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Expect More From... Preventive Drug Coverage!

Writer's picture: Christine JohnstonChristine Johnston

To many employers adding coverage of preventive drugs seems like an easy decision, but as fiduciary obligations need to in the forefront of benefit managers’ minds this upcoming year, more questions need to be asked of your PBM and advisor as to the financial impact of this decision. Coverage of preventive drugs is often taken for granted by plans, but today, with the high cost of diabetic products, how these drugs are covered is an important financial decision plans make.


Before, we discuss our recommendations, I would like to define what is a preventive drug.


There are two types of preventive drugs:

  • ACA Preventive Drugs are drugs that the Affordable Care Act (ACA) requires plans cover with a $0 copay. Grandfathered plans are exempted from this requirement.  ACA preventive drugs include the following products:

    • Aspirin

    • Bowel preparation

    • Breast cancer primary prevention

    • Contraceptives

    • Fluoride

    • Folic acid supplements

    • HIV pre-exposure prophylaxis (PrEP)

    • Iron supplements

    • Single agent statins

    • Tobacco cessation

    • Vaccines

  • HSA Preventive Drugs  are drugs that the IRS defines as preventive.  High Deductible Health Plans are able to offer first dollar coverage for these products and not compromise their tax status.  These drugs include:

    • Angiotensin Converting Enzyme (ACE) inhibitors

    • Anti-resorptive therapy (Osteoporosis)

    • Beta-blockers

    • Blood pressure (Hypertension)

    • Inhaled corticosteroids (Asthma)

    • Insulin and other glucose lowering agents (Diabetes)

    • Retinopathy screening (Diabetes)

    • Peak flow meter (Asthma)

    • Glucometer (Diabetes)

    • Selective Serotonin Reuptake Inhibitors (SSRIs) (Depression)

    • Statins (Heart disease and/or diabetes)


The second list is where seeing a lot of misuse.  In order to maintain tax status, HDHP plans can only offer first dollar coverage for drugs the IRS defines as preventive.  Drugs beyond these drug classes could compromise a plan’s tax status.  We see a lot of PBMs that have lists that are more expansive than the IRS rules.  Employers need to ask their PBM what their rules are for establishing and maintaining these drug lists.  If the IRS regulations are not the guiding principle, please ask more questions.


Secondly, plans do not have to offer HSA preventive coverage for all the drugs in these drug classes.  Plans can offer first dollar coverage for generics and lower cost brands, and require members pay their deductible for the higher cost brand drugs.  We are hearing a lot PBMs tell our clients that it is “all or nothing.”  That is simply not true. With the high cost of diabetic drugs, allowing first dollar coverage of all diabetic drugs and not modeling the financial impact, can be financially detrimental to a plan.  We recommend an employer challenge their PBM, if they are given the “all or nothing” argument.


Lastly, and I think most importantly, employers need to consider the impact of offering preventive drug coverage on the HDHP plan will have on plan selection.  Typically, when people smarter than me help groups set premiums, there is an assumption that sicker patients will select the PPO plan and healthier patients will select the HPHP plan.  Last year, I did a study on the adherence of preventive drugs in HDHP plans and compared to PPO plans.  What I found was a bit shocking (at least to me).  Adherence was almost exactly the same in HDHP plans with preventive list in place, HDHP plans without preventative list in place, and PPO plans.  But, we found that patients that had diabetes or asthma were more likely to select the HDHP plan, rather than the PPO plan, when the HDHP plan provided preventive drug coverage.  Therefore, employers need to make sure they are considering the impact having a preventive drug list in place will have on plan selection and premium amounts.


Not all preventive drug lists are not alike.  It is important to know if the preventive list provided by the PBM meets IRS regulations and includes only the most cost-effective drugs.  It is also important to consider your population, and if they are likely to pick one plan over another based on your coverage decisions.  No matter what, the plan’s budget needs to take into account all of these considerations.

 

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