Choosing the right health insurance plan is a difficult task, even for the pros.[i] It can be even more difficult when you or a loved one has a rare or chronic condition requiring ongoing medication. In this blog, I’d like to focus on a specific class of medications called specialty drugs. Coverage for specialty drugs is a hot topic lately – the academic research journal Health Affairs recently devoted an entire issue to studying the coverage of these drugs.[ii]
What are specialty drugs?
Specialty drugs are certain medications that are prescribed for people with complex, chronic, or rare conditions like cancer, multiple sclerosis, HIV/AIDS, and rheumatoid arthritis, among others. Because of their complex nature, they typically require special delivery, preparation, handling, storage, distribution and patient education. They also tend to be very high cost. The table below shows the average annual cost for 3 different specialty drugs used to treat 3 different conditions.[iii]
If you or someone you love takes a specialty medication, you should take into special consideration the way different components of each health insurance plan might cover specialty drugs as you choose your coverage for 2015. Let’s walk through these components one by one.
Medical or Drug Benefits?
You might not realize it, but 50% of specialty drugs actually run through medical benefits, not drug benefits.[iv] If a healthcare professional administers your specialty medication either in a clinic or in your home, your specialty drug likely runs through your medical benefits. However, if you administer your own medication, it likely runs through your drug benefit. Before you go any further, it is important that you know the answer to this question.
Your deductible is how much money you have to pay out-of-pocket before your insurance kicks in. If your specialty drug runs through your medical benefit, you will want to pay attention to the health insurance deductible or the combined deductible (if your plan combines medical and drug expenses into a single deductible). If your specialty medication runs through your drug benefit, you will want to pay attention to the drug deductible or the combined deductible.
Compare your deductible level to the total cost of your specialty medication. If your deductible is high, you could end up paying for one or more months of medication completely out-of-pocket before your insurance kicks in. Let’s look at an example.
In this example, the consumer is on a specialty medication that costs $2,000 per month. If her deductible is $2,000, she will have to pay for the entire cost of her first month’s prescription in order to hit her deductible.
Prescription Benefit Tiers
You have hit your deductible, and your insurance has kicked in, now what?
If your specialty drug runs through your drug benefit, it is important to know which prescription tier your medication is in. Most insurance plans have some sort of tier structure for their drug benefits, and as specialty medications have become more widely used, insurance companies have responded by creating a Specialty Drug or Injectable tier in their drug formularies, which is a list of the specialty prescriptions they will cover.[v] Be sure to check your plan’s drug formulary to determine which tier your specialty drug falls into. In general, the higher a prescription is in a drug tier structure, the more consumers pay out-of-pocket. v
Copays and Coinsurance
After you have hit your deductible, the copay or coinsurance for your specialty medication kicks in. Continuing on with our same example, after this consumer hit her $2,000 drug deductible, her drug benefits kicked in, and she was responsible for her $150 specialty medication copays each time she filled her monthly specialty prescription.
As you evaluate health insurance plans, make sure you can still afford to pay your copay or coinsurance. The more unaffordable a drug is, the less likely you are to take it as often as you should. In fact, eight states have put limits on how much a specialty drug can cost the consumer out-of-pocket (California, Delaware, Hawaii, Illinois, Louisiana, Maryland, Mississippi, New York).v
Because of the high cost associated with specialty drugs, knowing the out-of-pocket maximum on your plan is important. This is your safe-guard to limit the amount you will have to pay in a year. In our example, the consumer hit her out-of-pocket maximum in August, which means she does not pay any additional copays for her specialty medication for the rest of the year.
Other Things to Consider
Remember our discussion about the high cost and high degree of complexity of specialty drugs? Because of this, insurance plans might also include other conditions like those listed below. It is important to be aware of these conditions and allow extra time to fill your prescription, especially the first time on a new plan. Work closely with your doctor and your pharmacy to make sure you have the right paperwork to submit to your insurance company.
- Prior authorization – Your health plan may require your doctor or pharmacy to file prior authorization paperwork before they will allow your specialty medication to run through your insurance plan.
- Step therapy – Your health plan may require you to show that a lower-tier medication has not worked for you before they will allow your specialty medication to run through your insurance plan.
- Specialty pharmacy – Because of the complex handling and storage associated with specialty medications, many insurance plans require that consumers use a specific pharmacy to fill their specialty prescriptions. You may not be able to use your usual pharmacy for your specialty medication.
- Utilization management – Because of the high cost associated with specialty medications, insurance companies want to minimize the amount of these drugs that goes to waste. To do this, they might limit the number of months of the prescription that you can pick up at any one time. They may also limit how quickly you can refill your specialty medication.
There is a lot to think about when choosing the right health plan, particularly when you want to maximize your coverage for complex services like specialty medications. Arming yourself with information is the best way to choose the right plan.