Study: Pharmacy-led PA program increases hospital revenues

January 5, 2015

A pharmacy-led prior authorization service can generate additional hospital revenues through increased reimbursements and decreased write-offs, according to a case study to be published in the American Journal of Health-System Pharmacy.

A pharmacy-led prior authorization service can generate additional hospital revenues through increased reimbursements and decreased write-offs, according to a case study to be published in the American Journal of Health-System Pharmacy.

The prior authorization program on which the case study was based is at Froedtert Hospital, a 550-bed academic medical center in Milwaukee, Wis. Click here to read the report.

Froedtert was experiencing an increasing number of Medicare write-offs due to the off-label use of specialty medications. Additionally, more insurers were requiring prior authorization before beginning treatment with many specialty medications.

“Although Medicare provides clear guidelines for coverage, these guidelines were not being followed to allow for proper billing to and reimbursement from Medicare,” study authors wrote.

The hospital’s pharmacy department began reviewing all medication orders for high-cost specialty medications administered or infused in Froedtert’s outpatient clinics. A specialty pharmacy coordinator was also hired.

“Although the pharmacy department neither ordered nor administered the specialty medications that were being written off, we felt fiscally responsible for the medications our department was preparing and providing our various clinics to administer to patients,” study authors wrote.

As a result, the hospital decreased write-offs or increased revenues by more than $6.2 million during the first six months of 2013. Froedtert had a 20 to 1 return on investment in the prior-authorization program.

“Our prior authorization work across our health system has not only helped to reduce Medicare write-offs and commercial insurance denials, but has also resulted in closer working relationships with individuals in other departments of the hospital,” study authors wrote. “Several millions dollars in additional write-offs were avoided because our prior-authorization staff identified prescribed therapies that would not be covered by Medicare or commercial insurers before they started.”

Froedtert’s prior-authorization program initially focused on orders from the gastrointestinal clinic, but it was eventually expanded to the rheumatology and neurology departments, and to the hospital’s clinical cancer center. “Although the cancer center already had a nonpharmacy staff member handling prior authorizations for chemotherapy orders, we found that several ongoing chemotherapy regimens were not being covered by Medicare or the patient’s commercial insurer,” study authors wrote.