Friday, April 4, 2014

Defensive refills

Doctor prescribes a $2000 bottle of antibiotics. Patient cost is $10, insurance cost is $2000. (Numbers are rounded for simplicity.)

Insurance company, seeking to save money, demands prior authorization and refuses to fill the prescription until hoops are jumped through. Uncertain whether the hoops will ever be jumped through or when, and having been told that the antibiotics should be started immediately, patient grows increasingly concerned as an entire work week ticks by without authorization. When the insurance company finally approves the prescription, the patient fills the prescription and decides to get a defensive refill as well, just in case it is ever needed in the future, to avoid a risk of further dangerous interference from the insurance company. Final cost to the insurance company: $4000.

How could this cost be lowered? Well, the insurance company could skip the prior authorization, which would leave the patient willing to skip the refill if it isn’t needed. Final cost to the insurance company: $2000.

Any improvement possible over that? Well, the insurance company knows that some people only take these antibiotics for 2 weeks, so they could approve 2 weeks at a time without any prior authorization. Final cost to the insurance company: $1000 if only 2 weeks are needed.

Even if a minority of patients take the approach I described and get the defensive refill, there is still a cost to the insurance company in having the review process. The only way this makes economic sense for the insurance company is if they are denying a substantial percentage of these prescriptions. If a lot of patients get the defensive refill, the insurance company has to be denying well over half of these prescriptions. From a medical interference standpoint, it doesn’t really matter whether the insurance company is denying the prescription or if the insurance company is being such a source of frustration to the doctors that the doctors are deciding in advance to not even try to prescribe the drug that they believe is medically appropriate. Either way the patient does not get the drug their doctor wants them to take.

This is not the right way to run a health care system.

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