New Health Plans Offer Discounts For Diabetes Care
By Michelle Andrews
Kaiser Health News, November 17, 2015
Talk about targeted. Consumers scrolling through the health plan options on the insurance marketplaces in a few states this fall may come upon plans whose name — Leap Diabetes Plans — leaves no doubt about who should apply.
Offered by Aetna in four regions next year, the gold-level plans are tailored for the needs of people with diabetes. They feature $10 copays for the specialists diabetics need such as endocrinologists, ophthalmologists and podiatrists, and offer free blood sugar test strips, glucose monitors and other diabetic supplies. A care management program with online tools and coaching helps people manage their condition day-to-day. The plans also offer financial incentives, including a $50 gift card for getting an A1c blood test twice a year to measure blood sugar levels and a $25 card for hooking up a glucometer or biometric tracker to the Aetna site.
It’s unclear whether the diabetes plans are a good buy for people with diabetes. The cut rates for specialist visits only apply if they’re related to diabetes care, not for other conditions someone may have. Meanwhile, coverage for medications, which may cost consumers hundreds of dollars every month, is no different in the diabetes plans than in other gold plans.
This isn’t the first time that an insurer has designed a health plan for people with diabetes, but it appears to be the first on the health insurance marketplaces. They are part of a new line of plans Aetna is introducing, called leap plans, aimed at helping Aetna build its retail business. Aetna says they are simpler to use and will have more personal customer service.
Aetna Innovation Health Leap Gold Diabetes Plan
By Don McCanne, M.D.
Private insurers use innovation to maintain a competitive marketplace presence for their insurance products. Health care costs are so high that premiums become unaffordable without the introduction of innovations. Two ubiquitous examples are lower-cost narrow networks of providers, and shifting health care costs to patients through higher deductibles. Now Aetna is introducing an innovative plan targeted to one specific disorder – diabetes. How does this work, and who benefits?
This is a somewhat bizarre innovation since insurers traditionally have used various devious strategies to try to avoid selling their products to individuals anticipated to have higher health care costs. Diabetics certainly fall into this category. So what are they doing here that makes this a rational strategy?
It should be noted that the Aetna Innovation Health Leap Gold Diabetes Plan is a gold plan with an actuarial value of 80 percent (the individual pays 20 percent of the average costs of covered services). Lower-income individuals who would be eligible for subsidies for their covered out-of-pocket expenses must buy a silver plan (70 percent actuarial value) to qualify for those subsidies. So this plan is designed for individuals with higher incomes that would disqualify them for the out-of-pocket subsidies – individuals who would be more capable of paying higher premiums and greater out-of-pocket expenses anyway – the carriage trade.
So how can Aetna keep these plans affordable if they are deliberately marketing them to individuals with diabetes? First of all, they do increase the premium paid for the plan since patients would think that it is worth the difference because they are getting a plan that is customized to take better care of their diabetes. The insurers also use other innovations to keep spending under control. For example, although they include in their networks enough providers to take care of diabetes, they can keep the rest of the network as narrow as possible, thereby impairing access to care beyond their diabetes.
So how well is diabetes covered under this plan? In the example given – routine maintenance of well-controlled type 2 diabetes – for $5,400 of allowed costs, the plan pays $2,720 and the patient pays $2,680 – almost half. However, Aetna includes the disclaimer that “Your own costs will be different depending on the care you receive, the prices your providers charge, and the reimbursement your health plan allows.”
For individuals with significant disorders such as diabetes, out-of-network care is common and may be unavoidable. The deductible for an individual for out-of-network care in this Aetna plan is $20,000 ($40,000 for a family) and only allowed charges apply. The patient is also responsible for a coinsurance of 50% after the out-of-network deductible is met. Thus if the patient is charged $50,000 for out-of-network care, and the charge allowed by the insurer is $20,000, the patient must pay the entire $50,000 charge, and Aetna pays nothing.
Suppose the out-of-network charges are $50,000 but the insurer’s allowed charges are $30,000. In this case the patient pays the $20,000 deductible, $5,000 of the remaining allowed charges, and the $20,000 balance that was not allowed – a total of $45,000. The insurer pays $5,000 or a mere 10% of the bill.
Other features of the plan are of concern. The plan uses tiering of pharmacy benefits, and the patient could end up with very large out-of-pocket costs for their essential diabetes medications. Weight loss programs and bariatric surgery are specifically excluded even though many diabetics could benefit from these services. Several out-of-network services require precertification or the patient pays not only the $20,000 deductible and the 50% coinsurance, but would also have a penalty of a 50% reduction in the meager allowed benefits, up to $400. And so on.
So who gains? A diabetic patient might be better off if the only care received is for diabetes, but diabetics have a high incidence of serious concomitant disorders. Under this plan care for conditions other than diabetes could be restricted by narrower networks, higher cost sharing, and other restrictions of the plan. Plus the premium paid is higher. The insurer can benefit by providing a product that might have market appeal for a given sector (diabetics), resulting in greater enrollment. However, the insurer does bear some risk. The additional premium and the restrictions and cost sharing in the plan may not be enough to offset the additional costs of care that diabetics require, not to mention that an increase in insurer profits might not be realized.
Perhaps the most fundamental flaw with this proposal is that one condition is selected for better coverage whereas all other conditions have offsetting direct or indirect reductions in coverage, which goes one step further in disrupting the risk pooling that is essential in well functioning insurance programs. It is moving away from the direction in which we should be headed.
Just think of how single payer would eliminate these issues without having to play the games devised by the private insurers for their own benefit.