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Insurers to Disclose Drug Copays, Treatment Terms Under Proposal (1)

Nov. 15, 2019, 8:49 PM; Updated: Nov. 15, 2019, 10:06 PM

Insurance companies could be required to disclose the amount that patients are responsible for paying for their prescription drugs as part of a proposal from the Trump administration.

Patients could take action on the information if they have it while in treatment and share it with their doctors, Rachel Sachs, a law professor at the Washington University in St. Louis who studies drug pricing, said.

That would be a change from now. However, patients may still not have those real-time conversations with doctors about what they’re paying for drugs, Mike Strazzella, leader of the federal government relations department at Buchanan, Ingersoll & Rooney, said.

The plan is intended to give patients more information about what they’re paying for their drugs, but it may not work. Patients already don’t use available price comparison tools as much as they could or should, Stacie Dusetzina, a professor of health policy at Vanderbilt University Medical Center, said.

The proposed rule, released Nov. 15, would require insurance companies to disclose personalized out-of-pocket costs for services to patients. It must be finalized before the disclosure requirements become effective.

This rule and a similar final rule requiring hospitals to divulge their prices could dramatically change billing in health care and the way the industry conducts transactions. The two rules will be among the most scrutinized proposals to pass through the administration as both hospitals and insurers say the rules could cost them more and reveal negotiated prices they say are proprietary.

A Biotechnology Innovation Organization spokesman, Andrew Segerman, said in a statement for Bloomberg Law that his organization has “always supported providing patients meaningful transparency that will help them better understand their choices and out-of-pocket costs for prescription drugs. While we’re still reviewing the details of this regulatory proposal, we’re pleased the administration is committed to moving forward in that direction.”

A representative for the Pharmaceutical Research and Manufacturers of America praised the administration’s transparency effort, but at the same time criticized hospitals’ role in rising health-care costs.

“Hospitals are the largest driver of health care costs in the United States, and yet they are not always upfront with patients about the cost of care they provide,” Nicole S. Longo, a PhRMA spokeswoman said.

Sachs said the rule appears to be squarely within the government’s legal bounds. Any changes officials make before the rule is finalized will be for pure policy reasons.

That doesn’t mean the industry won’t protest or even sue. But as long as the administration doesn’t try to get insurers to disclose the drug rebates given to them by specific drugmakers, the administration will keep itself safe from immediate lawsuits, Dusetzina predicted. Insurers consider that information to be trade secrets.

Other Disclosures Possible

The administration is asking industry practitioners and health advocates if other prices, like a drug’s list price, should be disclosed.

List prices are irrelevant to most people because they only pay for part of their drugs. They want to know how much will be coming out of their pockets, Strazzella said.

But the list price may matter to people with high deductibles, which make up about 30% of people with employer-sponsored plans, Robin Feldman, a professor at the University of California Hastings College of the Law in San Francisco, said. They have to pay a list price until they reach their deductible.

The administration also wants to know if drug price information should be excluded in certain situations, like when providers receive a pre-fixed price for an episode of care and make a profit by keeping costs below a benchmark price. The proposed rule states that such an arrangement might not need to disclosed, since the payment is affected by other costs than the drug and would not be “reasonably knowable.”

To parse out the specific costs of drugs in these types of payment models would be difficult both in the process and in the ability of the patient to understand, Strazzella said.

Just because it’s complex doesn’t mean it can’t be done, Feldman countered. The goal is transparency, so it requires information on all levels to be out, not select information.

Pre-Authorization Notice

The rule would also require insurance companies to notify patients whenever a service would require a prerequisite for coverage, like prior authorization or requiring patients use the cheapest version of a drug and failing on it before switching to a more expensive brand.

Prior authorization requires health-care providers to submit a request to insurers for coverage of a service before providing it.

This would give patients the heads-up that their providers have to think about prior authorization and prescribing in a certain way, Dusetzina said. It also may help them realize they can’t automatically go on a more expensive drug.

Knowing when a service will require prior authorization empowers consumers, but that information is already available if people call their insurance companies, Strazzella said.

Implementation Difficulties

It may be logistically difficult to put all this data in one easy-to-use place for consumers because it requires real-time information on each patient’s plan and where they are in that plan, Dusetzina said.

Any cost information on drugs would need to take into account whether patients are in their deductible phase, whether they have coinsurance or copayments, whether they’ve hit their out-of-pocket maximum, or whether they have separate pharmacy maximum, Sachs said.

Another challenge will be figuring out what a drug costs based on when a patient is eligible for refills, a standard part of an insurance plan, Strazzella said. For example, if an EpiPen goes bad, can a patient get a new one sooner? Will the cost information take that into account?

(Updates with industry group reaction in eighth and ninth paragraphs.)

To contact the reporter on this story: Shira Stein in Washington at sstein@bloomberglaw.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com

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