Expensive Drugs Are Becoming More Accessible Under Exchange Plans

ACA exchange plans are making some drugs more accessible to patients in 2016. Plans are less likely to place all drugs for conditions, such as HIV, cancer, and multiple sclerosis (MS) in a class on the highest cost-sharing tier, according to a report by Avalere. The study looked at Silver plans across 20 classes of medications. In five medication classes, some plans all drugs on the highest tier including drugs to treat HIV, cancer, and MS. However, fewer exchange plans are doing so in 2016 than in the prior two years.

As in prior years, the anti-angiogenics class, used to treat cancer, was most often subject to universal placement on the specialty tier. Half of all Silver plans placed all covered drugs in this class on the specialty tier in 2016. Nearly one-third of Silver plans place all covered MS drugs on the specialty tier as well, though this rate is down 14% from 2015. The sharpest decline is for molecular target inhibitors at 18%. For these three classes, 2016 reversed the sharp increase in this tiering structure.

Since the launch of exchanges in 2014, patient groups and policymakers have considered how formulary designs could affect patients’ ability to access medications. At the same time, plans strive to offer innovative benefit designs with low premiums. CMS has issued guidance discouraging plans from placing all drugs for a condition on the highest tier without regarding the cost of the medication. The federal government has not yet created a tool for regulators to evaluate benefit designs in this regard. California passed legislation preventing plans from placing all drugs for a condition on the highest formulary tier beginning in 2017

Covered California Update

CoveredCAAnnouncementCOBRA Recipients Get Another Chance to Sign Up for the Exchange
At a recent board meeting,Covered California’s executive director, Peter Lee outlined what to expect with the state’s exchange over the next couple of years. He announced a special enrollment period for COBRA enrollees. On May 15, Covered California launched a limited-time special-enrollment period for people who have COBRA health insurance and would like to switch to an exchange plan. They will be eligible to buy coverage through Covered California until July 15.  “Since the passage of the Affordable Care Act, plans in the individual market could be preferable to COBRA coverage because of premium assistance and cost-sharing reductions…For some people who have COBRA coverage, purchasing a plan in the Covered California marketplace…could save thousands of dollars a year,” he said in a press release. At the board meeting, Lee explained that many people missed the open enrollment deadline because they found it difficult to compare the two types of coverage. Lee said that Covered California is telling COBRA recipients, “Don’t try to do this alone.” They are encouraged to get help from navigators and agents, whom Covered California has been busy training to help with COBRA issues.

Don’t Expect Major Changes to Covered California Until 2016
Lee said that Covered California is not expecting to make major changes in 2015. “We will continue to make sure that networks are adequate and that networks are not shrunk or changed…We need product consistency so renewal can be as smooth as possible. We expect minimal changes to our contracts with plans.” Lee said that Covered California will revisit model contract issues for 2016. “We think that there will be significant issues, such as how to look at benefit design and consumer understanding of coinsurance and copayments as well as issues of contract terms.”

Networks to Expand
Lee said that carriers are greatly expanding their networks in Covered California. Blue Shield has expanded its network significantly over past 12 months. He said that 65% of doctors in the company’s global broad PPO network are now serving enrollees in Covered California as well as individual enrollees outside of Covered California. Health Net has expanded its doctor network by 58% since Jan. Brad Johnson of the California Medical Assn. said that, under Covered California, doctors are having problems finding specialists and specialty facilities for referrals. Julianne Broyles of California Health Underwriters said, “From our meetings with our members, over the past few days, the issue of network adequacy has certainly come up as one of their top concerns that they are hearing from their clients.”

Enrollment
Lee said that Covered California expecting to have the next open enrollment available from November 15 to February 15. “We will have three months to renew a million people and hopefully sign up 500,000 more. It is a lot of work,” he added. Sixty percent of the people who have enrolled agreed to let Covered California use their financial data to automatically check their eligibility.” Covered California expects to have 1.2 million enrollees who have paid their premium by May 2014, increasing to 1.7 million by April of 2015, and 2 million by April 2016.

California Grapples with the Prospect of Not Cancelling Policies

notcancelledPresident Obama announced that the administration will allow states to reverse health insurance cancellations that were set to go into effect December 31. Insurance Commissioner Dave Jones is asking California health insurers and HMOs to allow customers to renew non-grandfathered policies for 2014. Jones said, “The President’s action makes it crystal clear that health insurers and HMOs are not required by federal law to cancel existing policies. California has more than 1 million people with non-grandfathered policies facing cancellation; they should be given the opportunity to keep their existing coverage next year. I am calling on all health insurers in California to let their policyholders keep their existing coverage for an additional year if they want it.”

At a press conference in San Francisco, Jones said that health insurers in California had decided to cancel individual plans, but not group plans. They are allowing small businesses to renew their existing policies for another year although those policies don’t comply with the new 2014 requirement.

Commissioner Jones also called on Covered California to release health insurers from a contract provision that requires them to cancel plans for individual policyholders on December 31. Jones said, “Over my objections, Covered California required health insurers participating in the Exchange to cancel all non-grandfathered individual policies on December 31.” Recently Jones persuaded Anthem Blue Cross and Blue Shield to delay the December 31 policy cancellations for individual and family (non-grandfathered) policies.

The American Academy of Actuaries’ warns that allowing states to reverse health insurance cancellations could lead to higher average medical spending among those purchasing new coverage, additional program costs for the federal government, and higher health insurance premiums in 2015. Cori Uccello, the Academy’s senior health fellow says that changing the ACA provisions could alter the dynamics of the insurance market, creating two parallel markets operating under different rules.

He said that allowing consumers to retain cancelled plans could affect the composition of health insurance risk pools. In particular, if lower-cost individuals keep their coverage, and higher-cost individuals move to new coverage, the medical spending for those purchasing new coverage could be higher than expected. He added that premiums approved for 2014 may not cover the cost of providing benefits for an enrollee population that has higher claims than anticipated in the premium calculations. Insurers cannot increase premiums in future years to make up for prior losses. However, assumptions about the composition of the risk pool would reflect plan experience in 2014., DOI

A Look at Off-Exchange Health Plan Premiums

Given the technical difficulties affecting the federal health insurance exchanges, off-exchange health plans are attracting attention. Off-exchange plans are health plans that are purchased outside a state’s health exchange. Since these health plans are not sold on an exchange, lower-income enrollees cannot receive premium subsidies for them. For some well-known insurance companies, such as Aetna and United Healthcare, their individual and family health plans are only available outside the exchanges in several states.

When investigating off-exchange premiums, HealthPocket found that many insurance company web sites were not yet displaying their 2014 rates. For example, Humana has not released on its web site the off-exchange Bronze Plan rates for Milwaukee Wisconsin. The rates for Aetna are limited to 2013 plans in many states supported by the Aetna web site. United Healthcare also was not displaying 2014 off-exchange rates online for many states in which they sell insurance.

HealthPocket did uncover some 2014 off-exchange rates. In Atlanta, HealthPocket found that the lowest priced Bronze Plans for a 27 year-old nonsmoker were more expensive at Coventry ($180.26) and Aetna ($196) than for the lowest priced Bronze Plan available on Georgia’s exchange ($166). In South Dakota, the off-exchange Bronze Plans faired better with Wellmark BlueCross and Blue Shield at $171.60 for its least expensive entry for a 27 year-old nonsmoker compared to $196 for the lowest priced Bronze on the state exchange. However, the given the paucity of exchange rates, HealthPocket was unable to release a comprehensive analysis of on-exchange versus off-exchange premiums.

Kev Coleman, head of Research & Data at HealthPocket said, “For those insurance companies only offering off-exchange health insurance plans within a state, there is a need to make a compelling case to the public that their premiums are worth investigating. If off-exchange rates cannot be easily reviewed on an insurance company’s web site consumers may assume that the rates aren’t competitive.” For more information, visit www.HealthPocket.com.

More Networks Exclude Pricey Hospitals

Employers are increasingly willing to choose networks that exclude prestigious high-priced research institutions, according to a report by HealthLeaders-InterStudy. The state’s health insurance exchange, Covered California, will only intensify the trend toward narrow networks since most health plans have excluded these research institutions from their exchange networks.

Los Angeles is already is preparing for models that benefit large delivery networks. The City of Los Angeles’ decision to choose an Anthem Blue Cross HMO illustrates this trend. The arrangement excludes physicians from Cedars-Sinai Medical Center and UCLA Health System in order to eliminate referrals to those more expensive hospitals.

Jenny Kerr, market analyst at HealthLeaders-InterStudy said, “We expect pressure on the high-priced, academic hospitals in the market to reconsider pricing. Employers are sending a message that they are no longer willing to pay for hospitals that charge higher rates for routine services to cover costs of their teaching and research missions.”

The growth in accountable care organizations (ACOs) is another key driver in this trend. Los Angeles has 23 ACOs, which is the most in the state and the second most in the nation. Kerr said, “The rapid creation of ACOs, which are primarily physician-led in this market, means that physicians will be incentivized to prescribe the most effective medication rather than the least expensive to ensure quality outcomes.” For more information, visit www.hl-isy.com.

Last Updated 10/20/2021

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