AH017 - Pharmacy Benefits 101: Prior Authorization

May 10, 2024

Capital Rx

In this episode of the Astonishing Healthcare podcast, we tackle one of the more polarizing issues in healthcare: prior authorization (PA for short). Sara Izadi, PharmD, Capital Rx's Chief Clinical Officer, Lorece Shaw, PharmD (Director of PA), and Product Manager Callie Burton-Callegari, join host Justin Venneri for a candid discussion about PA. They cover everything from basics like what a PA is, who decides the criteria, and common reasons for denials to why they are necessary and how technology - AI & ML - can help improve PA workflows. Listen below, and remember to subscribe on Apple, Spotify, or YouTube Music!


Lightly edited for clarity.

00:27] Justin Venneri: Hello and thank you for listening to this episode of the Astonishing Healthcare podcast. This is Justin Venneri, Director of Communications at Capital Rx, and the stars lined up nicely across departments for us today to talk about prior authorizations. Now, I can't promise we're going to get all the way to the bottom of the PA debate, but we do have Capital Rx's Chief Clinical Officer, Sara Izadi, PharmD, and our Director of Prior Authorizations, Lorece Shaw, also a pharmacist, and Callie Burton-Callegari on our product team to help us think through and talk about the basics of PAs and see if it's possible to improve the stigma and perception around them. Let's just start off with quick backgrounds for everybody to frame the discussion. Lorece, do you mind going first? Just start us off with a little bit about yourself, what you do here at Capital Rx.

[01:09] Lorece Shaw, PharmD: Sure. Hi Justin. It's so nice to be here with you today. My name is Lorece Shaw, as you stated, and I'm the Director of Prior Authorization here at Capital Rx. I've been with Capital Rx now almost four years, and it's been an amazing journey to see how our teams have grown and how the organization has grown. I come to Capital Rx with a background in PBM, where I worked at a major PBM for a little over five years in their PA department. And so, as a pharmacist, it's been a unique opportunity to be able to expand and grow my career here at Capital Rx.

[01:44] Justin Venneri: Perfect. Sara, do you mind sharing a little bit about yourself quickly?

[01:47] Sara Izadi, PharmD: Thanks, Justin. My name is Sara Izadi. I am a pharmacist by training. I've been with Capital Rx for almost six years. I also come to Capital Rx with a background in prior authorization, but also PBM and the creation of departments and teams. My background spans everything from the hospital setting to the ambulatory care setting and to managed care, both on the medical and pharmacy sides. And so, I hope that I can lend a unique perspective to this topic.

[02:23] Justin Venneri: I'm sure you can. Thank you. And Callie, last but not least.

[02:26] Callie Burton-Callegari: Hi. I am not a pharmacist by training, but I've spent so much of my past two years here at Capital Rx speaking to them every day. I'm a product manager on the development team that has been creating and supporting all the PA workflows for our internal team and also now our external users through our PA tool, PAT, and have a fun, different perspective on the PA inner workings than from that pharmacist or member experience.

[02:56] Justin Venneri: Okay, Lorece, let's start off with the most basic thing here, high level. What is a prior authorization?

[03:03] Lorece Shaw, PharmD: Yeah, so a prior authorization is a type of utilization management strategy where certain drugs may require it to be approved by the member's pharmacy benefit before they get covered by the plan.

[03:16] Justin Venneri: Okay. And why are prior authorizations necessary?

[03:21] Lorece Shaw, PharmD: Prior authorizations really help to ensure that members receive a prescription that's safe, efficacious, as well as cost effective.

I do think there's a misconception about the PA process -- that it's only about saving money, or delaying care, or actually stopping members from getting medications. But the reality is only about 3% of members that get prescribed a medication end up needing to go through the PA process. So, it's really designed to target drugs that have a high potential for inappropriate use, such as they should only be used for specific conditions or they have a confusing dosing schedule and also targets drugs that may be expensive for patients but have lower cost alternatives that are just as, if not more, effective.

[04:07] Justin Venneri: Got it. Sara, who decides what medications require prior authorization?

[04:13] Sara Izadi, PharmD: That's a really great question, Justin, and one we get often. So let me take a step back. So Capital Rx offers several standard formularies.  

Formularies are essentially lists of covered medications at the very basic levels. Formularies also include utilization management edits, or what's generally referred to as UM. Prior authorization is one of the utilization management strategies, or UM, on formularies. Formularies, as well as accompanying UMs, are determined by a body of experts across specialists, behavioral health and others. Guidelines also that lend to prior authorization reviews are generally aligned across the industry as they're really informed by national guidelines.  

You know, if you look at really all specialties, there are national guidelines. I'll just use cardiology, for example. So, we have experts in the field who sit together and create guidelines that are then released to inform prescribers of best practices. These are based on evidence-based research, and those guidelines lend themselves to the criteria.  

So, to summarize the answer, prior authorization is determined by a pharmacy and therapy committee made up of experts in the actual criteria, and what goes into them is informed by the national criteria also created by experts in the field.

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[05:52] Justin Venneri: Got it. Thank you. Lorece, back to you. What are the general turnaround times and processes for prior authorization in pharmacy?

[06:01] Lorece Shaw, PharmD: Yeah. So the prior authorization process and the turnaround time, how much time it takes for to complete a PA, heavily dependent upon the specific case that we are reviewing. And this may vary by the regulatory components of that case.  

So, for example, whether a plan is a commercial plan, or a Medicare, or Medicaid -- these things all impact the turnaround time. Some have longer turnaround time, some have shorter. Government plans, such as Medicare and Medicaid, tend to have shorter turnaround time, some as quick as 24 hours. Commercial, there is more leeway depending on whether it is a self-insured plan or a fully insured plan. These may have longer turnaround times, up to 15 to 30 days, depending on the case.  

However, here at Capital Rx, we do try to decision prior authorizations as quickly as they come in. So even if the plan may be subject to longer turnaround times and regulations, we try to decision ours faster than industry standard.

[07:07] Justin Venneri: That makes sense. And are there different state requirements across the country, or is it sort of at that plan level?

[07:12] Lorece Shaw, PharmD: Yes, there are different state requirements. And again, that goes to whether or not it's self insured or fully insured plan. Self-insured plans tend to follow federal guidelines under ERISA, and then fully insured plans would follow the state guidelines. And those guidelines can be, again, varied. I live in Texas, and in Texas, we have very stringent turnaround times. Other states may have longer turnaround times. So it really just depends on the scenario where you're located, the type of plan, and line of business.

[07:42] Justin Venneri: Thank you. I want to come back to Sara for this one. What are the most common issues that result in prior authorization denials? I think we hear a lot about that, even though it is a relatively small percentage of the overall pie of prescriptions in the country. What can cause those denials and or delays?

[08:00] Sara Izadi, PharmD: Yeah, Justin, oftentimes we are wanting to make a decision on a case and need additional pieces of information, and we generally reach out to the provider several times via different forms of communication to obtain the information. And oftentimes we do not hear back from the provider with the clinical information that we need to render a decision.  

So, an example of this could be as simple as a diagnosis. We have a prior authorization initiated, let's say, by a patient or a pharmacy, and we don't have confirmation of the diagnosis, or we may need certain labs. So, what we generally do as part of our best practices is we call the provider's office, the doctor's office, and we try to confirm this information. Now, oftentimes we get a referral coordinator and not always a live person, but a voicemail. So, we're left to leave voicemails. We then go ahead and fax the provider, which I know people are rolling their eyes saying that you use fax, but unfortunately, as those in the healthcare world know, fax is still used and commonly dependent on.  

So we use different modes of communication to obtain the information. We are looking for reasons to approve medications. I think there's a misconception in this industry that we're looking to deny. We are not. We want the patients to get the medications, but sometimes we do need necessary pieces of information to approve those. And I would say one of the main causes that leads to denials is the fact that we do not get that information within the regulatory turnaround time. And then we'd have to deny the case, which does not create a good patient or provider experience, and quite frankly, also increases our workload. So, I would say that's definitely the primary reason leading to denials.

[09:51] Justin Venneri: Interesting. And then, and are there any others that just, top of mind, most common reasons, you see that a prior authorization request might be denied.

[09:59] Sara Izadi, PharmD: I mean, I’d love Lorece to weigh in here, but I would say that there are cases that just do not meet the medical necessity guidelines. And going back to my previous point, these are not guidelines we make up. These are really informed by primary literature and agreed upon by a comprehensive clinical body of experts, specialists, behavioral health specialists, dietitians, pharmacists, and others.  

So, there are cases where the request just does not meet criteria. And in those cases, we are willing and do talk to the provider and are willing to look at primary literature as well. Lorece, can you think of anything else?

[10:34] Lorece Shaw, PharmD: Yeah, I would say one of the most primary reasons that I see are things denied for the diagnosis. So here, in most cases, we utilize, as Sara indicated, the prescribing guidelines, the FDA guidelines, to determine what drugs can be used for certain diagnoses. And a lot of times we see off label use. That means that the patient is using the medication for an indication that's not FDA approved.  

And so at that point, we have to then evaluate whether or not this medication would be safe and effective to treat that condition. So we would consult various literature. We may reach out to the prescriber to obtain some of that literature, but oftentimes we find that even if something may be something that people commonly prescribe for a particular diagnosis, it has not been shown in studies to be safe and effective. For that condition. That is a scenario in which we might deny a PA for, but we always speak with the provider and try to provide that information. We explain the reason for denial, and if we are able to speak with them, we can offer alternatives that may be more effective for that patient's condition.

[11:46] Justin Venneri: Okay. Callie, thanks for hanging on with us so far. I'm curious, it sounds like based on what Sara and Lorece were just describing, that technology can potentially help here. I'd love to hear your take. What can be done to speed up the prior authorization process and improve the member and patient and provider experience from here?

[12:06] Callie Burton-Callegari: Yeah, I think technology that can be leveraged within this process is, very top of the mind, AI - ML use. So we're currently working as a development team to leverage AI tools, especially in the fax intake process, so that a lot of the fields that need to be found across many pages of documents and handwritten or typed disparately and weird text boxes are able to be auto populated so that those cases can be created more immediately from fax.  

As Lorece mentioned, the turnaround times are very important, and for fax cases, those turnaround times begin when the fax was received, not when that case is created off the fax. So that's something that can really help speed up the process of creating and reviewing PAs.  

Additionally, we leverage something called auto-approval. Right now, it's only available for cases that come in through our two EPA vendors. And auto-approval means that through the criteria that we've configured very specifically for cases, members, clients, case types, drugs -- specifically drugs and the reject those cases come in with -- depending on the responses that we receive from the doctor at the point of them submitting that EPA request. If those would pass the criteria requirements, and we have everything necessary to proceed with an approval of that case, technology -- and what PAT currently uses is that ability to auto-approve cases that are eligible for auto-approval based on the criteria, the case, the drug, as well as other factors, whether or not they apply, I feel like there are other ways tech can be used.

[13:55] Sara Izadi, PharmD: I will say that it is an absolute privilege to work with our product teams, and I think that Capital Rx is really unique in the sense that actual clinicians and real users are the first customers of our product teams to ensure that the product meets all our needs. And we work really closely with Callie and her team. I fully acknowledge that no one in this industry likes prior authorizations. Prescribers don't like it, pharmacies don't like it, and patients absolutely do not like it. But it is a necessary tool to manage utilization. And I think auto-approvals allows us to have this tool in place and ensure that patients have access to care in a timely manner.  

And so, working with our product teams, we develop various tools that lend to auto-approval and also tools that allow our clinicians to decision cases quickly by producing a likely outcome using some of the things that Callie touched upon -- AI, ML, machine learning, and other capabilities. So, auto-approvals are top of line for us. There's just a very thin line between ensuring appropriate use and automation, and that's what we spend a lot of time working together on.

[15:15] Callie Burton-Callegari: And even outside of automation, one of the big things about PAT being a part of the larger JUDI platform is that we can leverage member history and have real-time claim information to reference for our reviewers. They can reference any authorizations, any plan overrides, any independent overrides. And being able to better link that member’s information and history across the platform really helps with leveraging the technology structure we have for PA reviews.  

[15:44] Sara Izadi, PharmD: I will also say not to just keep adding to Callie’s, but also to add to Callie’s response. The fact that PAT is integrated in JUDI really is a huge differentiator. And the workflow for PA, the way we built it, starts with a test claim where we see all the barriers. And as part of that process, not only do we conduct the clinical review, but we also try to address other clinical rejects that may accompany that claim. So the fact that PAT is in JUDI and a part of JUDI really does set it apart, and I think it lends to really good customer service and the patient experience.

[16:28] Justin Venneri: That makes sense. And I would think providers understand that, too, because it's sort of the fragmentation of care, which is why they don't see what else the patient might have been prescribed, or what the other risks are, or what's on the formulary, or what's covered. It seems like there's a lot of moving parts that, if connected, when connected, will help speed up the process and make it a better experience. That also helps the plan control utilization as needed, right?

[16:54] Sara Izadi, PharmD: It definitely helps with the fragmentation of care. The goal is certainly, I mean, all the workflows start with the test claim is when we have a provider, if we have a provider or provider's office on the phone to address the claim, and that member as a whole.

[17:11] Justin Venneri: Got it.

[17:12] Sara Izadi, PharmD: PAT certainly helps with that. So let me give you an example. You're reviewing a prior authorization for medical necessity that's also hitting a quantity limit reject. When you look at that case in PAT and when you're reviewing it from a clinical perspective, you're reviewing it end-to-end. You're trying to get to the point where you can clinically validate why it hit that QL and perhaps override it as part of your clinical review process, as well as ensure it meets medical necessity.

[17:41] Justin Venneri: And by quantity limit, you just mean the amount of medication prescribed to the patient at that point in time for the duration?

[17:48] Sara Izadi, PharmD: The amount of medication prescribed to the patient for the duration is inputted by the provider or if you actually have a claim that the pharmacy adjudicated. Because, like Callie says, that information is available to you, right, you see the patient's history, you see what the pharmacy adjudicated, which is really important, and then quantity limits are generally based on higher end of FDA approved doses. So, let's say you have that reject. You address that as part of your entire clinical review. And so it is not a fragmented review. It's a review to address everything, even perhaps nonclinical edits that accompany that claim.

[18:27] Justin Venneri: Interesting. Okay, so the last question I ask everyone, what's the most astonishing thing you've seen relating to the discussion topics here today that you can share, of course, over the course of your career or over the last few years here at Capital Rx in particular, in and around prior authorizations? Sara, you want to go first? No?. You have to. You have to answer this question. It's GLP-1s, isn't it? It has to be the volume of GLP-1s.

[18:54] Sara Izadi, PharmD: I've seen a lot of crazy things throughout the last few years, Justin. Yes, it has to do with GLP-1s. I've never seen anything like it in my career. You know, when the PCSK 9s hit, everybody was prepared because they were coming off of the -- I'm going to age myself -- Hep C agents and how no one was ready for that. I am not sure we're ready as an industry or as a country for the emergence of these GLP-1s.  

So I would say that's probably overall the most astonishing thing I've seen. As it pertains to PA, I will say it's not astonishing, it's really exciting -- working with production to leverage technology. I've never been in an organization where we work so closely together towards a common goal, and that's really exciting. Everyone says they have all of this functionality, but I haven't seen it. We have that functionality, and we continue to build and make it better.

[19:49] Justin Venneri: That's awesome. Callie, how about you? What's the most interesting or astonishing thing you've seen?

[19:54] Callie Burton-Callegari: Yeah, I think what's super special about the perspective that I come in from not really having any exposure to PAs or the considerations that pharmacists go through every day when they review pas is everything that happens underneath the hood of a PA review happens for a reason. And piggybacking off of something Sara said, being able to collaborate with our clinical ops team and with the product team and all the developers on the team that supports PAT, there's a lot that happens when it comes to making sure that a member does receive the care that they need and they do have a PA review for a drug that they're requesting, go through the proper channels of review and have that come back to them in a timely manner.  

So, I've seen a lot about how we all jump on, all hands on deck, to make sure that if there is a bug or if there is a feature that is needed, we all work on it together as fast as possible to get that decision out for the member so that they can access a drug, if that's where the decision is leading. But there is one scenario where we had an external user, so a client, switch from one PA platform to our PA platform, and they actually had a case that was in progress at the time of that switchover, and they weren't able to reference within that old system that case, and a lot of the documents that came from that case. So, they had to do a lot of work themselves, that PA team, to pull all the information for that PA review, so that by the time they came over to our system, we would be able to ingest that and help with that member's review.  

And that really stuck out to me, especially because it was around the time of 1/1. A lot is happening. All teams are underwater, just really working hard to make sure that each member gets the care they need. And you found a product manager, two pharmacists from two different PA teams, as well as developers, working to make sure that that member's case had the appropriate timeliness assigned to it, had all the documents they would need, had the member information that we had just transferred over for that 1/1 go live as well, all there on the case to be reviewed with the most accurate and up to date information and make sure that that member ended up getting access to the drug at the end of the day.  

So that was, I think, the culmination of all the surprises of what happens in a PA review, especially from our perspective, is we're all involved at the end of the day, and we all want what's best for the member. But platforms as a whole don't have that responsibility. They don't have that incentive to give the member the best experience. So, it was nice seeing that, at least from our perspective, as a team, we work together to give the member what they deserved. But not every platform or vendor is held to that same standard.

[22:49] Justin Venneri: All right, and how about you, Lorece? What is the most astonishing thing you've seen or experienced relating to our discussion topics here today?

[22:57] Lorece Shaw, PharmD: Yeah, so as I was mentioning before, in the prior authorization process, we not only review for cost savings or for drugs that have high potential for misuse. I mentioned dosing schedules. And one thing that prior authorization process can target through quantity limits, which is essentially having limits on the amount of drug that can be prescribed at any given time really helps to make sure that we curve inappropriate use or suboptimal or dosing recommendations that are higher than what is recommended.  

And I actually have a somewhat personal story. Many years ago, I was actually prescribed by a doctor two times the recommended dose of a medication. And it was actually very alarming to me. Luckily, I was able to catch it because I'm very familiar with that drug, actually due to my background in PA, because at the time, this drug required a prior authorization at the company that I was working for. But on my particular plan, it did not. And so it did not go through that process. But because I was so familiar with the drug, I was able to catch it and speak with a dispensing pharmacist. And she and I talked about it together. I was like, no, this is twice the recommended dose. This will not be safe. And she was able to reach back out to my doctor and have them updated.  

And so, it really just goes to show, like, how this process is really about patient safety. And doctors do their best. This is not to say that they don't know about prescribing guidelines, but again, when everything is so fast-paced in healthcare these days, it's great to have a process in place to catch anything that may be missed.

[24:40] Justin Venneri: Makes sense. Okay, so, Sara, Lorece, Callie, thank you so much for joining me today to share your thoughts on prior authorizations. It's a great discussion, and I look forward to seeing how things evolve with our technology and hopefully we can remove the stigma from prior authorizations if it's humanly possible.

[24:58] Sara Izadi, PharmD: Thank you. Justin, thank you so much.

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