Close Close

Life Health > Health Insurance > Health Insurance

Avalere: Benchmark Plan Candidates Cover Many Drugs

Your article was successfully shared with the contacts you provided.

The U.S. Department of Health and Human Services (HHS) has been talking about setting essential health benefits (EHB) package standards fit for customers with beer budgets rather than for those with champagne tastes.

But it turns out the beer-budget plans are more at a fine, artisan-brewery level than at a rotgut level, at least when it comes to their “formularies,” or lists of prescription drugs they cover.

Analysts at Avalere Health L.L.C., Washington, a health policy firm, have written about formulary practices in a look at the health plans that might serve as benchmark plans for EHB architects.

HHS is developing EHB standards to implement Section 1302(b) of the Patient Protection and Affordable Care Act of 2010 (PPACA).

PPACA drafters included the provision in an effort to ensure that all legal U.S. residents have a minimum level of health coverage, and to keep major medical issuers from using skimpy benefits packages to offer lower prices than competitors or chase away applicants with health problems.

HHS officials say they would like to let each state develop its own EHB standards, within guidelines set by HHS. Officials have noted that they would like to see the minimum plan standards reflect the kinds of features included in affordable small group plans rather than the kinds of features included in high-end large group plans.

HHS officials have listed 4 types of plans that could be benchmark plans:

  • The largest small group plan in any of the three largest small group insurance products in a state’s small group market
  • Any of the largest three state employee health benefit plans.
  • Any of the largest three national Federal Employees Health Benefit Plan options.
  • The largest insured commercial non-Medicaid health maintenance organization operating in the state.

HHS officials have suggested that the EHB package formulary should include at least one drug in each major class of drugs.

HHS officials outlined that approach in a bulletin released in December 2011. Comments on the bulletin — which only indicates what HHS might do and is not classified as a formal rulemaking document — are due Jan. 31.

The Avalere analysts tried in their study to determine what an EHB formulary might look like if the formulary resembled formularies now in place at typical small-group plans and other types of plans that could serve as models for EHB-makers.

The plans reviewed included the BlueCross BlueShield Standard Option PPO plan at the Federal Employees Health Benefit Program (FEHB), 3 small group plans operated by Blue Cross and Blue Shield carriers, and a small group plan operated by a unit of UnitedHealth Group Inc., Minnetonka, Minn. (NYSE:UNH),

More on this topic

The small group plans in the study are in California, Colorado, Maryland and New York.

The analysts went through the formularies of the FEHB plan and the 4 small group plans to see how many brand-name and generic drugs the formularies included in 9 classes of drugs.

The analysts counted, for example, how many antidiabetic agents each formulary offered and how many multiple sclerosis agents each offered.

To simplify the project, the analysts looked only at formularies and not at plan features such as utilization management efforts, premiums, co-payment levels or coinsurance rates.

The FEHB plan has a larger formulary than the small group plans do, because the FEHB plan covers all commercially available drugs approved by the U.S. Food and Drug Administration, the Avalere analysts report.

But the analysts found that all of the plans they looked at covered many more than one drug per class of drugs.

“For most of the classes in the study, plans covered at least 50% of both brand-name and generic products available in each class,” the analysts say. “In large classes, such as antidiabetic agents, small group plans cover more than 30 products.”

The FEHB plan formulary includes a total of 53 generic and brand-name drugs, but the small group plan formulary that served as a proxy for California formularies includes 31 drugs, and the other formularies include 36 drugs, the analysts say.

Similarly, the FEB plan formulary includes 10 anti-multiple-sclerosis drugs, but the small group plan formularies included 6 drugs in that category in Colorado and 7 drugs in that class elsewhere, the analysts say.