Editor’s Desk

Harvard researchers investigate ‘adverse tiering’

Peter Wehrwein
Editor

Last May, two health advocacy groups filed a complaint with the Office for Civil Rights at HHS accusing four insurers selling plans in Florida of discriminating against people with HIV/AIDS by putting the drugs for treating the condition on the top tier of their formularies.

Researchers at the Harvard School of Public Health have followed up that complaint with their own research into what they are calling “adverse tiering.” The researchers, Douglas B. Jacobs and Benjamin D. Sommers, reported their results in this week’s New England Journal of Medicine.

The Harvard researchers looked at silver-level plans listed in the federal health exchange in 12 states, six with insurers mentioned in the complaint (Delaware, Florida, Louisiana, Michigan, South Carolina, and Utah) and six of the most populous states without any of those insurers (Illinois, New Jersey, Ohio, Pennsylvania, Texas, and Virginia).

Jacobs and Sommers investigated the formularies and benefit summaries of the plans for nucleoside reverse-transcriptase inhibitors (NRTIs), a class of drugs that is a mainstay of HIV/AIDS treatment. They defined adverse tiering as placing all NRTIs on tiers with a coinsurance or copayment level of at least 30%. They used the drug prices paid by Humana, which publishes those prices online, to estimate cost.

Here are some of the highlights of what they found:

  • Evidence of what they defined as adverse tiering by 12 of the 48 plans in their study. Seven of the 24 were in the states listed in the HHS complaint and five in the six other states
  • Drug costs for enrollees in the adverse tiering plans were more than triple ($4,892 vs. $1,615) than enrollees in the other plans
  • Half of the adverse tiering plans had a drug-specific deductible compared with 19% of the other plans
  • Once lower premiums and ACA caps on out-of-pocket expenses were factored in, someone with HIV/AIDS enrolled in an adverse tiering plan would still pay $3,000 more than someone enrolled in the other plans.

The Harvard researchers mentioned two consequences of adverse tiering: financial hardship for those who are affected and, over time, adverse selection to health plans that don’t use adverse tiering.

Jacobs and Sommers also suggest ways to mitigate the effect of adverse tiering, starting with price transparency and a clear and concise explanation of a drug’s overall cost for the enrollee. In isolation, they say, price transparency could actually make adverse selection worse. So they also propose establishing “protected conditions” for which there would be an upper limit on cost sharing.  Protected conditions are nothing new, Jacobs and Sommers note, pointing to Medicare Part D and drugs for HIV, seizures, and cancer.

Finally, the Harvard researchers float the idea of requiring health plans to offer drug benefits that meet a set actuarial value. As they explain it, that would mean that the percentage of drug costs paid by a health plan would have to meet a certain threshold of, say, 70%.

When the HHS complaint hit the news in May, the health plans responded in several ways: that they viewed HIV drugs to be specialty drugs and covered in the same way as the expensive drugs for conditions like rheumatoid arthritis and multiple sclerosis; that enrollees wouldn’t have to pay anything after they hit ACA limits on out-of-of-pocket expenses; and that they offered a variety of services to their members with HIV/AIDS.

In November, Cigna agreed to restructure its drug plan for HIV drugs. According to the Wall Street Journal, while admitting no wrongdoing, the company entered into an agreement with Florida insurance regulators that, among other things, moved generic HIV drugs to a lower-cost generic tier and set limits on copays.

Who knows how adverse tiering will play out.

But in addition to bringing attention to a new term in the managed care lexicon (they didn’t exactly coin it), the Harvard researchers have definitely started an important conversation.

We need all the light we can get on drug benefit coverage—arcane and difficult to master even by the experts among us.

And any discussion that aids efforts to make them fair and equitable should be welcomed with open arms.