Evaluating the Operational Performance and Financial Effects of a Drug Prior Authorization Program

Abstract

OBJECTIVE: To present a managerial approach for evaluating the performance of a drug prior authorization (PA) program, illustrated through an evaluation of the Iowa Medicaid drug PA program. DESIGN: A before-and-after comparison without a control group. SETTING: State of Iowa Medicaid Program. PATIENTS: Iowa Medicaid enrollees (approximately 250,000). INTERVENTION: Medicaid Drug Prior Authorization (PA) Program. MAIN OUTCOME MEASURES: Operational and economic performance, including volume of prior authorization requests, PA program response times, PA approval rates by therapeutic category, medication utilization, and PA program savings and administrative costs. RESULTS: Overall, 82.9% of new and extension PA requests were approved for coverage. Of the new PA requests, 74.4% were approved for coverage, while 92.5% of PA extensions were approved. The average response time for new requests and extensions was 52.4 (s.d.=1 01.8) minutes. New PA responses averaged 73.2 (s.d.=119.6) minutes, while extensions averaged 28 (s.d.=7.5) minutes. The total net savings for antiarthritics, benzodiazepines, antiulcer, and antihistamines was $2.51 million to $3.83 million. CONCLUSION: The results are unique in providing both operational and economic performance of a drug PA program. The results show response times well below the HCFA mandated guidelines with relatively high approval rates. The economic results also suggest a large savings due to drug prior authorization. The evaluation procedures provide a workable method for program administrators to evaluate their own programs. In addition, the results provide a comparison for program administrators to judge performance.