“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 Studies Medicare 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 2014An Analysis of Exchange Plan Benefits for Certain Medicines: June 2014
Additional Resources A Closer Look at Health Plan Coverage Policies and Approaches | Download the Full PDFDownload the Full PDF Visit FasterCures Value & Coverage Reports and Briefs Website as the Issue Brief series continuesValue & Coverage Reports and Briefs Website Learn more | FasterCures Value & Coverage ProgramFasterCures Value & Coverage Program