August 15, 2008

Estimate of the Net Cost of A Prior Authorization Requirement for Certain Mental Health Medications

A report by Driscoll and Fleeter for the Ohio chapter of the National Alliance on Mental Illness found that a proposed prior authorization policy in Ohio found that the total estimated medical cost for relapses due to interrupted treatment for people with schizophrenia or bipolar disorder covered by fee-for-service Medicaid was about $18.6 million, about $7 million for the 576 people with schizophrenia and $11.1 million for the 1,152 people with bipolar disorder. For people with schizophrenia or bipolar disorder in a Medicaid managed care plan, the estimated medical cost of relapse was $4.6 million. The total medical cost of relapses due to treatment gaps likely to be caused by the prior authorization policy was estimated at about $23 million.