Pay BillSpring 2026 Insight Employer Newsletter
Preauthorization: why health plans use it
By Jennifer Johengen-Vogel, Senior Vice President, Clinical Value Management & Improvement
One of the more common questions we receive is about preauthorization. We recognize that preauthorization is sometimes questioned among health care consumers and providers, and hope this brief overview of why health plans use preauthorization helps to clarify some misunderstanding.
It is widely recognized that overutilization or inappropriate utilization impacts health care costs and may put patients at risk. In fact, a 2019 report found that waste in healthcare represents up to 25% of health care spending in the U.S.
At Independent Health, one of our core beliefs that compel us to work for our members each and every day is that better quality care leads to lower costs. We use a variety of “levers” to promote quality, access and affordability.
Independent Health evaluates medical services on an ongoing basis to understand utilization patterns in order to promote clinically appropriate, evidence-based care, and mitigate variability in quality, usage and cost.
We employ a variety of tactics and implement different initiatives to address services that may fall outside of benchmark ranges, or for services having unusually high utilization. We have a best-in-class analytics team, tools and integrated data sets which are key to identifying the right issues and solutions accordingly. These pieces are put together to develop a 360-degree view of not only each member, but a comprehensive assessment of our entire membership to develop population health strategies. You can read more about these initiatives and their outcomes here.
We work closely with our provider partners to address areas in need of improvement. For example, we implemented a post-acute readmission program to improve discharge planning and reduce unnecessary readmissions with local hospitals.
Independent Health’s results-oriented value-based care and reimbursement models promote evidence-based and best-practice standards. As a result, Independent Health paid more than $35 million to participating physicians and hospitals in 2025 for meeting or exceeding quality benchmarks.
For some treatments, medications, procedures, and services, we have implemented prior authorization programs to help providers effectively deliver quality patient care using clinical criteria based on nationally recognized guidelines to promote evidence-based practices. We refer to evidence-based best practices, or we partner with industry leaders, such as the company called Evolent, to manage our prior authorization processes.
The objectives of the prior authorization program are to:
Ensure medical necessity: Physical therapy can be highly beneficial, but the type, frequency, and duration of treatment should match the patient’s specific medical needs. Prior authorization helps confirm that the services recommended are appropriate for one’s diagnosis and condition.
Support evidence-based care: Evolent reviews requests using established clinical guidelines to ensure that treatment plans follow best practices and are proven to be effective.
Promote safe and effective treatment plans: By reviewing therapy requests, Evolent can help ensure that care is coordinated and adjusted as needed based on the patient’s progress.
Prevent unnecessary or duplicative services: Prior authorization helps avoid services that may not provide additional benefit or that duplicate other treatments the patient may already be receiving.
Help manage healthcare costs: By ensuring that services are necessary and appropriate, we help keep costs lower for all members, which can help control premiums and out-of-pocket expenses.
Our teams continually assess our prior authorization programs to ensure they add value and are meeting objectives. We will also discontinue prior authorization when we determine that it is not necessary. For example, we recently discontinued preauthorization for homecare services, which resulted in an 18% decrease of overall preauthorization volume.
As a not-for-profit health plan, Independent Health is committed to its members and the community in which it serves. Independent Health’s goal is not to delay or deny care, but to ensure the right care is received at the right time and for the most effective duration.
Beyond the numbers: Independent Health’s 2025 financial and operational results point to strength and a favorable future
Following an improved 2025, Independent Health saw a marked improvement in our financial performance, including an operational surplus in the fourth quarter of the year. The positive financial trend is continuing into 2026 as the company had an operational surplus, due to administrative efficiencies and successful medical management initiatives that we have implemented over the past 24 months and continue to implement going forward.
Corporate Structure provides strength through diversified business lines
Independent Health’s unique organizational structure is the underpinning of our financial and organizational stability that continue to enable us to serve our members, our employer groups and our community.
Unlike our competitors, Independent Health has two licensed companies to provide insured health care coverage:
- Independent Health Association (IHA), a company licensed under Article 44 of the New York Insurance Law, which includes large group HMO plans, Medicare Advantage and Medicaid managed care.
- Independent Health Benefits Corporation (IHBC), a company licensed under Article 43 of the Insurance Law, which includes our community-rated small group and individual plan membership, and experienced-rated large groups.
These two companies are part of a diversified enterprise whose affiliate entities augment our business operations and contribute to our financial strength. Our affiliated companies include:
- Pharmacy Benefit Dimensions (a pharmacy benefit management firm);
- RelianceRx (a specialty pharmacy) which now services patients in all 50 states and partners with health plans, PBMs, TPAs, and employer groups with contracts that represent access to more than 30 million covered lives;
- Nova Healthcare Administrators, which offers third party administration of dental plans, medical plans, reimbursement accounts and private label business.
Strength in Clinical Quality and Customer Service
Whether it’s Independent Health’s fully and self-insured lines of business or our affiliates, our family of companies is focused on providing the highest level of quality and service to our clients and customers. Our corporate portfolio enables Independent Health to be recognized for meeting national benchmark levels for clinical quality, member satisfaction, and performance from nationally recognized organizations such as the National Committee for Quality Assurance (NCQA) and The Centers for Medicare and Medicaid Services (CMS).
- NCQA 5 out of 5 Stars (Commercial) for clinical quality and member satisfaction for the third consecutive year – the only New York plan and one of only eight nationally;
- CMS 5-Star Medicare Advantage HMO (16th consecutive year at 4.5+ Stars) and 4.5 Star PPO (11th consecutive year) for 2026;
- Pharmacy Benefit Dimensions, received a 5-Star Rating for its Medicare Employer Group Waiver Plan Prescription Drug Plan. Pharmacy Benefit Dimensions is one of only two Prescription Drug Plans in the nation to earn 5 Stars for 2026, and the only plan to receive 5 Stars for five consecutive years.
Pending Affiliation with MVP Health Care
Over the last few years as we evaluated the increasingly challenging health care environment, Independent Health has taken an opportunity to shore up its strengths through a planned affiliation with MVP Health Care. This pending affiliation with MVP Health Care will further enhance and strengthen our ability to achieve a stronger, more connected health care experience for members and clients. MVP’s operational expertise will help address the financial challenges facing the entire health care industry and will unlock new opportunities for growth and innovation.
By affiliating, we will build more resilient, future-ready organizations—equipped to deliver sustainable value, stability, and enhanced benefits for customers, now and for years to come. Our commitment to quality and service is and will continue to be a hallmark of our company, as this affiliation aligns two not-for-profit, mission driven organizations with deep local roots and a shared commitment to improving lives through predictive, preventive, and personalized care.
Looking toward the future
Despite ongoing challenges that continue to impact the entire health care industry, due to our diversification, implementation of solutions and focus on the future, we are trending toward significant improvement in 2026, and our organization is well positioned to continue delivering on our mission to provide affordable access to quality healthcare while improving the health and well-being of the communities we serve.
A Hidden Driver of Pharmacy Cost Growth: Expanded Drug Indications
Pharmacy expenditures aren’t just rising; they are becoming increasingly difficult to predict, and the challenge is no longer limited to high-cost drugs. The accelerating pace of utilization growth, driven by expanding indications is impacting pharmacy costs.
Expansion of Drug Indications
While drug pricing often commands headlines, utilization expansion is the quieter force creating sustained financial pressure. The expansion of drug indications ( i.e., the specific diseases for which a drug has been approved to be used) has transformed once-niche specialty medications into mainstream treatment options, as nearly 40% of new drugs gain additional indications within five years of launch.
When manufacturers secure additional FDA approvals to expand their medications’ clinical use and longevity, plans are exposed to rapid cost growth that they likely didn’t predict and aren’t built to absorb.
The result? More eligible members, longer treatment durations, and compounding cost exposure for plans.
Examples of specialty medications and their indications
Many specialty medications entered the market serving limited populations. Over time, additional approvals expanded their reach across more common disease states, significantly widening the patient pool. For example, Skyrizi was first approved for psoriasis, and is now indicated for the treatment of psoriatic arthritis and Crohn’s disease. Stelara® expanded from dermatology into gastrointestinal indications, including ulcerative colitis.
GLP-1 therapies such as semaglutide (Ozempic®, Wegovy®) and tirzepatide (Mounjaro®) are another example. Initially approved for type 2 diabetes, they’ve now been granted expanded approvals for weight management, cardiovascular risk reduction, sleep apnea, and kidney disease, among others – dramatically increasing utilization. In fact, GLP-1 utilization has nearly doubled between 2024 and 2025, with Ozempic® and Mounjaro® now representing $20 billion+ in annual Medicare Part D expenditures.
How the Indication Evolution exacerbates rising costs
Each added indication increases costs, not simply because the drugs are expensive, but because more patients qualify, which increases utilization, and it may result in long-term treatment therapy, adding to spending.
Addressing the challenges
Even modest shifts in utilization can produce an outsized financial impact with such costly medications. Independent Health’ own pharmacy benefit manager, Pharmacy Benefit Dimensions PBD, manages our employers’ pharmacy benefit. As specialty medications’ indications expand and pharmacy costs continue to rise, having PBD allows us to react quicker to the changing landscape of pharmaceutical therapies, and in turn better address members’ needs. In addition, Independent Health’s specialty pharmacy affiliate, RelianceRx, works to achieve the maximum appropriate therapy adherence and promoting positive clinical outcomes, which results in improved quality and lower costs in specialty medication administration. Each organization working collaboratively and with our provider partners is helping to address these challenges in achieving better quality and value in our customers’ pharmacy benefits.
The Premium Dollar: Where Does Your Healthcare Dollar Go?
By: Jared Gross, executive vice president and chief financial officer
Health care costs continue to rise, and premiums reflect that reality. In 2025, the KKF reported that the average annual premium for family coverage reached nearly $27,000--about 6% higher than the year before-- with costs expected to increase in 2026. With that in mind, it’s only fair to ask: where does your premium dollar go?
At Independent Health, the answer is straightforward. About 90 cents of every premium dollar goes directly to health care, while 10 cents supports administration and operations that make coverage work. Since more than 90 cents of every premium dollar is used to pay for our members’ medical and prescription costs, increases to premiums are a direct result of health care cost increases; it’s the “cause-and-effect principle.” Understanding how those dollars are used can help bring clarity to a system that often feels anything but simple.
How Your Premium Dollar is Spent
Most of every premium dollar supports the care and services members depend on every day. Looking more closely at how those dollars are used helps show how coverage supports health across every stage of life.
Prescription drugs, especially specialty medications and biologic pharmaceuticals, make up the largest share, reflecting their growing role in managing chronic conditions, preventing complications, and supporting everyday health needs. Hospital care is another significant portion, with premiums supporting both inpatient services—such as surgeries and overnight stays—and outpatient services like same-day procedures, emergency visits, and other treatments that don’t require hospitalization.
Primary care also plays a central role by supporting preventive care, routine checkups, and early treatment—care that can often help prevent more serious and costly issues down the road. Specialist care ensures access to experts when conditions are complex or ongoing. Other services, like imaging, home health, and ambulance care, support members as their needs change.
Together, these services reflect how your premium supports care from prevention and diagnosis through treatment and recovery.
Administrative Costs and Taxes
Not every dollar goes directly to medical care. A portion of each premium supports the behind-the-scenes work required to provide coverage. This includes things like customer service, claims processing, care management, and the systems that help members and providers navigate benefits and treatment.
Although Independent Health is a not-for-profit health plan, we also pay federal and state taxes, which help fund broader programs such as medical education, care for uninsured individuals, and community health programs. These responsibilities are part of keeping the health care system functioning for everyone.
How Independent Health Works to Control Costs
Rising health care costs are a shared challenge across the industry. At Independent Health, we focus on using premium dollars responsibly while continuing to invest in quality care.
We work closely with primary care providers to identify gaps in care, encourage preventive services, and support better health outcomes. Our results-oriented value-based care and reimbursement models promote evidence-based and best-practice standards. We also take steps to manage prescription drug costs while maintaining access to necessary treatments. In addition, community-based programs like Fitness in the Parks promote healthier lifestyles, which can help reduce the need for more intensive care over time.
These efforts are all designed to support members’ health while making smart use of every premium dollar.
What Members Can Do
Members play an important role in getting the most value from their health coverage. Staying current on routine checkups, screenings, and vaccines can help catch issues early or prevent them altogether. Understanding care options like outpatient care or lower-cost medications can also help manage out-of-pocket costs. Taking medications as prescribed and following care plans can reduce the risk of complications and avoid more serious and costly health issues in the future.
Making Every Premium Dollar Count
Every premium dollar is spent with members in mind. The goal is to support health, provide access to quality care, and deliver value from your coverage. Independent Health remains committed to transparency, responsible stewardship of premium dollars, and supporting the communities we serve.
Understanding how your coverage works empowers members to make informed decisions—and to get the most from your health plan.
Independent Health ranked as the third highest health plan for member satisfaction in the New York region by J.D. Power
Independent Health is ranked as the third highest health plan for member satisfaction in the New York region, according to the J.D. Power 2026 U.S. Commercial Member Health Plan StudySM.
Independent Health is again ranked first among Western New York health plans, a ranking it has achieved 15 times over the past 16 years.
J.D. Power’s U.S. Commercial Member Health Plan Study measures satisfaction among members of 148 health plans in 22 regions throughout the United States based on performance in eight core dimensions. The dimensions are: able to get health services; product/coverage offerings; resolving problems or complaints; ease of doing business; digital channels; helps save time and money; trust; and people.
“Independent Health is honored to achieve this unparalleled mark of consistently one of the highest ranked health insurance plans in the country by an internationally known and highly respected organization like J.D. Power,” said Michael W. Cropp, M.D., president and chief executive officer, Independent Health. “Creating a positive experience for our members has always been central to our mission. This year’s J.D. Power ranking reflects the strength of our customer service, the value of the innovative benefits we offer, and the close collaboration we share with physicians and providers to help ensure our members receive the high-quality care they deserve.”
Insight Newsletter Archive:
Affiliation update
Independent Health’s planned affiliation with the MVP Health Care family of companies continues to move through the regulatory review process, which is expected to be completed this year. The pending affiliation will not affect our commercial or Medicare offerings for 2027, as product plans have already been finalized as part of the 2027 rate filings. While both organizations continue to operate independently during the review period, preliminary planning is underway to support a seamless transition following approval. Independent Health remains committed to its community-focused mission, with decisions that matter most to Western New York continuing to be made locally by those who know the region best. Together, we look forward to leveraging our combined strengths to advance the health and well-being of our members and the communities we serve.