U.S. employers are quietly cutting their pharmacy spend in hopes of not running afoul of laws that are rarely enforced
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Written By Jonanne Wojcik
By Bruce Shutan
By Laura Carabello
Written By Laura Hescock
(ISSN
MESSAGE FROM THE CHAIRMAN
Matt Kirk, SIIA Chairman of the Board, President & CEO, The Benecon Group
The Self-Insurance Institute of America has had an outstanding start to the year. We began 2025 with record-breaking attendance at the Spring Forum and a highly successful Future Leaders Forum—energizing the next generation of self-funding professionals, and sharpening our focus on the most pressing needs of our members and their clients.
The strong engagement we’ve seen at these events is a powerful testament to SIIA’s continued growth and its central role in shaping the future of the self-insurance industry.
One of the highlights of the Spring Forum was the comprehensive legislative and regulatory update delivered by SIIA’s Government Relations team.
With Republicans gaining control of both the House and Senate through 2026, several key policy priorities are now in motion.
Here are some of the most significant developments:
• Reconciliation Legislation: Focus areas include revisiting the 2017 tax reforms, rolling back recent energy policies, strengthening border security, and advancing immigration reforms.
• Federal Budget: Congress narrowly avoided a government shutdown, passing a clean continuing resolution that funds the government through September 30, 2025, with increased allocations for defense, immigration, and border security.
• Healthcare and Reconciliation: While a repeal-and-replace strategy is not expected, there may be movement on Medicaid reforms, ICHRA rule changes, and employer-sponsored tax preferences.
• Legislative and Regulatory Priorities: Key areas of focus include data transparency, pharmacy benefit manager (PBM) reforms, surprise billing protections, HSA expansion, site-neutral payments, and telehealth access.
• Price Transparency: There is increasing federal pressure on hospitals and insurers to disclose and standardize pricing, including for prescription drugs.
• Data-Sharing and Accountability: Enhanced enforcement efforts are underway to ensure the accuracy of claims data, remove “gag clauses,” and improve transparency across payers and providers.
These updates come at a critical time, especially as high-profile lawsuits allege that plan sponsors have breached fiduciary duties by overpaying for prescription drugs. Now more than ever, staying informed and engaged is essential.
I encourage all members to take advantage of upcoming SIIA events that offer valuable insight into these developments and showcase growth strategies from top industry experts:
• Corporate Growth Forum | June 9–10 | Charleston, SC
• 2025 National Conference & Expo | October 12–14 | Phoenix, AZ
On a personal note, I was honored to recognize Nigel Wallbank for his tremendous contributions to our community, awarding him the title of SIEF Chairman Emeritus.
Nigel’s decades-long leadership—spanning board service, international initiatives, and financial stewardship—has played a critical role in SIIA’s success and evolution.
Thanks to the hard work of our dedicated members, committees, and leadership, we’ve laid the foundation for an impactful year ahead. Together, we have the opportunity to drive meaningful improvements in healthcare cost and care delivery throughout 2025 and beyond.
Let’s keep moving forward—together.
Drug Importation: Cross-Border Cure or Crisis?
U.S. employers are quietly cutting their pharmacy spend in hopes of not running afoul of laws that are rarely enforced
Written By Bruce Shutan
AApromising approach for helping lower a self-insured employer’s pharmacy spend in the U.S. involves drug importation, though it also can be a breeding ground for confusion and legal trouble.
There are several myths about importing drugs from other countries, according to Andrew Miller, chief delivery officer of RxFree4me. For example, he said there’s no Federal Drug Administration (FDA) prohibition against personal importation of drugs, nor does it violate the terms of a pharmacy benefit management (PBM) contract. The FDA, however, must grant what’s known as an individual waiver before drugs are imported.
Ashley Gillihan, a partner with Alston & Bird, says there are two routes through which drugs can be imported. One is a waiver granted to individuals under circumstances that would make it difficult for them to receive the treatment they need in the U.S. The FDA also has a waiver program for states to import drugs from Canada for their residents. There are no such formal options in the commercial insurance market.
Florida became the first state to receive approval in January 2024, limiting the use of those drugs to its Medicaid program. In addition, legislation to establish drug importation programs has passed in Colorado, Maine, New
Hampshire, New Mexico, Texas, and Vermont – five of which have submitted proposals to the FDA. While Vermont sent a concept letter to the U.S. Department of Health and Human Services and the Office of Management and Budget, Texas has not yet submitted a proposal. Some states are also exploring drug imports from other countries. North Dakota and Virginia have established workgroups to examine drug importation.
The way individual waiver programs have been set up is that individuals sign agreements with a third party – not their employer, Gillihan notes. “The employer is not actually importing, but we’ve advised clients to be careful about that because they’re still paying the fee,” he says. “So, they’re not totally outside of this arrangement that they’ve got a foot in.”
Any violation of the law is rarely enforced, he explains, adding that time will tell how it’s handled under the Trump administration, which can be unpredictable. Still,
he says it’s a common practice among employer groups to import drugs.
The FDA’s Regulatory Procedures Manual allows Americans to source meds from tier-one countries for personal use. “You can drive across the border and bring them over, or you can have them shipped,” says Gary Becker, CEO of ScriptSourcing, “and what they’ve done is they’re not going to say it’s legal or illegal. There are no consequences for doing this. There’s no fine or jail time.”
However, he notes that the FDA has said U.S. Customs and Border Protection allows people to send meds over from Canada to the United States, "so we're taking advantage of that and empowering plan members on a voluntary basis to be good consumers of healthcare."
Miller says there are tradeoffs for employers to consider when it comes to drug importation. He says that while the rewards are substantially lower prices on medications, the risks are largely unknown since there isn’t much enforcement.
Noting that employers need guidance on this issue, he says brokers are an integral piece of the puzzle for helping educate and guide them through deciding whether to import drugs. “Just like anything else, if a group wants to put in a new vision or dental plan, they start with a broker, who’s the quarterback of their plan,” he observes.
Another unfounded concern about drug importation that Miller cites involves the efficacy of drugs flowing into the U.S. from four so-called tier-one, English-speaking nations because the same ingredients are being used. The FDA classifies scripts that are imported from Canada, England, Australia, and New Zealand as mirroring the same quality control standards enforced in the U.S.
Importation is confined to drugs that the FDA approves that are manufactured in foreign FDA-inspected facilities to ensure safety and efficacy, intended only for use by U.S. consumers, and imported into the country by the drug manufacturer. "By and large, there's very little that you can import without those exceptions," Gillihan says.
HUGE COST SAVINGS
The U.S. spends more on prescription drugs per capita than most other countries, with Becker noting that prices are two to 10 times more expensive than in other countries.
His company has saved employer clients “hundreds of millions of dollars” over the past decade by focusing on a small segment of health plan members who consume more than 80% of their company’s
Ashley Gillihan
pharmacy spend. Employers that save 50 cents to 75 cents on the dollar, depending on the medication, are able to zero out copays for their health plan members, he explains.
Becker recalls years ago how one of the municipalities he did business with saved employees hundreds of dollars in drug copays per month and his contact there said, “this is the difference for my family between a good Christmas and a great Christmas!”
Not only does it help these members spend less money, but it also allows them to adhere to their medications better because there's no cost barrier. He notes that nearly one-third of hospitalizations are due to medication nonadherence.
Typically, Miller has seen employers save roughly 50% by importing drugs. “Most of the international programs that are out there are going to substantially reduce or even eliminate copays and cost-shares at the member level,” he says.
There would be no need to import cheaper drugs from other countries, of course, if the U.S. government is able to get a handle on the PBM industry. “Employer plans are getting drugs solely from the PBMs,” Gillihan says. “There’s no other avenue from which to purchase drugs. And when you have middlemen in place, things are just going to be more expensive.”
He acknowledges that employers are squeezed between running the risk of violating laws governing drug importation and facing class-action lawsuits alleging a breach in fiduciary responsibility for not being proactive about combatting inflated prices in their prescription drug plan. Multistate employers also have to be concerned with regulating drug costs through networks and providing adequate coverage, he adds.
In attempting to regulate PBMs, Gillihan says states are also seeking to regulate plan design, which is preempted by ERISA. Tennessee recently lost a case with regard to its PBM law on the basis that parts of it are preempted by ERISA. Oklahoma’s PBM law is headed to the U.S. Supreme Court after the state lost a case before the Tenth Circuit U.S. Court of Appeals – a case that will be closely watched across the selfinsurance community.
There are so many different elements of prescription drug plans these days that make drug importation palatable to employers, Gillihan says, noting how specialty drugs are "ridiculously expensive," which is where manufacturer assistance programs help cover their cost. "Congress is going to have to decide what the best approach is and whether we need to change the rule at the FDA to get drugs from other countries under lesser terms," he suggests.
Many transparent PBMs have embraced personal importation of drugs, and some are even wading into this business, Becker reports. “We’re in the data business, and we are getting data feeds from many PBMs,” he says. “We know which medications we can source for what price and from which pharmacies, and we’ve got a pretty large team of member advocates that are identifying plan members who are eligible for our services.”
Bruce Shutan is a Portland, Oregon-based freelance writer who has closely covered the employee benefits industry for more than 35 years.
Gary Becker
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swirling around insurance company Prior Authorizations (PAs) that determine access to care have jumped to prime time. PA is a process that requires healthcare professionals to obtain advance approval from the insurer before a prescription medication or medical service qualifies for payment and can be delivered to the patient.
Amid patient and provider grumblings that PAs leave them in limbo while waiting for approvals, during the recent confirmation hearings on the nomination of Dr. Mehmet Oz to become the administrator of the Centers for Medicare and Medicaid Services (CMS), there was discussion of changes to PA programs. Oz promised that he would make sure that proposed treatments are “safe, effective, affordable, and covered by the plan.”
He said the typical health plan subjects about 3,000 procedures to PA, with each plan applying a different set of procedures to the process. That adds up to about 5,000 different procedures that may be subject to review. He suggested one way to improve the system would be to adopt a set of 1,000
Changes and Dilemmas
procedures to be reviewed at all plans and create real-time systems that could let providers know if a proposed course of care will be under review.
Now that Oz was confirmed, Caryn Rasnick, chief operating officer with Boon-Chapman, observes, “We haven’t seen a significant rise in PA requirements overall. However, we have seen a sharp increase in the use of specialty drug carve-out organizations, which complicates the process by adding another layer of authorization for both providers and members.”
Rasnick also believes PA is appropriate for services like PT, OT, and ST, but only after the standard treatment course is exhausted.
“For example, if 12 to 14 visits are typical, any additional care should go through a medical necessity review. Fraud, waste, and abuse remain a concern,” she adds. “Ultimately, PA criteria should be based on both the latest clinical evidence and the individual patient’s needs — not every patient fits into the same box.”
Offering the PBM and health plan perspectives, Billy Buckles, senior VP of Product and Client Services, RxLogic, asserts, “One of the purposes of the PA process is to help contain drug costs. But the growing complexity and significant escalation in PA requirements have impacted member access to medical care and prescription drugs. As more drugs come to market, more treatment options become available, and
Caryn Rasnick
there may be multiple treatment options available. Additional rules are being developed to guide coverage decisions on all these new entrants, which further complicates the process. “
He also points to the role of clinical teams that are becoming more involved in the decision-making process, designating preferred status for drugs based upon several different criteria: “As much as possible, the PA process funnels approvals toward the plan’s preferred drug(s), while still being flexible enough to address member concerns that a prescribed drug is not on formulary. “
As clients pursue more cost-effective care strategies, Brandy Maxwell, Director, Medical Management, Boon-Chapman, observes a gradual increase in PA requirements.
“While PA helps manage utilization, the burden on providers and patients can be significant,” she explains. “Delays are especially problematic for members with chronic or complex needs, which is why we work toward 24-hour turnarounds once records are received. PA criteria must reflect the latest clinical evidence while allowing flexibility for individual needs. PBMs play a strong role in drug access, setting coverage rules and negotiating rebates. While this can lower costs, it may also create delays for members.”
Beyond approvals, PA is deeply connected to broader medical management initiatives, as Amy Tennis, senior vice president of Medical Management, MedWatch, explains, “For example, a structured approach to PA in rehabilitative services ensures a balance between access and appropriate utilization. We take a measured approach to utilization review for physical, occupational, and speech therapy, as well as chiropractic services. Initial outpatient requests for 12 visits are automatically certified, while additional requests undergo Medical Necessity Review to prevent overutilization without meaningful outcomes.”
She also points to pharmaceutical oversight as another critical aspect of PA, particularly in the management of high-cost medications.
“MedWatch plays a significant role in pharmaceutical management, particularly with ‘J code drugs’ covered under medical plans,” says Tennis. "We focus on ensuring these medications are appropriate, cost-effective, and the best option for the patient, considering alternatives that traditional PBMs may not utilize."
As PA continues to evolve, its ability to balance clinical standards with individual patient needs remains a focal point, as Tennis continues, “Clinical expertise and judgment are essential in the PA process to ensure care is tailored to each member’s needs while also considering the broader treatment plan. For instance, a member may not strictly meet criteria for a skilled nursing facility, but a Case Manager may determine that a denial could lead to hospital readmission or increased health risks, making skilled nursing admission the most appropriate course of action.”
Amy Tennis
Brandy Maxwell
Changes and Dilemmas
PAS UNDER FIRE FROM PROVIDERS
Source: 2025 American Medical Association
The rate of delays and denials due to PA requirements is drawing the ire of providers. According to the Medical Group Management Association’s 2023 “Regulatory Burden Report,” nearly 97% of providers have seen delays or denials for necessary patient care due to PA requirements. More recently, Medscape‘s “Physicians and PAs Report 2024” unveiled that more than 7 in 10 physicians believe the costs of PAs are higher, or much higher, than they were three years ago.
The AMA declares that PA is overused, costly, inefficient, opaque, and responsible for patient care delays. The organization is lobbying to eliminate care delays, patient harm and practice hassles, and has made fixing PA a top priority to:
• Cut the overall volume of PAs.
• Increase transparency of requirements.
• Promote automation.
• Ensure timely care for patients.
Calling for further steps to be taken, the AMA has requested that the DOL build on the CMS requirements, including: 1) Impose a 24-hour response time limit on employer plans for urgent PA requests and a 48hour limit for non-urgent requests. 2) Discourage plans from conducting repeated reviews for patients who are continuing to access care for the same condition.
They contend that while health plans and benefit managers deem PA programs necessary to control costs, physicians and other providers find these programs to be time-consuming barriers to the delivery of necessary treatment:
o Patients suffer from care delays and denials associated with PA and often experience poorer health outcomes.
o Patients may clinically deteriorate while they are forced to wait, leading to serious adverse events -- hospitalization, disability, or even death.
o PA implementation for medications to treat diabetes, depression, schizophrenia, and bipolar disorder tied to worsening disease status, increased hospitalization, and higher net medical costs.
o Overuse of the PA process places significant strain on physician practices, with administrative burdens wasting significant practice resources; practices report completing an average of 43 PAs per physician.
PAS CHALLENGE CONSUMERS
Consumers express frustration with the current approach to PA and care denials. An ABC News broadcaster declared, “It's widely acknowledged that prior authorization tends to disproportionately impact some of the sickest people who need the most expensive care.”
PAs can affect productivity in the workplace when employees are missing work due to delays in care, leading to prolonged illness or attending rescheduled appointments. In an AMA study, nearly 60% of physicians with patients in the workforce said PA has affected work performance among their patients. These results reflect a KFF survey of adults with health insurance, which found that 16% of all insured adults in the past year experienced PA problems.
REASONS FOR PA DENIALS
Source: Managed Care
Buckles says the PA impacts quality if it is not properly managed, explaining, “Sometimes, inappropriate denials occur, prolonging member access to the medication and absolutely impacting the quality of care and outcomes. The goal is to make faster determinations and approvals that align with the drug formulary. But there's a myriad of reasons why decision-makers will approve drugs off-formulary. For example, if there is a formulary change and the individual has been taking the drug for years prior to the change, the approval will usually be granted.”
APPEALS
When a PA is denied, patients can appeal the decision, often with the help of their healthcare providers or other third-party advocates.
There are two main types of appeals:
• Internal: Request health plan review and reconsideration of their decision, often conducted by a different department or reviewer than the one who made the initial denial. If the internal appeal is denied, there is still the right to an external review by an independent third party. Review and response timeframes are set by the insurer, e.g., 30 days for pre-service denials, 60 days for post-service denials. The insurer is obligated to provide the patient with the right to appeal to an external source in the case of a denial.
• External: Request an independent third-party review of the insurance company's decision. An accredited Independent Review Organization (IRO) can assist by providing a neutral third party that is not affiliated with the health plan and makes decisions based upon medical evidence and the coverage in the policy. URAC's Independent Review Organization (IRO) accreditation standards validate that the third-party organizations providing medical determinations are committed to a fair and impartial peer review process for both patients and physicians.
Bruce D. Roffé, president and CEO, H.H.C. Group, a cost containment company using claim negotiation, repricing and independent review solutions, including a URAC-accredited IRO, describes their process, “When we find against performing a procedure, it is usually what is in the best interest of the patient as lesser modes of treatment may not have been tried or the submitted documentation does not support performing the procedure as medically necessary. Still, it may be denied as it is considered an experimental treatment. This does not mean that the procedure may not have to be performed sometime down the line, but at the time of submission, there was not enough information provided to support the procedure being requested.”
Roffé further explains that the H.H.C. Group conducts both internal and external reviews with impartial assessments of the patient's condition, adding, “For external reviews, we follow state or federal guidelines, and it's a more balanced, objective type of review. This is critical because we decide based upon the information that's been provided by each party. URAC certification is mandatory in these circumstances because it requires the IRO to meet or exceed certain standards when making these determinations.”
He further clarifies that both patients and providers are given the opportunity to submit information, and then the payer is given the opportunity to submit information as to why the PA was denied.
"We look at all of those materials, and then there's an objective assessment made based upon clinical criteria that is used," says Roffé. We primarily use the Official Disability Guidelines (ODG), which provides
Bruce Roffé
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Changes and Dilemmas
evidence-based guidelines for medical treatment and return-to-work in workers' compensation, nonoccupational disability, including impairment guidelines, and drug formularies. The physicians that we work with rely heavily upon ODG.”
REGULATORS STEP IN
CMS has already addressed a myriad of issues surrounding PAs. As part of the CMS new rule (CMS-0057) announced in January 2024 and effective January 2026, it is a pledge to streamline and standardize the PA process, reduce administrative load, minimize care delays, and establish industry-wide standards. This essentially promises to bring considerable change to a PA system that, despite its meaningful intentions, has been confusing and challenging for providers, members, and payers alike.
While self-insured employer plans fall under the jurisdiction of the Department of Labor and are not directly regulated by CMS, plan sponsors are starting to pay more attention to what the federal regulators are doing about healthcare PA efforts that impact Medicare Advantage (MA), Medicaid, Children’s Health Insurance Program (CHIP), and Marketplace plans.
IMPLEMENTATION OF THE PROPOSED CMS RULES IN JANUARY 2026
Source: 2025 Acentra Health
Now, state insurance regulators are following suit. Constituents of the National Association of Insurance Commissioners (NAIC), a Kansas City, Missouri-based group for state insurance regulators, have assembled 166 pages of PA background materials in a packet for an upcoming in-person session. NAIC cannot set state insurance rules directly, but many states start with NAIC models when creating their insurance laws, regulations, and procedures.
In fact, a growing number of states are imposing new limitations on PA requirements and tighter rules on insurers to address provider and patient complaints that health insurance companies are delaying and
When Healthcare Works as ONE, Patients, Payers, Providers,
and Plans Win.
Changes and Dilemmas
denying care. According to a National Conference of State Legislatures database, 23 states enacted more than 43 bills related to PA in the last few years, with 18 enacted in 2024.
While California, North Carolina and Hawaii are considering legislation targeting different aspects of the pre-approval process, others have already enacted changes:
• Arkansas banned PAs for many substance use disorder treatments, HIV prevention and certain ambulance services.
• Maine limited PA for breast pumps.
• Louisiana, Oregon, and other states have restricted pre-certification requirements for cancer care.
• NJ legislation mandates insurance companies to render decisions within 24 hours for urgent cases and 72 hours for routine issues. A similar law took effect recently in Washington state.
As these modifications unfold, actuarial and analytical experts at the TERRY Group advise payers to prepare for the changes by investing in technological infrastructure, ensuring timely response to PA requests, standardizing their authorization requirements, and establishing open communication with healthcare providers. Successful adaptation to the new rule involves making new technologies and processes user-friendly, ensuring effective communication among all stakeholders.
PA NOT A GUARANTEE FOR PAYMENT
“While PA is meant to help ensure appropriate and cost-effective care, it’s often misunderstood as a guarantee of payment,” says Mike Lanza, senior vice president, USBenefits Insurance Services. "In reality, pre-certification is usually based on limited documentation and still needs to be reviewed against the Plan Document once the claim is submitted."
Lanza observes that from a stop-loss carrier’s perspective, “We’ve seen situations where providers encourage patients to seek care in emergency settings for procedures that aren’t actually emergencies. While these services may receive PA, they can still be denied later if they don't meet the plan's criteria for medical necessity or proper setting. This creates higher costs, possible non-payment, and plenty of confusion."
He cautions that’s why it’s so important to stick closely to what’s outlined in the Plan Document.
“At the end of the day, the Plan carries fiduciary responsibility—and claims have to be reviewed with that in mind,” continues Lanza. "When TPAs, brokers and carriers work together, it's easier to keep things aligned, avoid unnecessary costs, and do what's best for the employer and the member."
Late last year, however, the AMA adopted a policy that would block insurers and plans from denying payment for claims after approving procedures through PA processes. AMA leaders argue that once
Mike Lanza
insurers or plans authorize care, that should be enough to guarantee payment. They also plan to encourage physicians to sue insurers and plans that deny payments for care that has already been authorized or that try to get cash back from the physicians or patients.
It is also worth noting that not all services are tied to PA processes. For example, David Adamson, MD, and CEO, ARC Fertility, shares that the ARC business model only requires eligibility information and the amount of subsidy remaining. All care is in pre-authorized packages and approved drugs.
Source: 2025 Infinitis: Report shows that 68.8% of the time, PBMs return PA determinations in five days or less, compared to 42.4% for major medical insurance companies. PBMs return over a quarter of PA determinations in less than 48 hours.
IN DEFENSE OF PAS
Patients and providers alike view PAs as a needless hurdle that payers have inserted into healthcare delivery processes. In defense of PA, many observers say it serves a vital purpose as a gatekeeping tool to ensure that the medication or therapy prescribed aligns with evidence-based guidelines and is necessary for the patient’s condition. Health plan managers also acknowledge that while there is a need to improve PA processes, a well-run program can protect patients against unnecessary, overly expensive, or even
David Adamson
Changes and Dilemmas
dangerous care, such as prescription opioid overdose deaths.
The critical benefit of PA is that it potentially controls costs and keeps them in check, ensuring that prescribed treatments are medically necessary, thereby avoiding unnecessary or overly expensive procedures.
“Prior authorization (PA) has been a cornerstone of healthcare for decades, designed to ensure medical necessity and cost-effectiveness before treatments, procedures, and medications are approved, with its primary goal to promote responsible medical management,” says Tennis.
She notes that although the system faces challenges in adapting to the evolving healthcare landscape, PA remains a crucial tool for managing healthcare costs and ensuring evidence-based care. Ongoing advancements are continually refining and modernizing the PA process, making it more efficient and transparent.
Many stakeholders assert that PA also serves as a quality check, ensuring that patients receive the most appropriate care for their specific health circumstances, thereby reducing the incidence of overmedication/ adverse drug interactions and inappropriate/ineffective treatments. Experts also say that by evaluating the necessity and suitability of a prescribed test or treatment, PA helps to ensure patient safety.
Caroline Forrester, PharmD, Clinical Specialist, MedImpact, points to some of the benefits of PA for prescription medications, including:
1. Management of prescription drug spend, as part of the toolbox payers use to manage prescription drug costs.
2. Clinically appropriate drug selection and utilization. PAs ensure that a drug is prescribed for patients with the specific FDA-approved indication. The goal is not to restrict appropriate use but rather to promote use in the patient population for whom safety and efficacy have been established.
3. Promotion of safe drug use. PA may help curb the opioid epidemic by providing opportunities for early intervention.
4. To support drug formularies and rebate programs. PAs may be used to support the use of preferred drugs -- because of their cost differences, efficacy and/or safety differences, rebate programs, or alignment with evidence-based treatment guidelines.
America’s Health Insurance Plans (AHIP) supports PAs as a “proven tool to ensure patients get the most up-to-date evidence-based care.” They insist that health insurance providers continue to collaborate with healthcare providers and other stakeholders to implement innovative solutions to improve the PA process, stating that the targeted use of PA can help ensure patients get care that’s not only safe and effective, but also affordable.
An AHIP clinical appropriateness project with Johns Hopkins found:
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Changes and Dilemmas
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CUSTOMIZING PA REQUIREMENTS
“MedWatch has observed an increase in the customization of our Standard Pre-Authorization Requirement Recommendations,” says Tennis. “While this approach responds to member concerns, it can also lead to higher costs by failing to contain waste, fraud and overutilization— allowing savings opportunities to slip through the cracks.”
She maintains that it may result in missed opportunities to trigger case management for high-cost claims and prevent deviations from standards of care, advising,” A strategic, balanced approach ensures PA remains effective without creating unnecessary complexity.”
PA criteria facilitate an open line of communication between all parties involved and help objectify what is being requested, why it is being requested, and progress towards the goals, advises Stacy Whalen, senior medical manager, Safety National.
“To best serve patients, take a comprehensive approach towards PA requests,” says Whalen. “We have clinical evidence-based guidelines available as a standard of care and foundation to build upon when considering PA requests. From that point, look outside the box and take into consideration the rationale for the request, the patient’s progress towards goals, diagnosis, and any unique complexities that might apply to that patient. The PA process provides the foundation that keeps all parties communicating towards the treatment plan's end goal.”
WHY PLAN SPONSORS HEED FEDERAL REGULATIONS
While self-insured health plans fall under the jurisdiction of the U.S. Labor Department, plan sponsors are closely following CMS PA regulations for MA plans.
For example, CMS requires MA plans to review PA requests within seven days and urgent requests within 72 hours. The Employee Benefits Security Administration and the Labor Department simply require employers' selfinsured health plans to respond to PA requests "within a reasonable time frame."
Jack Towarnicky, Member, aequum, LLC, explains, “The No Surprises Act regulations confirm that the term 'emergency medical condition' means a
Jack Towarnicky
Stacy Whalen
medical condition manifesting itself by acute symptoms of sufficient severity, including severe pain.”
He emphasizes that an astute layperson who possesses an average knowledge of health and medicine could reasonably expect the absence of immediate medical attention to result in a condition described in the Emergency Medical Treatment & Labor Act (EMTALA), as (1) placing the health of the individual (or, with respect to a pregnant woman, the health of the woman or her unborn child) in serious jeopardy, (2) serious impairment to bodily functions, or (3) serious dysfunction of any bodily organ or part.
“The current regulatory standard requires decisions on urgent care claims to be made ‘as soon as possible’ but no later than 72 hours,” he continues. “PA isn’t an issue when delivering emergency treatment to stabilize the patient. There is never a delay in those situations, nor a requirement for PA. Conversely, in seeking PA, it suggests that the patient or provider might forego the selected treatment where it isn’t covered by the employer-sponsored health plan.”
But the AMA protests that ERISA plans' efforts to manage use of care through PA and related programs are “about as burdensome and demoralizing for physicians as the PA efforts at Medicare Advantage plans are.” They attest that regulators have made progress at adding tougher rules for MA but claim that little reform progress has impacted employer-sponsored plans regulated by the DOL, and PA programs remain a detriment to physicians' morale. Physicians appear to be furious about reports that some health insurers may be using artificial intelligence (AI) systems to reject PA requests for some types of procedures with little or no live-human oversight.
One AMA spokesperson describes these frustrations with PA as a failure of the insurance company to relegate medical decisions to individuals who are not qualified or trained, and often, do not even know anatomy.
WILL ARTIFICIAL INTELLIGENCE AND AUTOMATION HELP OR HARM THE PA PROCESS?
The answer to this question depends upon who you ask.
Barbara Podzimkova Howell, CEO, True Claim, believes that PA should empower, not obstruct, access to care, a goal that’s almost impossible to hit without automation.
“With advancements in AI, health plan administrators shouldn’t need to scroll through hundreds of pages of medical records to determine clinical necessity,” she says. “A well-designed copilot can lead to almost instantaneous PAs while preserving the opportunity to steer members to better and more affordable care. Without such technology playing a role, prior authorization requirements should be designed carefully so they don't delay access to needed care."
HCAA’s Rasnick shares, “Whether AI-powered platforms can transform PA will depend entirely on the technology being introduced. It's important to balance the clinical requirements of the PA process with the integrity of AI systems. Ideally, these modernization efforts, especially with the support of AI, will help reduce turnaround times for procedures that don't require full clinical review. These are often the procedures that help manage large claims, so we believe the PA process needs to stay in place but be handled quickly.”
Changes and Dilemmas
Maxwell says that digital-first tools and AI hold promise, noting, “…particularly with new CMS requirements pushing for electronic PA. But AI isn’t a cure-all — clinical oversight is still needed to catch nuances in complex cases and avoid premature or incorrect denials.”
When it comes to the use of AI in the PA process, Buckles is “super excited.”
“RxLogic actually works with several large PA vendors that offer enterprise-level PA solutions,” he explains. “One of those PA vendors, in particular, is on the cutting edge of AI to power their solutions. AI is helping to make the PA much more efficient and less complex. It also helps to bring a lot more transparency to the member.”
For instance, when the doctor writes a script for a drug that's not covered or does not have preferredformulary status, the decision will have to go through the PA process if the physician doesn't want to change the medication.
Buckles continues, “The doctor must submit all this documentation to the PA vendor as to why they want the individual to take the drug and override the formulary. The PA vendor collects and organizes this information as best it can and then allows the designated users to review all the documentation supplied, review the decision criteria, and decide – allow or not allow. Finally, the physician must be notified with a letter of their final disposition.”
RxLogic has an MPA (Member Prior Auth) API that different PA vendor teams can access to push and pull data from their system.
“This allows them to extract the members/patients' claim history, run test claims, and update the PA to approve or deny the drug,” he says. “This automated approach helps to expedite the PA process, in general, and shortens the timeline for approval.”
In addition to RxLogic working with several of the industry-leading PA vendors in the market, the company has its own PA Lite module on its 2025 Product Pipeline.
“This helps our customers make their PA process as efficient as possible," says Buckles. “We intend to leverage an AI tool to assist with the processing and decision-making processes to help streamline the process for our clients and give them complete control over that process, much like the rest of the products in our RxLogic Product Suite. “
REAL-WORLD EXAMPLES
At Florida Blue, AI is intended to speed up the common PAs that are approved, not deny them. Back in 2022, the nonprofit insurance company deployed AI software to automate some pre-approval requests from providers. They have since relied upon AI to review more than 1 million PA requests related to advanced imaging and hip, knee, and other musculoskeletal services for its 6 million Medicare and commercial enrollees.
Software vendor Availity contends that although PAs are critical to ensure that patients receive necessary care, processes are inefficient for providers and payers. They say the root cause of this frustration is manual processes and analog technologies, outdated methods that make PAs one of the most burdensome transactions in healthcare, leading to negative patient impact.
Changes and Dilemmas
Availity insists that by automating and streamlining PAs, AI has the capability to extract pertinent and relevant information from clinical records for the PA process and determine whether the specific patient aligns with the criteria previously selected by the payer/plan. They cite the benefits of a system that combines the power of AI with the expertise of human clinicians.
Utilization management company Cohere Health concurs, criticizing many providers and health plans that still rely on outdated methods and fee-for-service models, which can lead to a reactive approach to UM that lacks real-time data and proactive care management. These practices collectively contribute to the prevalence of low-value care and medical services that do not align with evidence-based guidelines and offer minimal clinical benefit.
Cohere says the emergence of intelligent PA solutions represents a pivotal shift. These AI-driven tools are transforming traditional UM methods by providing data-driven insights and a patient-centered approach, significantly reducing low-value care, and improving patient outcomes.
Another example comes from Optum’s Surescripts PreCheck PA, designed to reduce physician administrative burden and expedite PA approvals -- from 8.5 hours to under 30 seconds. With an eye on improving such processes and the patient experience, the organization partnered to develop this innovative solution to help automate the PA submission and approval process for select drugs, including GLP-1s for diabetes.
Additionally, Blue Shield of California is teaming up with Salesforce, a cloud-based customer relation management company, to cut down the PA process from days to seconds. The tool queries the patient’s electronic health record for relevant clinical information and organizes the data into a pre-populated form for physicians to submit to Blue Shield. If a case requires additional clinical consultation, the submitting physician will receive a message within hours of the initial submission.
Notably, AETNA-owned CVS predicted in 2018 that the insurer saved more than $660 million from denying PA requests for inpatient facilities, saying their internal predictive model designed to “Maximize Approvals” was deemed too catastrophic for the bottom line. In 2021, hoping to save money in MA, CVS deployed AI to reduce spend in skilled nursing facilities. Though the company expected savings to total $4 million per year, leadership later raised the estimates to $77 million over the next three years.
Most recently, Surescripts, a health information network, unveiled Touchless PA technology intended to help automate existing manual workflows, significantly reduce the time-consuming administrative tasks often required for medication PAs and return time to prescribers, pharmacists, and care managers while quickly getting patients started on the best treatment path.
Finally, Amy Tennis at Medwatch affirms, “Technology is also reshaping the PA process. AI-powered, digital-first solutions have the potential to streamline approvals, reducing administrative burdens while ensuring compliance with clinical guidelines.”
She cautions that this technology is still in the early stages, emphasizing, “But it shows promise in reducing turnaround times and shifting clinical resources away from clerical tasks, allowing companies to focus on more member-centric activities. Integrating automation into PA processes enhances efficiency while maintaining the necessary oversight for cost-effective care.”
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SCATHING REPORTS OF AI ABUSE AND FAILURE.
One blistering report from the U.S. Senate Permanent Subcommittee on Investigations shows that the country’s three largest Medicare Advantage (MA) insurers obstruct seniors’ ability to receive post-acute care by using technology to reject PA claims.
Over a three-year period, three insurers -- UnitedHealthcare, CVS and Humana, which collectively cover nearly 60% of all MA enrollees -- denied claims for post-acute care at “far higher” rates than for other types of care. In one timeframe, Humana denials in post-acute care were 16 times higher than the companies’ overall denial rates.
Furthermore, a recently released AMA survey of 1,000 practicing physicians—400 working in primary care, the remainder in other physician specialties -- shows:
• 61% of physicians said they fear that payers’ use of unregulated AI is increasing PA denials, a practice that will override good medical judgment and exacerbate patient harm.
• 49% of physicians ranked oversight of payers’ use of AI in medical necessity determinations among the top three priorities for regulatory action.
An AI-related lawsuit appears to be moving forward, as a federal judge in Minnesota has dismissed five out of seven counts in a class action lawsuit against UnitedHealth Group, allowing the case to proceed. Healthcare Finance News reports that the lawsuit alleges that the defendants improperly denied claims for post-acute care in MA plans by relying on an AI program, nH Predict, rather than medical professionals.
The program purportedly had a 90% error rate, with nine out of ten appealed denials later reversed. Plaintiffs who were denied coverage argue that these AI-driven denials led to worsening health conditions and, in some cases, death. The court is allowing claims for breach of contract and breach of the implied covenant of good faith and fair dealing to move forward. The lawsuit claims that NaviHealth’s AI program overruled physician judgments and had a 90% error rate, with nine out of ten appealed denials later reversed.
COMMERCIAL PAYERS SCALE BACK PAS
• L.A. Care Health Plan removed 24% of PA requirements for most specialty visits; 50% of lab and radiology codes, durable medical equipment, and catheters.
• BCBS of RI eliminates 65% of PA requirements for PCPs by early 2025.
• Point32Health no longer requires PA for home care for first 30 days after hospital discharge.
• BCBS of Mass. will remove 14,000 PA requirements for home care services in response to the capacity crisis in the state’s hospitals.
• BCBS of Michigan will cut 20% of its PA requirements.
• Optum Rx trims reauthorization requirements for about 80 drugs beginning May 1
• UnitedHealthcare plans to cut nearly 10% of PAs this year.
• Cigna Healthcare removed PA requirements for 600+ medical procedures, cutting required PAs by 25%.
• Anthem BCBS rescinded recent decision to stop paying for anesthesia care in select circumstances, following widespread scorn from anesthesiologists and patients.
WHAT’S NEXT FOR SELF-INSURED EMPLOYERS AND PA?
PA has historically been a controversial process in healthcare. While providers view it as a barrier to quality patient care, health plans recognize the process as an essential tool for cost containment and care quality. Now, technological advancements and regulatory shifts are transforming PA into an instrument that benefits professionals can leverage to improve employee health outcomes and satisfaction.
Plan sponsors and benefits administrators will need to innovate, accelerate decision-making, and improve data sharing throughout the PA process, especially as they seek to comply with state regulations and the CMS Interoperability and Prior Authorization Final Rule (CMS-0057-F).
Tennis states that PA has long been a critical component of medical management, but as the healthcare landscape evolves, so too must the processes that support it. “While challenges such as administrative burdens and delays have fueled criticism, ongoing advancements in automation and case management integration are transforming PA into a more efficient and responsive system,” says Tennis. “Rather than serving as a barrier, PA -- when implemented thoughtfully -- ensures that care remains evidence-based, medically necessary, and cost-effective.
By continuing to refine these processes through technology and policy improvements, the industry can strike a balance between cost containment and timely, high-quality patient care.2025 will provide opportunities to streamline care access, harness responsible AI, reduce member and provider frustrations, and enhance the overall employee benefits experience.
If ever there was a grim reminder of PA challenges, the fatal shooting of Brian Thompson, CEO of UnitedHealthcare, certainly stirs one's memory. Some reports suggest the suspect may have been motivated by frustration with the health insurance industry, care denials, and rejection of insurance claims. PA is certainly in the crosshairs.
Laura Carabello holds a degree in Journalism from the Newhouse School of Communications at Syracuse University, is a recognized expert in medical travel, and is a widely published writer on healthcare issues. She is a Principal at CPR Strategic Marketing Communications. www.cpronline.com
FIRST THINGS FIRST: SET GOALS BEFORE IMPLEMENTING AI
Editor’s Note: This topic will be included as part of the educational program for SIIA’s upcoming National Conference, scheduled for October 12-14 in Phoenix.
Written By Jonanne Wojcik
AArtificial Intelligence, or AI, is transforming the self-insurance industry, offering solutions to longstanding challenges in claims administration, fraud detection, stop-loss underwriting, and customer engagement.
However, implementing AI in a way that delivers sustainable value requires a structured, goal-oriented approach.
As with any new software development project, organizations in the self-insurance industry need to set clear business objectives before diving head-first into Artificial Intelligence. AI is a strategic tool—not a one-size-fits-all solution.
And because AI can sometimes provide false information or make erroneous assumptions, organizations should always keep AI in check, using human oversight to verify AI results and prevent biases or inaccuracies from creeping in. AI should never replace humans, but rather, enhance human capabilities.
To maximize AI’s potential, organizations should outline an implementation strategy designed to deliver the most tangible benefits in key areas of their business, early adopters advise. Since AI capabilities are
constantly evolving and changing, any implementation strategy should also be flexible and agile.
“A product roadmap should never be set in stone,” said Simon Boehme, VP of Operations & Product at Atlanta-based balance billing support vendor BillingNav LLC, and the author of “Smart Risks: AI in Self-Insurance,” a book that explores how AI is reshaping the self-insurance industry.
Boehme is among a group of AI technology pioneers who will share their first-hand experiences during a panel discussion at the SelfInsurance Institute of America’s National Conference, which will be held Oct. 12-14 in Phoenix.
“First Things First…What Are Your Objectives?,” also will feature insights from Clay Wilemon, CEO of San Ramon, California-based Integr8 AI™ powered program and payment integrity solutions vendor 4L Data Intelligence Inc., and Paul Wann, senior vice president with Personify Health.
STRATEGIC VISION AND GOALS
To determine which areas of your business are likely to benefit most from the use of AI, these early adopters recommend dividing them into three buckets: Strategic Importance, Operational Bottlenecks, and Data Availability.
For example, the “Strategic Importance” bucket would contain areas that align closely with your organization’s long-term goals, such as reducing fraud or enhancing patient outcomes, Boehme suggested.
The second bucket, “Operational Bottlenecks,” would include the “manual and mundane” tasks that could be easily automated, according to Wann.
“From an operational perspective, it’s identifying the repetitive, time-consuming tasks and figuring out how to gain efficiencies by automating them,” Boehme explained.
The third bucket, “Data Availability” means identifying and evaluating the data your organization has readily available to be utilized by AI systems.
“Find the low-hanging fruit,” Boehme advised. “Focus first on areas where’s there’s high-volume, reliable data, such as claims history, which is accessible and well-structured.”
“When you look at using AI with those three buckets, it becomes less daunting and more exciting,” he said.
Before his previous company set out on its AI implementation journey, Wann asked two questions: “Where do we see AI, and what do we want it to do?” he recounted.
“We started working and teaming up with some partners to evaluate where it made the most sense to use AI. One is to give us scalability; second is to improve quality; and third is to be on the leading edge in our industry,” Wann said.
Before launching any AI initiative, organizations should prioritize what they’re looking to achieve, establish goals, and then develop some baseline metrics to measure their progress and return on investment along the way, first adopters recommend.
In his initial meetings with TPAs looking to purchase an AI solution that will help them detect and eliminate fraud, waste, and abuse, Wilemon asks them two specific questions: “What is your organization trying to do? And do you have the will to actually change what you’re doing?”
“One of the biggest opportunities that TPAs have through the use of Artificial Intelligence is to be a big hero with employers, whether it’s preventing fraud, waste and abuse on the payment side or preventing bad things from happening with predictive technologies on the care management side,” he said. “You have to have a firm conviction around a set of goals. Are you committed to really gaining market share by having a better mousetrap?”
ASSESSMENT AND FEASIBILITY: BUILD VS. BUY?
As part of the strategic planning process, organizations should assess the capability of their existing information technology systems, data quality, and interoperability. Then, the next question is: Build or Buy?
Are you going to build your own AI tool? And, if so, what sort of in-house tool will you build?
For AI to be effective, there must be sufficient clean and relevant data to train machine learning models, according to Boehme. It also needs to be in the correct format, he said.
In some cases, organizations can do reverse engineering, identifying their objectives and then work backwards to figure out how to achieve them, conducting a cost-benefit analysis, weighing potential
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savings and/or revenue gains, and determining how quickly they can create an AI system, from pilot to production, Boehme said.
Regardless of whether an AI system was built in house or purchased from a vendor, organizations should ensure their AI systems can exchange data seamlessly with third-party platforms.
“Moving claims back and forth sounds easy, but it’s never as easy as it sounds,” said Wilemon of 4L Data Intelligence. “Some teams are ready to do that, and some teams aren’t. The IT commitment’s got to be there.”
There’s also the issue of time. If it takes a long time to build an inhouse AI system, it might be more cost-effective to buy and then customize an off-the-shelf solution, early adopters recommend.
TEAM AND STAKEHOLDER ENGAGEMENT
One of the biggest risks of implementing AI is fear. Many people think it’s going to take their jobs, according to Wann.
“I have a saying that I started using at conferences, which is ‘I want more bots than butts.’
That’s because it’s hard to hire a person today. I can train a ‘bot’ a lot easier, and they will show up every day,” he explained.
“But ‘bots’ aren’t everything,” Wann acknowledges. “AI is not replacing humans. It’s actually putting humans on steroids. I need a human to make sure AI is correct because AI can give you false information.”
To keep all stakeholders engaged in building an AI solution, Boehme stressed the importance of balancing short-term wins with long-term, strategic goals, celebrating small victories as they occur, and having a flexible roadmap that allows for adjustments based on feedback and changing priorities.
Frequent communication throughout the development process is paramount to the success of any AI initiative, early adopters maintain. Organizations should conduct regular meetings and project reviews, using key performance indicators. They also should compile documentation to explain each step taken, always being transparent, sharing knowledge and progress with cross-functional teams.
RISK MANAGEMENT. ETHICAL, REGULATORY CONCERNS
Any solid AI implementation strategy should include risk management to ensure data security, eliminate bias and errors in machine learning models, and prevent regulatory compliance violations, early adopters say. This can be accomplished with rigorous testing, validation, and error tracking through periodic audits.
"Whenever you put anything online, there's always the risk of a breach or some malicious party getting data. Looking at current events and what hackers have targeted in the past, clearly, our healthcare system has a bullseye on it. So that's why you have to make sure everything is secure,” Boehme said.
When it comes to ensuring fairness in claims processing and underwriting, organizations should conduct thorough testing to track and ensure that when there is an error that it’s addressed and fixed quickly, early adopters say.
Good data governance is imperative, not only from a regulatory compliance standpoint but to ensure consistency in data collection, early adopters insist.
"When you use large language models, there are going to be biases and errors in the modeling. That's why audits are really important,” Boehme pointed out.
Wann advises organizations to be wary of vendors’ promises and conduct a solid vetting to make sure the companies they partner with are protecting data to comply with HIPAA privacy and security requirements.
“Make sure that they’re not letting PHI go outside anywhere or be exposed,” he said.
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LESSONS LEARNED AND BEST PRACTICES
When asked what advice they would give organizations just beginning their AI journeys, all three early adopters said it’s best to temper expectations, be patient, and trust, but verify. AI might be a shiny new tool with tremendous promise, but it’s still nascent technology.
“It’s crawl, walk, run,” said Wann. “Let AI handle the manual and mundane, the things I don’t need a human to do. But I need a human to make sure AI is correct, because AI can give you false information. It can adversely select things or make adverse decisions or assumptions. You can trust, but you must verify.” Focused on Clients. Dedicated to Results.
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ITRANSFORMING SUBROGATION: A DIGITAL REVOLUTION IS MAXIMIZING REIMBURSEMENTS AND ELIMINATING MEMBER FRUSTRATION
Written By Laura Hescock
If you’ve ever been treated in the ER for a broken bone, you almost certainly received a form known as a subrogation questionnaire in the mail.
Such questionnaires are long-standing industry practice to identify medical claims that should be paid by an insurance policy other than the primary health plan. These letters ask plan members for details about an injury — how, where, and who was involved — to understand if the injury is accident related, who has liability, and which insurance policy should pay.
While these questionnaires have been around forever, they are usually thrown away or disregarded by the member, rendering the process ineffective and risking negative consequences. Not least is their potential to harass and irritate plan members through repeated outreach while causing confusion as to why they are being asked to divulge sensitive information.
For payers and health plans, the member’s mood matters, a lot. Payers are focused on ensuring happy health plan clients, and in turn, health plans prioritize the satisfaction of their members. The scenario sketched above poses a serious threat to the latter and by default threatens the former.
A CLOSER LOOK AT POST-PAY SUBROGATION
Subrogation is the process by which a health plan seeks reimbursement for the money it has already spent on a member’s medical bills. The process works by identifying and recovering funds from responsible third-party insurance policies or legal suits seeking medical cost reimbursements. This is especially
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In simple terms, it’s about getting back money that the health plan is owed because another payment source (typically another insurance company or policy) should be covering those costs. Subrogation helps health plans guard against unnecessary costs, ensuring that financial burdens aren’t unfairly placed on them or their members.
Payers often administer the subrogation process in-house, which is one of the many services they offer to health plan clients. Yet when health plans think about their payer, they are more likely to view them as experts at paying claims and making sure things run smoothly when a member needs care. Postpay subrogation is frequently an afterthought. This explains why payers may outsource the subrogation function to a vendor, or they might try to do it in-house, juggling it along with multiple responsibilities.
The reality is that while post-pay subrogation often receives less focus it has great potential to disrupt, stress and confuse members. That’s why it’s crucial for payers and health plans to streamline the post-pay phase for administrative efficiency, higher reimbursements, and a better member experience.
For some payers and health plans, subrogation is a complex topic. For others, it's downright confusing. The issue is that subrogation can often feel like a necessary but cumbersome task. While clients care deeply about the reimbursements owed to them, the subrogation process itself is often complicated, slow, and at times, unpredictable. It’s one of those healthcare payment processes that has remained relatively unchanged for years. In fact, many still believe the process requires a team of lawyers to work through the particulars and settle claims.
Mary Ann Carlisle | 484.433.1412 | mcarlisle@elmcgroup.com
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This is far from the case. Subrogation best practices have changed a lot in just a few years. Thanks to digital transformation, automation, and advanced technologies, there is a massive opportunity for payers and health plans to improve the way they do subrogation, making it easier, faster, and more effective.
THE THREE PRIMARY POINTS OF FRICTION IN SUBROGATION
Subrogation is an essential function, but one filled with friction that can slow down the process, decrease the chances of recovering funds, and, most importantly, negatively affect the member experience. Here are key friction points that payers and health plans need to address:
1. Case Identification
The first hurdle in subrogation is identifying reimbursable claims. It’s not always obvious or easy to identify which medical claims have third-party liability or which medical claims are eligible for reimbursement. Many subrogation opportunities end up falling through the cracks.
The crux of the issue often lies in the injury code. In a medical claim, when a member has suffered an injury, it’s easy to see the diagnosis and treatment provided. Unfortunately, the cause of injury is not typically included in the claim data by the treating physician. Knowing what caused the injury is often the missing piece in subrogation. It’s
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vital in identifying paid claims eligible for reimbursement by an alternative insurance policy, such as auto, property, or workers compensation.
This is where things can go sideways in a traditional subrogation claim. Because injury and diagnosis codes alone can’t tell the full story, payers and health plans rely on member input to fill in the gaps. And that leads to the second major area of friction.
2. Member Experience
You can picture it now. Sally, a plan member, gets a letter that reads: “Hi, Sally. I see you fractured a bone in your back recently. Can you tell me what happened? Oh, and could you also provide information on all the insurance policies you carry?”
Let’s be honest: What’s Sally likely to do? Throw that letter directly into the trash. Or maybe place it in a pile of unread mail that gets forgotten about. The truth is, when members are asked to fill out forms, share personal medical and insurance information, or explain the cause of their injury, it can often be perceived as a scam, which leads to member concerns and a sea of confused member calls into the payer and health plan.
This step of gathering information from members is both frustrating and inefficient. The lack of member response leads to even more letters and requests. If they do respond to the letters, it might not be with the level of detail
needed to move forward with recovery efforts, resulting in follow-ups for even more information.
The reliance on member questionnaires creates an opening for the enemy of all subrogation results: speed. By the time it takes to gather the necessary information from members through mailed letters and reminders, policy funds may already be exhausted. The delay that questionnaires inject into the subrogation process reduces the overall volume of cases flagged for recovery, limits the potential for maximizing reimbursements, and diminishes the effectiveness of the subrogation process as a whole.
3. Human Error
Subrogation cases that are mishandled or overlooked are likely due to manual processes and human error. In turn, this leaves money on the table.
Reliance on manual processes and varying levels of tenure and experience of case managers exacerbate problems related to accurate calculation of the total lien. Thorough review of each case is time-consuming and prone to human error. For example, due to an incorrect understanding of hospital codes to determine which claims are related to the injury episode, a case manager might inadvertently leave out related claims, causing a lower calculation of the amount owed back.
Another area prone to human error is the documentation and tracking of recovery efforts throughout the subrogation process, which is further complicated by insufficient negotiation skills. Inaccurate or incomplete records, combined with a lack of expertise in identifying and challenging key defenses, can lead to missed opportunities and prolonged delays.
If a case manager does not have the skill to properly evaluate settlement offers or recognize weaknesses in a defendant’s position, they may fail to dispute unjustified reductions or negotiate better terms. Ineffective negotiation expertise not only diminishes the potential for a full recovery but also results in significant financial losses by failing to secure a higher settlement or allowing unjustified reductions.
Variability within case identification, lien compilation, and negotiation expertise can lead to significant gaps in financial recoveries. Such inconsistency frustrates clients who expect a full reimbursement of claims for which they are not responsible. It can also undermine the effectiveness of the subrogation function altogether.
SUBROGATION TODAY: WHERE PAYERS AND HEALTH PLANS CAN DELIVER IMPACT
The traditional subrogation process is often something payers and health plans view as simply “how it has always been done,” admittedly making little investment into optimization of post-pay processes due to other pre-pay focuses. However, with digital transformation and automation coming into play, subrogation is no longer a slow, labor-intensive function. Payers and health plans can significantly improve their processes and client outcomes in the following ways.
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Raquel Salamanca Balance Bill Specialist
One of the most significant advancements in subrogation today is the ability to quickly identify potential recovery opportunities without involving the member at all.
Technology takes over the heavy lifting of filling in the information gaps by cross-referencing data from multiple external sources like accident reports, insurance databases, court records, and clearinghouses. With all the necessary pieces of the puzzle, cases can be automatically identified as eligible for subrogation while eliminating delays caused by unreturned forms, confusion about the cause of the injury, and the frustration of contacting members multiple times for information.
Ensuring no-member disruption means a smoother experience for the member. For the payer and health plan, streamlined processes allow humans to focus on higher-value tasks like negotiating settlements and ensuring recovery.
CONSISTENCY AND EFFICIENCY TO SAFEGUARD AGAINST ERROR
While identifying cases is a crucial first step in subrogation, the goal of subrogation is to recover as much as possible on behalf of the
health plan. This is where digital transformation makes a profound difference.
Have you ever tried to get the same result from multiple people? It’s hard to ensure consistency when so much of the process relies on human judgment. Case managers might have varying levels of expertise, different negotiation styles, or unique ways of interpreting settlement opportunities. One case manager might recover a substantial amount on a particular case, while another could miss key recovery opportunities or settle for far less. Recovery outcomes can swing like a pendulum.
Digitization solves for inconsistency. Automation and machine learning can now monitor case needs, track recovery opportunities, and even prompt optimal negotiation strategies and responses based on historical data. Instead of relying on human discretion to make decisions on each case, the technology makes those decisions based on patterns and algorithms that are proven to deliver better results over time.
By removing the variability introduced by human judgment, technology ensures that decisions are made based on objective data, not personal biases, or errors. Machine learning models continuously refine their decisionmaking process by learning from past cases, improving the accuracy of recovery predictions and negotiation tactics with each case. This results in a more streamlined, efficient workflow,
where the likelihood of success is consistently higher, and the chances of missing valuable recovery opportunities are minimized.
Additionally, automation enhances transparency and accountability within the process. Digital platforms provide real-time updates and comprehensive case histories, allowing teams to easily track progress and identify any gaps in the recovery process. With automated notifications and alerts, critical deadlines and actions are never overlooked, and decision makers are always equipped with the latest, most relevant information. This results in faster recoveries and a more reliable, data-driven approach to managing subrogation cases that enhances overall operational performance.
HOW TECHNOLOGY COMPLEMENTS EXPERTISE
The prevalence of technology as an essential tool for subrogation does not diminish the need to keep humans in the loop. Rather than replacing people, digitization enables a new way of working, giving case managers the tools they need to work smarter, not harder.
Digital tools can handle the repetitive, time-consuming aspects of subrogation, allowing human experts to focus on relationship building and high-level negotiation. Technology ensures that the process is efficient, accurate, and consistent. However, it’s the humans behind the tech who navigate the complexities of building strong rapport with adjusters and attorneys and ensure that the health plan’s best interests are being served. Building rapport with these key stakeholders fosters trust and open communication, which can lead to smoother negotiations and more favorable settlements.
This human-tech collaboration enhances overall outcomes by combining the speed and precision of automation with the nuanced judgment and interpersonal skills that only humans can provide, ultimately driving more successful subrogation recoveries.
THE ROAD TO HAPPIER CLIENTS AND MEMBERS
The goal of subrogation should be financial outcomes and improving the experience for everyone involved. The more efficient the process, the fewer headaches for the payer, the health plan, and most importantly, the plan member.
Plan members no longer need to worry about the complex details of third-party claims or getting bombarded with requests for personal information. Payers can focus on their core mission of providing a positive experience for their health plan clients while maximizing the financial recovery for clients.
The future of subrogation is undoubtedly digital. Technology-driven consistency and accuracy are significant improvements over traditional methods that rely on manual processes. With technology handling the bulk of the routine tasks, humans are freed up to engage in the higher-level, more strategic aspects of subrogation. This leads to a process that is more consistent, efficient, and transparent.
As subrogation evolves through digital transformation, payers and health plans will be better equipped to capture every recovery opportunity, eliminate member disruption, and maximize reimbursements. This creates a process where everyone benefits. Health plans secure higher recoveries, members experience less hassle, and clients enjoy stronger, more profitable relationships. About the Author
Laura Hescock is the CEO of Intellivo. Responsible for overseeing all facets of the organization, Laura leads the company’s strategic vision with a focus on expansion to new markets and services. She is a business and technology executive who specializes in taking companies to the next level in growth and profitability.
MEDICAL CLAIMS REQUIRE
NEGOTIATIONS
NEWS FROM SIIA MEMBERS
SIIA MEMBER NEWS, JUNE 2025
SIIA boasts a very active and dynamic membership. Here are some of the latest developments from the companies powering the self-insurance industry.
Penfield Announces Promotion and New Legal Counsel Hire
Penfield has announced the promotion of Sandy Westman to Vice President, Operations. With over 20 years of experience in the medical cost containment and travel insurance industries, she has been a pivotal part of Penfield since its inception. Starting her career as the Director of IT/IS, she quickly demonstrated her exceptional leadership and strategic vision, leading her to transition into the role of Director of Operations, according to a company announcement.
The company also announced the appointment of Matthew Begbie as Counsel. In his role, Matthew manages Penfield client agreements, compliance, and regulatory requirements. He also leads the newly established Subrogation unit, adding an additional valuable client service. Matthew graduated from McGill University in 2007 and has been a member of the Law Society of Ontario (the Ontario bar) since 2010. Prior to Penfield, Matthew worked for the Federal Department of Justice.
Corey Biscoglia Named Chief Growth Officer at HPI
Health Plans, Inc. (HPI) has named Corey Biscoglia as chief growth officer. In this newly created executive role, Corey will oversee the national sales organization and lead the company’s efforts to accelerate growth, drive strategic expansion, and enhance market presence nationwide.
“Corey’s passion for innovation, talent development, and strategic leadership makes her the ideal person to guide our national sales efforts through our next phase of growth,” said Deb Hodges, President and CEO of HPI. “We are thrilled to welcome Corey to the executive team.”
Before joining HPI, Corey served as area vice president at Allstate Benefits, where she dramatically improved sales performance. Corey also held senior leadership roles at BeneCard PBF, including senior vice president of marketing and sales, where she led enterprise-wide strategy, pricing, and brand development. Corey's leadership directly contributed to revenue growth, operational excellence, and increased brand recognition.
"I am honored to join HPI to work alongside such a passionate and purpose-driven team," said Corey, "I look forward to leading our growth initiatives in a way that is strategic, collaborative, and fully aligned with HPI's mission and vision. True change begins where purpose meets action; when what drives us ignites what we do."
Dan Lebish Joins Benecon Board of Directors
Benecon has added Dan Lebish to its Board of Directors.
Mr. Lebish brings over 38 years of proven leadership experience across the healthcare and insurance industries. Most recently, he served as Executive Vice President and Chief Operating Officer of Aflac U.S., where he oversaw all U.S. operations, held P&L accountability for group insurance products, and spearheaded the expansion of the company’s broker sales channel. Prior to his time at Aflac, he spent 16 years at Highmark Blue Cross Blue Shield, where he held multiple senior leadership roles.
"We're thrilled to welcome Dan to our Board," said Matt Kirk, President and CEO of Benecon. “His expertise in operations, strategic partnerships, M&A, and product development will bring valuable insight
Corey Biscoglia Health Plans, Inc.
Matthew Begbie Penfield
Sandy Westman Penfield
as we continue to scale. Dan’s background in hospital administration and health plan delivery also aligns closely with our mission to deliver smarter, self-funded healthcare solutions.”
Liviniti Named Top Healthcare Innovator
Liviniti, a national leader in PBM transparency and prescription drug savings, has been named one of the top healthcare innovators for 2025. The Modern Healthcare Innovators Awards recognize organizations and leaders across the nation who are driving innovation to improve care, achieve measurable results and impact the clinical and financial goals of their organizations.
"We built Liviniti as a force for change, to innovate new solutions, move beyond the status quo and shape the future of pharmacy benefits for the better,” says LeAnn Boyd, CEO. “The Modern Healthcare Innovators Award is an affirmation of our commitment to complete transparency and development of powerful offerings that improve the cost and accessibility of pharmacy benefits.”
Dan Lebish Benecon
LeAnn C. Boyd Liviniti
"Our Liviniti team is action-oriented and so deserving of this recognition,” adds LeAnn. “We know that employers face real challenges with the rising cost of pharmacy care, and we challenge ourselves to develop and introduce new solutions for our clients that stretch the boundaries of what's possible in pharmacy benefits."
New Chief Financial Officer at Vālenz Health®
Vālenz Health® has announced that Bryan Perler is its new Chief Financial Officer.
A seasoned finance executive, Perler brings nearly 25 years of experience at high-growth, private equity-backed technology companies in the financial services and healthcare industries to his current role at Vālenz. Skilled in strategic accounting and finance and passionate about transforming healthcare, he is dedicated to “bending the cost curve” and simplifying the healthcare journey for consumers.
"We are both thrilled and fortunate to have Bryan join the Vālenz executive team during this exciting period of growth,” said Rob Gelb, Chief Executive Officer at Vālenz. “Bryan brings meaningful executive expertise in the techenabled healthcare sector and represents a tremendous addition of talent to our executive team as he leads our finance team through an accelerated and expansive series of growth opportunities ahead.”
Previously, Perler served as the Chief Financial and Administrative Officer at Icario and at Sapphire Digital, where he was responsible for leading the accounting and finance, legal, compliance, corporate technology, and human resources teams.
Berkley A&H Expands Sales Team
Berkley Accident and Health, a Berkley Company, announced the appointment of Geoff Sheffield as Regional Sales Manager for EmCap and Stop Loss Insurance. In this role, Geoff will focus on developing new Stop Loss Group Captive programs, identifying traditional Stop Loss opportunities, and contributing to growth initiatives in California.
"Geoff is an excellent addition to our rapidly expanding EmCap and Stop Loss business. His strong understanding of employee benefits and the self-funding industry will be invaluable to our clients,” said Brad Nieland, President and CEO of Berkley Accident and Health. “Geoff will help strengthen Berkley Accident and Health’s relationships in the Western region. We are delighted to welcome him to the team.”
Bryan Perler
Vālenz Health®
Geoff Sheffield Berkley Accident and Health
Missy Kveene Hired by Skyward Specialty for Key Clinical Position
Skyward Specialty A&H announced that Missy Kveene has joined its Accident & Health Division (A&H) in the newly created role of Vice President of Clinical Consulting.
A dedicated healthcare executive, Missy brings 30 years of extensive experience in healthcare and insurance combined, while also holding several degrees in nursing and a Master's in Business.
The BPO division will offer Quote-LinQ and Smart-LinQ services, including customer support, technical assistance, back-office processing, and virtual assistant solutions, tailored to simplify the complexity of the stop-loss procurement cycle from market to bind to administer to renew. Neary will play a pivotal role in leading the team, implementing best practices, and ensuring operational excellence.
Tatum RE is an
works with
Missy Kveene Skyward Specialty
"Missy holds an ideal blend of solid leadership and skills in the industry, enabling her to build a successful Clinical Consulting Unit that will provide positive outcomes for our clients," said Mike Remeika, Divisional President of Skyward A&H.
"I'm thrilled to be a part of the Skyward A&H team," said Missy, "I'm impressed how they act as a steadfast advocate on behalf of their clients and have a proven track record of seeking creative and innovative approaches to achieving success for employers."
Ringmaster Launches Business Unit and Announces New Hire
Ringmaster Technologies, Inc., has launched a new Business Process Outsourcing (BPO) division, designed to deliver scalable, high-quality stop-loss RFP and administration support services to self-funding administrators and brokers.
As part of this expansion, the company has appointed Robert Neary, a seasoned operations leader with over 20 years of experience in the account management and BPO stop-loss sector, as Vice President of Operations.
Robert has held senior positions at leading organizations, including Ryan Specialty, McGriff, and Gallagher. Throughout his career, he has earned a reputation for building lasting client relationships and delivering data-informed solutions that enhance plan performance and drive cost containment.
"Launching our BPO services marks a significant milestone for our company," said Todd Roberti, CEO of Ringmaster Technologies. "We're thrilled to welcome Robert to the team. His deep industry knowledge and leadership track record will be instrumental as we grow our capabilities and serve a broader client base."
Captive Resources to Produce New Podcast
Captive Resources' Health Solutions business unit has launched a new podcast, "Captivating Health Insights,” which will focus on strategies for a healthier workforce and bottom line. It is designed to provide captive member-owners, brokers, consultants, and industry stakeholders with expert advice on managing healthcare costs and optimizing population health management.
Hosted by Maddison Bezdicek, Vice President of Health Solutions’ Strategic Vendor Services at Captive Resources, the podcast will bring together thought leaders and industry experts to discuss innovative approaches to reducing healthcare costs and improving employee well-being. Each episode will focus on practical insights, equipping listeners with actionable strategies and real-world solutions for navigating the challenges of today’s healthcare landscape.
Virtue Health Expands Sales Team
Virtue Health has welcomed Brennan Burdo as its new VP of Sales. New to Virtue Health.
According to a company statement, “We’re excited to welcome Brennan as our new VP of Sales at Virtue Health. With six years of experience navigating complex sales cycles, exceeding ambitious targets, and driving scalable growth, Brennan is a powerful addition to our team.
His consultative, relationship-first approach is a natural fit for how we support innovative benefits consultants and forward-thinking employers.”
Boon-Chapman Adds New Regional Sales Executive
Boon-Chapman has announced the appointment of Brock Mowery as Regional Vice President, Sales.
Mowery brings more than a decade of experience in employee benefits to his new role at Boon-Chapman, with a recent focus on employer advocacy in the specialty pharmaceutical space. His expertise spans both self-funded and fully insured group health plans, third-party administration (TPA), and various healthcare delivery models, including HMOs, PPOs, and integrated health systems. Prior to joining Boon-Chapman, he served as a Healthcare Consultant at Paydhealth, where he supported clients in navigating complex healthcare plans, driving cost efficiencies, and securing optimal pharmaceutical solutions.
"We couldn't be more excited to welcome Brock on board. His deep knowledge of employee benefits and sharp strategic mind are impressive on their own, but it's his passion for people and dedication to building real partnerships that truly set him apart.
www.tpac.com
For 30+ years, TPAC has helped employers manage
Brock Mowery Boon-Chapman
At Boon-Chapman, where innovation and growth drive us forward, Brock aligns perfectly with our vision, said Kari L. Niblack, Esq., President, Boon-Chapman.
Daniel Dugan Jr. Joins Auxiant National Sales Team
Auxiant announced the addition of Daniel Dugan Jr. to its national sales team as National Sales Executive. Dugan brings over a decade of experience delivering strategic, cost-effective self-funded benefit solutions to employer groups across the country.
In his new role, Dugan will focus on driving both new business development and existing client growth. "I'm excited to join an independent TPA like Auxiant that is deeply committed to helping clients take control of their health plan costs,” said Dugan. “I look forward to contributing to the continued growth and success of the organization.”
Dugan's background spans business development, account management, stop-loss market strategies, and cost-containment initiatives. His proven ability to forge consultant relationships and deliver value-driven solutions makes him a strong addition to a sales team that averages over 15 years of industry experience.
Daniel Dugan Jr. Auxiant
SIIA NEW MEMBERS
JUNE 2025
NEW CORPORATE MEMBERS
Dan Powers SVP, Value-Based Healthcare Solutions Alliant Needham, MA
Kelly Martin Executive Director
AMHIC, A Reciprocal Association Washington, DC
Johnny Crowder Founder & CEO
Cope Notes Tampa, FL
Curt Mooney
Vice President, Broker and Employer Sales
XO Health, Inc. Alpharetta, GA
NEW GOLD MEMBERS
Sasha Yamaguchi Chief Growth Officer MotivHealth South Jordan, UT
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2025 SELF-INSURANCE
INSTITUTE OF AMERICA
BOARD OF DIRECTORS
CHAIRMAN OF THE BOARD*
Matt Kirk
President
The Benecon Group
CHAIRPERSON ELECT, TREASURER AND CORPORATE
SECRETARY*
Amy Gasbarro
President
ELMCRx Solutions
DIRECTOR
Mark Combs
CEO/President
Self-Insured Reporting
DIRECTOR
Orlo “Spike” Dietrich Operating Partner
Ansley Capital Group
DIRECTOR
Jeffrey L. Fitzgerald
Managing Director
SRS Benefit Partners
Strategic Risk Solutions, Inc.
DIRECTOR
Mark Lawrence
President
HM Insurance Group
DIRECTOR
Matthew Smith
Managing Director
Risk Strategies
DIRECTOR
Beth Turbitt
Managing Director
Aon Re, Inc.
VOLUNTEER COMMITTEE CHAIRS
Captive Insurance Committee
George M. Belokas, FCAS, MAAA
President Beyond Risk
Future Leaders Committee
Erin Duffy
Director of Business Development
Imagine360
Price Transparency Committee
Christine Cooper CEO aequum LLC
Cell and Gene Task Force
Ashley Hume President
Emerging Therapy Solutions®
* Also serves as Director
2025 BOARD OF DIRECTORS
SIEF CHAIRMAN
Nigel Wallbank President New Horizons Insurance Solutions Wellington, FL
Les Boughner Chairman Advantage Insurance Management (USA) LLC Charleston, SC
Matt Hayward Office President Ryan Specialty Benefits Greenwood Village, CO
Elizabeth Midtlien Vice President, Emerging Markets AmeriHealth Administrators, Inc. Bloomington, MN
Jonathan Socko President
East Coast Underwriters, LLC Spartanburg, SC
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