Benefits designers may be intentionally luring insurance buyers into health insurance plans with high drug costs by keeping premiums artificially low.
A study of exchange marketplace health plans by Avalere Health found that most of the plans examined pushed all drugs used to treat complex diseases into the drug formulary with the highest cost-sharing tier. Avalere said the plan's premiums appeared to be kept low, with plan designers apparently expecting higher revenue from the drug cost-sharing to offset the low premiums.
"Plans continue to innovate on benefit design in the exchange markets," said Avalere CEO Dan Mendelson. "These designs are calibrated to optimize enrollment by delivering low and stable premiums — the primary metric that consumers use to select a plan."
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Because most customers evaluate plans almost entirely on the cost of the monthly premium, designers are studying ways to increase plan revenue elsewhere. Drug cost-sharing is among those strategies.
"Enrolling in a plan that places all medications for a particular disease on the specialty tier can mean significant out-of-pocket costs for consumers, particularly if they do not qualify for cost sharing reductions," said Caroline Pearson, vice president at Avalere. "Plans that place some drugs in a class on lower tiers may allow consumers to find lower cost alternatives."
Avalere looked at a series of marketplace plans to see how they managed drugs for such disorders as cancer, HIV, diabetes and other complex chronic diseases.
"Specifically, in five of the 20 classes of drugs analyzed, plans placed all drugs in a class on the specialty tier. Specifically, in the Protease Inhibitor and Multiple Sclerosis Agents classes, 29 and 51 percent of plans respectively place all drugs, including available generics, on the highest tier. There are no generics in the other three classes of drugs listed below," Avalere reported.
It found another trend: in 10 drug classes, all single-source branded drugs went straight into the specialty tier.
"Specifically, in eight of the 10 classes, 2015 exchange plans were more likely than 2014 plans to assign all single-source branded drugs to the highest cost sharing tier. A single-source branded medication is a brand name drug without a generic equivalent," the report said.
Avalere said the results of the study underscore the importance of looking at all cost aspects of a health insurance plan prior to making a purchase.
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
