HIT Perspectives: Stakeholder Impacts of the AMA’s Prior Authorization Reform Proposal

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HIT Perspectives – April 2017

Stakeholder Impacts of the AMA’s Prior Authorization Reform Proposal

By Tony Schueth, Editor-in-Chief


prior authorizationPrior authorization (PA) for medications and therapies is viewed as a valuable utilization management tool by payers but a long-standing pain point for providers and pharmacists and a barrier to access for pharmaceutical manufacturers. Led by the American Medical Association (AMA), a 17-member coalition — including the American Hospital Association and groups representing providers and pharmacists — recently drafted a framework for PA reform based on 21 Principles.

Over time, we believe the 21 Principles have a good chance of being implemented. The timing is right, coinciding with advances in the health information technology (health IT) marketplace. An example is the adoption of the new electronic prior authorization (ePA) standard from the National Council on Prescription Drug Programs (NCPDP). Moreover, the AMA-led coalition includes many powerful members whose influence carries a lot of weight in Washington and the industry. Many (or all) of the 21 Principles could end up being carried out via government regulation — unless, of course, the industry adopts them first.

Here is a quick overview of the 21 Principles and how they impact vendors, payers and pharmaceutical companies.

What the Principles Require. Most of the 21 Principles seem aimed at payers, addressing specific coverage and process issues. Reducing burden as well as improving accuracy and transparency are themes that run throughout. However, several principles have direct implications for health IT:

  • Principle #9 proposes that utilization review (UR) entities provide and vendors display accurate, patient-specific and up-to-date formularies that include PA and step therapy requirements in electronic health record (EHR) systems for purposes that include electronic prescribing (ePrescribing).
  • Principle #12 proposes that a UR entity requiring health care providers to adhere to PA protocols should accept and respond to PA and step therapy override requests exclusively through secure electronic transmissions using the standard electronic transactions for pharmacy and medical services benefits.
  • Principle #18 encourages UR entities to standardize criteria across the industry to promote uniformity and reduce administrative burdens.

Impact on stakeholders. Overall, the 21 Principles have implications for affecting the accuracy and timelines of how medications are prescribed. Their adoption will have a profound and sustained impact on the use of EHRs, utilization management, PA and related provider work flows. It also will improve the accuracy and transparency of formulary and PA decision criteria. Ultimately, implementation of the 21 Principles will spur use of the NCPDP ePA standard.

There also are impacts on specific stakeholders, as described below.

Vendors. EHR and ePrescribing vendors can use the 21 Principles as a guide to improve their products.  For example, they can:

  • Hasten integration of ePA functionality in EHRs and ePrescribing. They have been moving conservatively to embrace ePA because of uncertainty of utilization by providers, despite the fact that there are state mandates requiring ePA. As utilization management entities that support ePA begin to reach critical mass, provider demand will be sufficient so that software vendors feel confident in building ePA functionality into their products.
  • Keep an eye on pilots, which are providing patient-specific, real-time formulary and benefit information at the point of care (see more information here). As utilization management entities elect to leverage this emerging technology, EHRs should actively consider incorporating it into their solutions.
  • Take advantage of standardized criteria. Having better, standardized and more specific requests for information means they can be built into the ePA process, with answers that could be extracted automatically from the EHR.
  • Should ensure that payers include complete coverage restriction data in the formulary files they provide. Although EHRs have been programmed and certified to show proper formulary data, many payers are not providing robust information. Of course, this only works on pharmacy benefit medications because medical benefit medications are left out of the ePA process.
  • Should develop their products to accurately display coverage restrictions, which many today feel are missing or inaccurate.

Impact on payers. There are several steps health plans and pharmacy benefit managers (PBMs) can take to address adoption of the 21 Principles. For example, they can:

  • Continue critical upgrades to their health IT systems to automate PA. This will ensure their systems accept transactions using the NCPDP ePA standard. The industry has made significant progress and investment over the past several years to implement the first generation of ePA processing. Continued adoption of ePA-based transactions on the provider side will drive more payers and PBMs to make richer returns on these investments.
  • Address the accuracy and completeness of formulary data head on. Payers and supporting vendors must make it a priority to ensure that complete coverage of restriction data are included in formulary files provided to EHR vendors.
  • Consider making sure that their coverage restrictions and supporting documentation requirements are both transparent and consistent. They can work with EHR vendors to ensure that coverage restrictions are displayed – and displayed accurately —and documentation requirements are clearly stated in EHR offerings. Updates also should be made available to vendors and incorporated on a timely basis in EHRs.
  • Support the migration of specialty work flows for prescribing and dispensing to NCPDP standards. Specialty medications generally are expensive and almost always require PA. Yet, specialty pharmacies are still mired in the antiquated paper-phone-fax processes for PA. Known limitations to work flows required for the ASC X12 278 are holding automation work back for all but drugs covered under the pharmacy benefit.

Impact on pharmaceutical companies. While the 21 Principles themselves do not directly affect pharmaceutical companies, their adoption ultimately will reduce barriers for selecting medications with PA for appropriate patients. For example:

  • Standardized PA questions would lower provider barriers in addressing PA requirements while increasing the precision of responses pulled directly from medical records.
  • Making the criteria and supporting documentation used by payers more publicly visible could create new pressure from medical societies and patients for timely updates as new criteria arrive. Such transparency might also create a better understanding by providers of the criteria underlying a payer’s decisions to use a medication, appeal it or deny its use.
  • Adoption of the 21 Principles will affect payer portals. Today, most PA is done via payer portals, which provide an electronic door to paper-based processes. In addition to the hassles and inefficiencies of paper, finding and accessing portals for various payers are not integrated into the EHR work flow. Adoption of the 21 Principles will move everyone toward established transactions in the NCPDP Script standard for pharmacy benefit products and ASC X12 278 for medical benefit products and away from independent portals, either payer specific or multipayer. For the pharmaceutical industry, automation of the provider work flow facilitates use of drugs with PA requirements. Portals, as seen with reimbursement hubs, create barriers to high use because they are outside providers’ work flow.

Going forward. Point-of-Care Partners (POCP) applauds the work of the AMA and coalition for restarting the conversation on ways to balance patients’ need for quick access to appropriate therapies and the needs of payers and PBMs to control costs and utilization. We also acknowledge the work and foresight of the NCPDP and others supporting the infrastructure needed to make PA a totally electronic process.

POCP also understands the work flows and pain points involved in switching to ePA — both as national experts on the issue as well as conveners of the NCPDP task group on ePA. Let us know how we can put our expertise to work for you.


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