Insured Beneficiaries will pay More for Prescription Drugs
According to Scott-Levin, a Newtown, Pa., market research firm about 80% of the HMOs and pharmacy-benefit managers will now be offering a three-tier co-payment plan for prescription drugs. This is up from the 52% figure for 1998. For the first tier of co-pays, which will be for the generic drugs the amount will be about $15. For the second-tier, which will be for brand name drugs, the co-pay will be about $25. For the third-tier which would be for drugs that ordinarily would not have been covered the co-pays will be about $50. The good news therefore is that drugs that had not been previously covered will now be covered. The bad news is that for most of the beneficiaries of such plans they will be paying more of the cost for their prescription drugs.
With costs for prescription drugs rising sharply health insurance companies are devising revised systems to determine how much you will pay for these drugs under your health plan coverage. This is especially important for those of us over 65 years of age since on average we will use about 18.5 prescription drugs in a year. As a group this is the most profitable age category for the prescription drug industry.
The tremendous shift that has occurred in medical costs was highlighted in some recently announced numbers from Empire Blue Cross and Blue Shield. For the first time since these figures have been compiled the cost to the premium dollar of drugs (15.5%) will exceed the cost to the premium dollar of hospital care (14.9%).
In order to be able to meet the cost of this rise the health insurance companies are revising the methodology of payment from the beneficiaries. They are also devising new systems of payment to the hospitals to lower the cost structure for drugs in the hospitals. In this article we will examine some of these new systems so that you can anticipate what may be in store for you in the future.
To help contain the cost of the premium to its employees some employers are requiring higher co-payments from the employees for prescription drugs. In many cases the co-payment is a fixed percentage instead of the $5 to $15 figure. 20% is the figure most commonly being used in this system. Under this methodology deductible amounts are being established similar to the system used for medical insurance deductible coverage.
Another new system being utilized is a so-called 3-tier structure. Under these plans the beneficiary will co-pay the lowest amount if they use a generic drug. The cost under the next tier is a favored drug rate determined through prior negotiations between the insurance carrier and the various drug companies. The highest cost for a prescription drug will be paid for a drug that is not in one of the two prior categories. This type of plan is available only to smaller employees in New York State, but is pending approval for larger ones right now.
Hospitals are also being affected by the new cost containment
systems being devised by the health insurance companies. Drug
costs accounted for about 6% of a hospital's budget in 1995, and
it is estimated that the cost will rise to about 10% of the
budget in 1999. Much of this rise has been due to the increased
cost of today's new drugs, but many claim that doctors are
over-prescribing prescription drugs. The latest figures available
from the HCFA show that while overall health care costs rose 5%
in 1997, the cost of prescription drugs rose 14% in that year. To
try and contain the costs for drugs for patients in hospitals,
limits are being placed on the amount of money being spent per
patient. Many hospitals are resisting the effort by the insurance
carriers to place caps on the cost of prescription drugs for
their patients. This system had been tried in California in the
early 1990s but it caused tremendous hardships both for the
patients and the hospitals.
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By Allan Rubin
updated August 13, 2000
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