Potential impacts on costs and premiums related to the elimination of prior authorization requirements in Massachusetts
Prior authorization (PA) is one tool employed by commercial payers and managed care organizations (MCOs) to optimize the utilization of various high-dollar or potentially low-value services covered under typical comprehensive medical coverage. PA can be an effective cost-control tool, but it also can increase the administrative burden and long-term costs. The Massachusetts Association of Health Plans recently engaged Milliman to model the potential cost impacts from generally limiting or eliminating PA in the commercial and Medicaid markets. In this report, we discuss:
- Background on PA
- Medical and drug allowed cost results
- Impacts to premiums and member cost sharing
- Key considerations
This report was commissioned by Massachusetts Association of Health Plans.
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Potential impacts on costs and premiums related to the elimination of prior authorization requirements in Massachusetts
In Massachusetts, we found that reducing or eliminating prior-authorization programs could lower costs for payers and managed care organizations in the Medicaid and commercial health insurance markets.