Criticism has mounted in recent weeks that some health plans allegedly dissuade those with pre-existing conditions from enrolling by placing all drugs for certain chronic conditions in their highest cost-sharing tiers—potentially undermining the intent of the ACA.
Arguably, health plans in the nongroup market have to make up costs somewhere now that they are unable to deny coverage or charge higher premiums to those with chronic conditions under the ACA. However, the issue is when/how strategically-designed drug formularies will be considered an acceptable way to do it—and how such formularies will impact the industry.
The Cigna story
As noted in a popular paper in the New England Journal of Medicine, a formal complaint was submitted to the Department of Health and Human Services in May 2014 contending that several Florida insurers providing plans through the federal exchange had placed all HIV medications, including generics, in their highest cost-sharing tier. Such "adverse tiering," the complaint argued, discourages those with HIV from enrolling or leaves them with prohibitively high costs that they may not have anticipated.
From an insurer's perspective, such tiering presents concerns of legality and public perception, given the increased scrutiny of the practice.
Cigna was among those Florida insurers targeted by the formal complaint, along with CoventryOne, Humana and Preferred Medical Plan—and it chose to be proactive in resolving the issue.
Cigna spokeswoman Karen Eldred shared some information with Healthcare Dive about changes made in response to the complaint:
"To address local market needs of public health insurance exchange customers, in November Cigna voluntarily agreed to the request of the Florida Office of Insurance Regulation to modify its formulary structure for generic versions of specialty drug medications," Eldred wrote in an email. "All generic drugs that were included in the Specialty Tier have been transferred to a lower tier in Cigna's Florida public exchange plans. Cigna also capped customers’ costs on Atripla, Complera, Stribild, and Fuzeon to $200 per month. Cigna also removed the 30-day supply limit per prescription for HIV drugs."
In November Eldred had told the media that the changes only applied in Florida for now, and that the company would be looking at "whether and how changes to the formulary structure might be appropriate in other states." Cigna has not released an update on that statement at this time.
At a competitive disadvantage
The second major issue presented by adverse tiering is that ultimately, it can be expected to result in sick customers clustering in plans with more generous prescription drug benefits, adversely impacting those plans and forcing them to adopt similarly-designed benefits.
As noted in a Health Affairs blog by Douglas Jacobs and Robert Restuccia, adverse tiering puts those insurers that have not engaged in the practice at a competitive disadvantage. "As a result, adverse tiering is increasing in popularity among insurers," they write. "Avalere Health, a research and consulting firm, conducted a separate analysis of silver plan formularies across eight states and found adverse tiering was more prevalent in 2015 compared to 2014 for conditions like Multiple Sclerosis, HIV, Hepatitis, and various cancers. The data shows that for some insurers, the 'race-to-the-bottom' has begun."
They say HHS has recently taken note with a regulation that categorizes adverse tiering as discrimination, and would force plans to stop or potentially be dropped from the marketplaces. However, the language of the regulation, they write, still allows insurers to justify adverse tiering when the drugs are "expensive," leaving the issue still somewhat in limbo.