Out of Pocket Costs 

Patients depending on specialty medications to treat arthritis and/or other chronic health decisions are being burdened by surging copays and out of pocket costs. Let's review potential solutions.

The Issue

  • Pharmacy benefits have historically come with fixed copays for different tiers of medications. As an example, the copayments might be set at $10/$20/$50 for the three tiers. Some health insurance policies are now moving vital medications (mostly biologics) into a fourth or higher specialty tier. Specialty tiers require people with arthritis and other conditions to pay a percentage (co-insurance) of their drug cost—often 25 percent to 50 percent—rather than a fixed dollar amount.  
  • High cost-sharing is a barrier to medication access for people with chronic, disabling, and life-threatening conditions. Cost-sharing for prescription medications should not be so burdensome that it restricts or interferes with access to necessary medications, which can lead to negative health outcomes and additional costs to the health care system. 
  • Since many people with arthritis also suffer with chronic diseases such as diabetes or heart disease, their monthly expenditures can include several types of specialty medications.

The Solution

  • Cap the cost of a 30-day (one-month) supply of any single prescription medication and cap the total aggregate monthly out-of-pocket cost for all prescription medication.
  • Limit the total annual out-of-pocket expenditures for all prescription medications.  
  • Increase the number of co-pay only plans without more costly co-insurance requirements.  
  • Let patients spread out payments on their deductible to avoid facing the full cost of their deductible in the first months of their plan year.

Current Trends

  •  With respect to the health care exchanges, an Avalere analysis indicated that consumers selecting “silver” plans saw a significant increase in the amount of coinsurance for specialty drugs. In 2017, 84 percent of silver plans sold charged coinsurance, up from 74 percent in 2016. On average, coinsurance also increased from 34 percent in 2016 to 37 percent for silver plans in 2017.   
  • Co-insurance and specialty tiers are becoming more common in Medicare and employer sponsored plans. In 2015, all Medicare Part D plans used specialty tiers in their formularies for the first time. Currently, there is no out-of-pocket cap in Part D.  
  • In a 2016 Kaiser Family Foundation Employer Survey, 84 percent of employees worked at a company with three or more tiers of prescription drugs in their largest health plan. Further, 32 percent of those surveyed had plans of four tiers or more. The difference between tiers is often significant—with average copayments of $11 for first-tier drugs, $33 for second-tier drugs, $57 for third tier drugs and $102 for fourth-tier drugs. Coinsurance rates were no different—with average rates of 17 percent for first-tier drugs, 25 percent for second-tier drugs, 37 percent for third-tier drugs and 29 percent for fourth-tier drugs.  
  • In Congress, there are two bills that would cap out-of-pocket prescription drug costs: the Patients' Access to Treatments Act addresses out-of-pocket limits in commercial plans, and the RxCAP Act addresses out-of-pocket limits in Medicare Part D.   
  • To date, 6 (six) states have addressed out of-pocket limits through legislation.  


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