Utilization management, or UM, is a broad term that describes the variety of tools (e.g. quantity limits, step therapy, and prior authorization) that an insurer might use to help ensure a consumer has access to proper care and required services while controlling costs. In the context of prescription drugs, insurers can use UM to prevent overutilization and underutilization of medications, promote patient safety, and strike a balance between offering consumers access to a range of brand-name drugs and limiting a plan’s exposure to the high prices associated with these drugs.
This report examines recent trends in UM in health insurance marketplace plans and concludes that insurers’ use of UM may require further scrutiny to better understand if and how it might limit appropriate access to prescription medications for enrollees ages 50 to 64. Nationally, adults ages 50 to 64 have consistently made up the largest segment of enrollees in the health insurance marketplaces, representing around one-third of all enrollees since 2014. Among the many important benefits of marketplace coverage to adults ages 50 to 64 is prescription drug coverage.
For this report, AARP contracted with Avalere Health to examine prescription drug UM in the top 10 marketplace plans by enrollment in all 50 states and the District of Columbia. The analysis focused on brand name drugs in five therapeutic areas commonly taken by older adults: antipsychotics, cancer, chronic obstructive pulmonary disease (COPD), cardiovascular disease, and diabetes.
It finds that from 2016 to 2020, the percent of covered brand name drugs by the top 10 marketplace plans decreased, and the percent of covered brand name drugs subject to UM increased, in several therapeutic areas. The trends show that consumers faced an increasing concentration of UM from 2016 to 2020. Not only did the top 10 marketplace plans apply UM to more covered brand name drugs in four of the five therapeutic areas across the period, but they also subjected a consistently high percentage of drugs in certain therapeutic areas to certain UM tools.
Today, more than 94 percent of plans report using UM to manage costs and access. The ACA did not change the UM process for plans; however, it did require oversight of it. The law required that a Pharmacy and Therapeutics (P&T) Committee review each plan’s overall UM policies as well as the criteria that plans use to determine which tool applies to each drug. But P&T Committees, made up of medical professionals, often meet and make decisions behind closed doors; consumers and other stakeholders have little insight into the decision-making process.
The report suggests changes in the following areas to help consumers navigate prescription drug UM under their plans:
- Transparency – Insurers, pharmacy benefit managers (PBMs), and P&T Committees should improve transparency around formulary decisions and how UM decisions are made around particular drugs and ensure that consumers have access to this data.
- Navigation – The ACA requires that all marketplace plans make public an accurate list of covered prescription drugs with any UM restrictions. However, enrollees must know where to search, how to search, and be capable of navigating the document once they obtain it. Insurers could consider new ways to communicate with enrollees about which covered drugs receive UM and how to access drugs with UM.
- Formularies Based on Drug Value – Insurers and PBMs should support prescription drug price reforms and aggressively pursue reforms that address unjustifiably high prices. Furthermore, these entities should work with policymakers to enact drug pricing policies that encourage P&T Committees to maintain clinical criteria as the foundation for balancing costs with appropriate care.