Rx sticker shock
Cost is often a mystery until picking up your prescription
As a pharmacist, Kandida Madery often encounters a malady related to the health care system itself: sticker shock.
Customers pick up prescriptions and get surprised by the price tag, either because they didn’t know their share of the cost (known as a copay) or that their insurance doesn’t cover the particular drug prescribed by their physician.
This occurs frequently at the start of the year, when plans change and deductibles reset, but Madery says confusion is commonplace all year long.
“When there was a wide umbrella of things that were commonly covered, it didn’t happen so much that they met a roadblock,” she said. Madery is the outpatient pharmacy manager at Feather River Hospital in Paradise. “I think a lot of the problem is they’re unaware that their insurance plan does have a formulary.”
That’s the key word: formulary. The term refers to a list of pharmaceuticals approved by an insurer that also delineates the cost to subscribers. Insurers categorize drugs in “tiers” with corresponding copays.
Clare Krusing, director of communications for America’s Health Insurance Plans (an industry trade association), said that formularies “encourage the use of safe, effective and affordable medication. The decision to include any particular drug on a formulary is made by a committee composed of physicians, pharmacists and other experts; this committee … is constantly reviewing scientific literature and information, and this provides the foundation for evaluating the benefits and particular outcomes of drugs for patients.”
For the classification of drugs, she said, “lower-cost tiers typically are generic medications…. As you get into higher tiers, there will be changes in the cost-sharing structure—and as consumers, broadly speaking, looking at the prices of those drugs and prescription medication, it’s important to note that benefits like formularies are designed to broaden access, but benefit design alone can’t address the underlying cost.”
The cost—actual cost, what manufacturers charge and how that translates into pharmacy prices—is the result of a complicated interplay. Krusing said insurers not only negotiate reimbursement rates with pharmacies but also negotiate prices with drug-makers.
In the process, insurers may designate a “preferred actual manufacturer” and put its medication on a lower-cost tier than the same drug from another company. Generally, Madery said, tiers reflect the price the pharmacy pays; in other words, the more expensive the drug, the higher the copay. Yet, because of what she called “little quirky things” in the system, common wisdom doesn’t always hold. For instance, not every generic has the lowest copay and every brand name the highest.
Patients who aren’t surprised by price may be surprised by a delay. Formularies designate certain medications as requiring “prior authorization”—meaning the physician must request approval to prescribe from the insurer before the insurer will reimburse the pharmacy.
“There’ve been more instances than we can count of patients having tests that they don’t need or having to get treatments that aren’t necessary for treating their condition,” Krusing explained. “Plans want to avoid that—it’s costly for the consumer; it’s costly for the health system.”
Not surprisingly, prior authorizations aren’t the favorite part of a physician’s day. Doctors, particularly in primary care, already have their hands full with formularies and other variations from the multitude of insurance policies.
“Most people have no idea what they cover,” said Dr. Brad Smith, owner of Chico Immediate Care. “The patient sure doesn’t, and most primary-care guys don’t have the time to pick up a formulary and read through it for 400 different insurance plans.
“They’re not always making the best decision. What they’re doing is trying to guess at what’s covered, not what they think is best for the patient.”
Smith recently installed a new electronic health records system in his clinic that enables him to access the formulary for each patient, but it still won’t tell him what tier a drug falls into, so he gets calls from harried pharmacists and frustrated patients.
Smith, who in his 30-year career has spoken for major pharmaceutical companies and also worked on developing a health plan, deems formularies “an abject attempt to control cost by insurance companies by controlling what doctors prescribe.”
He understands the motivation to control cost: “In a way, there’s nothing wrong with that, if the generic is just as good. It’s where the generic isn’t going to do as good as something else you want, and you can’t get the other drug—that’s when it comes up a problem.”
Insurers aren’t the ultimate authorities, however; they are subject to regulations, both for medications provided and for medications they decline to provide.
According to Rodger Butler from the California Department of Managed Healthcare, “all plans must have procedures in place that allow an enrollee access to medically necessary drugs not covered on the plan’s formulary if their condition warrants the use of such drugs. If a health plan denies access to a nonformulary drug on the basis that it is not medically necessary, the enrollee has the right to an independent medical review.”
Patients can get a review through the DMHC Help Center: (www.HealthHelp.ca.gov or 888-466-2219).
Hopefully, before reaching that point, patients will get to know their formulary.
Madery suggests checking an insurance card for a phone number or website, then getting a copy. Look it over. Bring it to the doctor’s office and pharmacy.
In any case, don’t hesitate to consult your pharmacist, especially in the event of sticker shock.
“Speak up,” Madery said. “We always welcome questions.”