Insurer drug reclassification leads to price spike for patients

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Health insurers are shifting expensive drugs into “tier 4” classification, resulting in a price spike for some patients, according to a New York Times report. The tier 4 system already exists in 86% of national Medicare health plans. 

Private health insurers have reclassified a number of drug treatments for serious or chronic disorders, such as multiple sclerosis, rheumatoid arthritis, hemophilia, hepatitis C and some cancers, the Times reports.  In the past, private insurers have typically reserved tier 4 classification for expensive “lifestyle” drugs, such as erectile dysfunction treatments, or biologics, such as HIV treatments.

In some cases, drugs previously available for a fixed co-payment are now requiring patients to pay an average rate of 36% of the total drug cost, according to a Kaiser Family Foundation survey.

Given the expense of some drugs, a percentage of the total drug cost could mean hundreds of dollars for a single 30-day prescription – even when the medication was previously classified under a different tier, and a different payment structure.

Payment structure, or “cost-sharing,” for tier 4 drugs, varies between fixed co-payment and co-insurance rates. “Co-insurance” refers to payment in the form of a percentage of the total drug cost. In 2007, the average co-payment for tier 4 drugs was $71, while the average co-insurance rate was 36%, with the number of workers facing co-payments or co-insurance rates being roughly equal, according to the Kaiser survey.

Three out of four employees receiving health insurance coverage were enrolled in plans with tier 3 or tier 4 classifications, the survey said.

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