Insurers have to improve consumer education about drug formularies in exchanges, at the least, and some may even have to change their practices to meet new health reform standards.
While payers are using drug tiers to try to control pharmaceutical spending and offer more choices, patients, advocates and clinicians have criticized the emergence of narrow and restrictive formularies. Tiered plans for HIV/AIDS drugs have led to regulatory interventions in Florida and elsewhere, and also drawn the attention of the Obama Administration, which is investigating whether plans have been in compliance with the Affordable Care Act's nondiscrimination provisions.
Now, a new study has uncovered a fairly significant extent of what HIV/AIDS advocates see as a problem -- "adverse tiering," as researchers call it in the New England Journal of Medicine.
Harvard public health researchers Douglas Jacobs and Benjamin Sommers, MD, examined the formularies of 48 silver exchange plans in 12 states, and found that 12 of the plans placed HIV medications in a specialty tier where members have to pay at least 30 percent of the drug's cost.
"The differences in out-of-pocket HIV drug costs between adverse-tiering plans and other plans were stark," Jacobs and Sommers wrote, "with someone in a tiered plan paying as much as $4,800 annually, compared to $1,600 in less-restrictive plans, and differences of more than $2,000 even for generic medications."
Half of the "adverse-tiering plans" have drug-specific deductibles, compared to less than 20 percent of the other plans. Although the silver plans may have lower premiums than gold and platinum options and also include out-of-pocket caps, Jacobs and Sommers estimate that a person with HIV would pay more than $3,000 annually for treatment in a highly-tiered plan.
Other research has found drug tiers being used for treatments of diseases that include arthritis, cancer, diabetes and mental illness; an Avalere Health study found that 52 percent of marketplace plans required at least 30 percent coinsurance for every covered drug in at least one class.
Formularies in adverse tiering plans and other plans, via NEJM:
This kind of drug tiering is problematic especially in HIV but also for other conditions, Jacobs and Sommers argue.
"First, it puts substantial and potentially unexpected financial strain on people with chronic conditions," they write. "These costs may be difficult to anticipate, since calculating them would require knowing an insurer's negotiated drug prices -- information that is not publicly available for most plans."
Another problem, they argue, is that "tiering practices will most likely lead to adverse selection over time, with sicker people clustering in plans that don't use adverse tiering for their medical conditions."
Individuals with chronic conditions who face higher-than-expected drug cost will eventually switch to less restrictive, more affordable plans. "Over time, thanks to word-of-mouth or clinicians' advice, plans offering generous prescription-drug benefits may see a large influx of sick enrollees, which would reduce their profits and could lead to a race to the bottom in drug-plan design."
While the ACA's risk-adjustment, reinsurance, and risk-corridor programs are supposed to give insurers financial protection in the new, guaranteed-issue, essential health benefit market, "the existence of adverse tiering in 2014 suggests that selection opportunities remain," Jacobs and Sommers argue, wondering about what will happen when the reinsurance and risk-corridor programs are phased out after 2016.
The trade group America's Health Insurance Plans questions some of those assertions and the significance of the findings, noting that the study only probed silver plans and did not look at the gold and platinum plans designed for individuals who have complex health needs, like HIV/AIDS patients.
Even while offering those higher-premium, richer benefit options, insurers are facing probes from regulators and criticism from patient advocates to make drug formularies more transparent and easier to access to shoppers if they are going to use high-cost sharing tiering.
Seven of the plans using the "adverse tiering" for HIV drugs are in states where patient groups have filed complaints with the Department of Health and Human Services (Delaware, Florida, Louisiana, Michigan, South Carolina, and Utah). The other five plans were scattered across Illinois, New Jersey, Ohio, Pennsylvania, Texas, and Virginia.
Last spring, HIV/AIDS advocates filed a federal complaint against four insurers in Florida, arguing that their tiering of HIV medications amounted to reduced access to the treatments, and all of the insurers have since agreed to changes. The Centers for Medicare and Medicaid Services is following the issue carefully, and late last year opened an investigation into the use of drug tiers across all health conditions in states served the federal exchange.