Procedural prescription denials affect hospital visits and spending of Medicaid patients. From Scope, the blog of the Yale Scientific Magazine.
As prescription drug costs climb, procedural prescription denials have become a widespread cost-control measure in healthcare. These denials, which occur more frequently in Medicaid than in other insurance plans, are meant to regulate spending and prevent unnecessary medication use. However, researchers at Waymark, a California-based company that partners with Medicaid care providers, recently found that these denials may have unintended consequences. In particular, among Medicaid patients, they can lead to increased reliance on emergency care and higher overall healthcare costs.
A procedural prescription denial occurs when an insurance company rejects coverage for a prescribed medication based on administrative or procedural criteria rather than medical necessity. Common reasons for these denials include exceeding the allowed size of a prescription, failing to obtain prior authorization, or prescribing a medication not included in the plan’s formulary. These denials are more than just administrative hurdles for Medicaid patients, many of whom already navigate economic and health challenges. They produce treatment gaps that compromise safety—in addition to the strain they put on the greater healthcare system.
Sadiq Patel, the vice president of data science and AI at Waymark, highlights that procedural prescription denials, sometimes seen as trivial administrative hurdles, can lead to unexpected clinical consequences. “One of the major reasons for prescription denial is the patient goes in to refill their prescription a couple days before their previous supply has ended,” Patel said. While policies limiting early refills aim to prevent medication misuse, they can also delay necessary treatments. For example, a type two diabetes patient unable to refill insulin due to timing restrictions may experience dysregulated blood sugar levels. Thus, an initially stable patient may soon require emergency hospitalization.
Waymark’s analysis indicates that these denials not only contribute to worsening health outcomes, but also increase overall healthcare spending. Accounting for both prescription and medical costs, denials across six medication classes resulted in net total medical spending increases from $624 to $3,016 per member per year. “In an effort to drive down spending on medications, we inadvertently have an unintended consequence of increasing acute care utilization for physiologically related conditions,” Patel said. This shift reflects a broader issue: when patients are unable to access essential medications, they may forgo routine, preventive care and instead rely on emergency services, which are often less cost-effective for long-term health management.
These findings raise important questions about the trade-offs involved in cost-containment strategies. Patel suggests that small adjustments, such as more flexible refill timelines and less restrictive rules for which medications are included in insurance plans, could help minimize unnecessary denials and reduce the cascade of costly acute care needs. “Health plans, providers, and community organizations can update their operations, invest in community-based care teams, or invest in data science technologies,” Patel said. Such interventions could ensure that Medicaid patients can receive the consistent and timely care they need without broad legislative overhauls.
Looking ahead, Patel’s team aims to enhance the study’s generalizability by expanding their research beyond Virginia and Washington while incorporating a wider range of health plans. Additionally, technology-driven approaches, such as artificial intelligence and machine learning, could optimize prescription approvals and improve access to essential medications. “Medicaid patients are also very deserving of more advanced tooling […] that can refine and improve services,” Patel said. By leveraging data-driven care models, providers can proactively identify at-risk patients, streamline prescription approvals, and secure consistent medication access.
Ultimately, while procedural prescription denials are designed as cost-saving measures, growing quantitative evidence suggests that they may be counterproductive, increasing both acute care utilization and long-term healthcare spending. As healthcare systems refine cost-containment policies, balancing fiscal responsibility with patient-centered care will be key to ensuring that vulnerable patient populations receive the medications they need without avoidable disruptions.