Tag Archives: Insurance

Healthcare is a Freedom Issue

“Texas Jim,” as his friends called him, worked on a house framing crew making $18 an hour ($37,000 a year). He was able to support a wife and two little boys. They lived in a rental house with a small yard and shared a family car. Jim’s wife supplemented the family’s income by watching a couple of babies in the home.

Jim’s employer couldn’t afford health insurance for the framing crew. Texas Jim and his wife looked into insurance options, but the cost for basic nothing-special coverage was way too high. It would have claimed more than one third of the family’s income for premiums, not to mention deductibles and co-pays.

Then came that Saturday when Texas Jim was putting boxes in the attic. He lost his balance and fell through the ceiling, breaking his right leg in two places. He went to the emergency room, where they set the leg and braced it. The attending physician told Jim the break was complicated and he needed to see a specialist. The bill for the ER visit was a staggering $2200, which the family didn’t have. They set up payments.

Texas Jim talked to his boss about the broken leg and the need for further treatment. The boss liked Jim and valued his work. He encouraged him to heal up and return to the framing crew. As a show of support, the boss told Jim he could provide half-pay for two weeks.

The orthopedic specialist told Jim there would be a need for surgery and a few months of physical therapy. Without treatment, he would have chronic pain and limited use of the leg. The cost for surgery and physical therapy, without health insurance, was estimated to be around $25,000. For Jim, that cost was completely out of reach. The freedom to work a good paying job was gone. 

There are millions of hardworking Americans like Texas Jim who don’t have health insurance. They support families, pay taxes, and contribute economically to their communities. What happens when serious illness strikes? Back injury, cancer, a broken leg, and severe depression are just a few problem with the potential to interfere with employment. Sadly, the most common reason given by the poor for being unemployed is illness or disability

Healthcare is a freedom issue. Without it, the door to work a good paying job can become suddenly closed. It is time for our nation to provide Medicare for all. 

Medicare is divided into two parts. Part A covers hospitalizations and home healthcare. That’s free. Part B requires a reasonable monthly premium and covers doctor visits, therapies, tests, and medications. There are deductibles and co-pays attached. Some people opt for an additional layer of coverage, known as Medigap insurance. This is a private healthcare insurance that can expand Medicare coverage and limit out-of-pocket expenses. 

Medicare for all promotes the freedom to continue working a good paying job when faced with illness or injury. It’s made up of layers of cost and care, depending on what a person can afford. It works within our current healthcare system. 

Freedom always wins.

ALERT! YOUR CO-PAY HAS BEEN CLAWED BACK

How Does Prescription Drug Insurance Work?

Every insurance plan has preferred drugs, brand name drugs and drugs that are either not covered or have a high co-insurance cost.  These are often arranged into Tiers.

  • Tier 1 – Generic Drugs

    • Once a drug has been on the market for 20 years (25 in some circumstances), the patent held by the company which created the drug expires.  This allows other companies to create the exact same drug (chemically and in delivery) for a tiny fraction of the price.
    • Lowest copay amount
  • Tier 2 – Non-Preferred Generic Drugs

    • Same as above just more complex or expensive ingredients.  Could also be generics purchased by new companies trying to drive profits.
    • Slightly higher copay amount
  • Tier 3 – Preferred Brand Name Drugs

    • These drugs are less expensive than the Non-Preferred list, but are still under patents and therefore significantly more expensive than a generic.
    • Often have a higher copay than a generic drug
  • Tier 4 – Non-Preferred Brand Name Drugs

    • These are expensive drugs which are still under patent.  They are often the brand name drugs for the generics in Tier 1.  Considered an unnecessary insurance expense.
    • These drugs are often susceptible to a copay and having to pay the cost difference between the Brand Name and the Generic version.
  • Tier 5 – Specialty Drugs

    • These drugs are expensive, new and used to combat complex diseases.
    • They are often not covered at all or require heavy co-insurance payments and restrictions on access.

So…how do tiers become tiers?  Why is a drug covered under one insurance plan and not another?  Who controls this system?

Pharmacy Benefit Managers

Insurance Companies and Employers contract PBMs (Pharmacy Benefit Managers) to organize and negotiate plans with pharmacies and drug companies.  These folks are super important to understanding the cost of pharmacological medicine.

BCBS uses Prime Therapeutics from Irving, TX, as their PBM for many of their plans.  According to Prime Therapeutics’ website:

“Prime Therapeutics’ NetResults is one of the most aggressive formularies in the industry. And it works. Our clients are seeing an estimated savings of more than $10 per member per month.

So being aggressive pays off — we get people the medicine they need without the use of high-cost drugs.

Go bold or go home.”

So wait.  You do this formulary thing and we avoid high-cost drugs and everyone wins?  Cool.  

What’s a formulary?

A formulary is a tiered list of drugs covered by a prescription plan.  The “NetResults” formulary can be accessed here.  It uses a “p” for Tier 1, “np” for Tier 2, “P” for Tier 3 and “NP” for Tier 4.  The copay assigned to each of those tiers depends on how much your insurance company/business wants to pay for prescription coverage.

The average copay for a three-tier system (usually combines tiers 1 and 2 from above and excludes all drugs from tier 5) are $11 for Tier 1, $31 for Tier 2 and $53 for Tier 3.

So how do Wal-Mart and Target offer $4 generics WITHOUT INSURANCE? (They totally do.  Check out their lists here and here)

Average Wholesale Price

The Average Wholesale Price is the price a pharmacy buys the drug for in bulk.

It is considered the industry’s average price paid by a pharmacy to a drug manufacturer per 30/day or traditional supply.  You can find the federal government’s ACA payment AWP list here.

Let’s use Meloxicam 15mg as an example.  Target offers it for $4 without insurance.  The FDA says its AWP is about 1 cent a pill.  That’s a wholesale cost of 33 cents per 30 day supply.  With my insurance it is $4.18/30 day supply at Walgreens (as mine is a percent, not a copay).  The average cash price for the same amount is $13.78.  Priority Health will charge you $7 after you meet their $75 deductible.

NOTE:  The pricing isn’t even this simple as it is what the manufacturer reports to the government.  It doesn’t include all of the standard rebates and coupons given as incentives to PBMs and Pharmacies in the form of checks after our collective purchases.

Has it ever occurred to you that pharmaceuticals are like a grocery store without price tags?  Everyone pays a different amount and no one knows exactly why.  But more importantly, does Walgreens keep all of the 1,250% markup on my Meloxicam?

The Clawback

A PBM clawback occurs when an insurance company assigns expensive copays to a drug, a price that may be significantly higher than the actual value and acquisition cost of the drug.

Clawbacks occur when your pharmacy submits a claim for a prescription drug, and you’re directed to collect a specific dollar amount for the copay. The amount will likely be excessive and unrelated to the acquisition cost of the drug. – pbahealth.com

So for example, if you paid that $7 co-pay for 30 days of Meloxicam and Walgreens paid 33 cents, the PBM would clawback over $6 of that copay YOU PAID after paying your deductible and monthly premiums.  The amount of clawback to these PBMs has skyrocketed the cost of medication.

  • The PBM negotiates with drug companies to decide which drugs will be part of their formulary and on which tier.
  • The PBM establishes a rebate program for themselves based on purchases made by member of their formulary.
  • The PBM then sets the copay amount (often far above the actual price of the drug).
  • When the copay is more than the pharmacy charges, the PBM claws back all of the copay paid beyond the cost of the drug.

On top of this, you could have gotten the prescription cheaper by paying cash and not using your insurance.  But, if you’re a pharmacy, telling a customer not to use their insurance is asking for big-time PBMs to make your pharmacy a persona non grata under all plans they administer.  That would be a huge loss.

What Did We Learn?

There is a lot about pharmaceuticals that needs overhaul and transparency.  When the pharmaceutical rep shows up in a short skirt to your doctor’s office talking about the next big drug, she’s bringing with her a list of PBMs who have tiered that very medication.  The whole system revolves around a few key players who negotiate the prices, set the premiums, set the copays, choose the drugs, tell the doctors what scripts to write, tell the pharmacies what to charge and then collect back huge sums of cash from your family’s bank account.  We need transparency so that we can reform this broken system.  The only thing that can fight darkness is the light of day.

Further reading on other relevent pharma shenanigans

Micah Crittenden is a Senior Writer for American Research and is on Twitter at @thatgingerish

 

 

One Day in the Life of a Private Payer

The Backstory

We were in between insurance plans.  My husband had changed jobs and his new insurance would kick in on May 1st.  By the time we realized all of this, we had about 14 days to go.  We were faced with a decision – pay $1,800 for COBRA or take the risk and hope our family’s care for two weeks would cost less.  We took the risk.

With seven days to go, I developed a really ugly cough and fever.  I’ve had pneumonia a couple of times and the intensity seemed similar.  I had to go in.  We decided on Care Now, a “doc in a box” clinic which does Urgent Care.  I knew their fees would be standard and up front while my doctor’s office’s would be based upone many variables.

I have visited Care Now in the past for treatment on a weekend or during the evening when I didn’t want to miss work.  With insurance, they normally cost about $75 ( co-pay flat rate) and are able to do x-rays, blood work, urinalysis on site.  This is an affordable way to get rapid care for more intense illnesses – Pneumonia, Kidney Infections, Bronchitis, Pertussis – without having to do a stop at the doctor, then a lab, then an x-ray technician and wait for results.  Additionally, in the latter scenario, I often get a co-insurance bill from the x-ray tech and the lab for the cost of the testing.  This isn’t the case with Care Now.  One price to the patient — if you have insurance.


One Day as a Private Payer

Returning back to my day as a private payer, I used the mobile app to call ahead.  They usually call you back and let you know your wait will be 1 1/2 to 2 hours and they’ll call you when they are almost ready.  When they called me and I explained that I was going to be a private payer, they told me it would be about an hour or so.  Within 5 minutes they called me back and told me they were ready to see me.

Normally, even though they call you when they’re “ready” they’re not really ready.  I expect to spend a half hour sitting in their lobby with sick kids watching Moana on repeat anytime I want to see a doctor at Care Now.  I even brought my phone charger.  Within 5 minutes I had checked in, filled out their questionnaire and was called back to a room to be seen.  I was blown away.

My nurse was unexpectedly prompt as well, popping into the room to assess my condition.  She took basic vitals and then told me the doctor would see me soon.  She wasn’t kidding.  Within 3 minutes, the doctor was in my room to listen to my lungs and talk about my symptoms.

After she finished with the stethoscope, I asked what she thought.  She said, “well, I would recommed blood work and an x-ray to check for any possible infection – just to be safe.”  Then she looked down at the chart.  “But I see you’re a private payer, so I’ll leave that decision up to you.”

I think my jaw fell on the floor.  I have never had a healthcare professional let me make my own testing decisions.  I said, “well, you listened to my lungs…how did they sound?”

She thought for a moment.  “They sounded a little strained.  But that could be because you weren’t breathing all the way in – probably because it hurts.  Because of that, I wasn’t able to tell how well they were functioning.”

Jaw-on-floor-again.  “I could try harder, if you want to listen again?”

She agreed and we repeated the breathe-in breathe-out routine.

“Your lungs actually sound pretty clear.  It seems to me that you have sinusitis and it isn’t infecting your lungs yet.”

Excited by the new medical conversation I’m able to have I ask, “so then why am I coughing so hard?”

“Because the drainage from your sinuses is irritating your throat.  Its hard to tell.  Your lungs could be a problem.  I can never know for sure without testing.”

“But as it stands right now, you would be willing to treat me for sinusitis and then, if it didn’t improve in a couple days, we could explore doing the blood work and x-ray?”

“Absolutely.  If that’s the course you decide to go, I think I would also prescribe you a cough syrup to help as we fight off the sinus infection.”

“Sold.”

I sailed out of Care Now within 5 minutes of that moment paying only $150 for the visit.  I left with an antibiotic and a cough syrup.

Next up was Walgreens.  Certainly this would hurt, right?  Prescriptions with ZERO coverage have gotta be EXPENSIVE.  I dropped the scripts off and explained again that I would be a private payer.  She took the time to give me an estimate of my prescriptions before I left the window so I would know what they were going to cost.  $116.41 for my antibiotic and syrup combined.  Not too bad.

When they were ready for pick up, I walked up to the window.  The clerk said “I noticed you’re a private payer, so I hope you don’t mind, but I looked up some coupons for you.  Instead of $116.41, your total is $68.42.”  I thanked her and collected my medicine in awe.  Since when has Walgreens tried to save me money?

The doctor was right.  I was better within 48 hours of treatment and had spent a total of $218.42.


The Takeaway

 

If I had used insurance on that day in April the total bill paid by my insurance company would have been higher than what I paid as a private payer.  They would have charged for the visit, the blood work and the xray.  In addition, my copay would have been subject to The Clawback.  All of these costs would have resulted in a net cost increase for the coverage across the board.

This is the long term result of allowing doctors and pharmacies to bill our insurance companies whatever they think could be necessary.  While the cost to patient appears less with insurance, the cost to the system is greater due to the freedom afforded to perform tests and prescribe at will.  If we begin to work with our doctors as collaborators on our health instead of as flat-rate consumers, we can decrease costs to the system and lower the burden on the flawed American insurance system.

Think of it like managing data on a cellular plan.  If we all agree to only stream netflix when we are on wifi, there’s more to go around for everyone.  Hell, with collective cost savings in mind, we could make single payer dreams affordable for our nation without sacrificing quality or skyrocketing cost.  We just need doctors to join us in our fight.