In a recent study based on researchers affiliated with the University of North Carolina (UNC) and UNC Health, it was found that incorporating a pharmacy-managed medical necessity review program for high-cost outpatient drugs prevented reimbursement issues for therapies not eligible for payer prior authorization (PA).

A common denial trend that occurs with outpatient medical benefit drugs, such as medications covered by a medical benefit plan and administered in an outpatient visit, is payers not requiring or permitting PA proactively. Despite this lack of requirement, they still deny the drug after administration for medical necessity.

For these denial situations, the study found that a preemptive strategy of complying with payer-mandated requirements is critical for revenue protection. To address this need, UNC incorporated a medical necessity review into its existing closed-loop, pharmacy-managed precertification and denials management program that helped safeguard reimbursements for therapies not eligible for payer PA.

As part of the study, referrals for targeted payers and high-cost medical benefit drugs not eligible for PA and deemed high risk for denial were reviewed, with payer medical policies evaluated and clinical documentation assessed to confirm alignment. The report outlined the medical necessity workflow as a component of the larger precertification process, detailing the decision-making process when performing the review, and delineating the roles and responsibilities for the team members involved.

For the study, a total of 526 drug orders were evaluated from September 2018 to August 2019, with 146 interventions completed. Of the 761 individual claims affected by proactive medical necessity review, more than 99% resulted in payment and fewer than 1% resulted in revenue loss, safeguarding more than $5 million in annual institutional drug reimbursement. At the time of study analysis, there were only three cases of revenue loss.

The study team concluded that a revenue cycle best practice, like the one successfully implemented at UNC, can be replicated at other institutions.