Report: Specialty Drug Costs May be Misleading on Healthcare Exchange Plans

According to a report from Avalere Health, consumers purchasing health insurance on the exchange are having a tough time determining out-of-pocket costs for specialty medications due to new benefit designs and a lack of clear information provided.

Among silver plans sold on exchanges, 17% use multiple specialty tiers in their 2015 formularies. Those plans typically designate generic, preferred, or nonpreferred specialty tiers. On the exchange, enrollees have the option to choose a bronze, silver, gold, or platinum plan, which differ in the percentage the plan pays of overall healthcare costs.

“Consumers purchasing these plans need to understand what is in their benefit plan and be ready for a substantial out-of-pocket costs if specialty products are needed,” said Dan Mendelson, CEO, Avalere. “While these plans are typical of the exchanges and Medicare Part D where insurers are competing to keep premiums low, they remain rare in the employer market.”

Avalere conducted a manual search of plan documents for silver plans because of inaccuracies noted on HealthCare.gov and in associated data sets. They found that HealthCare.gov reports formulary cost-sharing for all plans in a 4-tier structure, including only 1 specialty tier; however, about 35% of silver plans do not use 4-tier formularies. Because of this discrepancy, consumer costs appearing on HealthCare.gov may misstate actual enrollee financial responsibility. 

“The mismatch between a plan’s formulary design and the cost-sharing displayed on HealthCare.gov and on state exchange Web sites may be a source of confusion for consumers,” said Caroline Pearson, vice president, Avalere.

This analysis was conducted using Avalere PlanScape^®, a proprietary analysis of exchange plan features. Data included the federally-facilitated marketplace landscape file, as well as plan documents for all silver plans. Avalere did not include health plans in which there was no cost-sharing across service categories or that had deductibles that were equal to the out-of-pocket maximum. Silver plan selection data applies only to federally-facilitated marketplace states through December 15, 2014.

To download the complete report from Avalere Health, click here.—Kerri Fitzgerald