Policy Spotlight: Understanding Step Therapy and Prior Authorization

Key Takeaways

• Prior authorization is the approval process that many health insurance plans require before they agree to cover specific treatments, procedures, or medications.
• Step therapy is a rule set by some health insurance plans that requires patients to try lower-cost or preferred medications before they can get coverage for a more expensive drug prescribed by a doctor.
• These policies are designed to help insurers manage costs and determine whether treatments meet coverage requirements, but they can create additional steps for patients and healthcare providers.
• Treatment delays can interrupt the continuity of care for people with autoimmune diseases, and forced adjustments to their treatment plans can cause adverse side effects.

Two Policies That Can Affect Your Treatment

After a healthcare provider recommends a medication or procedure to someone, it isn’t always easy for the patient to move forward with care. Unfortunately, financial barriers stand in the way of many people getting the treatment they need, and some health insurance requirements can make situations more challenging, especially for people with autoimmune diseases.

Two great examples of this are utilization management practices called prior authorization and step therapy. Both can influence access to treatment, but they work differently. The guide below explains what these policies are, how they impact people with autoimmunity, and how we can work together to reform them so that, one day, everyone can get the medical care they need.

What is Prior Authorization?

Prior authorization is when an insurance company requires approval in advance before it will cover a particular medication, procedure, test, or other healthcare service. To satisfy this requirement, the patient’s licensed healthcare provider may need to submit information to their insurance company on their behalf. What needs to be shared depends on the policy and the treatment that coverage is being requested for; nevertheless, some common examples are: 

• Details about the patient’s diagnosis
• The patient’s medical history, including previous treatments
• The reason why the suggested treatment is medically appropriate

The insurer then reviews the request and determines whether it meets the plan’s coverage criteria.

What is Step Therapy?

Step therapy is when an insurance company requires a patient to try one or more other treatments before they will help cover the treatment originally prescribed by the healthcare provider. This is sometimes called a “fail first” policy because the patient may have to show that another treatment did not work adequately, caused unacceptable side effects, or was otherwise inappropriate before moving to another option.

Why Insurers Use These Requirements

Step therapy and prior authorization are examples of utilization management. Insurers use these policies to manage healthcare and medication spending by evaluating whether a treatment meets coverage criteria and encouraging the use of treatments that are considered appropriate or cost-effective for certain conditions.

While these policies are often portrayed as a way for insurance companies to ensure policyholders get the most appropriate, cost-effective medical care, they can actually be detrimental to the patient experience by causing delays and other treatment barriers.

How These Requirements Can Delay Treatment

Prior authorization and step therapy can create additional steps between a healthcare provider’s treatment recommendation and a patient’s ability to receive that treatment. 

Steps That May Be Involved in Obtaining Prior Authorization

Prior authorization may involve tasks like:

• Gathering medical records
• Completing forms
• Submitting clinical documentation
• Waiting for an insurer’s review
• Responding to requests for additional information
• Appealing a denial

Steps That May Be Required for Step Therapy

With step therapy, a patient may be required to try another medication or treatment before the insurer will cover the prescribed option. If that treatment does not work or causes problematic side effects, the healthcare provider may then need to document the outcome before requesting coverage for the next treatment.

These requirements can be particularly significant for people with autoimmune disease, as their original treatment decision may have been rooted in things like:

• Their specific autoimmune condition
• Disease activity
• Previous treatment response
• Side effects
• Other individual factors. 

So, changing their established treatment can sometimes have consequences for disease management.

The Negative Impact of Utilization Management Strategies

Since the tasks required for prior authorization and step therapy can take substantial time and require coordination among patients, healthcare providers, pharmacies, and insurers, sometimes patients are kept from the care they need.

In a survey conducted by the American Medical Association, physicians reported that prior authorization has led to the following problems:

• Patient harm – About 26% of the physicians surveyed reported that prior authorization has led to a serious adverse event, such as hospitalization, permanent impairment, or death.
• Delayed care – Roughly 95% of the physicians said prior authorization had delayed access to necessary care.
• Disrupted care – Approximately 79% of the physicians stated that they had patients who abandoned treatment due to authorization challenges.
• Poor outcomes – Around 92% of the physicians said prior authorization has negatively affected clinical outcomes for their patients.

The findings above represent physician-reported experiences and should not be interpreted as evidence that every prior authorization or step therapy requirement produces these outcomes.

How Delays Can Affect People with Autoimmune Diseases

For someone living with a chronic autoimmune condition, delays can be especially difficult. A person coping with autoimmunity may already be juggling things like:

• Symptoms
• Appointments
• Laboratory testing
• Medication schedules
• Work responsibilities
• The uncertainty that can accompany disease flares

Therefore, delays or forced treatment changes may affect treatment continuity, how the patient goes through everyday life, and their confidence in the healthcare system.

What Patients Can Expect After Being Prescribed a Treatment

The exact process varies by health plan, treatment, and type of coverage. Nevertheless, due to utilization management practices, many patient experiences include these five steps:

1. The provider identifies an insurance requirement – The healthcare team or pharmacy may learn that the treatment requires prior authorization, step therapy, or another coverage review.
2. The healthcare team gathers information – For prior authorization, the insurer may request information, such as the diagnosis, medical history, previous treatments, or treatment response.
3. The insurer reviews the request – The insurer reviews the submitted information against its coverage criteria. Depending on the outcome, the treatment may be approved, denied, or require additional information.
4. Potential follow-up steps – If step therapy applies, patients may be required to try another treatment before the prescribed treatment can be covered. If a request is denied, the healthcare team can possibly request reconsideration.
5. Keep track of the process – Keeping copies of relevant insurance communications, treatment history, prescriptions, decisions, and appeal information can make it easier to communicate with healthcare teams.

How to Know If Prior Authorization or Step Therapy Applies to You

Some questions you can ask your healthcare team and insurer to get a better understanding of your situation are:

• Does my plan require prior authorization for this treatment?
• Does my plan have a step therapy requirement?
• What treatments or documentation are required first?
• What information does my healthcare provider need to submit?
• What happens if the treatment is denied?
• Is there an exception or appeal process?

Your healthcare provider can explain the medical reasoning behind the recommended treatment, while your insurer can explain its coverage requirements. Having a conversation with each can help you understand both the clinical decision and the insurance process.

The Push to Reform Step Therapy and Prior Authorization

Concerns about utilization management have contributed to ongoing efforts to change how prior authorization and step therapy work—it is one of the main reasons why the autoimmune advocates push for reform on Capitol Hill every year.

Reform proposals and enacted policies have addressed issues such as:

• Reducing administrative burdens
• Improving transparency
• Protecting continuity of care
• Speeding up reviews
• Creating circumstances in which exceptions may be appropriate

A Recent Change in Prior Authorization

The Centers for Medicare & Medicaid Services finalized a 2024 rule intended to streamline certain prior authorization processes and improve health information exchange for certain Medicare Advantage, Medicaid, CHIP, and federally facilitated Marketplace plans. Some provisions began taking effect in 2026, while certain application programming interface requirements currently have compliance dates that begin in 2027.

The rule also requires certain impacted payers to publicly report specified prior authorization metrics. CMS says these requirements are intended to increase transparency and reduce the burden associated with prior authorization.

Step Therapy Efforts

Some reform efforts focus specifically on step therapy. Proposals have included:

• Protections for people who are already stable on a treatment
• Greater transparency about coverage restrictions
• Processes for obtaining exceptions when a standard requirement is not appropriate for an individual patient

Policies continue to evolve, and requirements can differ depending on the type of insurance, state, health plan, and treatment involved.

For the autoimmune community, access to appropriate treatment is an important part of this broader discussion. The Autoimmune Association currently identifies prior authorization, step therapy, and other burdensome utilization management protocols among its legislative priorities and guiding principles.

How Patients Can Make Their Voices Heard

People living with autoimmune disease can play a role in policy discussions without having a policy background. Staying informed, understanding an issue, and sharing an experience can all be forms of participation.

Some specific ways patients can help change policy are:

• Share personal experiences with prior authorization or step therapy
• Contact elected officials about healthcare policies
• Support patient advocacy campaigns
• Participate in public policy and awareness efforts 
• Learn about legislation and regulatory changes
• Help others understand how insurance requirements can affect treatment

The Autoimmune Association provides advocacy resources for people who want to become more involved, including an Advocacy 101 guide that teaches people about the legislative process and how advocacy plays a key role in policymaking.

Breaking Down Barriers to Care

With hurdles like prior authorization, step therapy, and the generally high prices for specialized medications and treatments, many autoimmune patients still have trouble getting the care they need.

To help knock down some of these obstacles, the Autoimmune Association provides guidance and resources for managing prescriptions. We can also point patients in potentially helpful directions for financial assistance. Additionally, you can find us at the forefront of many reform efforts, talking to government officials ourselves—as policies continue to change, we try to make it easy for patients to stay informed with advocacy news.

You can share your health insurance experience to ensure that when our team campaigns for change, our message reflects as many people’s struggles as possible.