Factors and Solutions Driving Commercial Co-pay Assistance Strategies
By Lash Group
The changing landscape of the underinsured
No doubt the healthcare landscape is in fluctuation, with the underinsured population feeling the significant force of change. While identification of the uninsured is clear, the identification of the underinsured population is more challenging. The underinsured are those individuals with medical coverage who are still exposed to financial risk.
The most commonly cited definition of the underinsured defines this group as individuals who meet one of the following qualifications:
- Out of pocket medical expenses (not including premiums) greater than 10 percent of annual income
- Annual income less than 200 percent of federal poverty level (FPL) and medical expenses that are greater than or equal to 5 percent of income.1
According to a May, 2015 Commonwealth Fund report, 31 million people were underinsured in 2014.2 This population is more likely than those with adequate coverage to have plans with higher cost-sharing features, plan limits and more restrictive benefits. To paint a picture of the challenges faced by the underinsured, according to the study, the underinsured go without health care and struggle with medical debt at rates as high as those without insurance. The study reported that 44 percent of the underinsured did not fill a prescription, see a doctor when sick or seek recommended medical treatment or tests compared to 23 percent who had adequate insurance. Also, 51 percent of underinsured (as well as 51 percent of uninsured) had trouble paying bills, were contacted by collections agencies or had to endure a hardship due to the medical debt. Another study conducted by Lash Group and Xcenda revealed that every additional $100 of patient responsibility increased risk of discontinuation of therapy by 5 percent.3
These barriers to medical care have direct consequences, including prescription abandonment, forgoing medical tests and lower adherence to therapy, which is twice as high among underinsured compared to adequately insured.
Co-pay: emerging trends among payers and manufacturers
Trends today are pointing toward managed care plans with more restricted benefits, higher deductibles and patient cost-sharing programs. Additionally, payers are starting to set limitations or even exclusions on their members’ participation in commercial co-pay programs. These shifts could increase the number of patients whose exposure to high treatment costs is greater than they can afford, posing a greater financial risk for patients who have insurance but lack the financial resources to absorb these cost shifts. Interestingly, payers have not shown an interest, at least publicly, in limiting or excluding copay support via 501c3 charitable foundations, which in essence would have the same effect in offsetting out-of-pocket costs. In a recent double-blind survey of payers conducted by Xcenda, 21 percent, including seven national plans and eight regional plans, indicated they were considering implementing such a policy in the future.4 They represent more than 36 million Americans.
Payers are concerned that commercial co-pay programs are incompatible with their tiered utilization management approach.
United Healthcare (UHC), the largest U.S. health insurer, made a bold move in this direction by announcing in January 2013 that they will not allow any specialty pharmacies in their network to accept commercial copay cards for six products, which have generic alternatives. The new policy was intended to encourage members to consider lower-cost prescription alternatives for these products, which are used to treat multiple sclerosis, rheumatoid arthritis, hepatitis C and transplant patients. UHC found that it was spending higher amounts on payments for certain drugs when the majority of its members had access to a clinically equivalent generic alternative. This new policy is not a denial of coverage for these products — they are still covered — however, United Healthcare will not accept copay assistance mechanisms — and patients will experience an increase in copay.
CVS Caremark, the second-largest pharmacy benefit manager, has also started to make policy changes related to copay. In January 2012, the company started limiting coverage for 34 treatments that also have viable, lower-cost generic alternatives. About half of these branded drugs had copay cards.5
These actions reflect the payer perspective that copay cards could increase drug costs to employers and health insurers because the patient financial support undermines the benefit designs that are meant to promote value to the consumer through the use of lowest-cost, clinically appropriate products. However, another study shows that most copay program spending is on drugs that don’t have lower cost, reasonable substitutes.6
Challenges that lie ahead for commercial copay
Most payers are currently allowing manufacturer- sponsored assistance to help with out-of-cost expenses, but this may change given recent moves by payers and PBMs. Benefit managers may continue to aggressively implement strategies in efforts to limit copay programs. If programs aren’t eliminated altogether, consumers may see other more traditional controls put into place, such as prior authorization.
It is important for manufacturers to stay ahead of these limitations so that their program design, availability and effectiveness meets the primary objective of opening access to the appropriate patient population.
Copay strategies moving forward
Manufacturers continue to take multiple approaches to support commercially insured patients while mutually aligning with payer objectives. Key strategies to consider in order to maintain continuity and affordability of care for patients include:
1. Conduct benchmarking and exposure analyses to identify eligibility and out-of-pocket costs.
The implementation of the Affordable Care Act (ACA) expanded access provisions in 2014 and has decreased the percentage of uninsured from 18 percent in the fourth quarter of 2013 to 12.9 percent in the fourth quarter of 2014.7 As penalties increase for the uninsured, the number of uninsured is expected to continue to decline.
It is important for manufacturers to stay ahead of these limitations so that their program design, availability and effectiveness meets the primary objective of opening access to the appropriate patient population.
2. Closely examine contracting strategies.
Manufacturers should look closely at the cost/benefit associated with different types of price concessions. For example, both contracting and copay assistance programs are levers that manufacturers use to position their products favorably to patients. Manufacturers incur a certain cost for each of these strategies, and each program can affect the other program. Manufacturers should ask some key questions when analyzing the economics of a copay program, like:
- What is the role of copay in their access strategy?
- How much are we currently paying for copay assistance?
- Are my rebate and copay support strategies complementary to each other?
- Which tools may be more appropriate for securing preferred access?6
3. Implement utilization controls for commercial co-pay eligibility.
4. Use technology to improve patient access.
Manufacturers are investing in technologies in order to better identify eligible populations and provide a variety of enrollment options and rapid response features to get patients on therapy quickly. These technologies include:
- Interactive Voice Response (IVR) technology, which provides a high-tech online experience for patients needing to quickly and efficiently access co-pay programs.
- Online activation through provider and patient portals which are also becoming increasingly important in providing 24-hour access to application submission through a secure website.
- Patient communication tools, like text messaging and e-mail updates, are highly effective in providing patients with enrollment reminders and drug updates, which also improves adherence.
The time to evaluate your copay strategy is now
