Consumers Face Obstacles in Understanding Prescription Coverage

Consumers Face Obstacles in Understanding Prescription Coverage
Consumers find it frustrating and time consuming to get information about their prescription drug benefits, according to a report by the California HealthCare Foundation (CHFC). CHFC surveyed consumers as well as agents and enrollment counselors. Publicly posted formularies are hard to navigate. They often feature arcane terminology, provide incomplete and inaccurate information, and are not available in languages other than English.

Many consumers don’t think of checking whether their medications are covered before selecting a health plan. But those who seek this information have a hard time finding it. Participants say that prescription benefit information is not prominent on plan websites or on the Covered California website. Many participants say that it took multiple clicks to locate a company’s formulary, if they were able to find it. Most were unable to find all the information they wanted, and resorted to calling each plan under consideration to check whether their drugs were covered and get details on their financial responsibility.

In general, consumers are not familiar with many of the terms used routinely in prescription benefit information, such as “formulary,” “prescription drug tier,” “co-insurance,” and “preferred drug” versus “non-preferred” drug. Consumers want materials that are written in more common, accessible language. The following are more key findings:

  • Consumers have little awareness of how to request medications that are not on a plan’s formulary.
  • When shopping for health insurance, drug benefits take a backseat. Consumers base their health plan choices on monthly premiums, physician access, and out-of-pocket costs, such as deductibles and copays for physician office visits.
  • Consumers have often assumed that their drugs would be covered so they didn’t double-check their availability or potential cost.
  • Neither agents nor counselors routinely help clients conduct drug benefit searches. Agents in the study say that it is too time-consuming to be profitable while counselors say they have limited familiarity with the process.
  • Study participants reviewed online formulary search tools. The Colorado Health Plan Finder tool is well-received among consumers and agents because it offers filters to refine plan options. Shoppers can view only plans that cover their drugs. It also displays the copays. Participants said that it allowed them to figure out what they would be spending monthly on prescriptions.
  • Information throughout the Covered California website was consolidated into a table to clarify relationships among prescription coverage and metal tier options. Agents say that having the information presented this way is useful when explaining drug costs to clients. Consumers are split on whether they could understand all elements of the table.

Respondents offered the following suggestions:

  •  Have an online tool with drug cost and coverage information, by plan. An interactive Internet formulary search tool would allow consumers to input drug names. Results would include details, such as cost and tier placement for each plan.
  •  Health plan websites should consolidate drug benefit information under a clearly labeled tab that’s easy to find with a minimum number of clicks.
  • A formulary should specify whether it is for individual or group plans or those included or excluded from Covered California.
  • Consumer education should address the differences among formulary designs. There should be particular attention to educating consumers on how to appeal medication denials and seek redress of other prescription drug coverage issues. Enrollment counselors want additional education on prescription benefits.
  • Use the term “prescription drug list” instead of “formulary.”
  • Drug categories should include understandable terms like “high blood pressure” instead of “hypertension.” Other suggestions are to standardize formulary terms and abbreviations to make comparisons less confusing.
  • Display copay information with tier placement, the cost of monthly prescriptions, the difference between branded drugs and generics, information on step therapy, the appeals process, and a list of pharmacies.

Preferred Pharmacy Plans at the Foundation of Medicare Part D

Eighty-one percent of seniors in 2015 Medicare Part D plans chose lower-cost preferred pharmacy plans. These plans offer convenient access and extra discounts at certain pharmacies, according to an analysis by Drug Channels. “Preferred pharmacy plans are now the foundation of Medicare Part D. Last year CMS defused a bipartisan uproar by withdrawing its proposal to overhaul Part D and promising Congress to end its pursuit of ‘controversial’ requirements that put preferred pharmacy plans and other benefits at risk,” said Pharmaceutical Care Management Association President and CEO Mark Merritt.

Through December 4, 2014, 15.4 million beneficiaries enrolled in preferred pharmacy Part D plans. A survey by Hart Research reveals that nine out of 10 seniors have convenient access to these discounted pharmacies in Part D. An actuarial study finds that preferred pharmacy plans would reduce federal Medicare Part D costs up to $9.3 billion during the next 10 years. Another actuarial study finds that eliminating preferred pharmacy plans in Part D would increase premiums by about $63 annually for over 75% of Part D enrollees and raise program costs by an estimated $24 billion over the next 10 years.

Most national Part D pharmacy networks include nearly all drugstores — almost 67,000 nationwide — giving beneficiaries access to more pharmacy locations than the combined number of McDonald’s, Burger Kings, Pizza Huts, Wendy’s, Taco Bells, Kentucky Fried Chickens, Domino’s Pizzas, and Dunkin’ Donuts across the country.

Preferred Pharmacy Networks Are Not Always Cheaper

Negotiated prices at preferred retail pharmacies are sometimes higher. In a recent study, CMS compared the negotiated prices at non-preferred retail pharmacies for Part D sponsors with both preferred and non-preferred networks. CMS looked at a one-month sample of negotiated pricing for the top 25 brands and 25 generics in the Part D program. Pricing at preferred retail pharmacies is lower than at non-preferred network pharmacies, but when mail and retail pharmacy costs are included, some sponsors’ preferred network pharmacies offer somewhat higher negotiated prices compared to their non-preferred network pharmacies.

In March 2012, only about 11% of the beneficiaries in standalone Part D plans were enrolled in contracts that CMS identified as having higher preferred than non-preferred prices. In its report CMS added, “From 2012 to 2013, the enrolled population in PDPs with a preferred network has doubled. Thus, we believe the impact of higher preferred network prices on the program, as a whole is likely to become increasingly significant. Since we believe higher negotiated prices in network pharmacies violate the intent of § §1860D-4 (b)(1)(B), we are considering options for clarifying our requirements in future rulemaking.”

Last Updated 10/20/2021

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