UNDERSTANDING PRESCRIPTION DRUG DEDUCTIBLES, COPAYS, COINSURANCE & COUPONS
Background: In private insurance plans, patients pay a share of the costs of their prescription drugs through deductibles, copays, and coinsurance:
- Deductibles: With a deductible, the patient usually pays the entire price of the drug up to the amount of the deductible. Example: If a patient has a deductible of $1,000 and the price of the medicine is $150, the patient would pay the entire $150 and the remaining deductible is $850.
- Copay: Patients with a set copay pay a predictable dollar amount for their prescriptions, such as $30 per prescription each time it’s filled. That amount can vary for different medicines as the level of the copay varies depending upon the health plan’s coverage requirements.
- Coinsurance: Patients pay a percentage of the price of the medicine, such as 30% of the price.
Over the last several years, commercial insurance coverage for prescription drugs has shifted away from having patients pay fixed copays for medicines. Now, more health plans are requiring patients to pay deductibles before prescription drugs are covered and increasingly are using coinsurance instead of copays even after deductibles are met.
Health plans use formularies or lists of covered medicines and have different “tiers” or levels of coverage for different medicines. Higher tiers require patients to pay a greater share of the costs, depending on the medicine. Deductibles and coinsurance can be less predictable for patients in terms of what patients pay at the phamacy counter. Also, what patients pay may be based on the full price of a drug, instead of the discounted price the health plan has negotiated. For people with one or more chronic disease, the additional cost burden can be particularly difficult.
How do high out-of-pocket costs affect patients? Faced with high costs, many patients will not fill their prescriptions, which puts their health at risk and can lead to worse health outcomes and undertreatment. Unlike physician or hospital visits, where patients often receive services and are billed later, patients have to pay for prescriptions upfront, at the pharmacy counter or not receive the drug.
What is patient assistance and how does it work? Assistance with out-of-pocket costs for medicines is available to help offset the high cost sharing that patients face, including programs offered by the biopharmaceutical companies who make the drugs. Patient assistance, also known as coupons or copay cards, can lower the out-of-pocket costs patients pay for their drugs and help them to start or stay on a treatment. For many patients who have complex and chronic diseases, there are no lower cost alternatives, such as over-the-counter or generic medications. Without cost sharing assistance, these patients may not be able to access the treatment prescribed by their physician. Similar to other rebate or discount programs, these coupons typically have a dollar limit associated with them.
What is happening in this plan year with coupons? Previously, patients taking prescription drugs could use coupons to reduce their out-of-pocket costs, and have what they paid and the value of the coupon count towards their deductible or out-of-pocket maximum. However, pharmacy benefit managers, working with employers and health plans, are changing what patients can count toward meeting deductibles. Plans with these programs, called “accumulator adjustment programs,” count only the amount the patient paid themselves towards meeting the deductible or maximum out-of-pocket and not any help the patient gets from coupons. As a result, patients may exhaust their copay assistance before their full deductible is met and face a significant increase in out-of-pocket costs to continue taking their medication.
What can be done to help people who depend on these patient assistance programs? If you have insurance through an employer and rely on patient assistance such as coupons or other programs to lower your healthcare costs, speak to a human resource benefit manager at work to find out if your employer has a program (sometimes called accumulator adjustment programs) that limits the benefits of coupons or other assistance you use. If there is such a program, explaining why this program is harmful to you, your family, and potentially other employees with chronic illnesses could help to change these policies or identify other coverage options. If you purchased health insurance yourself, you should call your insurer to understand its coverage policies, raise these concerns, and shop for coverage that does allow assistance programs to count toward meeting deductibles and out-of-pocket maximums.
 Health plans and pharmacy benefit managers (PBMs) negotiate discounts on brand medicines, but these discounts, also known as rebates, are paid directly to the health plan or PBM after a patient fills a prescription. Most health plans and PBMs do not make these discounted prices available to patients who fill a prescription in a deductible or with coinsurance. Instead, the cost sharing that a patient pays in the deductible or coinsurance is based on a medicine’s full list price.