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Health Insurers Face New Attack on Cost-Sharing Defense

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What You Need to Know

  • Health insurers see making patients pay part of the bill as way to get the patients to think about cost.
  • Patients do not necessarily see why they should have that much in common with the health insurers.
  • Some state lawmakers also are skeptical about the value of giving patients skin in the game.

State insurance lawmakers are considering an attack on one of health insurers’ defenses against rising prescription drug costs: Making patients pay part of the cost of the drugs they take.

The National Council of Insurance Legislators has put a drug copayment proposal in the packet of materials for the council’s upcoming in-person meeting in Scottsdale, Arizona. The meeting is set to start Nov. 17.

The proposal could encourage states to let patients use money from charities, drug companies and other sources to pay any deductibles, copayments or coinsurance amounts associated with prescription drugs.

For agents and brokers trying to help patients use their coverage, the proposal could lead to welcome relief for desperate customers who are struggling to pay for essential medications.

For producers wishing someone would do something about rising drug costs, implementation of the proposal could mean that health insurers will have even less ability to influence drug costs.

The Background

Health insurers, and the pharmacy benefit managers that work with health insurers and self-insured employer health plans, often use tiers of copayments and coinsurance amounts to manage patients’ use of prescription drugs.

Plan members might be able to get generic antibiotics and other low-cost generic drugs with no copayments.

For the kinds of specialty drugs that can cost more than $10,000 per year, plans might require patients to pay more than $1,000 in “cost-sharing” amounts.

Some drug companies work with patient advocacy groups to fund support cost-sharing assistance programs that help patients with bills.

Patients and cost-sharing assistance program managers say the programs help patients comply with physicians’ directions and stay healthy.

Insurers and PBMs say that, in some cases, the programs may wreck efforts to encourage patients to stick with more affordable drugs when possible, eliminating any difference between what patients pay for affordable drugs and what they pay for drugs that cost $10,000 or more per year.

Insurers see “giving patients skin in the game” — making them pay part of the cost of care — is a great way to help patients understand what care really costs and align their thinking with the thinking of the insurer.

The Proposal

NCOIL is a Manasquan, New Jersey-based group for people who serve in state legislatures and have an interest in insurance. NCOIL members help write and pass bills in their states. They have no ability to set or change state laws, but state legislators can start with NCOIL models when drafting their own legislative proposals.

More on this topic

The new proposal is a draft version of an Accumulator Adjustment Program Model Act.

NCOIL’s Health Insurance & Long Term Care Issues Committee is preparing to discuss the draft at an NCOIL meeting session Nov. 18.

Drafters note in a statement of legislative purpose that some insurers and PBMs have implemented “accumulated adjustment programs” and other programs that keep cost-sharing assistance payments from counting towards a patient’s annual out-of-pocket spending limit.

In some cases, those programs require a patient to keep paying copayments or coinsurance amounts even ever the patient has reached the annual out-of-pocket spending limit, when including the cost-sharing help, drafters write.

“As such, the cost sharing assistance depletes leaving the patient responsible for paying the full deductible and meeting the annual out-of-pocket limit for a second time,” drafters say. “This means accumulator adjustment programs limit the benefit patients receive from copay assistance programs.”

Patients may have no idea that the programs exist, and the programs let health insurers and PBMs get paid twice, by both the patient and the cost-sharing assistance program, the drafters add.

“Therefore, the legislature declares it a matter of public interest that health insurers and PBMs must count any amount paid by the patient or on behalf of the patient by another  person towards a patient’s annual out-of-pocket limit and any cost sharing requirement, such as deductibles,” according to the model act draft text.

Health Insurers’ View

Brendan Peppard, a regional director for state affairs with America’s Health Insurance Plans, spoke about the proposal in July, at an NCOIL meeting in Boston, according to draft minutes included in the meeting packet.

Peppard said that, in its current form, the model is harmful because it does nothing to control drug prices and takes away a level that health plans have to control discount-based market manipulation by drug companies.

One way to improve the drug would be to limit its scope to include drugs with no lower-cost alternative, to keep drug makers from using cost-sharing assistance programs to steer patients toward the higher-cost alternatives, Peppard said.

The cost-sharing assistance programs should also provide help for all affected patients for the full year, and provide advanced notice about discount discontinuations, Peppard said.

Patients also should have to disclose when they are using cost-sharing assistance program coupons to pay for drugs, Peppard added.

(Image: Adobe Stock)