Getting the drugs you need is one of the toughest obstacles in managed care. New drugs often offer major improvements for people living with chronic conditions, such as arthritis or depression. But because pharmacy costs have been going through the roof, health plans are eager to steer consumers toward cheaper, older medicines. To avoid paying for an expensive drug out of your own pocket, make sure you understand your health plan’s “formulary,” or list of approved drugs, and its rules. Here are some key features:
Closed or open: A health plan with a closed formulary pays only for certain preapproved drugs. If the one you need is not on the list, you pay the whole cost yourself. In contrast, open formularies offer most drugs, but the prices vary. HMOs are increasingly instituting a three-tiered scheme, in which the patient makes a flat copayment of $5 for a generic drug, $10 to $15 for a brand-name drug in the formulary and roughly $30 for a brand-name drug outside the formulary. “HMOs maintain some restrictions, but the formulary isn’t totally closed,” says Mary Sevon, a pharmacy consultant in Fairless Hills, Pa. About 40 percent of HMOs still have closed formularies, according to the Chicago-based SMG Marketing Group. If your plan is one of these, find out how to request an exception. Some plans simply require your doctor to fill out a form, while others insist that you follow a lengthy grievance or appeals process.
Financial constraints: You’ve probably heard that HMO doctors risk financial losses if they order too many tests or specialist consultations. What’s less known is that some doctors can lose money if they prescribe too many expensive drugs. About 25 percent of HMOs specify an annual drug budget for each member. If physicians overspend, the money comes out of their pocket. Other HMOs may award bonuses to doctors for prescribing cheap drugs, or dock doctors’ pay for prescribing expensively. Either way, the doctor has an incentive to put finances ahead of patients’ best interests, says Dr. Jerry Avorn of Harvard Medical School. It’s especially important to know about these arrangements if you’re a candidate for a costly new drug such as Viagra, for sexual dysfunction, or Celebrex, for arthritis.
Step therapy: Another way plans limit expensive drug use is to require members to follow a specific sequence of prescriptions, called step therapy. Starting with the least-expensive remedy, a member moves, rung by rung, up the prescription ladder until her condition or symptoms are under control. This protracted process, which is used by 41 percent of HMOs according to SMG Marketing, can be annoying for members with new diagnoses. But it’s sheer harassment for a new member who already knows which medicine works for him. Before joining a new plan, call its member-services department to see if it restricts any of the drugs you’re taking. If your medication is considered “step three,” explain that you’re already on it–and ask if you can skip steps one and two.
Shifting benefits: Medicare HMOs attract many seniors by offering them $1,000 or more in free prescription drugs each year. But this wonderful benefit comes with some hidden traps. The most important is that Medicare HMOs may reduce or drop the benefit in coming years. They can also make the benefit hard to use. Find out if you can spend your drug allowance any time throughout the year (some plans impose quarterly limits). And ask whether the plan uses discounted prices or full retail prices to calculate how much of the benefit you’ve used.
For more and more of us, getting control of our health means finding the right pill to swallow at the right price. So knowing a health plan’s drug policy isn’t just for vigilant consumers anymore. It’s a key way to protect both your health and your wallet.
