qotd: Large variation in cost-sharing reductions in silver plans harms patients

Avalere Health
June 2014
Analysis of Benefit Design in Silver Plan Variations
By Kelly Brantly, Hillary Bray and Caroline Pearson

Both state-based and federally-facilitated exchanges offer financial
assistance for low-income enrollees. The assistance takes two forms:
advanced premium tax credits and cost-sharing reductions (CSRs). This
report focuses on CSR plans, which are available to individuals and
families earning between 100% of the federal poverty level (FPL) and
250% FPL.

CSR plans use federal subsidies to increase their actuarial value (AV)
and lower cost-sharing for low-income exchange enrollees. Avalere Health
conducted an analysis of the standard silver and CSR plans offered in
the federally-facilitated exchange (FFE) that spans 34 states.

* Cost-sharing reductions are more often applied across multiple types
of benefits
in 94% and 87% AV plans compared to 73% AV plans.

* Many CSR plans have MOOP (maximum out-of-pocket) limits lower than
the amount required by law.

* Almost all CSR plans feature lower deductibles than the standard
silver plans, though wide variation remains.

* Consistent with standard silver plans, copays for specialist visits
are higher than those for primary care visits.

* Low-income consumers may face very high coinsurance for drugs on
tiers three and four, which is least likely to be reduced in CSR plans.

The large variation in co-payments, co-insurance, and deductibles
required by CSR plans may not be clear to exchange enrollees with
limited income.

Across all CSR plans, there is broad variation in how issuers reduce
cost-sharing across benefit categories relative to the standard silver
plans. Because issuers have a high level of flexibility in designing
these CSR plans, cost-sharing amounts vary across services and in some
cases mirror the cost-sharing in standard silver plans.

The large variation in how plans apply the cost-sharing reductions
across covered benefits may not be clear to consumers while they are
shopping and comparing plans.

Notably, consumers with the lowest income who qualify for the highest
level of financial assistance (100% to 150% FPL) could encounter some
94% AV CSR plans with cost-sharing requirements for specific services
that are identical to standard silver plans. Even for CSR plan
cost-sharing that is reduced, out-of-pocket costs could still serve as a
barrier to accessing care.

(This analysis was funded by PhRMA.)

At this link, click "Download PDF" for full report:
http://avalerehealth.com/expertise/managed-care/insights/avalere-analysis-cost-sharing-reductions-unevenly-applied-across-services-i

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Comment by Don McCanne

This report provides a highly technical explanation of the great
variation in cost-sharing provisions for lower-income individuals
insured by the various silver plans in the exchanges. This is just
another example of the unnecessary increase in administrative complexity
brought to us by the Affordable Care Act.

What is particularly egregious is the intolerably high cost-sharing
required of low-income individuals who need higher-tier drugs. High cost
drugs, such as those used to treat hepatitis C or those that meet the
expanded recommendations for HIV prophylaxis, will be unaffordable for
individuals with low incomes, in spite of the cost-sharing reductions.

By making these drugs unaffordable, the insurers accomplish two ends: 1)
the cost sharing is so high that many lower-income individuals will not
fill their prescriptions, saving the insurers those costs, and 2) those
with chronic hepatitis C, those at high risk of HIV exposure, or the
many others who have disorders requiring expensive tier 4 drugs will
likely select other insurers once they realize that the drugs that they
need will be unaffordable (favorable selection). These are some of the
newer innovations that the insurers are using since they are now
prohibited from using medical underwriting to deny insurance to
individuals with greater anticipated health care costs.

More administrative complexity. More insurer chicanery. More inequity in
the provision of health care. And this is because our politicians
selected the most expensive model of health care reform - one that
places insurers and pharmaceutical firms above patients. Many studies
have shown that the most efficient and equitable model of comprehensive
health care coverage - single payer - is also the least expensive of the
comprehensive models of reform. Amongst other important measures, it
would put pharmaceutical firms in their place, and it would dismiss the
intrusive and wasteful insurers from the scene.

We can still do that.