As we head into health insurance enrollment season, which opens in November, consumers/patients will face yet another challenge in selecting the best health plan. Sorting through policies was tough already, but now insurers are making it even harder by changing the way they will cover generic drugs.
It used to be that opting for generics was a snap. Health plans usually offered three or four tiers of drugs – one for preferred brand drugs, one for non-preferred drugs, a category for the expensive specialty drugs and another for low-cost generics. The advice was to always buy generics if you could.
Last week, an editorial in the Journal of Managed Care revealed that some insurers are now splitting their generic tiers. There will be a preferred group of generics that will cost less for consumers and a non-preferred tier of generics that will be pricier. In essence, some generics are now becoming like brand-name drugs.
For years, insurers have tried to persuade consumers to pick low-cost generics over preferred brand drugs as a way to reduce the national health care tab, a strategy that also lowered their outlay. When consumers chose lower-priced drugs, the portion of the drug that insurers paid for was lower too.
But there may be greater fallout from this new plan than making consumers dig deeper in their pocketbooks to pay the additional cost. There's a real danger patients won't buy the prescribed drug and will go without it.
There's plenty of evidence this happens: "There's strong evidence that even a $1 difference in out-of-pocket expenditures changes (medical) behavior," says Dr. A. Mark Fendrick, who directs the Center for Value-Based Insurance Design at the University of Michigan, a group that's trying to encourage the use of medical treatments based on clinical and scientific evidence rather than advertising claims.
And RAND Corp. studies similarly show that even small price increases are enough to make patients stop buying a drug. Congress also recognizes that cost increases and co-pays can keep people from getting needed care, particularly people with low incomes. That's why the Affordable Care Act reduces cost sharing requirements on policies sold to low-income consumers and eliminates coinsurance and co-pays for many preventive services. "We should have low or no barriers as opposed to high barriers," Fendrick said.
I thought of all those newly insured Medicaid recipients brought into the health system, especially in states like Iowa and Arkansas, which have expanded their programs but require a nominal contribution. While they may seem trivial to Beltway policymakers, even small co-pays are a barrier for the poor. It is possible consumers could even abandon health insurance coverage. As Daniel Riley, the CFO of the University of Arkansas for Medical Sciences Medical Center in Little Rock, told Modern Health Care, "We're already seeing in those eligible for subsidized exchange coverage, that when they have to pay a co-pay, even if it's just a little bit, they are not signing up."
For those who do have health insurance and face two-tiered arrangements for generics, there's an additional challenge. Will this new strategy result in lower quality care?
Possibly, says Fendrick. A study by Policy Analysis, Inc. found that some drugs that are the standard of care for many ailments, such as metformin to treat diabetes, are not always in an insurer's preferred generic tier. "This is something that makes it more difficult to provide high quality care," Fendrick told me. "It will harm national efforts to put incentives in place to improve care."
Fendrick has a point. The Affordable Care Act was all about improving access and quality of health care. But it was silent on what happens when those goals conflict with the bottom-line demands of the medical marketplace.