Why do pharmacies need "prior authorization" to fill some prescriptions? Is the prescription itself not enough? What is prior authorization?
This is a fun answer. FIRST, Pharmacies never require prior authorizations. Do you know why? Because pharmacies don’t pay for your medication, they sell you your medications. Who, besides you, pays for your medications? That’s right, your Insurance Company. It’s completely wrong to think any Pharmacy is holding up your prescription because of a Prior Auth. Pharmacies bill in real time. Unlike Doctors offices. Doctors collect payments on the expected charge. And, if that’s wrong, they ask for more money. And, if you don’t pay them, they send your bill to collections. Pharmacies don’t utilize collection agencies. They bill in real time. That’s why people have to wait for their prescriptions, because the pharmacy has to get the billing absolutely correct at the time of service or else the Pharmacy loses money. Somebody, I don’t know who, decided it was the Pharmacies responsibility to make sure the Patient’s Insurance pays for the Patient’s medications that the Doctor prescribed. In the prior authorization process, pharmacies have essentially nothing to do with any of it, except get yelled at by angry customers.Here’s the breakdown. Insurance companies are still businesses. They are in the business of making money. To keep deductibles affordable, they can not cover every medication. So, they make what is called a formulary. Which are the medications the Insurance Company prefers to cover. This gives the Insurance company wiggle room to make money. It allows them to work contracts with drug companies, and to cover less expensive medications so that they can use their business skills to make money. There are many categories Insurance Companies place medications in, primarily for business reasons. Formulary, Non-formulary, Not covered, partially covered. Formulary is the list of medications the Insurance prefers to cover. Non-formulary are those they prefer not to pay for. If a drug is a Prior Authorization drug, that means it’s not on their formulary. That does not mean that the Insurance Company will not pay for the medication at all. It means they will only pay for the medication under certain circumstances. And, “prior” to the Insurance Company paying for the medication, they want to make sure it meets their criteria. This information they often want only from the Doctor, because they might want the diagnosis, certain tests run, or chart notes. These things can only come from the Doctor.Here is the process• you get a prescription from a Doctor, and the Pharmacy tries to bill it. The pharmacy gets a rejection saying this medication requires a Prior Authorization. Occasionally, there are cases where the pharmacy can put in a code. If that is possible, the Pharmacy just does this for the patient. More often than not, the Insurance Company wants the Doctor to submit information as to why the patient needs the medication prescribed, versus a medication on their formulary, which saves the Insurance Company money. The Pharmacy faxes or calls the Doctor’s office, letting them know to contact the Insurance Company, to find out the requirements for the Insurance Company to pay for the medication. If the patient fits the criteria, the Doctor faxes the information to the Insurance Company, and eventually, the medication gets paid for. If the patient does not fit the criteria, the Doctor usually has to change the medication to something the Insurance Company will pay for.You may notice, in this process, the Pharmacy is just an “errand boy”. The Insurance Company says the medication requires a Prior Authorization, they tell the pharmacy by rejecting to pay for the medication. Then, the Pharmacy tells the Doctor’s office. Then, it’s worked out one way or another between the Insurance Company & the Doctor’s office. Depending on how fast the Doctor acts, how much information the Insurance Company requires, and how fast the Insurance Company makes their decision, is what determines how quickly/slowly the prior authorization takes.An interesting tidbit in this whole process• if the Insurance Company approves the Prior Authorization (Meaning they will now pay for your medication), they do not call the Pharmacy to let them know that the medication has been approved, and the Pharmacy can rebill the Medication. Apparently, they are too busy to do this. The Doctor’s office doesn’t usually call the Pharmacy either. Apparently, they are too busy to do this. So, the patient’s medication is now covered, but neither of the two parties that know this, contacts the Pharmacy, so that they can rebill the medication and fill it. If the patient calls the Insurance Company or the Doctor’s Office• they usually say, oh yes, that was approved, I have no idea why the Pharmacy did not fill that medication, and call you to let you know! Then, the customer calls the Pharmacy or comes in, and yells at someone in the Pharmacy.Of course, the Pharmacy never knew this, because nobody called them. But, nobody cares about that, because the patient gets to vent their irritation, even if it’s at the wrong people. Obviously, this is a simplified version of the whole process. It’s probably more than you needed to know. But, this is a situation that’s all too common for people in Pharmacy. Getting the fuzzy end of the lollipop.