I have a family member who has an infection in his nail. The treatment for the infection is a pill that is taken for 3 months (with some liver function monitoring). It's not a fatal condition. He went to the doctor, got the bloodwork, waited for the results, then got a call from the doctor that he could start the medication and had the doctor call in the prescription to the pharmacy (CVS) next to his work. The pharmacy told him the medicine requires preauthorization. Even though there is not an alternative medication. The pharmacy called the doctor. The doctor filled out the preauthorization form. The form was sent in and it was rejected. The doctor called to say it was rejected and she didn't know why or what to do. She said the medicine is available at Walmart for $4 and offered to call it in there. She waited while the number for Walmart was located. She phoned the medicine in. She called back to say it was done. My family member didn't get the medicine at the pharmacy next to his office (where it cost $70 as cash, but likely has a negotiated lower cost to the insurance company plus his cash co-pay) and instead he drove 20 minutes each way to Walmart to pick up his $4 medication. The insurance company then spent the money on a 2 page personal letter and a stamp to inform him he wasn't preauthorized because the physician did not document that the condition was painful or uncomfortable and did not document that over-the-counter topical medications had been tried (they haven't been, but note, they take months to try and are known to be ineffective). The infection looks groddy, will not get better without treatment, and can spread, so treatment seems reasonable to me. There are no less expensive prescription treatments for this conditions and essentially no other options.
So let's see: 6 phone calls by the doctor
3 phone calls by the pharmacist (to the insurance, to the doc, to someone to say the preauth was denied)
A 2 page letter spit out by a computer but with some personalization as to patient name and drug name
A postal stamp and the involvement of several postal employees
40 minutes of driving by an executive with a top notch private health plan.
And the $4 prescription was had.
And we'll guess this amount of rigamarole saved the insurance company money by essentially bullying him into paying cash elsewhere rather than asking the doctor to fill out an appeal form and fax in "supporting documentation" for the appeal. How much did they save for the 3 months of medication they denied? Well $12 if they bought their meds at Walmart. If the insurance company actually paid the top cash price minus the copays, they saved an absolute max of $165 for 3 months at $70 (so $210) minus the $15 generic copays. My guess is it was somewhere inbetween, so was it worth it in terms of doctor time, pharmacist time, care manager time at express scripts, secretarial time for the appeal letter, mail carrier time, gas, and an hour of some busy's guy's life spent running around to get a script he could have gotten on his way back from lunch?
I don't have the answers, but I do know our system is broken. Many say it's broken only for the certain people....and really my family member got his medicine, and if the story got any more complicated, he would have just paid the $70, it's just the idea that they throw you through all these hoops because they can.