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Look to Benefit Design Trends of Exchange Market for Formulary Management
San Diego, CA—“Although the exchange market is still small, it is important for the managed care industry to be on the forefront of trends in formulary management,” said Caroline Pearson, vice president, health reform and policy, Avalere Health, Washington, DC.
Speaking at an AMCP session, Pearson emphasized the need for managed care professionals to know where the market is headed to be able to determine their own strategy for formulary design both inside and outside of the health care exchange market.
Since many of the insurance companies participating in the exchange market are the national and local plans that offer employer coverage, recognizing and understanding the benefit design trends of the new exchange market is important. “We expect the benefit design trends we see in the exchanges to spill over into the employer-sponsored insurance market that currently covers the majority of Americans,” she said.
During the session, Ms Pearson and Lisa Murphy, MPP, director, Avalere Health, provided a snapshot of enrollment in the exchanges to date, followed by a presentation on research done by Avalere Health to determine how coverage in the exchanges differs from employer-sponsored insurance and Medicare Part D coverage plans.
Health Care Exchanges
As of March, nearly 11.7 million people have enrolled in a health care exchange plan. Most of the enrollees qualify for subsidies—either through cost-sharing reductions and premium subsidies combined or premium subsidies alone—and low premium plans are the most popular. The plans, to date, have had limited progress of achieving targeted goals of enrolling young people and more Latinos. Whites comprise most of the enrollees (66%) and young adults18 to 25 years of age and those 26 to 34 years of age comprise only 11% and 17% of enrollees, respectively. In terms of carriers, participation has increased in 2015 with 33 new states and Washington, DC, offering exchanges.
These exchanges, said Ms Pearson, are focused on keeping premium costs affordable. “This means that plans have focused on narrowing provider networks, restricting drug access, and structuring cost-sharing to reduce overall costs,” she said.
Avalere Research Data
To determine how coverage in the exchanges differs from coverage in employer-plans and Medicare Part D, Avalere analyzed data from 8 states with high exchange enrollment in 2014.
Included in the analysis was a review of 20 formulary classes, including agents to treat HIV/AIDs, hepatitis, asthma/ chronic obstructive pulmonary disease, diabetes, mental health, multiple sclerosis, oncology, and rheumatoid arthritis.
The analysis found that health plans in the exchanges differed, sometimes significantly, from plans in the employer market. For example, the analysis found that utilization management rates in the exchanges studied were triple those of employer plans. For single-source drugs in select therapeutic areas, utilization management rates were 36% for exchange plans, 12% for employer plans, and 27% for Medicare Part D coverage.
The analysis also found that employer plans tended to cover more specialty drugs compared to exchange plans. For example, the average number of drugs prescribed for patients with HIV/AIDS was 40 in the exchanges compared to 44 in employer plans and 38 in Medicare Part D coverage. For oncology, the average number of drugs was 69, 87, and 62, respectively.
All plans, she said, are increasingly creating multiple specialty tiers with one-third of plans having ≥5 tiers. In addition, in some specialty drug classes all the drugs are placed on a specialty tier.
The analysis also looked at how coverage through the exchanges changed from 2014 to 2015. Although exchange plans did not narrow their formulary breadth in 2015, according to Ms Pearson, “they dramatically increased rates of utiliza- tion management for drugs.” This was particularly true for patients with HIV/ AIDS in whom utilization management significantly increased in 2015.
In addition, the analysis showed that exchange plans have increased cost- sharing for specialty products in 2015 with specialty co-insurance often >30% for single-source drugs for HIV/AIDS, hepatitis, oncology, and multiple sclerosis.
In stark contrast to this, she said, are the trends for the employer market where utilization management is still limited and specialty tiers remain rare.
Ms Pearson said the aim now will be to find the right balance between managing costs and utilization management and promoting access. She expects to see exchange plans ramp up formulary management. This may include formulary exclusions, utilization management, separation of preferred and nonpreferred tiers, increased specialty drug cost-sharing, and drug-specific deductibles.—Mary Beth Nierengarten
