For many patients, the new year arrives with the unwelcome news that vital medications are no longer covered by their insurance. Some companies already have announced that certain drugs will be excluded from insurance coverage starting in 2017.
Allowing insurance companies to limit the drugs they cover is necessary to give them leverage that can result in lower medication costs for all patients. Still, there are some things that could be done to make the process more transparent, and perhaps more manageable, for patients suddenly facing higher out-of-pocket costs or an unexpected switch to an alternative covered medication.
The ability to drop drugs from the formulary is an important part of insurance companies' negotiation with pharmaceutical companies. If insurers have the option to exclude certain drugs from the formulary, pharmaceutical companies may be more likely to offer lower prices for the medication. In turn, insurers can pass these savings on to enrollees in the form of lower premiums. If insurers were required to maintain the same formulary over time, pharmaceutical manufacturers could simply raise prices at will and insurers would lack leverage to stop them.
Some patients may find themselves being forced to switch to an alternative medication with little warning.
Both Medicare Part D and the Affordable Care Act marketplaces require insurers to cover at least a certain number of drugs in a given class, meaning that patients will always have at least one covered medication to treat a particular condition. But some patients have worked with their physicians to select the best treatment for their unique case and condition, and may have been stabilized on it for a significant period of time. If this medication is no longer covered by their insurance, some patients may find themselves being forced to switch to an alternative medication with little warning. This could mean that in order to be covered by their insurance, patients might be forced to use drugs they have already tried and found to be less effective or that come with unwanted side effects.
Since the ability to negotiate for lower prices is an important tool for insurers to help keep costs down, the question of how to smooth the change for these patients becomes critical. While all insurers are required to send documentation of formulary changes once a year to enrollees, these lists are often difficult for patients to understand, requiring them to sift through page after page of changes to coverage to find out if their specific drug is affected.
A few alternative approaches might help patients better understand what changes are coming, to help them negotiate the transition and prepare for a potentially significant increase in out-of-pocket costs.
One option is for insurers to include inserts tailored to specific patients who take affected drugs when sending general notices regarding formulary changes to all enrollees. These tailored notices would include information specific to that drug, the upcoming changes, and easy-to-understand information regarding how the patient can initiate a conversation about alternatives with his or her physician. This also could inform patients about appeal options that might allow them to continue receiving the medication at the old cost-sharing level.
Another option is to take advantage of insurers' medication therapy management programs, which help patients manage their medications via a variety of tools and outreach. Insurers could leverage these programs to reach out to patients who will be affected by the changes and to work with patients and physicians to make any necessary changes to their medications.
Finally, insurers could provide a grace period of one or two months, during which existing coverage would be maintained. This would give patients and their doctors time to make any necessary adjustments to avoid health impacts or financial stress.
With health care costs skyrocketing, it's hard to imagine discarding cost-saving opportunities such as formulary management. But insurers can offer tools and guidance to help patients navigate these new paths to care with as little anxiety as possible.
Erin A. Taylor is a policy researcher at the nonprofit, nonpartisan RAND Corporation.
This commentary originally appeared on The Hill on October 28, 2016. Commentary gives RAND researchers a platform to convey insights based on their professional expertise and often on their peer-reviewed research and analysis.