Contributor: Chris Lewis
Topics: Covered California, Exchanges, Affordable Care Act
More than two weeks into open enrollment, shoppers in the Covered California insurance exchange lack access to two critical pieces of information to help them select a plan: a directory of in-network providers and the drug formularies.
Limiting provider networks is one of the only levers health plans can use to lower prices to attract customers. For instance, Health Net has some of the lowest premiums in Los Angeles, but its low-cost HMO CommunityCare health plan provides access to fewer than half the number of hospitals in the regular PPO network. That information was available for only a couple of days before Covered California yanked insurers’ provider directories off the site in order to work out bugs in the system. Media outlets highlighted the glitch, which may very well be corrected by the time you read this.
What few people are talking about, however, is the inability to call up preferred drug lists when previewing plans on the site. Repeated requests to Covered California officials for formulary information have yet to produce results. Some of the lists are still under regulatory review, such as the one by Anthem Blue Cross.
Granted, the formulary process is more complex with the Affordable Care Act. Plans must follow the state’s benchmark formulary—in California’s case, the Kaiser Permanente small-group HMO plan, which has a relatively narrow two-tier formulary. The ACA mandates that the formularies have at least as many drugs per category and class as the benchmark plan.
California insurers are limited in how they can control costs through the drug benefit. The state sets standard drug copays and coinsurance in the exchange by metal tier. Also, insurers in the state’s regulated insurance market must cover all medically necessary drugs.
Insurers are left with pharmacy controls such as narrow pharmacy networks, steering to mail order and tiering. Generally generics are on Tier 1 and specialty drugs are on tier 4 at a standard cost-sharing in the exchange, but coverage of branded primary care drugs depends on their preferred or non-preferred status. Customers should have ready access to tier information, since it affects their out-of-pocket costs and may impact the plan they choose.
Some of the major exchange players—including Anthem, Blue Shield of California and Health Net—have posted their exchange formularies on their websites. Unfortunately, they’re not easy to find, and the lack of standardization makes the lists difficult to compare.
Some of the published lists do not show all drugs covered. For instance, Blue Shield’s document states that only the most commonly prescribed ones are shown in its published formulary. Anthem Blue Cross’s published list is also not comprehensive and may change once finally approved by the state.
Blue Shield’s new standard formulary will be used not only for the exchange, but for the regulated individual and small-group markets as of 2014. A major difference between the formulary for the exchange and grandfathered plans is that most Tier 3 branded drugs are missing from the new list, including Crestor and Nexium. The new formulary document notes that non-preferred drugs are not listed on the formulary but covered at a higher copayment. Without Tier 3 displayed, it’s difficult to tell whether prior authorization or step therapy is required.
In contrast to the grandfathered formulary, the new Blue Shield list has fewer Tier 2 preferred brands in some key categories. The new list includes five drugs in the proton pump inhibitor class, down from 13 for the grandfathered plans. The only branded drug left is Dexilant, but it has moved from Tier 2 to Tier 3. Anthem Blue Cross’s preliminary list doesn’t have any of the major branded PPIs, instead covering the generic versions.
In the category of nasal steroid inhalers, Blue Shield’s new formulary is missing several branded drugs currently on Tier 2, including Advair, Asmanex, Flovent, Pulmicort and Symbicort—all of which are presumably non-preferred and covered under the Tier 3 copay. By contrast, Anthem prefers Advair Diskus, Dulera, Symbicort and Qvar.
In the anti-diabetic DPP-IV category, Januvia by Merck is on Tier 3 in Blue Shield’s new formulary, versus Tier 2 in the current formulary, still requiring step therapy. Anthem Blue Cross covers the generic versions of the anti-diabetic drugs.
Health Net’s Essential Rx Drug List for the exchange is not substantially different from its current formulary. The insurer leaves many branded drugs in their current tiering structure, opting to preserve the rebates it is getting from drug companies. Health Net, which uses CVS Caremark for pharmacy benefit management, notes the availability of many chronic-care drugs through mail order, which is one way it controls costs.
Drug coverage may fly under the radar for now, but as consumers start to use their health plans in 2014, some are in for a reality shock—and doctors and insurers will hear about it. Some people are going to be pleasantly surprised—such as those with new access to drug coverage or low-income residents who may see cost-sharing decrease. The bottom line is that drug takers are better off in most cases if they learn to love generics.
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