States eye health insurance regulations to control drug costs

Healthcare insurance companies are actively fighting to keep drug costs low for their members and for their own bottom lines. Now a new policy brief offers state policymakers tips on how to shift more of the costs to payers in an effort to protect consumers. 

The brief (.pdf) from the National Association of Insurance Commissioners outlines several regulations policymakers can adopt to ease consumers’ cost burdens, including:

Imposing restrictions on how many cost-sharing tiers per plan insurers can use, as in the case of standardized plans in New York, Vermont and Massachusetts, where ACA plans are limited to three tiers. Policymakers should also prohibit payers from switching a drug they cover to a costlier tier over the course of the plan year.

Locking health plans into their list of covered drugs, rather than giving them the option to change them midway through the year. Such changes are already prohibited in most cases in Texas and Nevada, but an Avalere analysis in all 50 states and the District of Columbia found nearly half of plans made changes between October 2013 and September 2014.

Plans should be given flexibility for mid-year changes that add to the lists, however. “These formulary changes have the potential to enhance consumer coverage, rather than detract from it, and should be allowed at any time,” the report states

Prohibiting plans from charging a percentage-based coinsurance rather than a flat dollar copay. Montana law, for example, requires payers to offer a single silver-level marketplace plan that only charges copayments for drugs.

“States have long played this role, trying to make policies that work for consumers,” co-author Katie Keith told Kaiser Health News.  “It’s more urgent now with all the crazy drug prices we’re seeing.”

Drug costs are putting serious pressure on payers’ margins. Insurers and state lawmakers have tried pushing back, with Virginia among several states trying to legislate better price transparency. Insurers also are experimenting with negotiating deals with drug manufacturers that link prices to how well the drugs work and requiring patients to switch to alternatives, giving health insurers leverage to negotiate lower drug prices.

Meanwhile, under the Affordable Care Act, patient's out-of-pocket prescription costs have gone down, even as the number of prescriptions filled has gone up.