How to Advocate for Yourself: Making Employer-Sponsored Health Plans Work for Your Diabetes Care

This content originally appeared on diaTribe. Republished with permission.

By Julia Kenney

The therapies, devices, and care that people with diabetes need can be expensive without adequate insurance coverage. For those with employer-sponsored health insurance, there are steps you can take to improve your insurance options and advocate for yourself.

Over 45 percent of Americans have diabetes or prediabetes and roughly half of US adults receive health insurance through their employer. Unfortunately, not all employer-sponsored health plans meet the needs of people with diabetes. According to a study of 65,000 people with type 1 diabetes on employer-sponsored health insurance, the average annual out-of-pocket cost of diabetes care was $2,500. Eight percent of study participants had annual costs well over $5,000. Since diabetes is most prevalent in low- and middle-income households, these costs, in addition to paying for premiums and non-diabetes healthcare, are unaffordable for many people.

If your health insurance does not cover a component of your diabetes healthcare, or if your diabetes care is covered but still unaffordable, you can work with your employer to get better coverage. Here is an overview of the different types of health insurance, who to go to for help, and how to advocate for better diabetes health coverage.

What are the different types of health insurance?

You will have expenses no matter what health insurance you have, but some plans can be more affordable for diabetes care. These are the expenses you will typically encounter with your health insurance plan:

  • Premium – Similar to paying rent, a premium is a fixed amount that you pay every month to keep your health insurance active. It’s common for employers to pay about half of your monthly premium, and sometimes more. In 2019, people with employer-sponsored insurance paid an annual average of $1,242 for health insurance premiums.
  • Deductible – The deductible is the amount you pay out-of-pocket before your insurance provider covers expenses. For example, if you have a $1,000 deductible, your insurance coverage will not kick in until you’ve paid $1,000 in healthcare expenses for that year.
  • Copays – Copays are a fixed amount that you pay for a health service or medication, and your insurance provider covers the rest of the cost. Copays are a helpful way to pay for diabetes care because they are fixed, predictable costs that people can plan for.
  • Coinsurance – Unlike fixed-price copays, coinsurance costs are a percentage of the total price of a health service or medication. These expenses are less predictable because medication prices can fluctuate.

There are three main types of health insurance – health maintenance organizations (HMO), preferred provider organizations (PPO), and high deductible health plans (HDHP). Here is an overview of the different types of health plans and what they might cost:

  • HMO – Health maintenance organizations have high premiums and low deductibles. An HMO plan covers healthcare within a network of hospitals and healthcare professionals. Your providers must be in-network in order to get your diabetes care covered. If your diabetes care professionals are in-network, this is often the most cost-effective healthcare option for people with diabetes.
  • PPO – Preferred provider organizations also have high premiums and low deductibles than HDHPs. PPOs are more flexible than HMOs because you are able to see providers out-of-network and you can see specialists without a referral. Because of this, PPOs typically have higher premiums and out-of-pocket costs than HMO plans.
  • HDHP – High deductible health plans typically have low monthly premiums and high deductibles. In 2020, the IRS defined a HDHP as any plan with a deductible of at least $1,400 for an individual and $2,800 for a family. If you have a high deductible health plan, you can open a health savings account where you set aside money to pay for medical expenses tax-free. These health plans are good for people who don’t anticipate needing regular healthcare; paying for diabetes care can be difficult with this type of plan because you will have high out-of-pocket costs upfront before you meet your deductible.
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Keeping these different types of health insurance and related expenses in mind, here are some things people with diabetes should think about when reviewing an employer-sponsored health plan:

  • What are my diabetes-related costs? Make a list of your diabetes healthcare costs including medications, devices, supplies, healthcare visits, and lab tests.
  • What are the health insurance costs? Look at the premium, deductible, and whatever cost sharing method (copay or coinsurance) is used for the health plan.
  • Are my medications and devices covered? Refer to your health plan’s Summary of Benefits and Coverage to see what is included in your insurance coverage. If a therapy or device is not covered, you may have to switch to one that is or submit a request to get it covered. Getting a new medication or device covered under your health plan can be a challenging and time-consuming process.
  • Is insulin covered pre-deductible? Some health plans cover insulin before you reach your deductible because it is considered preventive medicine. This can make insulin considerably more affordable, especially for people on high deductible health plans.
  • Are my healthcare professionals in-network? Accessing in-network healthcare is more affordable than out-of-network care. You should choose a health plan where your current providers are in-network or one that has good in-network options.
  • Can I access a flexible spending account (FSA) or health savings account (HSA) to save money? FSAs and HSAs are used to put aside money that is not taxed to help pay for medical expenses. HSAs are paired with high deductible health plans. FSAs can be used for any kind of health insurance and all FSA funds must be used in the same calendar year. Learn more about FSAs and HSAs here.

If I have a problem with my insurance, who do I go to for help?

Your employer’s human resources (HR) department should be able to address many of your insurance-related questions, since it likely helped select the health plan(s) available to you. Your HR department is your first resource for health insurance questions. If you need help selecting an insurance plan, want to see if your diabetes care is covered, need to file a claim, or are having trouble navigating your plan and understanding the costs, the HR department will support you.

For further questions, your HR department can refer you to a representative with the health insurance company or to a third-party administrator. A third-party administrator will help you understand your health plan, file health insurance claims, and navigate the appeals process if your insurance company denies coverage for a diabetes treatment. You can also apply for an exception to get treatments, medications, and devices covered if recommended by your doctor. A third-party administrator will guide you through these steps for getting important diabetes treatments covered.

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How can I make my employer-sponsored health coverage better for people with diabetes?

People with diabetes typically require expensive medications, devices, and regular visits with healthcare professionals to stay healthy. Robust employer-sponsored health insurance plans should make these expenses affordable and predictable. If you are trying to make permanent changes to your employer-sponsored health plan, your HR department can help you advocate for future health plans that better support diabetes needs. Employers have the power to make changes to their health coverage options every year. Here are some changes you can advocate for:

  • Add insulin and other diabetes care to the preventive medicine list.

In 2019, the IRS ruled that expenses for chronic disease management can be covered before you meet your deductible under a high deductible health plan. HMOs and PPOs also have preventive medicine lists. Diabetes care such as insulin, A1C testing, blood glucose meters, and eye screening – which are all considered preventive medicine – can be added to the preventive medicine list to reduce the copay or coinsurance costs for diabetes care. This saves employees money instead of paying full price before meeting their deductible.

  • Request to get a medication or device covered under your health plan.

If a device or medication you currently use (or want to try) is not covered under your health plan, you can ask for coverage in next year’s health plan. Diabetes devices, such as continuous glucose monitors (CGM) and insulin pumps, can help people with diabetes manage their glucose levels and increase their Time in Range, but are expensive without insurance coverage. Employers can typically negotiate to cover essential diabetes care, so request coverage for your medications and devices. Your diabetes treatment should be determined by your healthcare professional, not by what’s included in your health plan.

  • Share discounts and rebates with employees.

While list prices for diabetes medications may be high, your employer’s pharmacy benefit manager (PBM) can negotiate discounts and rebates on drug prices on behalf of the insurance plan and employer. The list price minus the negotiated discounts is called the net price. Sometimes PBMs and employers will keep the money saved; however, employers can pass discounts on to their employees to lower their out-of-pocket costs.

  • Use copayments for cost sharing instead of unpredictable coinsurance.

Coinsurance costs are unpredictable because they fluctuate as a drug’s net price changes. You can advocate for your employer to choose health plans that use copayments for healthcare cost sharing, instead of coinsurance.

More resources for accessing diabetes healthcare with your employer-sponsored health plan:

Feel free to share this article with your employer or your HR department. All people with diabetes deserve access to affordable, high-quality care. To learn more about health insurance and affording diabetes treatment, visit diaTribe.org/access.

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This article is part of a series on access that was made possible by support from Insulet. The diaTribe Foundation retains strict editorial independence for all content. 

Source: diabetesdaily.com

How Insulin Rebates Work

This content originally appeared on Beyond Type 1. Republished with permission.

By Lala Jackson

A major contributor to high insulin list prices that is often misunderstood – because it is designed to be complex and opaque – is the Pharmacy Benefit Manager (PBM) and rebate system. Rebates are a percentage of the list price of a medication, given by a drug manufacturer to a Pharmacy Benefit Manager (PBM), in order to be listed on the health insurance plan formulary or placed in a pharmacy.

Essentially, rebates function a bit like a “broker’s fee” of sorts and can account for 30-70% of the cost a person has to pay at the counter for insulin if they don’t have insurance, or if they are paying the full cost of insulin until they hit their insurance deductible. The PBM takes a portion of the rebate as their own profit, then gives the remainder to their client, which can be the federal government (Medicare), an employer’s health plan, or a standalone health insurer.

Insulin manufacturers choose to participate in this system that drives list prices up because it benefits their business – by giving PBMs a large cut of their profits, their products get placed on insurance formularies more often, leading to more sales. This system creates up to 70% of the current list price of insulin in the US, and it doesn’t have to be this way.

Rebates – They Don’t Mean What They Sound Like

The math is infuriating, but here’s the heavily-simplified basics of how rebates work – if you made a product for $5 and wanted to sell it, you may set the price at $10, to create a $5 profit. With that $5 profit, you can invest back in your company to create better products, pay yourself – whatever you want to do with your $5.

But let’s say you want your product to be in more places and available to more people. You might hire a middle person to place your product in new stores across the country, and they’ll charge a fee, which is reasonable.

When you begin, their fee is $1. So that you can keep your $5 profit, you raise your price to $11. Still reasonable. But over time, your middle person makes themselves indispensable and knows it. You’re making way more money because of how many products you’re able to sell, so you’re not about to drop your middle person.

And oh oops – you also signed a contract with your middle person to ensure you’ll always get your product placed in these nation-wide stores, so you’re locked in. And part of that contract was a promise that you won’t lower your price, since that would impact your middle-person’s profit.

And oh oops – your middle person also has contracts with your competitors, and the contracts signed with those competitors make it so that if your competitor gives the middle person a little bit more of their profits, your middle person won’t sell your product in certain stores for a year. You can fix this by raising your own price to give the middle person more profits, so you can kick your competitor out of a store the next year.

So now, your product costs $50. It’s the same product – you’ve never improved it. Your customers are receiving no more value than when the product costs just $10. Over time, you wanted to make more money from it, so your profit is now $10.

It’s still $5 to make your product.

You get $10 profit, doubled from your original earnings.

And your middle person? They’re making $35, 70% of the list price, off a product they don’t make or even touch.

But you’re definitely not going to get rid of your middle person, because they’re the reason you’re able to sell so many products and make the money that you do.

For a regular product like a water bottle, no worries, your customer will just go somewhere else.

But what if your product was water, and your customer needed it to survive?

The Role of Pharmacy Benefit Managers (PBMS)

PBMs are third-party intermediaries who negotiate prices and drug placements on insurance formularies between pharmaceutical companies and insurance companies. Sometimes they are standalone companies, other times they are attached to national pharmacies or insurance companies.

For their negotiating services, they take a share of the profits from prescriptions. This share is known as ‘rebates.’ They also profit from “administrative fees” for each unit of drug sold, which can be up to 5% of the list price.

Speculated about for some time but difficult to prove because of private contracts (fully legal through the US system, which is notoriously bad at regulating drug pricing) is the sheer amount of cash being collected by PBMs. Originally created to help get needed drugs to patients more efficiently, PBMs have unfortunately become a key agitator to high out-of-pocket drug costs.

From a January 2021 Senate Finance Committee report, we now definitively know that “…drug manufacturers increased insulin WAC [wholesale cost], in part to give them room to offer larger rebates to PBM and health insurers, all in the hopes that their product would receive preferred formulary placement. This pricing strategy translated into higher sales volumes and revenue for manufacturers.”

The big legislative stumbling block we now face is just how reliant on PBMs the US healthcare system has become. In a more simple system, a pharmaceutical manufacturer could provide their medications to a pharmacy for direct disbursement to patients who require them. But in a system with a shaky foundation to start with and many players in the space, across private and public entities, the water gets significantly muddied.

To keep PBMs happy, ensuring they negotiate the placement of each manufacturer’s insulin on insurance formularies, rebates for insulins have increased exponentially, particularly since 2013.

In July 2013, Sanofi offered rebates between 2% and 4% for preferred placement on a formulary. The same product in 2018 provided a 56% rebate. That’s more than half of the out-of-pocket cost of insulin being handed to companies that don’t make the insulin.

This is one example, but every single insulin manufacturer does this. As the report states, “What is clear is that the money that flows through PBMs is nothing short of enormous. As discussed throughout this report, rebates have grown at a rapid pace in the insulin market in recent years, which is not true in all therapeutic markets.”

The Bigger the PBM, the Greater the Power

The three largest PBMs – CVS Caremark, Express Scripts, and Optum Rx – wield significant power in the market commanding large rebates. Lilly documents show that they offered a 22% rebate to a small PBM, but offered Optum Rx a 68% rebate for the same products in order to get placement in Medicare’s Part D prescription plan. As noted in the report, this robust ability to negotiate has led to “…some PBMs securing rebates as high as 70% in recent years.”

Manufacturer contracts with PBMs, previously confidential but exposed by the Senate Finance Committee report, are written in percentages. This means that it is to the PBMs’ benefit to encourage list price increases, making their portion of payout larger.

PBMs actively encourage manufacturers to raise the list price so that they may receive more money, and use threats of removing insulins from insurance formularies as leverage. The bundling of multiple products (increasing one product’s rebate amount to get other products included) is also a tactic used in PBM and manufacturer negotiations, especially in exclusivity contracts.

“As Eli Lilly explained to its investors in 2019, failing to secure formulary placement can “lead to reduced usage of the drug for the relevant patient population due to coverage restrictions such as prior authorization in formulary exclusions, or due to reimbursement limitations which result in higher consumer out-of-pocket cost, such as non-preferred co-pay tiers, increased co-insurance levels, and higher deductibles.”

The Bottom Line

The US healthcare system is deeply broken, and insulin pricing is one of the clearest examples that an unregulated drug pricing system motivated by profit will always put cash flow over patient lives. PBMs and the rebate system exacerbate the problem, but every participant within the system is at blame. Each entity has chosen profit over people.

Significant rebate reform and an overhaul or removal of the PBM system could slash the list price of insulin by up to 70% and would impact not just insulin, but many medications and devices that are subject to the rebate system. Robust federal healthcare reform could create a system where drug prices could be negotiated on a federal level, and current proposals like rolling back prices to more reasonable levels could be a step.

A deeply broken system requires layered solutions. Without a full overhaul, we risk fixing the insulin pricing issue with a bandaid, while driving up prices and limiting access to other life sustaining medications and life changing technology.

Substantial healthcare policy change takes the voice of many, and individual advocates make a resounding and impactful difference. If you are looking to get involved with diabetes access advocacy, start here. Reach out and get to know your state’s congressional representatives in the House and Senate. Make sure they know your personal experience and how issues of healthcare, drug pricing, and access impact you.

Source: diabetesdaily.com

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