To stay on the forefront of trends in formulary management, managed care needs to know where the market is headed and be able to determine strategy both inside and outside of health insurance exchanges.
The health insurance exchanges created under the Affordable Care Act are part of an emerging market with rapidly evolving benefit designs focused on keeping premium costs affordable.
“That means plans have focused on narrowing provider networks, restricting drug access, and structuring cost-sharing to reduce overall costs,” said Caroline Peterson, vice president, Health Reform and Policy, Avalere Health, Washington, D.C.
To stay on the forefront of trends in formulary management, the managed care industry needs to know where the market is headed and be able to determine its own strategy both inside and outside of these exchanges, she said.
Speaking with her co-presenter, Lisa Murphy, MPP, director, Avalere Health, during a session entitled Current Trends in Insurance Exchange Benefits and Formulary Design as part of the Academy of Managed Care Pharmacy (AMCP) conference, Peterson presented data from an Avalere Health analysis on exchange plan formularies from eight states with high exchange enrollment in 2014. The analysis sought to determine how coverage offered through exchanges differs from employer-sponsored insurance and Medicare Part D coverage plans. The analysis also looked at how coverage offered through the exchanges changed from 2014 to 2015.
Included in the analysis was a review of 20 formulary classes, including agents to treat HIV/AIDs, hepatitis, asthma/chronic obstructive pulmonary disease (COPD), diabetes, mental health, multiple sclerosis, oncology, and rheumatoid arthritis.
The analysis found that health plans in the exchanges differed, sometimes significantly, from plans in the employer market. For example, it found that utilization management rates in the exchanges studied were triple those of employer plans, and employer plans tended to cover more specialty drugs compared to exchange plans.
The analysis also found changes in exchange plans from 2014 to 2015. “While exchange plans did not narrow their formulary breadth in 2015, they dramatically increased rates of utilization management for drugs,” said Peterson. “Exchange plans also increased cost-sharing for specialty products in 2015.”
In stark contrast to this, she said, are the trends for the employer market where utilization management is still limited and specialty tiers remain rare.
“Because many of the insurance carriers participating in the exchange market are the large national and local plans that offer employer coverage, we expect the benefit design trends we see in the exchanges to spill over into the employer-sponsored insurance market that currently covers the majority of Americans,” said Peterson.
Based on Avalere research, Peterson expects exchange plans to ramp up formulary management going forward. This may include formulary exclusions, utilization management, separation of preferred and non-preferred tiers, increased specialty drug cost sharing, and drug-specific deductibles.