JustCare

Tag: insurance

  • Insurers overcharge Medicare enrollees for generic drugs

    Insurers overcharge Medicare enrollees for generic drugs

    The biggest health insurers and Pharmacy Benefit Managers (PBMS) offering Part D prescription drug coverage are overcharging Medicare for generic drugs, according to a new JAMA study by researchers at UC San Diego, West Health and the University of Washington. More than 40 million people with Medicare have Part D drug coverage for their outpatient drug needs. As a result of these overcharges, their out-of-pocket coinsurance costs are likely signficantly higher than they should be.

    The researchers find that part of the reason that older adults and people with disabilities face high out-of-pocket drug costs with Medicare Part D is that Rite Aid, Cigna, Centene, CVS Health Humana, and UnitedHealth, which offer Part D coverage, and the Pharmacy Benefit Managers they own or contract with are inflating the costs of some drugs significantly. Pharmacy Benefit Managers or PBMs buy drugs from manufacturers and design the Part D drug formulary–list of covered drugs–that an insurer offers.

    What’s happening? The insurers and/or the PBMs maximize profits by paying pharmacies (often the pharmacies they own and operate) many times the pharmacies’ acquisition cost of a drug. The insurers or the PBMs eventually clawback that overpayment. But, because they pay a high price to the pharmacies, the Part D insurers can charge a much higher copay to their enrollees–based on the inflated price of the generic drugs–driving up enrollees’ costs.

    The researchers found that sometimes, insurers or PBMs pay pharmacies markups of 6,000 percent or 7,000 percent. For example, insurers paid pharmacies $126 for a cancer tablet that costs $4.20 a tablet.

    In 2022, a USC Schaeffer paper also reported generic drug price padding by the PBMs. The authors call for drug pricing transparency. But, that proposal still gives a role to the PBMs and does not fix the system. It would continue to allow PBMs and insurers to keep low-cost generics off their formularies in order to benefit from big rebates they receive from brand-name drug manufacturers for putting their drugs on formulary. And, it would not stop the padding of generic drug prices.

    The simplest way to address inflated drug prices in the US is to open our borders to drugs from verified pharmacies around the world and require insurers to cover them.

    Here’s more from Just Care:

  • Cigna denies medical claims with a “click and submit”

    Cigna denies medical claims with a “click and submit”

    A new Pro Publica report finds that Cigna’s physicians reject millions of their enrollees’ treating physicians’ insurance claims “on medical grounds” each year, without even looking at them. Other major insurers appear to do exactly the same thing. It seems that Cigna and other corporate health insurers see no need to spend money determining whether claims should be paid when they can refuse to pay and save billions of dollars.

    Whatever you think about government-administered insurance, like Traditional Medicare, the government defers to the treating physician to determine whether care is reasonable and necessary and should be covered. But, unlike the government, corporate health insurers come between patients and the care their treating physicians recommend for them. Denying care means maximizing profits; the less they spend on care, the more of the premium dollars they are able to keep for their shareholders.

    The Pro Publica report confirms that the insurers take little time, less than two seconds, when deciding whether to pay certain claims even though, in many instances, these claims are for medically reasonable and necessary services that should be paid.  “We literally click and submit,” one former company doctor said. This behavior would appear to be forbidden under state and federal laws.

    Under both state and federal laws, the insurance company doctors are required to “review” all claims to determine whether they should be denied or not. “Medical directors are expected to examine patient records, review coverage policies and use their expertise to decide whether to approve or deny claims,” according to regulators. The goal is to minimize inappropriate denials. Still it appears that Cigna and other insurers believe that physician reviewers can determine whether a claim is covered without looking at patients’ files.

    “Why not deny claims?” seems to be the mantra of some corporate health insurers, if not most of them. They face no penalty for high rates of inappropriate denials. Instead, these insurers burden patients and physicians with having to appeal if they want to be paid. And, the insurers know that in 95 percent of cases, the physicians and patients won’t appeal.

    Only five percent of the time do patients and physicians appeal the insurance company denials. It’s easier for the physician to stop performing the procedures that the insurers deny, even when the patients need them. And, the patients often do not know that it’s generally relatively easy to appeal, they can do it themselves and they have a high likelihood of winning on appeal, if only after many months. Even when they do know they could win on appeal, people might not have the time, energy or ability to file an appeal.

    The Pro Publica story focuses on patients with employer coverage. But, you can bet your bottom dollar that the health insurers use the same tools to reject claims of people in Medicare Advantage plans–the corporate health plans that contract with the government to offer Medicare benefits–as they do for people with employer coverage. So, if you’re in a Medicare Advantage plan and you need costly services, don’t be surprised when your health plan denies coverage for the medically necessary care your treating physician believes you need.

    Here’s more from Just Care: