• Menu
  • Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Before Header

  • About Us
  • Lexicon
  • Contact Us
  • Our Store
  • ↑
  • ↓
  • ←
  • →

Balloon Juice

Come for the politics, stay for the snark.

He wakes up lying, and he lies all day.

Our messy unity will be our strength.

Wow, you are pre-disappointed. How surprising.

The current Supreme Court is a dangerous, rogue court.

Seems like a complicated subject, have you tried yelling at it?

Peak wingnut was a lie.

The gop is a fucking disgrace.

… gradually, and then suddenly.

Fight for a just cause, love your fellow man, live a good life.

Russian mouthpiece, go fuck yourself.

Speaking of republicans, is there a way for a political party to declare intellectual bankruptcy?

Accountability, motherfuckers.

You are so fucked. Still, I wish you the best of luck.

We’re watching the self-immolation of the leading world power on a level unprecedented in human history.

GOP baffled that ‘we don’t care if you die’ is not a winning slogan.

Mediocre white men think RFK Jr’s pathetic midlife crisis is inspirational. The bar is set so low for them, it’s subterranean.

Do not shrug your shoulders and accept the normalization of untruths.

Polls are now a reliable indicator of what corporate Republicans want us to think.

Marge, god is saying you’re stupid.

Stamping your little feets and demanding that they see how important you are? Not working anymore.

Not rolling over. fuck you, make me.

It’s the corruption, stupid.

… pundit janitors mopping up after the gop

I’d hate to be the candidate who lost to this guy.

Mobile Menu

  • Seattle Meet-up Post
  • 2025 Activism
  • Targeted Political Fundraising
  • Donate with Venmo, Zelle & PayPal
  • Site Feedback
  • War in Ukraine
  • Submit Photos to On the Road
  • Politics
  • On The Road
  • Open Threads
  • Topics
  • COVID-19
  • Authors
  • About Us
  • Contact Us
  • Lexicon
  • Our Store
  • Politics
  • Open Threads
  • 2025 Activism
  • Garden Chats
  • On The Road
  • Targeted Fundraising!
You are here: Home / Anderson On Health Insurance / Utilization management through hassle or guidelines

Utilization management through hassle or guidelines

by David Anderson|  March 2, 20176:32 am| 17 Comments

This post is in: Anderson On Health Insurance

FacebookTweetEmail

The Alliance for Patient Access (a combination of drug industry advocacy group and physician advocacy group) released an interesting report early last week. It looked at the denial rates of PCSK9 inhibitors. This is a new class of anti-cholesterol drugs that are targeted at individuals with an unusual genotype and high cholesterol. The drugs are expensive ($14,000 or more) and are not cost effective clinical interventions at current prices under almost any range of defensible assumptions compared to the next best alternative.

They highlight the following chart of denials in Florida. I want to look at something else that this chart implies that is completely tangential to the point APA is trying to make.

What I found interesting was the relationship between the initial rejection rate and the reversal rate. I think this tells us how different payers do their utilization management.

Carriers that have a low initial rejection rate have a high reversal rate on appeal of the initial rejection. Carriers that have a high initial rejection rate don’t lose many appeals of the rejections. The R^2 is high for a simple linear regression as a BS check. More complex trend lines upped the R^2 but for simplicity sakes, a simple fit fits the intuition. Chopping off the top most outlier only slightly decreases the R^2. This is not a comprehensive study, but it is a useful BS check.

So what is going on here?

I think it is a good example of two different utilization management strategy poles. The first pole is effectively utilization management by hassle. A lot of claims will be approved so there will be a low rejection rate. Of those that get rejection, most will get overturned. The utilization management strategy is to create a bureaucratic barrier to use so as to drive people away out of frustration and fear. But if they persist, they get the drug eventually. The side effect of this system is that it could be a subtle selection mechanism to drive people to other plans that are more user friendly.

The other extreme pole is a strict guideline based utilization management system. Most attempts to prescribe will be rejected as the patient does not meet the payers’ guidelines. And since the guidelines are firm, most appeals are also denied. The appeals that do get approved will be ones where the patient’s health status either changes in the course of treatment or there is documentation already in the patient file that was not included in the initial request for authorization. It is a stricter but in some ways a much more transparent process.

Insurers are usually obligated to pay for “medically necessary” treatment. The lawyers will argue long and hard and quite profitably as to what is “medical” what is “necessary” and what is “medically necessary” when answering one way or another means a major swing in expenditures or revenue. Utilization management is partially a systemic way of implementing the insurer’s judgement (constrained by state regulations, medical opinion, and the risk aversion/seeking profile of the legal department) as to what is medically necessary.

Strict rule based utilization management was initially used for the Hep-c drugs. There the rules were often the patient had to be at an advanced disease stage (F-3 or F-4), abstinent from IV drug use and deemed likely to be compliant. These rules were put in place to minimize the number of doses bought at a high price that would not lead to long lasting cures. Over time, the rules have loosened as pricing has come down a bit. The process is clearer than randomly rejecting or approving authorizations and then overturning a significant number of the rejected authorizations. That system no one would know if they qualified. Under a strict rule based system, it is more predictable even if the probable result is a denial.

I would love to see this type of data by carrier for other high cost drugs. I wonder if there is a different set of behaviors for one-off high cost interventions like the Hep-C drugs compared to maintenance medications like these PCSK-9 inhibitors? But until we get this data, it is a good illustration of how different companies manage utilization and thus costs.

FacebookTweetEmail
Previous Post: « Jefferson Beauregard Sessions III Is A Lying Liar, and the GOP Needs to Be Held Responsible
Next Post: Local variations on what a flat subsidy buys »

Reader Interactions

17Comments

  1. 1.

    AnonPhenom

    March 2, 2017 at 6:41 am

    Former PBM director here. It’s both, hassle and guidelines.

  2. 2.

    Richard Mayhew

    March 2, 2017 at 7:11 am

    @AnonPhenom: The question is how much of each strategy the different PBMs engage in. FEHB looks to be strong guidelines low hassle while Humana is low guideline high hassle

  3. 3.

    AnonPhenom

    March 2, 2017 at 7:34 am

    @Richard Mayhew:
    Depends on the corporate culture. There are valid reasons to slow walk some of the newer therapies (FDA regulatory capture resulting in the first 18 months of marketing being a clinical trial of sorts) and crappier ones “this is going bust the budget”. Both can be true at the same time.

  4. 4.

    DHD

    March 2, 2017 at 7:46 am

    Interesting to think that “utilization management by hassle” is basically the thing that American politicians are complaining about when they trot out supposed horror stories of the Canadian healthcare system.

    And in the end the only places it really applies up here are primary care and elective surgeries. Ironically, the former is actually a serious problem, while the second is the one that gets harped on all the time by the Republicans and their useful idiots to the North.

  5. 5.

    Wag

    March 2, 2017 at 7:51 am

    You bring up an interesting contrast between the drugs for hepatitis C and the PCSK9i’s. Hep C treatment is short term, 90 days, with a hard, easily monitored end point of virologic cure, abenefit that occurs in >95% of treated patients.

    Compare this to cholesterol treatment with the inhibitors. A patient needs to be treated for life to accrue benefit. And if the model is similar to statin therapy, then treating 100 patients for 10 years will prevent two or three heart attacks. In other words, an insurance company would need to spend $14,000/patient/year, or $14,000,000 to prevent a couple of heart attacks that cost the company $100,000 apiece. All in all, a pretty poor return on investment.

  6. 6.

    SRW1

    March 2, 2017 at 7:58 am

    Y-axis presumably should say ‘reversed’ and the ‘rate’ may not be necessary.

    In any case, the spread of reversals (approx 10% to 65%) for the initial 30% decline rate is amazingly wide.

  7. 7.

    Another Scott

    March 2, 2017 at 8:07 am

    J deals with this “management through hassle” stuff with our insurance all the time. Her physical therapist doesn’t take insurance, so J has to file the paperwork herself. The “codes” seem to change randomly within the year (in addition to often officially changing annually). Claims that will be approved for months on end will suddenly be denied (for the same treatment), so being “approved” is never the end of it – “smooth sailing from here on – we’ve been approved!!”. Claims that were filed months ago have to be refiled because they “lost” some paperwork. Etc.

    It’s maddening, and a huge wast of time (and money) for everyone involved. It’s hard to believe that BCBS is actually saving much money doing this (the claims are roughly $100 each), but it’s been going on for years. I’d hate to actually be one of the 1/1M people who actually need these $500k+/yr treatments.

    (sigh)

    Thanks.

    Cheers,
    Scott.

  8. 8.

    ThresherK

    March 2, 2017 at 8:24 am

    I’ve never heard of ’em but the info that they’re A combination of drug industry advocacy group and physician advocacy group leaves me confused, basically because everything else in this post is over my head.

    Allliance for Patient Access: Are they a fair player, or just another “Americans for Health Liberty Freedom and Choice and What Are You A Commie” newspeak-labeled group?

  9. 9.

    David Anderson

    March 2, 2017 at 8:38 am

    @ThresherK: If you look at their funders, it is entirely big Pharma. Their angle is that anything should be prescribable at any time at any price. That does not sound good coming out of the spokesbots of Pharma but it is convincing come out of a doctor’s mouth.

  10. 10.

    Barbara

    March 2, 2017 at 9:01 am

    It’s hard to evaluate this without some kind of baseline for rejections/reversals for all kinds of drugs. There can be rejections that are based on things other than UM guidelines. In addition, some of these insurers might actually have this drug as an on-formulary product if certain conditions are met (meaning that you would expect the rejection rate to be lower for this drug all other things being equal). In my experience, probably a little out of date at this point, PBMs are better at communicating formulary status and UM guidelines, as well as having a much higher market share and thus doctors being more familiar with what they have to do to get something covered. This probably explains some of these numbers. For instance, ExpressScripts and CVS received a pretty low number of claims given their overall market share, which might be a function of doctors knowing in advance not to bother. Of course I am speculating — the overall point is that this review is probably not well-enough controlled to say a whole lot about a given carrier’s view on utilization management. Especially since it comes from a highly interested party.

  11. 11.

    David Anderson

    March 2, 2017 at 9:19 am

    @Barbara: Agreed, it does not prove what the interested party thinks it proves. I found the relationship between the level of initial rejections and the overturned on appeal rates to be fascinating. That I think is something that the author of the original piece would not give a shit about.

  12. 12.

    Eric S.

    March 2, 2017 at 9:24 am

    After my surgery Tuesday I had 3 prescriptions: percocet for pain, anti constipation and anti nausea to counter the side effects of the percocet. 30 pain pills to take every 4 hours? No problem. Express Scripts only allows me 7 of the anti nausea drugs per month. Fortunately I don’t have that side effect.

  13. 13.

    Alex

    March 2, 2017 at 9:27 am

    This interests me because it’s the opposite of the pattern you seen with applications for Social Security disability. With SSI and SSDI, they deny more than half the applications, but way more than half of those who appeal are accepted. SS is supposed to be using a strict guidelines approach, but some judges find the guidelines weren’t followed in about 90 percent of appeals. The initial denials discourage people from applying because they know it would take 2 years even if they won in the end ( the hassle factor). And the system further avoids having to pay out because many applicants are so sick they die before they can get their appeal.

  14. 14.

    Barbara

    March 2, 2017 at 9:42 am

    @David Anderson: Right. Just looking at ESI and CIGNA, they have high rejection rates but low reversal rates. This says to me that they might have some other Hep C product as an on-formulary and clear criteria for when you don’t get that product as a first measure. (There are now multiple Hep-C products.) Those doctors who insist on starting with the off-formulary product are less numerous (ESI in particular), likely to get rejected and unlikely to get that rejection reversed. I realize that in an ideal world all drugs would be cheaper, but in the world that these companies deal with, playing one drug off against another is how they manage to keep prices from spiraling utterly out of control.

  15. 15.

    ElegantFowl

    March 2, 2017 at 12:45 pm

    It struck me today that I haven’t heard anything about the political fallout of medical underwriting, and I wonder what Republicans plan to do about that. I mean, every Republican proposal has some sort of “high risk” plan, and as soon as you use those words you bring back medical underwriting, right? Everyone has forgotten about the hassle and anxiety of pre- and post-coverage questionnaires and exams and denials, and they’re going to bring that all back, and I don’t see how it can be hidden or obfuscated or blamed on Obama. Any idea what the plan is?

  16. 16.

    ElegantFowl

    March 2, 2017 at 12:49 pm

    And I imagine there could be dramatic advances in risk reduction through medical underwriting these days, once that class of innovation is unleashed. Family history, genetic analysis, lifestyle surveillance, social media monitoring, etc. None of it was legal under Obama, all may be legal under Republicans, and people are surely gonna hate it.

  17. 17.

    EthylEster

    March 2, 2017 at 12:56 pm

    Personally I have always revered rejection.

Comments are closed.

Primary Sidebar

On The Road - beckya57 - Copper Canyon, Mexico, April 2025
Image by beckya57 (7/31/25)

World Central Kitchen

Donate

Recent Comments

  • Omnes Omnibus on The Texas Flood Tragedies Continue (Jul 9, 2025 @ 11:21am)
  • dnfree on On The Road – dmkingto – SF Bay Area Scenes (Jul 9, 2025 @ 11:21am)
  • mappy! on The Texas Flood Tragedies Continue (Jul 9, 2025 @ 11:18am)
  • MazeDancer on The ACA in 2026 (Jul 9, 2025 @ 11:13am)
  • Citizen Dave on The Texas Flood Tragedies Continue (Jul 9, 2025 @ 11:12am)

Balloon Juice Posts

View by Topic
View by Author
View by Month & Year
View by Past Author

Featuring

Medium Cool
Artists in Our Midst
Authors in Our Midst
No Kings Protests June 14 2025

🎈Keep Balloon Juice Ad Free

Become a Balloon Juice Patreon
Donate with Venmo, Zelle or PayPal

Calling All Jackals

Site Feedback
Nominate a Rotating Tag
Submit Photos to On the Road
Balloon Juice Anniversary (All Links)
Balloon Juice Anniversary (All Posts)
Fix Nyms with Apostrophes

Social Media

Balloon Juice
WaterGirl
TaMara
John Cole
DougJ (aka NYT Pitchbot)
Betty Cracker
Tom Levenson
David Anderson
Major Major Major Major
DougJ NYT Pitchbot
mistermix

Keeping Track

Legal Challenges (Lawfare)
Republicans Fleeing Town Halls (TPM)
21 Letters (to Borrow or Steal)
Search Donations from a Brand

Feeling Defeated?  If We Give Up, It's Game Over

Site Footer

Come for the politics, stay for the snark.

  • Facebook
  • RSS
  • Twitter
  • YouTube
  • Comment Policy
  • Our Authors
  • Blogroll
  • Our Artists
  • Privacy Policy

Copyright © 2025 Dev Balloon Juice · All Rights Reserved · Powered by BizBudding Inc

Share this ArticleLike this article? Email it to a friend!

Email sent!