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AIS's Health Business Daily
Featured Story June 23, 2009 Part D, FEHBP or Massachusetts Connector Could Be Reform Model for Prescription Drug Coverage Reprinted from DRUG BENEFIT NEWS, biweekly news, data and business strategies for health plans, PBMs and pharmaceutical companies. By Jill Brown, Managing Editor, (jbrown@aispub.com) Leading health reform proposals in Congress are calling for prescription drug coverage to be included as a standard benefit in health plans offered by private insurers, as well as in a competing public-plan option. But what form might such drug benefits take? Experts point to three possible models: Medicare Part D, the Commonwealth Choice option sold via the Massachusetts Connector, or the Federal Employees Health Benefits Program (FEHBP). "There's absolutely no question that pharmacy [benefits] would have to be a part of it," says Joseph Paduda, principal of Madison, Conn.-based health care consulting firm Health Strategy Associates. "The initial step, a very big first step, was Medicare Part D." He says Part D, FEHBP or the standardized benefit package required in Massachusetts could be used as a model. "It almost certainly would include pharmacy benefits," agrees Bonnie Washington, a vice president at Washington, D.C.-based consulting firm Avalere Health LLC. But, she adds, the bill "would probably specify broad categories of services [for coverage], and then leave it up to someone else to decide the details" via regulatory action. The Senate Finance Committee's health reform policy options paper, issued last month, proposed that all health plans operating in the non-group and small-group markets be required to provide prescription drug coverage as part of their benefit designs. Health plans would be required to offer four different coverage options with actuarial values of 76% to 93% (defined as the percentage of health care expenses paid by the plan), according to the proposal of the committee, which is chaired by Sen. Max Baucus (D-Mont.). That proposal also borrows some aspects of the Medicare Part D benefit. For example, drug coverage would have to meet the pharmaceutical class-and-category coverage requirements in Medicare Part D. Some aspects of the Medicare Part D benefit design are quite controversial, Washington says. They include the six protected classes, such as antipsychotics and antidepressants, in which Part D plans must cover all or substantially all available medications. "Policymakers will also try to avoid the 'doughnut hole' [coverage gap in Part D]," she predicts. FEHBP is used as a model for coverage expansion in the Affordable Health Choices Act, circulated June 9 by the Senate Health, Education, Labor and Pensions Committee, which is chaired by Sen. Edward Kennedy (D-Mass.). Prescription drug coverage is one of the essential health care benefits that must be included in health plans for them to meet minimum qualifying coverage standards. But the bill did not outline a specific actuarial value or benefit level, instead leaving that task to a Medical Advisory Council. Here's a look at the prescription drug coverage included in the three possible models: (1) The Commonwealth Health Insurance Connector Authority: The Connector oversees implementation of the groundbreaking 2006 health reform law, which required most Massachusetts residents to have health insurance by July 2007. The regulations set forth minimum requirements for health plans offered through the Connector Authority, as well as plans offered by employers. Connector Has Few Rx Rules Although the Connector has outlined specific coverage requirements for medical benefits, "the current prescription drug standards on plans offered through the Connector are solely that the prescription drug benefit meet the MCC [i.e., Minimum Creditable Coverage] requirements," explains spokesperson Dick Powers. Unless the product is targeted specifically to young adults, health plans must provide prescription drug coverage. And "if the plan has a separate prescription drug deductible,…that separate deductible is no more than $250 for an individual policy and $500 for a family policy. For the current plans on the Connector shelf, we have not been more prescriptive than [that]," Powers says. Failure to offer prescription drug coverage is a common reason for finding that a product does not meet MCC requirements. In fact, the Connector says, in some cases it disallows benefit designs that place a cap of, say, $5,000 to $25,000 on drug coverage, even though the benefit design may have a higher overall actuarial value than some products that are deemed MCC-compliant. (2) FEHBP: Although there are 260 benefit-design options for federal workers, the Blue Cross and Blue Shield Association's Federal Employee Program (FEP) is the most popular, covering about 60% of the nation's 8 million federal employees, dependents and retirees. FEP's "Standard Option" members may fill prescriptions at any retail pharmacy, "preferred" Internet pharmacies and through the FEP mail-service program. Incentives are in place to encourage use of preferred retail and Internet pharmacies and mail service. At preferred retail pharmacies, Standard Option members pay 20% of the plan allowance for Level I generic drugs, and 30% of the plan allowance for Level II formulary or preferred brand-name drugs and Level III nonformulary or nonpreferred brand-name drugs. At nonpreferred retail pharmacies, members pay the full cost of the drug, and then file a claim to be reimbursed 55% of the plan allowance. Using the mail service, Standard Option members have a $10 Level I copayment, which is waived for the first four generic prescriptions filled per calendar year. There is a $65 copay for the first 30 brand-name prescriptions filled, after which the copay drops to $50. "Basic Option" members are required to use preferred retail or Internet pharmacies. There is no mail service available. These enrollees have a $10 copay for Level I, a $35 copay for Level II and pay 50% of the plan allowance (a $45 minimum) for Level III. (3) Medicare Part D: Legislators can draw on three years' experience with administering pharmacy benefits at the federal level via the Part D program. And although the highly regulated federal benefit has been the subject of intensive criticism — particularly for the confusing "doughnut hole" coverage gap — the program has an established formulary and management structure. Paduda
predicts that a federally mandated standard benefit design "will
not mirror the original Part D, but I think a lot of the lessons learned…from
administering Part D will be part and parcel" of the design. |
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