There are rules, exceptions to rules, and rules for exceptions to rules. Yep, payers have all of the above, and exceptions to cost-sharing requirements are no exception. For example, payers may apply a lower in-network copayment for out-of-network care when a medically necessary specialist is not in the plan’s network. Payers may also make cost-sharing exceptions for prescription drugs for situational, clinical, or financial reasons.
Medicare Part D plans
Exceptions for continuity of care. To promote continuity of care when patients must transition from one medication to a therapeutic equivalent, Medicare requires Plan D sponsors to provide beneficiaries with at least a 30-day transition supply of their existing medications under four scenarios: (1) when newly eligible beneficiaries enter Medicare from commercial coverage; (2) when enrollees join a new prescription drug plan following the annual election period; (3) when enrollees switch from one plan to another after the start of the contract year; or (4) when enrollees are affected by negative formulary changes (e.g., removal a drug from the formulary; a higher cost-sharing amount; or new or revised changing prior authorization requirements, quantity limits, or step-therapy requirements) in the middle of a plan year. Part D sponsors must also provide a 30-day transition supply of an existing medication to beneficiaries seeking a formulary exception on medical-necessity grounds. These short-term, rules-based exceptions are situational in nature.
For beneficiaries who qualify for the Low-Income Subsidy (LIS), a Part D sponsor must not charge higher cost sharing for transition supplies than the statutory maximum copayment amounts. For non-LIS enrollees, cost sharing for transition supplies for “nonformulary” Part D drugs (i.e., [1] drugs not on a sponsor’s formulary, [2] drugs previously covered under a prior medical exception, and [3] drugs on a sponsor’s formulary but requiring prior authorization, step therapy, or a quantity limit below that of a beneficiary’s current dose) would be the same as cost sharing for medical exceptions.
Exceptions for medical exceptions. Medicare also requires Plan D sponsors to reduce cost sharing for certain medical exceptions. Such exceptions are very common and are more durable than transitory, situational exceptions. If a nonpreferred drug is medically necessary because the preferred drugs would not be as effective and/or would have adverse effects, then the cost-sharing level for preferred drugs would be applied to the nonpreferred drug. Importantly, a Part D plan sponsor may design its exception process so that very-high cost or unique drugs on a specialty tier are not eligible for tier exceptions. A Part D plan sponsor is not required to cover a nonpreferred drug at the generic drug cost-sharing level if the plan maintains a separate tier dedicated to generic drugs. Further, a Part D plan sponsor may choose to continue coverage into the subsequent plan year. These medium- to long-term, rules-based exceptions are clinical in nature.
Exceptions for LIS beneficiaries. Under the LIS, the federal government subsidizes premiums, deductibles, and cost sharing for the Part D prescription drug benefit, providing varying levels of assistance to beneficiaries at different income and asset levels. Qualifying beneficiaries pay no Part D premium or deductible and only modest copayments for prescription drugs until they reach the catastrophic threshold, after which they face no cost sharing. These medium- to long-term, rules-based exceptions are financial in nature.
Commercial plans
Exceptions for ERISA plans. Payers make cost-sharing exceptions for their administrative services only (ASO) lives when self-insured employers request such exceptions for clinical, financial, or other reasons. Why? Because it is the self-insured employer’s dollars, and for the most part, they can do what they want to do with their dollars. There is, however, no formal term for these non–rules-based cost-sharing overrides.
Exceptions for fully insured commercial plans. Tier exceptions for medical exceptions typically do not apply to fully insured commercial plans. But, of course, there are exceptions to the rule. For example, one payer makes tier exceptions for a particular employer client for HIV therapies and insulins. Under this nonstandard special policy, patients can request to receive a drug at a lower out-of-pocket cost if they can demonstrate medical necessity — that the options on the lower tier are, in their cases, ineffective or dangerous. While this unique rules-based policy is real, the threshold is high and the approval rate is very low. Unfortunately, for fully insured commercial plans, tier exceptions are few and far between.
There are several reasons why payers do not make cost-sharing exceptions for fully insured commercial plans. These include:
1. They can’t — unless or until they include tier-exception policies in their rate filings with the state agencies regulating health insurance (e.g., Department of Insurance).
2. They don’t think it is necessary. Some plan executives sleep better at night knowing that members can: (A) typically find a medically appropriate, low-cost option on the formulary, (B) switch to a different formulary during the next open enrollment, (C) lower their out-of-pocket costs by leveraging manufacturers’ copay assistance programs.
3. They don’t think it is desirable — they don’t want to get caught in a morass. Without explicit rules governing exceptions, decisions could be inconsistent, seem arbitrary and capricious, and subject to criticism. And they don’t want to develop qualifying criteria for cost-sharing subsidies or the methods for calculating the subsidies.
Making situational cost-sharing exceptions that help ensure continuity of care, clinical cost-sharing exceptions to cover medications that are medically necessary, and financial cost-sharing exceptions to help ensure that medications are affordable are, ethically, the right things to do. States, self-insured employers, and fully insured commercial plans should follow Medicare’s lead and develop both exceptions to cost-sharing rules and rules for these exceptions for specific situational, clinical, and financial circumstances. States could mandate these benefits, and payers could voluntarily bring plans with these policies to market. Cost-sharing exceptions should be made available to all without exception.
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