Analysis of Benefit Design in Silver Plan Variations

By Kelly Brantly, Hillary Bray and Caroline Pearson
Avalere Health, June 2014

Both state-based and federally-facilitated exchanges offer financial assistance for low-income enrollees. The assistance takes two forms: advanced premium tax credits and cost-sharing reductions (CSRs). This report focuses on CSR plans, which are available to individuals and families earning between 100% of the federal poverty level (FPL) and 250% FPL.

CSR plans use federal subsidies to increase their actuarial value (AV) and lower cost-sharing for low-income exchange enrollees. Avalere Health conducted an analysis of the standard silver and CSR plans offered in the federally-facilitated exchange (FFE) that spans 34 states.

• Cost-sharing reductions are more often applied across multiple types of benefits
• in 94% and 87% AV plans compared to 73% AV plans. 
• Many CSR plans have MOOP (maximum out-of-pocket) limits lower than the amount required by law. 
• Almost all CSR plans feature lower deductibles than the standard silver plans, though wide variation remains.
• Consistent with standard silver plans, copays for specialist visits are higher than those for primary care visits.
• Low-income consumers may face very high coinsurance for drugs on tiers three and four, which is least likely to be reduced in CSR plans.

The large variation in co-payments, co-insurance, and deductibles required by CSR plans may not be clear to exchange enrollees with limited income.

Across all CSR plans, there is broad variation in how issuers reduce cost-sharing across benefit categories relative to the standard silver plans. Because issuers have a high level of flexibility in designing these CSR plans, cost-sharing amounts vary across services and in some cases mirror the cost-sharing in standard silver plans.

The large variation in how plans apply the cost-sharing reductions across covered benefits may not be clear to consumers while they are shopping and comparing plans.

Notably, consumers with the lowest income who qualify for the highest level of financial assistance (100% to 150% FPL) could encounter some 94% AV CSR plans with cost-sharing requirements for specific services that are identical to standard silver plans. Even for CSR plan cost-sharing that is reduced, out-of-pocket costs could still serve as a barrier to accessing care.

(This analysis was funded by PhRMA.)

At this link, click “Download PDF” for full report: http://avalerehealth.com/expertise/managed-care/insights/avalere-analysis-cost-sharing-reductions-unevenly-applied-across-services-i

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Comment:

By Don McCanne, MD

This report provides a highly technical explanation of the great variation in cost-sharing provisions for lower-income individuals insured by the various silver plans in the exchanges. This is just another example of the unnecessary increase in administrative complexity brought to us by the Affordable Care Act.

What is particularly egregious is the intolerably high cost-sharing required of low-income individuals who need higher-tier drugs. High cost drugs, such as those used to treat hepatitis C or those that meet the expanded recommendations for HIV prophylaxis, will be unaffordable for individuals with low incomes, in spite of the cost-sharing reductions.

By making these drugs unaffordable, the insurers accomplish two ends: 1) the cost sharing is so high that many lower-income individuals will not fill their prescriptions, saving the insurers those costs, and 2) those with chronic hepatitis C, those at high risk of HIV exposure, or the many others who have  disorders requiring expensive tier 4 drugs will likely select other insurers once they realize that the drugs that they need will be unaffordable (favorable selection). These are some of the newer innovations that the insurers are using since they are now prohibited from using medical underwriting to deny insurance to individuals with greater anticipated health care costs.

More administrative complexity. More insurer chicanery. More inequity in the provision of health care. And this is because our politicians selected the most expensive model of health care reform – one that places insurers and pharmaceutical firms above patients. Many studies have shown that the most efficient and equitable model of comprehensive health care coverage – single payer – is also the least expensive of the comprehensive models of reform. Amongst other important measures, it would put pharmaceutical firms in their place, and it would dismiss the intrusive and wasteful insurers from the scene.

We can still do that.

Analysis of Benefit Design in Silver Plan Variations

By Kelly Brantly, Hillary Bray and Caroline Pearson
Avalere Health, June 2014

Both state-based and federally-facilitated exchanges offer financial assistance for low-income enrollees. The assistance takes two forms: advanced premium tax credits and cost-sharing reductions (CSRs). This report focuses on CSR plans, which are available to individuals and families earning between 100% of the federal poverty level (FPL) and 250% FPL.

CSR plans use federal subsidies to increase their actuarial value (AV) and lower cost-sharing for low-income exchange enrollees. Avalere Health conducted an analysis of the standard silver and CSR plans offered in the federally-facilitated exchange (FFE) that spans 34 states.

• Cost-sharing reductions are more often applied across multiple types of benefits
• in 94% and 87% AV plans compared to 73% AV plans.
• Many CSR plans have MOOP (maximum out-of-pocket) limits lower than the amount required by law.
• Almost all CSR plans feature lower deductibles than the standard silver plans, though wide variation remains.
• Consistent with standard silver plans, copays for specialist visits are higher than those for primary care visits.
• Low-income consumers may face very high coinsurance for drugs on tiers three and four, which is least likely to be reduced in CSR plans.

The large variation in co-payments, co-insurance, and deductibles required by CSR plans may not be clear to exchange enrollees with limited income.

Across all CSR plans, there is broad variation in how issuers reduce cost-sharing across benefit categories relative to the standard silver plans. Because issuers have a high level of flexibility in designing these CSR plans, cost-sharing amounts vary across services and in some cases mirror the cost-sharing in standard silver plans.

The large variation in how plans apply the cost-sharing reductions across covered benefits may not be clear to consumers while they are shopping and comparing plans.

Notably, consumers with the lowest income who qualify for the highest level of financial assistance (100% to 150% FPL) could encounter some 94% AV CSR plans with cost-sharing requirements for specific services that are identical to standard silver plans. Even for CSR plan cost-sharing that is reduced, out-of-pocket costs could still serve as a barrier to accessing care.

(This analysis was funded by PhRMA.)

At this link, click “Download PDF” for full report:http://avalerehealth.com/expertise/managed-care/insights/avalere-analysi…

This report provides a highly technical explanation of the great variation in cost-sharing provisions for lower-income individuals insured by the various silver plans in the exchanges. This is just another example of the unnecessary increase in administrative complexity brought to us by the Affordable Care Act.

What is particularly egregious is the intolerably high cost-sharing required of low-income individuals who need higher-tier drugs. High cost drugs, such as those used to treat hepatitis C or those that meet the expanded recommendations for HIV prophylaxis, will be unaffordable for individuals with low incomes, in spite of the cost-sharing reductions.

By making these drugs unaffordable, the insurers accomplish two ends: 1) the cost sharing is so high that many lower-income individuals will not fill their prescriptions, saving the insurers those costs, and 2) those with chronic hepatitis C, those at high risk of HIV exposure, or the many others who have  disorders requiring expensive tier 4 drugs will likely select other insurers once they realize that the drugs that they need will be unaffordable (favorable selection). These are some of the newer innovations that the insurers are using since they are now prohibited from using medical underwriting to deny insurance to individuals with greater anticipated health care costs.

More administrative complexity. More insurer chicanery. More inequity in the provision of health care. And this is because our politicians selected the most expensive model of health care reform – one that places insurers and pharmaceutical firms above patients. Many studies have shown that the most efficient and equitable model of comprehensive health care coverage – single payer – is also the least expensive of the comprehensive models of reform. Amongst other important measures, it would put pharmaceutical firms in their place, and it would dismiss the intrusive and wasteful insurers from the scene.

We can still do that.