Tip Sheets

Angles, resources to consider when covering insurance discrimination

By Joseph Burns

Health insurers focus so closely on the cost of care that they sometimes face charges that they discriminate against members with chronic costly conditions.

Over the past year, patient advocates have complained to state and federal regulators that health insurers have failed to provide adequate insurance coverage to patients with cancer, HIV, mental health conditions and other illnesses.

For journalists covering insurance discrimination, the HIV cases offer important lessons about how insurers have used pharmacy benefit pricing strategies to shift the cost of medications to members. Health policy researchers and patient advocates contend that these pricing policies, including one called adverse tiering, are discriminatory.

This tip sheet explains issues and resources journalists will find valuable when covering pharmacy benefit discrimination cases.

Tim Fitzsimons of Marketplace recently reported that the federal Department of Health and Human Services was addressing complaints against insurers that their benefit programs are designed to drive away members with costly pre-existing conditions. The department has been attempting to ensure that insurers comply with regulations against discrimination under the Affordable Care Act, he added.

Also, the Florida Office of Insurance Regulation just warned insurers (pdf) that it would review their 2016 rate filings to insure qualified health plans did not use discriminatory pharmacy benefit plans. The AIDS Institute, a patient advocacy group that identified discriminatory benefit plans last year, welcomed the news.

In March, Wes Venteicher, a health care reporter for the Chicago Tribune, reported on efforts by health insurer Coventry, a division of Aetna, to reduce co-pays for most HIV treatments by $5 to $100 per month. Those costs had totaled more than $1,000 a month before members and patient-advocacy groups complained, he wrote.

The AIDS Foundation of Chicago warned health plans that charging patients higher co-pays for HIV drugs violated federal protections against discrimination. The foundation said Coventry and three other insurers – Aetna, Health Alliance, and Humana – had improperly put some drugs into high-cost tiers.

In a March 2104 letter (pdf) to the Illinois Department of Insurance, the foundation said the four insurers made HIV medications more expensive and possibly unaffordable for nearly all members with HIV by placing medications for this condition on the highest-cost tier. On this tier, members would pay co-insurance of as much as 50 percent of the retail cost of the drug, an amount the foundation estimated would be $1,126 monthly.

Coventry put HIV drugs on its two highest cost coverage tiers: Tier 4, which is for specialty preferred drugs, or Tier 5 for specialty non-preferred drugs, the foundation said.

After the complaints, Coventry reclassified HIV drugs as generic or non-preferred brands, Venteicher reported. (For another look at the pricing for generic drugs, see this recent AHCJ blog post, “Report says generic drugs are a wild west of pricing,” by my colleague Liz Seegert.)

Discriminatory co-pays, drug tiers targeted

Coventry was one of several insurers that advocacy groups and health care researchers said were discriminating against members with HIV/AIDS and other chronic conditions, such as cancer, hepatitis, mental health disorders and multiple sclerosis. The discrimination charges involve how the insurers set co-payments for medication tiers in their pharmacy benefit plans. As a result of the discrimination complaints, insurers Cigna, Humana and Preferred Medical have made changes to their plans in Florida to reduce what members pay for HIV drugs, and Aetna has changed the pharmacy formulary it uses nationwide to make HIV drugs more affordable for members.

The discrimination charges began in February 2014 when the AIDS Institute reported that its analysis of silver health plans on the federal exchange in Florida showed that half of the insurers were placing medications for HIV and hepatitis on the highest drug formulary tiers. In an analysis (pdf) of Florida's insurers' benefit plans this year, the institute said several insurers continue to use high-cost sharing to discriminate against their members with HIV.

In 2014 testimony before the Presidential Advisory Council on HIV/AIDS, Lindsey Dawson, then a public policy associate with the institute, testified that Aetna, Cigna, CoventryOne and Humana had placed drugs for these patients on tiers requiring high co-insurance payments. The testimony was based on the institute’s analysis of plan documents from qualified health plans in Florida.

Source: Avalere Analysis: Exchange Benefit Designs Increasingly Place All Medications for Some Conditions on Specialty Drug Tier, Avalere Health LLC, 2015. (Reprinted with permission.)

“This means that individuals could be faced with cost-sharing amounting to over $1,000 per month for some therapies, including single tablet regimen drugs which for some are the best clinical option,” Dawson testified. “Even with the out-of-pocket cap and cost-sharing protections in the law, this level of cost-sharing is unthinkable for many living with HIV.”

Since then, Dawson has joined the Kaiser Family Foundation as a senior policy analyst with KFF’s HIV policy team. In an interview last month, she told me, “We saw a trend to move HIV drugs into specialty and high-cost-sharing tiers.”

Research from a several HIV groups showed similar discriminatory benefit designs in many states and among many insurers, she added. The ACA prohibits discrimination based on health status and in benefit design.

In May 2014, the AIDS Institute and the National Health Law Program (NHeLP) filed a discrimination complaint with the Office of Civil Rights of the federal Department of Health and Human Services. In the complaint, the organizations alleged that four insurers on the federal exchange (at HealthCare.gov) in Florida–Cigna, CoventryOne, Humana and Preferred Medical–discriminated against their members with HIV by requiring high co-payments or co-insurance. Cigna, for example, had placed all HIV drugs, including generics, on a fifth tier and some plans required a 40 percent co-insurance payment (meaning a member had to pay 40 percent of the cost of the medication) after paying a deductible that could be as high as $2,750, the complaint said.

Source: Avalere Analysis: Exchange Benefit Designs Increasingly Place All Medications for Some Conditions on Specialty Drug Tier, Avalere Health LLC, 2015. (Reprinted with permission.)

Writing about the complaint in Modern Healthcare, Paul Demko reported that insured members with HIV in other states, including California, Georgia, North Carolina, and Texas, were paying high copays and coinsurance in health plans sold through the ACA’s exchanges. In addition, many patients with cancer and multiple sclerosis also had to make high coinsurance payments, he wrote.

‘Race to bottom’ trend under scrutiny

Wayne Turner, an attorney with the National Health Law Program, told Demko he worried that more insurers would require similarly high coinsurance for certain patients. “Our concern is that there’s going to be a race to the bottom,” he said.

This language is similar to what other experts have said about insurers’ alleged discrimination against high-cost patients. One of those experts is Gerry Oster, PhD, a health economist with Policy Analysis Inc., in Brookline, Mass. In an interview last fall, Oster told me, “In Massachusetts, we’ve seen insurers chasing each other to the bottom of the barrel in offloading drug costs to patients. Once one health plan in the marketplace is able to reduce its costs relative to its competitors — and increase market share — by making patients who take certain medications pay a lot more out-of-pocket for their therapy, other health plans effectively have no choice but to follow them.

“Couple this with higher deductibles that many people have before their insurance coverage even kicks in, and you end up in many instances dis-incentivizing patients from taking medications that we know help them manage their diseases better and keep them out of hospital,” he said. “That’s the scheme — and it’s insane, especially when you are trying to figure out ways to contain health care costs without compromising quality. This is penny-wise, pound-foolish benefit design if there ever was such a thing,” he said.

Oster was the co-author along with Mark Fendrick, M.D., of an editorial discussing the high cost of generic medications in the September 2014 issues of the American Journal of Managed Care. Fendrick is a practicing internist and director of the Center for Value-Based Insurance Design at the University of Michigan.

For their piece, “Is All ‘Skin in the Game’ Fair Game? The Problem With ‘Non-Preferred’ Generics,” Oster and Fendrick did extensive research into how six health plans were placing generic medications in high-cost tiers.

They explained that many insurers now have two tiers for generic medications; previously they had one generic tier for low-cost drugs. “Now, however, a number of insurers have split their all-generics tier into a bottom tier consisting of ‘preferred’ generics, and a second tier consisting of ‘non-preferred’ generics, paralleling the similar split that one typically finds with branded products,” they wrote. “Co-pays for generic drugs in the ‘non-preferred’ tier are characteristically much higher than those for drugs in the first tier.”

Many non-preferred generics are recommended as first-line treatment in evidence-based guidelines for hypertension, diabetes, epilepsy, schizophrenia, migraine headache, osteoporosis, Parkinson’s disease, and HIV, they added. As a treating physician, Fendrick wondered how an insurer could make it difficult for members to afford their medications when guidelines recommend these drugs for members.

In a piece for the Upshot blog in The New York Times, Charles Ornstein of ProPublica explained that while health insurers could not charge patients with pre-existing conditions more or refuse to cover them, some insurers may force members with such illnesses as Parkinson’s disease, diabetes and epilepsy to pay more for their drugs.

Use of ‘adverse tiering’ to discriminate

Other researchers who investigated how insurers use what they call adverse-tiering plans (ATPs), saying insurers do so discourage patients with HIV from enrolling. In January, Douglas B. Jacobs, and Benjamin D. Sommers, M.D., Ph.D., of the Harvard School of Public Health wrote an article in the New England Journal of Medicine about their research on ATPs. They investigated how insurers used pharmacy tiers in 12 states using the federal marketplaces.

For years, insurers have use tiered pharmacy plans to encourage members to select generic or preferred brand-name drugs, they explained. “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,” they wrote. “This effect suggests that the goal of this approach — which we call “adverse tiering” — is not to influence enrollees’ drug utilization but rather to deter certain people from enrolling in the first place,” they explained.

Note that Jacobs and Sommers confirmed what Oster found: that the copayments members with HIV paid was much higher than the copayment members pay in non ATP plans. In a recent Health Affairs blog post, Jacobs and co-author Robert Restuccia said the Obama Administration needs to be vigilant in its oversight of insurers to prevent discrimination.

David Heitz of Healthline News covered the Jacobs and Sommers research well, explaining that when insurers place all drugs for HIV patients on the highest cost-sharing tier, members do not have the option to choose generic or preferred brand-name drugs. He also provided a link to a report from the AIDS Foundation of Chicago, “The Cost of HIV Medications in the Illinois Health Insurance Marketplace” (pdf). The report gives examples of what a person with HIV would pay in all the various health insurance plans in Illinois.

Other resources that journalists covering this story may find useful include an analysis in February by consultants Avalere Health LLC showing that the percentage of silver plans placing all HIV drugs on the specialty tier increased in 2015 from 2014 and that not only do insurers put drugs for members with HIV on high-cost tiers, they also do so for patients with cancer and multiple sclerosis as well, Dawson said.

In February, the HHS issued rules that address benefit design, including the pharmacy benefit discrimination issue. In the Health Affairs blog, Timothy Jost, a law professor at Washington and Lee University School of Law, explained the rules thoroughly in three blog posts, saying health plan formularies must provide “appropriate access to drugs included in broadly accepted treatment guidelines and be consistent with best practice formularies in widespread use.” State regulators are primarily responsible for enforcing the rules, he added.

Joseph Burns (@jburns18), a Massachusetts-based independent journalist, is AHCJ’s topic leader on health insurance. He welcomes questions and suggestions on insurance resources and tip sheets at joseph@healthjournalism.org.