Value & Coverage Issue Brief Slides

A Closer Look at Health Plan Coverage

Policies and Approaches

Health Plan Coverage Policies and Approaches

“Medically Necessary”

Medical necessity is the basis for most coverage policy in the United States but there is no single, consensus--based, definition of medical necessity.

Transparency of Coverage Decisions

There is little public information available about how health plans and government programs develop coverage policies.

Coverage Policy Processes

In addition to clinical evidence, insurers report using other inputs to make their coverage decision.

Validation StudiesMedicare Coverage Decisions

Specialty Society Recommendations

Coverage Decision

Considerations and Influences

Pharmacy Coverage Decisions

Drug Manufacturer

Third-Party Studies

Burden of Illness

Existing Treatment Options

Coverage Decision

Pharmacy & Therapeutics Committees’ Considerations

Information Sources/Considerations

Pharmacy Benefit Managers (PBMs)

• PBMs contract with payers, with their own recommended formulary

• Design co-pays to drive utilization towards lower cost drugs

• PBMs contract with pharmacies to establish drug reimbursement and professional fee levels

Source: CVS Caremark 2014 Insights

Specialty Drugs: Major Concern for Payers

Specialty drugs are high-cost drugs used to treat complex or rare conditions, such as multiple sclerosis, rheumatoid arthritis, hepatitis C, and hemophilia.

Affordable Care Act Impact

• Charge premiums related to one’s health, and/or

• Avoid unhealthy people altogether, and/or • Limit services covered to discourage

enrollment of individuals who might need those services

Old business model:

• Limits premium rates for older individuals,• Requires people to be insured, • Prohibit insurers from turning people away, • Outline of services that must be covered with

• limits on consumer out- of-pocket costs, and• services that must be offered free of cost

ACA reorganized marketplace:

Utilization Management Tools

Prior Authorization• Health plan pre- approval of a health care item or service

Step Therapy• Requires the utilization of less costly, less invasive treatment alternatives

Linked Services• Coverage of one service contingent on utilization of another service

• Tools: case management, disease management, health education, or comprehensive care plan

Provider Networks

Exclusive provider networks• Plans contract with limited number of providers, charge 100% patient

copays to “out-of-network” providers

• Plans may be limiting patient choices in providers

• “Network adequacy” is now being closely monitored by federal oversight

Benefit Design

Cost Sharing• Instead of raising premiums, plans increase copays and coinsurance

• “yes but” coverage

Tiered Benefit• Out-of-pocket costs increase based on “tier” of drug

• Drive patients to certain treatments over others

ACA Exchange Plan Benefits

Source: PhRMA: An Analysis of Exchange Plan Benefits for Certain Medicines: June 2014

AdditionalResources

• A Closer Look at Health Plan Coverage Policies and Approaches | Download the Full PDF

• Visit FasterCures Value & Coverage Reports and Briefs Website as the Issue Brief series continues

• Learn more | FasterCures Value & Coverage Program