Prior authorizations are commonly used in the healthcare industry to help ensure the right drug is used for the right patient at the lowest cost. Depending on the overall plan design, prior authorizations may be required for everything from medications to procedures to diagnostic tests.

Prior authorizations involve a medical necessity review to ensure appropriate and safe use of the prescribed medication, while step therapy programs help the company and the employee save money on prescription costs while still offering the medications that people need.

What is step therapy?

Step therapy is a common structure in prescription benefits that authorizes the lower-cost (but therapeutically equivalent) medication for a member before coverage of a higher-cost medication.

Step therapy helps with cost control because it requires plan members to try the lower-cost solution first. If the first medication doesn’t resolve their symptoms or provide the desired treatment/outcome, they are then allowed to obtain the higher-cost medication while still being covered by the prescription benefit plan. That translates to potential cost savings for the employer and higher employee satisfaction because they have an option for the higher-cost medication.

What is the Reference Price Program?

An alternative to step therapy programs that can also save employers money is the MaxChoice Reference Price Program. This system provides your employees with a list of low-cost options within the category of therapeutically equivalent medication that they need. From there, they can select one of the medications from the list and pay a specific copay.

This method works well for everyone involved, as it gives the employee a choice in their medication while also helping contain costs for the plan provider.

This is also helpful when providers prescribe new-to-market drugs that have a higher cost than existing drugs to treat the same condition. The Reference Price program doesn’t say the member can’t receive coverage for those new drugs. Instead, it gives them the option to pay a higher copay if they prefer it instead of one of the recommended lower-cost alternatives.

Using prior authorization and step therapy in your plan design

Is your current pharmacy benefit manager (PBM) working to help ensure patient outcomes and save you and your employees money through the use of prior authorization and step therapy? If so, do you understand how it’s structured and the potential cost savings of the program?

At MaxCare, we work with each of our clients to create a customized plan that fits their company’s financial needs, as well as their employees’ healthcare needs. We also take time to explain the plan and ensure our clients understand what they’re paying for with their plan.

Contact us today to see if we can help save you money on your prescription benefits plan.