In a final rule released late last week, the Department of Health and Human Services’ Office of Civil Rights declined to provide details on health insurance benefit designs it considers to be discriminatory. This is understandably disappointing to patients who have found many of the plans offered in the new health insurance marketplaces appear to be designed to discourage enrollment by individuals with certain health conditions.
The Affordable Care Act includes several provisions designed to protect patients from discriminatory benefit designs. The final rule released last week focused on just one of those provisions—Section 1557, which prohibits discrimination on the basis of race, color, national origin, sex, age or disability in certain health programs and activities. Other provisions of the Affordable Care Act prohibit discriminatory benefit designs in the newly created marketplaces and in the individual and small group markets more generally.1
Protecting patients from discriminatory benefits is particularly important when it comes to plan formularies. For many patients with chronic conditions, it is relatively easy to predict their prescription drug needs. This means plans may be able to discourage enrollment by certain higher cost individuals simply by not covering the medicines they need or placing them on a high formulary tier. Unfortunately, we have seen many marketplace plans placing all medicines for certain conditions on the specialty tier or on a tier with coinsurance above 40 percent. In some cases, this is even happening in classes where generics are available. This leaves patients with no lower cost alternative and goes against the very nature of insurance by punishing individuals who happen to need a particular class of medicine. A New England Journal of Medicine study found this type of benefit design translated into thousands more in out-of-pocket costs for HIV patients.2
CMS already stated this type of formulary may be discriminatory and it will be reviewing tier placement as part of its 2017 plan reviews, but it has not developed clear standards or tests to help prevent discriminatory plans from reaching the marketplace. States conduct many of these plan reviews themselves, with CMS making tools and guidance available. The presence of plans continuing to put all medicines to treat certain conditions on the highest cost sharing tier suggests additional federal standards and tools for states are needed. Even though HHS did not add clear standards related to plan benefit design in this new final rule, we hope that states and CMS will still take a close look at plan formularies to help ensure that plans meet the standards in the ACA.
We need to engage and empower consumers and remove potential discrimination in insurance benefit design. Learn more about this and other solutions here
1. ACA § 1302(b)(4); ACA § 1311(c)(1)(A).
2. Douglas B. Jacobs & Benjamin D. Sommers, Using Drugs to Discriminate: Adverse Selection in the Insurance Marketplace, 372 New Eng. J. Med. 399, 401 (2015), available at http://www.nejm.org/doi/pdf/10.1056/NEJMp1411376.