Multitier co-pays emerge at two managed care groups


Humana switches to four-tier copays and Express Scripts tests a five-tier plan



Multitier co-pays emerge at two managed care groups

At first, there were only two tiers of copayments—one for brand-name drugs and a lower co-pay to encourage use of generic drugs. Then managed care companies and pharmacy benefit managers established formularies and created a higher third tier for brand-name drugs not listed on the formulary.

Now two of the largest managed care groups have broken the three-tier limit, announcing four- and five-tier co-pays to be implemented soon. Humana calls its program Rx4 to describe its new system of four co-pay levels. Express Scripts is proposing a five-level system, which it says will give employers more flexibility.

Both organizations claim pharmacists will have no trouble determining the co-pay since the new tiers will be integrated into their computer programs. However, when patients are asked for a larger co-pay, they will turn to the pharmacist for answers.

"The pharmacist will bear the brunt of consumer questions as well as complaints," said Phillip Schneider, v.p. of external affairs and program development of the National Association of Chain Drug Stores. He noted that an NACDS study showed that R.Ph.s spend a great deal of their time dealing with plan administrative problems that patients encounter.

"We're trying to drive choice for our members to get them to the pharmaceutical choices they want," said Mary Sellers, corporate spokeswoman for Humana. "We looked at prescription drugs based on our own claims information and organized our co-pays and the drugs into four tiers."

The four levels of Humana's Rx4 program are as follows:

  • Level One includes low-cost generic and brand drugs and requires the lowest co-pay of around $10, depending on the area and the cost negotiated by the employer group on behalf of employees.

  • Level Two includes higher-cost generic and brand drugs and requires a higher co-pay of about $25.

  • Level Three includes mostly brand drugs that have generic or brand therapeutic options in Levels One or Two and require a higher co-pay of about $45.

  • Level Four includes high-tech drugs, such as certain brand drugs, biotechnol-ogy drugs, and some self-administered injectables, which require a 25% co-pay.

Sellers pointed out that patients have a maximum co-pay of up to $2,500 for Level Four drugs, after which Humana covers the full cost.

The five-tier plan proposed by Express Scripts is organized differently. Some drugs have higher value because they provide benefits that are life-enhancing, explained Fred Teitelbaum, v.p., research and development, Express Scripts. Drugs that prolong life, such as insulin, would be considered high-value drugs, while others that simply improve the quality of life, such as remedies for toenail infections, would be considered of lower value. "Each employer will determine which drugs have higher or lower value for its specific plan," he said.

The five tiers of the Express Scripts plan are as follows:

  • Level One: Low-cost generics, including drugs of high and low value

  • Level Two: More expensive generics, including high- and low-value drugs

  • Level Three: High-value preferred brands Level Four: Nonpreferred brands of high value; preferred brands of low value

  • Level Five: Nonpreferred brands of low value

Teitelbaum said he could not give co-pay amounts for each level because that is determined by the employer.

The change in co-pay programs is a reaction to the rising costs of prescription drugs. Expensive brand-name drugs, now coming off patent, will be more costly in their generic form than traditional generic drugs. This means that a very low co-pay is no longer the norm for all generic drugs.

Another factor cited for rising Rx costs is direct-to-consumer advertising, which creates a demand for the newest and more expensive brand drugs. Rather than accept older therapies that are effective, patients often insist that physicians prescribe the therapies they see advertised. Brand drugs generally found on formularies are less-expensive older therapies, and there often is no provision for patients to purchase more expensive drugs within the plan.

"When health plans make a significant change without fully informing the beneficiaries, that unfairly shifts a burden to the pharmacist," said Schneider. Employers do not have the materials to communicate this information, he added. They rely on the health plans to develop the materials to be distributed to employees.

Humana is just beginning to roll out its Rx4 plan, according to Sellers, with the new levels being introduced to insured groups as they renew. Express Scripts plans to introduce a pilot mode of its new program around the first of next year.

Ann Saul

Based in the Philadelphia area, the author writes frequently on health-related subjects.


Ann Saul. Multitier co-pays emerge at two managed care groups.

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