Understanding prior authorization for drug claims

Understanding prior authorization for drug claimsControlling benefits plan costs is a constant concern for employers. With the rising costs of drugs and the development of new, more expensive, medical technologies, benefits plans are at risk of becoming prohibitively expensive for both plan sponsors to administer, and plan members to participate in. In fact, according to the Canadian Institute for Health Information, Canadian employers on the whole spend approximately $200 million each week on prescription drug claims.

In order to ensure employees are receiving proper drug therapies in a cost-effective manner, most insurers have implemented “prior authorization” (PA) requirements. Under prior authorization, specified drugs are reviewed against established clinical criteria (these criteria may vary from insurer to insurer and plan to plan) and reimbursement is granted only if the drug meets the criteria.

In most cases, such a requirement is used to regulate drugs issued for illnesses such as multiple sclerosis, lupus, muscle-nerve disorders, cancer, asthma, rheumatoid arthritis, Crohn’s disease, and other diseases that require high-cost specialty or biologic drugs.

Overall, a successfully executed PA requirement will ensure that a plan stays affordable and manageable, as well as effective for managing employees’ health.