Impact of Benefit Restrictions

Patients living with chronic illnesses or multiple health conditions need to know that they'll be able to get the right medicines they need. Sometimes health benefit design can make it very difficult for patients to get those medicines.

Formulary design. A formulary is the list of medications for which the insurer will pay. These medicines are placed on different tiers; patients will pay little or no out of pocket costs if they use medicines that are on the "lowest" or most preferred tier. These lower tier medicines are usually medicines that have been found to work well in the majority of the population with that condition, with a preference given to generic medications. Medications that do not have a generic substitute, are higher cost or work for smaller populations tend to be placed on "higher" tiers, with higher costs passed on to patients.

Some patients, due to their biology, do not respond well to the medications placed on the lowest tier of the formulary. Under this tiered cost-sharing system, using that medication means higher out-of-pocket costs to the patient. As a result, this type of tiered design can impose a bigger burden of out-of-pocket costs on lower income patients, potentially causing them to reduce their compliance with necessary treatments or avoid care altogether.

Population-based design: Comparative effectiveness research (CER) has been heralded as a way to reduce health-care costs by determining which treatments provide the most benefit for the largest number of patients. By simply choosing "winners and losers," CER drug trials could leave patients who best respond to the "losing" drug without coverage.

A 2011 report examined a CER trial for antipsychotic drugs in the Medicaid program and found that applying restrictive reimbursement for "losing" drugs could actually reduce patient health and increase health-care costs. By limiting coverage for more expensive drugs that benefit patients outside the average, worsened patient health would increase health-care costs by $1.3 billion, outweighing the Medicaid savings.