In the struggle to lower healthcare insurance expenditures, step therapy has emerged as one of the more controversial cost-cutting measures. Often called “fail first,” step therapy protocol requires reluctant medical practitioners to prescribe patients relatively inexpensive treatments for an ailment before stepping up to more expensive options. Only after inexpensive choices fail will the insurer cover pricier ones.
This practice sometimes makes sense. Private insurance companies have no obligation to cover overpriced medication with no significant benefit over cheaper ones (unless their contract specifies otherwise), and government-run organizations costing taxpayers $1.6 trillion annually have a duty to lower expenditures.
The danger arises when clear differences in safety or effectiveness exist between treatments, but insurers insist on starting with a substandard remedy. An antibiotic with a 10% success rate in treating pneumonia and a 90% chance of causing hives obviously would not be an appropriate substitute for an antibiotic with those figures reversed. The numbers are decidedly lopsided: pneumonia is life-threatening, and proper treatment is urgent.
But in the real world, differences do not typically make themselves so evident. Only an alert doctor will recognize that due to a patient’s family history, a normally adequate drug will likely be ineffective or harmful. Before the medical community has time to compile statistics, only a few doctors may notice an atypical or newer drug far outperforms its cheaper predecessors. The disease at hand may not ordinarily be dangerous, as in the case of insomnia or acne, but the doctor may see firsthand the patient is suffering significantly and needs intense medication to avoid complications.
How can laws protect both insured and insurers, while avoiding government overreach? Individual states have much discretion in how they manage this balance, so they should look at multiple methods when crafting laws.
Bans
Some states prohibit most step therapy, but this approach has drawbacks. Just as step therapy itself involves an unbending set of rules, bans risk a lack of nuance. States need to ensure reasonable exemptions are built into any legislation, and insurers need timely methods of recourse for problems arising.
Although the front-line viewpoint of doctors generally renders them most qualified to make judgments about treatment, they may also have a bias in favor of newer, older, common, or novel medications. And because 67% of doctors receive compensation from pharmaceutical companies, incentives may exist to use expensive brand-name medications before cheaper generics enter the market. The insurance company footing the bill should have some right to oversight.
Time Limits
States can also implement time limits on waiting periods for any treatment a doctor wants to prescribe. For example, a law can mandate an insurance company cover a requested medication after 30 days on one less-costly alternative.
Legislation should further stipulate that insurers process exemption requests quickly, so practitioners can begin treatment without delay. Medicare Advantage, for instance, is legally required to respond within 72 hours to a doctor’s appeal.
Cost Analysis
Finally, both taxpayers and private insurers benefit from analyzing the true costs of step therapy. Study results have been mixed, with some suggesting short-term savings come at higher long-term costs.
Far worse, some savings result from patients giving up or even dying due to “temporary” coverage gaps. Under no circumstances should an insurance company agreeing to payment be allowed to sidestep it. Although ethical implications of healthcare coverage abound, state governments have not just a right, but a duty, to ensure companies deliver the goods they are contracted to deliver. This is especially important in health care.