Study: Insurers may be using drug costs to discriminate

FORT LAUDERDALE, Fla. -- Insurance companies, perhaps more than thought, may be charging the sickest patients extra for drugs under the federal health law in an effort to discourage them from choosing certain plans, according to a study released Wednesday.

One of the cornerstones of President Obama's health law forbids insurance companies from turning away people with pre-existing conditions such as diabetes or cancer. Yet hundreds of patient advocacy groups say insurance companies have found a way to discriminate against these people, who are more expensive to cover because they require lifelong treatments.

The companies do this by putting all of their medications in a special category where the patient is required to pay a percentage of the cost of the drug rather than a flat copay. Some are as high as 50 percent, leaving people on the hook for thousands of dollars. Most people pay a copay as low as $10 per medication.

A study published in the New England Journal of Medicine only examined HIV drugs, but noted the problem applies to mental illness, cancer, rheumatoid arthritis, diabetes and other chronic conditions.

Patient advocates have complained that prescriptions for these patients were virtually unaffordable in some plans offered on healthcare.gov.

The AIDS Institute even filed a formal complaint with Health and Human Services officials last summer about four plans in Florida. Georgia plans to file a similar complaint, but the scope of the problem has been difficult to gauge as many of the complaints have been anecdotal.

The researchers studied 48 plans in 12 states using the federal marketplace: Delaware, Florida, Louisiana, Michigan, South Carolina, Utah, Illinois, New Jersey, Ohio, Pennsylvania, Texas, and Virginia.

They found that one-quarter of the plans placed all of the HIV drugs into the highest-cost category and required consumers to pay at least 30 percent of the drug costs instead of a flat copay. Annual drug costs in these plans were more than triple compared with other plans ($4,892 to $1,615), according to the analysis. And 50 percent had to pay a separate deductible for drugs, compared to only 19 percent of consumers in other plans.

Insurers have historically placed drugs in categories with higher copays to encourage consumers to select generic or preferred brand-name drugs. The problem is exacerbated as more plans place all drugs, including generics, in the more expensive category.

"Our findings suggest that many insurers may be using benefit design to dissuade sicker people from choosing their plans," the study noted.

Over time, researchers predicted sicker people will enroll in plans that don't charge such high prices. That means certain plans could have a higher number of sicker, more expensive consumers than their competitors. The federal law has financial protections for those plans but some will be phased out in 2016.

The law does ban insurers from charging an individual more than $6,350 in out-of pocket costs a year and no more than $12,700 for a family policy.

Advocates have asked federal health officials to intervene and nearly 300 patient groups sent a letter last month urging Health and Human Services Secretary Sylvia Burwell to beef up enforcement. The federal government has warned against such discrimination.

"We analyze plan information submitted by insurance companies to uncover discriminatory benefit designs, and work with outlier plans to update formularies so they do not discourage enrollment of consumers with specific medical conditions," agency spokesman Aaron Albright said in an email.

It's unclear what the penalties are for drug companies who discriminate.

Meanwhile, insurance officials in some states are stepping in. Three out of four of insurance companies restructured their plans in Florida late last year.