Fair Copay VA supports HB 702 and SB 442, legislation to prevent insurers from discriminating against patients by moving all treatments for a disease to the highest cost-sharing tier – a practice known as “adverse tiering.”
Health insurance plans include a complicated mix of patient cost sharing or “out-of-pocket” costs. Annual maximum out-of-pocket caps include deductibles, co-pays (usually a flat amount), and co-insurance (usually a percentage of total cost). Under ACA, annual maximum out-of-pocket cap limits began in 2015.
Health insurance plans typically cover drugs in one or more “tiers” within a formulary. The co-pay or co-insurance required differs from tier to tier.
♦ Tier 1: Generic (Lowest co-pay) ♦ Tier 2: Preferred Brand
♦ Tier 3: Non‐Preferred Brand ♦ Tier 4: Specialty Drugs (Co-insurance %)
Insurers in Virginia are currently free to move all drugs that treat certain conditions to the top pricing tier of their formularies. This means that some Virginia families must pay a high percentage of the total cost of medication, rather than manageable and fixed copayment, for all available treatment choices – even those that were once lower-cost options. This common practice, which is known as “adverse tiering,” can result in hundreds or even thousands of dollars per month in additional out-of-pocket costs for even a single medication.
Adverse tiering discriminates against entire patient populations who have paid their insurance premiums, yet find ALL treatment choices for their conditions now out of reach. Although any Virginian could be subject to unreasonably high out-of-pocket costs, those most likely to be faced with adverse tiering are living with life-threatening or chronic conditions, such as cancer, hemophilia, hepatitis C, multiple sclerosis, and HIV/AIDS.
The ACA Doesn’t Fix the Issue:
Despite the protections in the ACA, consumers are still exposed to significant cost-sharing. While the ACA establishes a maximum annual limit on out-of-pocket spending, spending for individual services and drugs is not capped. This means that at the point of sale or service consumers can be faced with substantial out-of-pocket expenses in the form of deductibles, co-pays, and co-insurance. Additionally, not all utilization applies towards the annual out-of-pocket maximum. Out-of-network providers, services and drugs that are not covered, and non-essential health benefit services do not need to count towards the annual out-of-pocket maximum.
Multiple other states have taken action: Texas, Louisiana, Maryland, Delaware, New York, Arizona, Maine, Oklahoma, New Mexico, Vermont, and California.
Impact on Individuals Living with Chronic Illness:
Although any Virginian might be affected by co-insurance, those patients most affected will likely include Virginians living with chronic illnesses such as rheumatoid arthritis, hemophilia, multiple sclerosis and those with life-threatening conditions such as HIV, breast cancer, colorectal cancer and leukemia.
Many of these patients must take multiple medications to improve the quality and duration of their lives. Drugs for these conditions are typically new, produced in lesser quantities than other drugs, and not available as less expensive generic prescription drugs, so patients often have no choice but to take the brand name medication prescribed to them.
The high cost of medication of these medications may be difficult for a family to absorb, often leaving no option but to cut back on a drug’s use or stop taking it altogether.
Non-adherence to medication regimens not only have a direct impact on health and disease progression - it contributes direct annual costs of $100 billion to the US health care system. Indirect costs exceed $1.5 billion annually in lost patient earnings and $50 billion in lost productivity.
The interest of constituents should come before insurer profits. Support legislation to ensure that Virginians have access to the medication they need.
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 Goldman D.P., et al. (2004). Pharmacy benefits and the use of drugs by the chronically ill. JAMA., 291(19): 2344-2350