CHA News Article

Report Examines Out-of-Pocket Prescription Drug Costs in Covered California Plans
Details steps Covered California is taking to limit consumers’ costs for some prescription drugs

The California HealthCare Foundation (CHCF) has released a report that examines the significant variation in prescription drug coverage in Covered California health plans in 2014, particularly for drugs treating medication-reliant chronic conditions, such as bipolar affective disorder and rheumatoid arthritis (RA). Because plans with these benefit designs are offered both on- and off-exchange, and because these designs remained virtually unchanged from 2014 to 2015, the findings are broadly applicable to the individual market for both years. Titled Better Shop Around: Out-of-Pocket Prescription Drug Costs in California Standard Benefit Plans, the report describes how consumers’ out-of-pocket costs were affected by the variation and formulary design choices.

In addition, the report details the steps Covered California is taking for the 2016 benefit year to limit consumers’ costs for some prescription drugs. One example is capping the maximum consumer payment for filling a drug on the specialty tier, which limits the per-prescription, out-of-pocket costs for products subject to co-insurance and requires plans to place at least one medication on a non-specialty tier for chronic conditions that have multiple treatments available. Patients, therefore, would have access to at least one treatment option at a lower out-of-pocket cost. The report also identifies additional steps that can help consumers with chronic conditions understand the out-of-pocket costs associated with different health plans.

Key report findings include:

  • Because California standardizes benefit designs, prescription drug formulary placement was the primary source of out-of-pocket cost variation across different plans.
  • For consumers with significant health needs earning no more than 250 percent of the federal poverty level, enhanced silver plans — which have cost-sharing reductions that lower the amount consumers pay out of pocket with no increase in premium — dramatically reduced expected enrollee costs.
  • Some unsubsidized consumers benefited from paying higher premiums for a platinum plan, which reduced their total annual costs.
  • Regardless of income, medication-reliant consumers faced front-loaded spending at the start of the year because of specialty tier costs and deductibles.
  • Among consumers with medication-reliant chronic conditions, those who rely on specialty drugs experienced higher out-of-pocket costs than those who don’t use specialty drugs.
  • While standard benefit designs limit variation across plans, consumer costs still varied based on an enrollee’s particular health care needs. Even for patients with the same chronic condition, variations in disease severity and comorbidities lead to significant differences in patient costs.

The full report is available on the CHCF website.