Insurers Using Site of Care Optimization to Reduce Specialty Drug Costs

For the past several years, the infusion-product market has been moving from hospital-based care to ASOCs. As a result of high-cost and higher volume drugs such as rheumatology and oncology infusion products, manufacturers are increasingly being affected by the commercial insurance market’s shift of medical coverage policies to lower-cost alternate sites or levels of care for infusion of specialty drugs.

The need for a comprehensive medical benefit drug strategy applies to providers and health plans as well as purchasers. Purchasers seek optimal plan performance, which is dependent upon their perception of value for their group health program.

In September 2019, UnitedHealthcare announced that it will implement prior authorization requirements and site-of-service medical necessity reviews for certain procedures if they are requested to be performed in the hospital outpatient setting.

UnitedHealth CEO Dirk McMahon said during a recent earnings conference call that United sees “considerable excess spending” on care delivered at “sub-optimal high cost settings.” On United’s commercial side, McMahon said, the insurer sees an opportunity to shift more than 20% of medical spend to what it terms “more effective sites.”

Site of service medical necessity reviews began for certain surgeries when surgery is performed in an outpatient hospital setting. These reviews were to begin on or after Nov. 1, 2019 for fully insured groups in most states. In California, Colorado, Connecticut, New Jersey and New York, reviews were to begin for certain surgeries happening on or after Dec. 1, 2019.

Takeaway: UnitedHealthcare Sees an Opportunity to Shift 20% of Medical Spend to More Effective Sites