Pharmacy Benefits 101: Prior Authorizations

This article was originally published on the Capital Rx Insights page.

Prior authorizations (PA) are often considered a frustrating part of healthcare in America. Yet, at the same time, PAs can help patients receive a prescription that's safe, efficacious, and cost effective.

A misconception about PAs is that the pharmacy benefit manager (PBM) is looking for reasons to deny access to medication. According to Sara Izadi, PharmD , Chief Clinical Officer here at Capital Rx, “We are looking for reasons to approve medications. We want the right patient to get the right medication at the right time.” However, there are several reasons a prescription might need to go through the PA process to ensure it is the right fit for the member of a health plan. Similarly, the PA process helps catch errors that may slip through the cracks due to healthcare’s fast-paced nature and disconnected systems.

So, what is a prior authorization? Why do some medications go through them, and why are they important?

What Is a Prior Authorization?

Prior authorization is a type of utilization management strategy requiring a more in-depth (and usually clinical) review before a medication is covered by the plan. Capital Rx’s Director of Prior Authorization, Lorece Shaw, PharmD , says examples of this can include:

• Brand name medications that have generic alternatives

• Medications used to treat complex conditions that require monitoring and/or special considerations

• Medications that may have dangerous interactions, confusing dosing schedules, risks for abuse, or other adverse health effects

A well-designed PA process is patient- and prescriber-focused. It may help to reduce any potential issues someone could run into when being prescribed a medication. For example, if a prescriber were to prescribe a medication with a dosing schedule that is not supported by the FDA or literature, a PA review can help add an additional layer of safety before a patient fills the prescription.

Similarly, if a doctor prescribes a costly brand name medication that has a generic alternative, it could be beneficial for the plan and the patient to switch to that generic medication.

Misconceptions About the PA Process

While a lot of the pharmacy claims adjudication process happens in the background, outside of a patient's view, PAs are visible and can be a pain point. Because PAs pause the delivery process – from a doctor prescribing a medication to a patient picking it up at a pharmacy – it's easy to see why some would view PAs with skepticism.

PAs can work as a patient safeguard, helping them get a safe and cost-effective medication. Additionally, less than 3% of members that get prescribed a medication end up needing to go through the PA process.

As mentioned above, PAs are meant to be helpful to all parties, and they can be processed efficiently if the information required to approve them is readily available.

Who Decides Which Medications Require Prior Authorization?

It starts with the formulary. For this blog’s purposes, it’s important to know that formularies are, essentially, lists of covered medications. Formularies also include utilization management (UM) edits including PA. However, if you’d like to learn more about formularies, check out our blog on the subject.

A pharmacy and therapeutics committee (P&T) made up of general and specialized physicians, pharmacists, and other practitioners and other experts in the actual criteria weigh in, informed by national guidelines, to determine which of the covered medications might require a PA.

The national guidelines are crucial. Across healthcare disciplines, experts come together and create these evidence based guidelines, which are then released to inform prescribers of best practices. PA criteria are objective and based on widely published national guidelines.

Why Prior Authorizations are Sometimes Denied

A potential reason for a PA denial relates to a patient’s diagnosis. For example, if a patient is prescribed a medication for “off-label use” -- i.e., a medication for an indication that it’s not FDA approved for – then the PBM evaluates whether that medication is safe and effective to treat the condition, relying on the provider and relevant literature to evaluate the case.

Another potential reason for denial is related to the specific information required to approve a PA. Sometimes, a PBM, for example, won’t hear back from the provider with the information needed to render a decision. In those instances, a PA may be denied.

Often, in this circumstance, the PBM may not reach a live person – or if they do, it’s a referral coordinator who may not be able to provide the needed information. The PBM will leverage multiple forms of communication – voicemails, faxes, etc. -- to attempt to reach the provider. But if the provider does not respond, the case may be denied.

However, it is still possible that these situations can result in a denial because studies may not show the medication in question is safe and effective in treating the diagnosis. In those situations, the PBM will attempt to reach out to the provider, explain the situation and the reason for denial, and recommend a more effective medication for the patient’s condition.

Again, the goal is not to deny PAs; it’s to help patients get the right medication that is affordable and can treat their condition effectively.

How Modern Technology Helps with Decisioning PAs

For PAs, turnaround time is paramount. At Capital Rx, we do our best to decision PAs as fast as possible. JUDI® , our purpose-built enterprise health platform, aids in our efficiency.

How? We’re glad you asked.

Callie Burton-Callegari (Manager, Product) explains that the fax intake process can be a significant source of delay for PAs, and that AI can help speed this up. “We're currently working as a development team to leverage AI tools, especially in the fax intake process, so a lot of the fields that need to be found across many pages of documents, which are handwritten or typed disparately, can be auto populated so that those cases can be created more immediately from fax.”

Additionally, within JUDI, there is a Prior Authorization Tool (PAT). Since PAT is integrated into JUDI, our reviewers can leverage member history and reference real-time claim information. They can also reference authorizations, plan overrides, and independent overrides. Being able to link a member’s information and history across the platform helps enhance PA review efficiency.

Within PAT, an “Auto Approval” tool further drives efficiency. It considers medications that meet very specific criteria our team has configured for cases, members, clients, case types, and medications depending on the responses that they receive from the doctor at the point of EPA request submission. If a medication meets all the criteria and requirements, PAT is able to approve them. It’s important to note that this tool’s use case is currently limited to cases that come through our two EPA vendors. In that way, it helps drive efficiency while ensuring our team retains control over the process.

All of these innovations work together to help speed up and smooth out the PA process – that way a patient and their provider knows what the status of a PA is and the reason behind a denial, all without having to wait for weeks on end.

Want to Learn More About JUDI?

One of the most exciting things about JUDI is that the platform ties all pharmacy benefit workflows into one astonishingly efficient and scalable system. As was mentioned, for Prior Authorization, this means the relevant data needed to decision a PA case is readily available. Coupled with modern tools that enhance efficiency within these workflows, the result is a faster PA decision and deeper insights into why a case may have been rejected.

Want to learn more about how Capital Rx is providing the electronic infrastructure our nation needs to deliver the healthcare we deserve? Click here to meet JUDI.