'It's in everyone's best interest to make sure the spend is as efficient and responsible as it can be,' says benefits consultant
Although it has existed in drug plans for many years, some plan sponsors are starting to face growing pressure to defend the use of prior authorization in drug plans.
Designed to contain costs by requiring plan members to seek insurer approval before select medications are covered, the tool is increasingly under fire from both employees and organized labour, according to one benefits expert.
Abigail O’Neill believes that while employers are committed to offering modern, inclusive benefits, the realities of budget and sustainability create constant tension. And despite prior authorization being a standard tool that applies across all drug plans, she argues it's starting to become a pain point.
“Prior authorization is just one of many tools that providers leverage to help look after drug plan cost," explained O'Neill, VP of strategic initiatives and benefits consultant at Mosey & Mosey. “It is standardly applied by all benefit providers. It’s not something that the employer elects. It doesn’t work like that. Insurers standardly embed prior auth as a tool to look after costs on behalf of the plan sponsors and therefore on behalf of the plan members."
O'Neill's comments come as the pressure is on for plan sponsors to deliver competitive health benefits. It’s no surprise that employers across all industries and sectors are competing for talent and a robust benefits package is now a core part of that equation.
“It’s table stakes,” asserted O’Neill. “Benefits are important to employees. They want a comprehensive plan.”
But meeting those expectations comes with financial strain. O’Neill notes that while employers understand the value of supporting their workforce’s physical and mental wellbeing, the challenge lies in balancing ambition with affordability.
“Cost is always a factor,” she said. “Decisions always have to be made about where they’re going to get the most benefit from their investment. When employers look at the premium breakdown or their spend breakdown, extended health, particularly drugs, will be a huge component of that."
That’s why O’Neill doesn’t dispute the value of prior authorization in managing plan sustainability. However, she also stressed that while the tool is necessary, it’s not always executed well. Poor user experiences like delays, paperwork, and back-and-forth between health providers and insurers are creating headaches for both plan sponsors and members.
“It's not always the best plan member experience,” she said, underscoring this can't be ignored. Notably, when plan members face delays in accessing medication, it impacts how plans are perceived and valued by plan members.
“If the member experience is poor, that's problematic,” she added. “It's counterproductive to why employers are investing in drug plans. Employers invest significantly into benefit plans and they want the plan to deliver for their employees and their covered family members in a way that does not cause additional stress or worry.”
O’Neill argues that requests for employers to remove prior authorization are problematic for many reasons and notes that even public plans apply similar tools in an effort to support long term sustainability and that it's not unique to employer sponsored plans.
In her view, removing tools like prior authorization jeopardizes the long-term sustainability of benefit programs. However, many plan members don’t understand that drug costs are directly tied to utilization, which in turn affects their own premiums.
“It's not just about cost because there are several reasons that drugs may be placed on prior auth,” she noted. “Health and dental benefits are largely based on utilization. It's not the big, bad insurance company that gives you a package and off you go. Utilization drives costs so the usage matters.”
Without adequate checks and balances, drug plans can become financially unsustainable, argued O’Neill.
"An easy example are drugs that have both a medical and cosmetic use. Without prior authorization, there is no way to ensure the drug plan is covering prescriptions that are medically required," she said, emphasizing that educating employees about this connection is critical.
“Every benefit is important, meaningful and valued to different degrees by employees at different times in their life and drugs can easily become catastrophic for people,” she said. “It’s so important that employers look after that plan and make sure it’s there year after year after year and employees have a vested interest. They want that plan to be there if they or their kid or a loved one needs an expensive medication,” she said.
O’Neill ultimately believes the process can be improved through better communication, easier access to forms, and eventually, digital adjudication. But the underlying message she wants sponsors to communicate is prior authorization helps ensure sustainability. She calls on insurers to simplify the experience for plan members and seek accreditation through the Prior Authorization Framework and Accreditation (PAFA) Program.
“Let’s get it done right. Let’s have the insurers do a better job,” she said, adding that the system should allow employees to access information and submit documentation more easily.
“It’s in everyone’s best interest to make sure the spend is as efficient and responsible as it can be."
