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📋 '''Step therapy''' is a [[Definition:Utilization management | utilization management]] protocol used by [[Definition:Health insurance | health insurers]] and [[Definition:Pharmacy benefit manager (PBM) | pharmacy benefit managers]] that requires a [[Definition:Policyholder | policyholder]] to try one or more lower-cost or preferred treatments before the plan will authorize coverage for a more expensive or specialized therapy. Often called a "fail-first" policy, it is a cost-containment tool embedded within the [[Definition:Formulary | formulary]] design of health insurance and [[Definition:Prescription drug plan | prescription drug plans]], directing clinical decision-making along a predefined sequence of treatment options.

⚙️ Under a step therapy program, an insurer establishes clinical criteria — usually developed in conjunction with a [[Definition:Pharmacy and therapeutics committee | pharmacy and therapeutics committee]] — that define the required sequence of medications or interventions. When a physician prescribes a drug that sits at a higher step, the [[Definition:Claims adjudication | claims system]] automatically flags it and requires evidence that the patient has tried and failed on, or is contraindicated for, the lower-step alternatives. If the criteria are not met, the claim is denied unless a [[Definition:Prior authorization | prior authorization]] override is obtained. Insurers encode these protocols into their [[Definition:Claims administration | claims administration]] platforms and [[Definition:Policy administration | policy administration systems]], making the process largely automated at the point of dispensing.

🏥 The significance of step therapy extends well beyond pharmacy costs. It sits at the intersection of clinical outcomes, member satisfaction, and [[Definition:Medical loss ratio (MLR) | medical loss ratio]] management — three areas of intense focus for health plan executives. Critics argue that step therapy can delay access to effective treatments, leading to [[Definition:Adverse outcome | adverse outcomes]] and potential [[Definition:Litigation risk | litigation risk]] for the carrier. Several U.S. states have enacted step therapy reform laws that require insurers to grant exceptions under defined clinical circumstances and to respond within specified timeframes. For [[Definition:Insurtech | insurtech]] companies building [[Definition:Digital health | digital health]] platforms, designing intelligent step therapy workflows that balance regulatory compliance with clinical flexibility represents a meaningful product opportunity.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Prior authorization]]
* [[Definition:Formulary]]
* [[Definition:Utilization management]]
* [[Definition:Pharmacy benefit manager (PBM)]]
* [[Definition:Medical loss ratio (MLR)]]
* [[Definition:Health insurance]]
{{Div col end}}

Definition:Step therapy - Revision history

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