If you had a medical condition requiring you to purchase expensive medication on a regular basis, you’d probably lean toward the insurance plan in which those drugs were the least expensive, right? Sure you would.
And that’s what insurers are counting on, according to a study in the New England Journal of Medicine. The study found that some insurers participating in the Affordable Care Act’s new federal marketplace use discriminatory drug tiering for a regularly prescribed class of HIV medication: nucleoside reverse-transcriptase inhibitors, or NRTIs.
In plain English, that means that the insurers made the drugs so expensive that people with HIV would be forced to choose another plan. Or at least, if they stayed in the plan, they paid for it: People in these plans paid three times more for HIV meds, on average, than people in other plans, to the tune of $3,000 more per year.
It’s exactly the behavior being alleged in a complaint to the Department of Health and Human Services made last May, which alleged that Florida insurers participating in the federal marketplace discouraged people with HIV from choosing their plans by putting all relevant drugs in the most expensive tier—even the generics.
Unfortunately, this is the kind of insurer conduct that the Affordable Care Act was created to address. “Eliminating discrimination on the basis of preexisting conditions is one of the central features of the Affordable Care Act,” writes Doug Jacobs, MD/MPH candidate at the Harvard T.H. Chan School of Public Health and lead author of the study. “Insurers have historically used tiered formularies to encourage enrollees to select generic or preferred brand-name drugs instead of higher-cost alternatives. But if plans place all HIV drugs in the highest cost-sharing tier, enrollees with HIV will incur high costs regardless of which drugs they take.”
The study termed this behavior “adverse tiering,” and researchers found evidence of it in 12 out of 48 plans they examined in 12 states. Consumers enrolled in these “adverse tiering” plans, or ATPs, spent an average of $4,892 per drug annually, versus $1,615 for people in non-ATPs. And half of ATP enrollees had a drug-specific deductible, while only 19% of non-ATP consumers did. "I was definitely surprised by how prevalent the practice was," Jacobs says.
The problem isn’t just limited to HIV, either. Adverse tiering exists for other pricey chronic conditions, such as cancer and diabetes. In essence, insurers want the chronically ill to choose another plan, because insuring them—and covering the cost of their treatments and medications—is expensive. "It's impossible for us to exactly say the intent by which insurers are doing this, but historically, insurers have tried to deny insurance coverage to those with preexisting conditions," Jacobs says. "So this could be a way to not have people in their plans who are costly to insure, but also as a way to have them shoulder some of the costs."
This is unfortunate for several reasons. First, it places a financial burden on the chronically ill, who are already burdened. These consumers may choose an ATP plan because their premiums tend to be lower, then unexpectedly end up footing a sky-high bill for treatment, since insurer’s negotiated drug prices are difficult to find. "People with HIV, when they're signing up for plans, it's truly not easy for them to figure this out," Jacobs says. "And even if they did know the exact coinsurance level of every drug, the plans don't tell beneficiaries the negotiated price of the drug before they sign up. People with HIV would be pretty surprised."
Second, the study authors suggest that sick people will bunch together in the plans that offer decent drug coverage, leading to a “race to the bottom in drug-plan design.”
There are a few things that might help the situation, according to the report. For instance, if the estimated prices of medications were transparent for each insurer, consumers would at least have all the information they need to choose a better plan, avoiding sticker shock down the road.
The marketplaces could also take their cue from Medicare Part D, in which there are a few protected classes of drugs, such as those used for mental illness, HIV, and cancer. That approach keeps those drugs from becoming out of reach for consumers. “A similar approach in the marketplaces could set an upper limit on cost sharing for medications for protected conditions,” Jacobs writes.
Not everyone thinks this study got it right. "This analysis ignores a critical component of the marketplace: consumer choice," says Clare Krusing of America's Health Insurance Plans (AHIP). "Individuals have diverse health and financial needs, and health plans have designed a wide range of coverage options, including those with lower cost sharing, so that individuals can pick the policy that is best for them."
In the meantime, the Department of Health and Human Services has proposed a rule that categorizes this practice of placing all or most drugs for treating a certain condition on the highest cost sharing level as discrimination. "But that's a proposed rule, and it's not finalized," Jacobs says. "So it could continue to happen."
