Blue Shield (BCBS) of Michigan created a pilot project to leverage available technology for its medical specialty drug management program. It involved a five-part process:

1. Analysis, including in-depth review of its current medical drug management program  

2. Program requirements development

3. Folding ePA into the company’s newly created overarching strategy to manage medical drug distribution channels

4. Issue a request for proposals and vendor selection  

5. Project implementation and oversight

A multidisciplinary team was assembled over a three-year period to complete different phases of the project.

Although the cost of implementation has been in the millions, the benefit cost savings quickly exceeded the initial investments.

Provider acceptance, development of web-based prior auth algorithms and interconnections of claims systems presented challenges at different phases of the program.  

Collaborative problem-solving and education throughout the organization and with provider groups has allowed this program to exceed expectations in benefit cost-savings within the first few years of implementation.

Lessons learned

The pilot resulted in a number of lessons learned for health plans and their physician stakeholders. These will be helpful in moving the ePA adoption needle.

•       Health Plans. Adoption of ePA may be slower than anticipated. In-depth review of the current medical drug management program is key. Internal resources need to be aligned to make sure all aspects of medical claims systems are working synergistically.

•       Providers. Provider issues must be addressed, such as access and login.  Continued communication with providers is essential for a successful utilization management program. Despite training, many providers are reluctant to utilize another tool in their work flow. This is similar to the barriers encountered in adoption of electronic prescribing.

Conclusion

Payers are stepping up to address the growing issues of costs, use and therapeutic needs to specialty medication. Electronic prior authorization shows promise to balance those realities. Pilot programs yield valuable insights, which can help move ePA implementation forward.

James Lang, PharmD, MBA, is vice president, pharmacy, with Blue Cross and Blue Shield of Michigan.

Anthony J. Schueth, MS, is CEO and managing partner of Point-of-Care Partners, LLC. They presented a session entitled “Update on the Electronic Prior Authorization Landscape,” on Thursday, April 21, at the AMCP Managed Care and Specialty Pharmacy Annual Meeting 2016 in San Francisco.