I've been sharing Laurie's newsletters for some time now (years), and some of us who take the time to read her analysis have been rewarded with her insights. We've also been troubled with her findings. Sorry to be gloomy, but tell me I am wrong...then explain why.
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Insurance Warrior News - 1/24/11
Expensive prescription drugs: Are you covered?
Over the past thirty years, total spending for healthcare in the United States has more than doubled as a percentage of the gross national product (GNP). As of 2010, this figure stood at 17.3% of GNP. The Congressional Budget Office estimates that this figure will grow to 31% of GNP by 2035, and 46% of GNP by 2080. Imagine 46% of the total market value of all of the goods and services in the United States being spent on healthcare.
The cancer drug Erbitux costs $4,700 per month in the England, $12,000 per month in the U.S. In a report published in 2009, the Department of Health and Human Services projected that prescription drug spending would increase from $234.1 billion in 2008 to $457.8 billion in 2019 --
almost doubling over the 11-year period.
I do not approve of the subterfuges and strategies that insurance companies use to shift costs to patients. However ... no private insurance company, no government, no entity of any kind has enough money to pay these wild, astronomical, out-of-control medical expenses. Rather than face the terrible problem of runaway hospital costs, drug and medical device prices, insurers have come up with a million ways not to pay for them. Or,
when they pay, to pay as little and as late as possible.
Until we get to the bottom of why medical care costs twice as much in the United States as it does in Europe, all efforts to make insurers really cover us will only result in the insurers finding new and more clever ways not to pay.
Nobody can afford these charges -- least of all the patients.
A case in point: Expensive prescription drugs
Over the past couple of months, three cases about expensive prescription drugs have come my way. I did not end up writing appeals for them, but I did enough research to get a glimpse of the "cost containment approachs" being used by both Medicare and private insurers with regard to prescription drugs.
Which drugs are insurers most likely to not pay for? Expensive drugs.
Which drugs are most likely to be expensive? Drugs used to treat cancer.
How do insurers get out of paying for expensive drugs? Let me count the ways ...
1. The formulary. You have prescription drug coverage -- that doesn't mean that your insurer will pay for every drug that you may ever need. It means that they will pay for the drugs that they choose to pay for. This list is called the "formulary." If the insurer wants to shave a bit off their operating expenses, all they have to do is eliminate a few of the most common drugs -- or the most expensive ones.
2. Percentage co-pays. I studied the formulary for one of the expensive drug denials. I noticed that formularies look very different than they did twenty years ago. On this current formulary, the less-expensive drugs had a dollar-amount co-pay -- $10, $20. When the list got to the more expensive drugs, the co-pay magically turned into a percentage. Erbitux, $12,000 per month. Even if the insurer approves it, you will be paying whatever percentage the insurer chooses -- in this case, 40%, or $4,800 per month. That's a pretty hefty price tag, when you are taking Erbitux for recurrent colon cancer, and you can't work.
3. Medical policy statements. On top of these other hidden icebergs, every insurer has hundreds of medical policy statements -- for other medical procedures and treatments, and for expensive drugs. These documents explain all of the reasons why the insurer won't pay for these drugs or medical treatments. Or, they explain which under which limited circumstances they will cover them.
Off-label use
When I delved into these drug cases, I discovered something shocking. After fighting sixty-nine appeals, it takes a lot to shock the Insurance Warrior.
When the FDA approves a drug for sale, it specifies what conditions the drug should be used for. The FDA also states the doctors are welcome to prescribe these drugs for other uses -- "off-label use."
I learned that there is a law on the books stating that Medicare will not pay for drugs which are prescribed for off-label use. What is so shocking about that?
One out of every five prescriptions written by doctors in this country is for an off-label use. With one regulation, Medicare gets out of paying for one-fifth of all prescriptions that are written. But it gets worse ...
One out of two prescriptions for cancer drugs are for off-label uses. Plus, cancer drugs are the most expensive drugs. What a great cost-savings! With one law,
Medicare gets out of paying for one-half of all prescriptions for these pesky expensive cancer drugs!
As of this year,
private insurers denying more expensive drugs, and invoking Medicare rules as the reason for their denials.
Ignoring the medical policy
I recently received an email from Jim in California: "Anthem Blue Cross of California denied Avastin, my wife's treatment is supposed to start next week. Can you help?" Anthem's denial stated that Avastin "is experimental for this condition." Jim's wife was diagnosed with primary peritoneal cancer.
I found Anthem's medical policy statement for Bevacizumab (Avastin) on their website. It took me five minutes to find the list of diagnosis codes for which they would approve Avastin. Lo and behold, there it was: "158.0-158.9 -- Malignant neoplasm of the retroperitoneum and peritoneum."
Anthem had denied Avastin for a use that was expressly allowed in their own medical policy statement.
I sent Jim a copy of the med policy, and told him to point this out to his doctor, and to put that page of the medical policy statement in front of the correct decision-makers at Anthem. Anthem immediately approved the drug.
There are two possibilities of what happened there; both are equally bad:
Anthem doesn't bother to read their own medical policies before denying a treatment.
Anthem knows full well that they approve this drug for this use. They bet on the fact that neither the patient nor his doctor will never find the medical policy statement.
Compendia
Which brings me to the most cruelest tool in Medicare's arsenal -- the compendia. The compendia are so cruel, because they look like something that will help us.
Medicare will cover anti-cancer drugs for off-label use -- if they are mentioned positively for the requested use in one of four designated drug compendia. Of course, these encyclopedias of prescription drugs are published by private companies, nobody is overseeing what they publish, and they each contradict the other. But that's not the worst of it.
When your $12,000 per month Erbitux is denied, you can simply look it up in one of the compendia, find a positive mention about it for your condition, and report this to the insurer, right? No, wrong. Joke's on you.
Nobody has the compendia.
Your doctor doesn't have the compendia. The public library doesn't have the compendia. Your local medical school library doesn't have the compendia. Amazon has copies of one of the four compendia; it costs over $300, and is three years out of date.
In one of the drug cases, my helpee had a fast-moving cancer. She had already been through all of the usual chemotherapies. Her doctor had prescribed Sutent, and the insurer had denied it for her disease.
Sutent is made by Pfizer. When I found out that my helpee's sister-in-law works for Pfizer, I said, "Eureka, we have an inside track!" I assumed that Pfizer -- a drug manufacturer -- would have ready access to all of the four compendia that dictate what drugs get paid for by insurers. The sister-in-law could look up Sutent, find a couple of positive mentions, and it would be a slam dunk.
Guess what?
Drug companies do not have the compendia.
Do you really think that the average cancer patient in immediate need of a cancer drug will be able to dig up these books, when the combined efforts of the Insurance Warrior and a scientist at a drug company couldn't produce them?
It's so cruel that it boggles the mind. Perhaps if these drugs didn't cost so much, the payors wouldn't have to go to such extravagant lengths not to pay for them.
Happy and peaceful Insurance Warrior-ing,
Laurie Todd