Utilization Management (UM) describes a set of mechanisms or tools that health insurance companies apply to prescription medication coverage. Three common examples of UM are requiring prior authorization to fill a prescription, limiting quantities, and requiring consumers to first try a less expensive medication (called step therapy).
While evidence shows that appropriately designed UM can enhance coverage and provide consumers with access to drugs supported by clinical evidence, achieving the appropriate design is a balancing act. In marketplace plans that increase UM significantly, consumers may encounter additional challenges in accessing certain drugs. In plans that decrease UM significantly, plan and consumer costs (i.e., premiums) may increase and/or consumers may begin overutilizing certain drugs. Neither situation benefits consumers.
This study examines the prevalence of prescription drug UM between 2016 and 2020 in the top 10 marketplace plans (by enrollment) in all 50 states and the District of Columbia. It focuses on brand-name drugs in five therapeutic areas —antipsychotic, cancer, chronic obstructive pulmonary disease (COPD), cardiovascular disease (CVD), and diabetes—commonly taken by older adults ages 50-64. It concludes that for the 3.6 million adults ages 50 to 64 enrolled in health plans through their states’ individual health insurance marketplace, UM for common drugs often depended on where they lived.
More Increases than Decreases in UM
During the five-year period, the increases in UM (across all five therapeutic classes) were more than 10 percentage points in 28 states and more than 20 percentage points in 16 states. In four states, the percentage of covered drugs with UM increased more than 30 percentage points. While most states saw increases in the percentage of covered brand-name drugs in included classes with UM, 11 states had overall decreases between 2016 and 2020. The majority of these states (7) had decreases of less than 10 percentage points, although four states had decreases greater than that.
Certain Drugs Subject to UM
Along with variations between states, there are clear variations in categories of covered drugs subject to increases in UM. In particular, increases were on average 24 percentage points for covered cancer drugs and 16 percentage points for covered antipsychotic drugs, while the average UM for the percentage of covered COPD drugs, for example, remained flat.
Disproportionate Impact of UM
Some chronic conditions are more prevalent among certain racial and ethnic groups, which can stratify the impact of UM. For example, this analysis found that UM for covered brand-name diabetes drugs increased an average of 8 percentage points between 2016 and 2020, and up to 50 percentage points in some states. Meanwhile, the risk of Black adults having a diagnosis of diabetes is 77 percent higher than for White adults, and the risk for Hispanic adults is 66 percent higher. Thus, the increased use of UM for diabetes drugs may have greater implications for Black and Hispanic adults than for other racial and ethnic groups.
McSpadden, James, Utilization Management for Prescription Drugs Commonly Used by Older Adults: Wide State Variation Among Top Marketplace Plans. Washington, DC: AARP Public Policy Institute, August 2022. https://doi.org/10.26419/ppi.00167.001
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