Mod­ern med­i­cines have result­ed in longer, more pro­duc­tive lives for many of us. Pre­scrip­tion drugs soothe sore mus­cles after a stren­u­ous work­out or man­age the con­di­tions of a chron­ic dis­ease. Unfor­tu­nate­ly, this use of pre­scrip­tions drugs can come with a hefty price tag.

Amer­i­cans are spend­ing more mon­ey on pre­scrip­tion drugs than ever before and the Unit­ed States as a nation spends more per capi­ta on pre­scrip­tion drugs than any oth­er coun­try. With the cost of some drugs exceed­ing thou­sands of dol­lars for a 30-day sup­ply, this can trans­late into finan­cial hard­ship for many Americans.

For employ­ers spon­sor­ing a med­ical plan, man­ag­ing the cost of these pre­scrip­tion drugs is also becom­ing a task. Insur­ance com­pa­nies and employ­ers strug­gle with the abil­i­ty to pro­vide afford­able med­ical plans, and the ever-increas­ing pre­scrip­tion drug costs are a pri­ma­ry dri­ver of this dif­fi­cul­ty. As a result, pre­scrip­tion drug plan designs are chang­ing shape – mov­ing to a mod­el that helps push more of the cost of these drugs to the mem­ber along with increas­ing aware­ness of the true cost of the prescriptions.

Flat dol­lar copay plans have become an expect­ed norm in med­ical plans for almost a decade. How­ev­er, insur­ance com­pa­nies under­writ­ing ful­ly insured med­ical plans and employ­ers spon­sor­ing self-fund­ed med­ical pro­grams now need to make mod­i­fi­ca­tions to these plan designs to man­age the ever-increas­ing pre­scrip­tion drug costs. As a result, we are see­ing more pre­scrip­tion drug plans com­bin­ing some aspect of coin­sur­ance along with or in place of the flat dol­lar copayments.

Accord­ing to the 2016 UBA Health Plan Sur­vey, copay mod­els are still the most pop­u­lar, with a three-tier copay struc­ture the most preva­lent. Medi­an retail copay­ments for these three-tier plans are $10 for gener­ic drugs, $35 for pre­ferred brand drugs (drugs on the carrier’s pre­scrip­tion drug list) and $60 for non-pre­ferred brand drugs (drugs not on the carrier’s pre­scrip­tions drug list). While 54.5 per­cent of all pre­scrip­tion plans are copay only, approx­i­mate­ly 40 per­cent of all pre­scrip­tion drug plans have co-insur­ance along with (or in lieu of) copays–a plan design that is par­tic­u­lar­ly com­mon among four-tier plans.

Coin­sur­ance mod­els have many unique designs. Some plans are a straight per­cent­age of the cost of the drug; some may involve a max­i­mum or min­i­mum dol­lar copay­ment com­bined with the coin­sur­ance. For exam­ple, a plan may require 40 per­cent coin­sur­ance for a pre­ferred brand drug, but there is a min­i­mum copay­ment of $30 and a max­i­mum copay­ment of $50. Typ­i­cal­ly, we see a high­er coin­sur­ance per­cent­age for non-pre­ferred brand drugs and spe­cial­ty drugs. The mem­ber cost of the drug is cal­cu­lat­ed after any nego­ti­at­ed dis­counts, so mem­bers cov­ered by a coin­sur­ance plan are reap­ing the ben­e­fits of any dis­counts nego­ti­at­ed with the phar­ma­cy by the phar­ma­cy ben­e­fit man­ag­er (PBM).

Coin­sur­ance plans do pro­vide sev­er­al advan­tages to man­ag­ing pre­scrip­tion drug costs. Under a flat dol­lar copay plan design, mem­bers may not tru­ly under­stand the full cost of the drug they are pur­chas­ing. Phar­ma­cies are now dis­clos­ing the full cost of drugs on the pur­chase receipts. Yet, most con­sumers do not take note of this dis­clo­sure, focus­ing only on the copay­ment amount. When a mem­ber pays a per­cent­age of the cost of the drug as in a coin­sur­ance mod­el, the true cost of the drug becomes much more apparent.

Anoth­er advan­tage of the coin­sur­ance mod­el is that it auto­mat­i­cal­ly increas­es the mem­ber share of the cost as the price of the drug increas­es. Under the flat dol­lar copay­ment mod­el, as the true cost of the drug increas­es, the mem­ber pays a small­er por­tion of the total cost. When the member’s por­tion is deter­mined by a coin­sur­ance per­cent­age, the mem­ber pays more as the cost of the drug increases.

As the costs of health care over­all con­tin­ue to increase, we all need to become bet­ter con­sumers of our health­care. Mem­bers cov­ered by a pre­scrip­tion drug plan with a coin­sur­ance mod­el will have a bet­ter under­stand­ing of the true cost of their pre­scrip­tions. As mem­bers become more aware of the true costs of their care, they make bet­ter health care deci­sions, man­ag­ing the over­all cost of care.

We expect to see pre­scrip­tion drug ben­e­fit plans change even more as the cost of health care – espe­cial­ly pre­scrip­tion drugs – esca­lates. These changes will like­ly result in more of the cost being pushed to the patient. There are resources avail­able to patients for assis­tance with some of these out-of-pock­et costs. It is vital for the patient to under­stand their costs and know how to max­i­mize their ben­e­fits. In a few weeks, the UBA blog will high­light some of these resources and pro­vide infor­ma­tion on how to edu­cate employ­ees on max­i­miz­ing their ben­e­fits and the indus­try resources avail­able to them.

For all the cost and design trends relat­ed to health and pre­scrip­tion drug plan costs by group size, indus­try and region, down­load UBA’s Health Plan Sur­vey Exec­u­tive Sum­ma­ry.

By Mary Drueke-Collins
Orig­i­nal­ly Post­ed By