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What should health plan “nutrition labels” say about drugs?

By Allison Bell

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Doctors and drug manufacturers want health plans to give consumers more information about drug coverage right up front.

The American Medical Association (AMA) and the Pharmaceutical Research and Manufacturers of America (PhRMA) are asking regulators to build more information about major medical plan drug coverage into the next revision of the Summary of Benefits and Coverage (SBC) and the Uniform Glossary.

The Consumer Information Subgroup, an arm of the National Association of Insurance Commissioners (NAIC), has published copies of letters from the AMA and PhRMA along with other SBC and Uniform Glossary comment letters on its section of the NAIC’s website.

Drafters of the Patient Protection and Affordable Care Act of 2010 (PPACA) created the SBC in an effort to help consumers, employers, researchers and others compare health plans on an apples-to-apples basis. Every plan is supposed to provide SBCs in the same standardized format. Some have described the SBC as being similar to the nutrition labels that dairies put on milk cartons.

PPACA drafters hoped the Uniform Glossary would be a short, easy-to-understand guide that consumers could use to make sense of the information in the SBCs. The current version includes definitions of everything from “provider” to “reconstructive surgery.” The current version also includes a definition of “formulary,” or the list of drugs that a health plan covers. 

Originally, the U.S. Department of Health and Human Services (HHS) and other federal departments were hoping to get an updated SBC into use in 2016. Health insurers and others said the industry needs more time to develop, test and implement new consumer materials. Regulators decided to put off updating the materials until 2017,

The Blue Cross and Blue Shield Association told members of the NAIC’s Consumer Information Subgroup that they would like the SBCs to be more flexible and easier to understand, and that they want to see any template revisions as quickly as possible.

America’s Health Insurance Plans (AHIP) also said the SBC ought to be more flexible, and not so tightly fitted to suit the two-tiered, in-network and out-of-network coverage, preferred provider organization plans that now dominate the market.

Both AHIP and the people who officially represent consumer interests in NAIC proceedings said they would like to see more consumer testing. AHIP wants more information about how consumers really shop for coverage, such as whether consumers rely heavily on SBC examples illustrating how coverage might work in specific health care scenarios.

The consumer reps suggested bringing in professional designers to make the SBC easier for consumers to understand.

The AMA and, especially, PhRMA, talked about how revising the SBC might affect a major PPACA consumer protection controversy: concerns that many consumers who are taking specific medications have trouble determining whether plans will cover their medications.

For a look at what the AMA and PhRMA commenters said about the SBC and Uniform Glossary components related to prescription drug coverage, read on. 

The out-of-pocket cost blank in the SBC

1. The AMA wants SBCs to state whether the plan’s out-of-pocket cost limit includes a patient’s prescription drug costs. 

PhRMA representatives also want to see the SBCs give clearer information about the interaction between PPACA out-of-pocket cost limits and prescription drug costs.

Issuers are using several different methods toward counting drug costs toward deductibles, the PhRMA reps say.

In some cases, officials say, plans use a combined deductible. In other cases, they may use separate deductibles, and provide first-dollar coverage for prescriptions. In still other cases, plans may require deductibles only for more expensive drugs.

“For example,” the PhRMA reps say, “if a plan has nested deductibles and a $1,000 medical deductible and a $500 drug deductible, a person who has spent $400 out-of-pocket on medicines would need to spend an additional $600 on medical care to meet the medical deductible.”

At this point, there is not a standardized way for issuers to describe their prescription deductible strategies on their SBCs, the PhRMA reps say.

“This raises concerns because deductibles have such a significant impact on potential out-of-pocket costs,” the PhRMA reps say.

The prescription drug information part of the SBC

2. The AMA says the SBC prescription drug information link should go to a website that lets consumers search for specific drugs in the formulary associated with the plan described by the SBC.

PhRMA reps are also asking regulators to add direct formulary links to SBCs. 

“While we recognize that it is not practical to provide all relevant information in an SBC, the rule should require that plans provide easily accessible internet links where more detailed information can be found,” the PhRMA reps say.

The Centers for Medicare & Medicaid Services (CMS) is already preparing to require health plans that sell coverage through the HealthCare.gov public exchanges in 2015 to put direct formulary links on HealthCare.gov, the reps say. 

See also: Plans in showdown against high-cost drugs

The specialty drug definition in a draft of a revised PPACA Uniform Glossary

3. PhRMA reps would like regulators to change the proposed definition of “specialty drug.”  

The current draft version calls for regulators to define a “specialty drug” as “a type of prescription drug that, in general, requires special handling or ongoing monitoring and assessment by a health care professional, or is relatively difficult to dispense.”

“If the plan’s formulary uses ‘tiers,’ and specialty drugs are included as a separate tier, you will likely pay more in cost sharing for drugs in the specialty drug tier,” according to the draft.

The PhRMA reps say that definition is unclear, and they suggest that the glossary should use the term “specialty category,” rather than “specialty drug.”

The PhRMA reps proposed the following rewrite:

A formulary category, or “tier,” sometimes used to separately group prescription drugs that, in general, require special handling or ongoing monitoring and assessment by a health care professional. If the plan‘s formulary uses categories, and certain drugs are placed in a specialty category, you will likely pay more out of pocket for drugs in that category.

See also: Just how sick are exchange plan enrollees?