The Insurance Industry's Abusive Tactics
Health Insurers have continued to use a number of abuse tactics that harm patients in exchange to cut cost and boost their profits. These tactics limit patient access to affordable treatment and often override decisions made between doctors and patients. The top two tactics used by insurance companies are:
Prior Authorization
Prior authorization forces doctors to get approval from an insurance company before a patient can receive a key treatment or medication. This tactic results in slow and less effective treatment processes for patients and increases cost burden for physicians.
Most recently a physical survey by the American Medical Association found 92 percent of physicians say prior authorizationnegatively impacts patients’ outcomes. The survey also found that 78 percent of physicians reported that prior authorization can sometimes, often or always result in patient stopping a “recommend course of treatment.”
Step Therapy
Step therapy, also known as “fail first,” requires patients to first use a simpler and cheaper drug for treatment, only allowing patients to use more complex and expensive medications if the first drug does not produce the desired therapeutic outcome. This method leads to slow and ineffective treatment for patients, and could create higher medical utilization and costs for the health care system.
Other tactics used by health insurers:
Non-Medical Switching
Non-medical switching refers to the practice of insurers forcing patients to switch their medication to a chemically distinct but similar medications for non-medical reasons, often to control costs. Non-medical switching has been associated with negative patient outcomes, increased risk of complications, and increased costs for patients.
A 2016 poll from the Global Healthy Living Foundation and the Tennessee Patient Stability Coalition found that more than two-thirds of patients with chronic diseases were forced to change medications because of either reduced insurance coverage or increased out-of-pocket costs. 66% of patients found that, after switching, their medications were less effective, and 95% of patients had their symptoms worsen when they were forced to switch medications.
Adverse Tiering
Adverse tiering is when payers place all or most medications used to treat a particular condition on formulary tiers with higher copayments or cost-sharing requirements, placing heavy financial burdens on patients with those conditions.
Patients with HIV/AIDS have been particularly impacted by this tactic. In 2014, complaints were filed against four insurers for discriminating against people with HIV/AIDS and hepatitis C through adverse tiering, resulting in settlements and a $500,000 fine. A 2015 study in the New England Journal of Medicine found that one-quarter of reviewed health plans in the Affordable Care Act federal insurance exchange had evidence of adverse tiering, as a result of which an HIV/AIDS patient enrolled in an adverse-tiering plan would pay $3,000 more than a patient in another plan.
Patient & Physician Cost Sharing
Patient cost sharing refers to the increasing out-of-pocket costs insurers have shifted to patients through high deductibles, copayments, coinsurance, and other methods before plans will actually cover treatment costs. Insurers have also shifted costs to physicians by requiring them to spend billions of dollars and dozens of hours interacting with insurance company bureaucracy. Cost sharing increases costs for patients and can prompt them to cut back on treatment or even skip procedures and medications altogether.
In 2015, patients spent an average of $815 on out-of-pocket health care costs, up from $751 in 2012, according to a report by the Health Care Cost Institute. In 2016, the Kaiser Family Foundation reported that the percentage of covered workers enrolled in a health insurance plan with a deductible of at least $1,000 increased from just 6% in 2006 to 45% in 2016, while the average deductible for employer-sponsored insurance rose 255% to $1,077 between 2006 and 2015.
Formulary Exclusion Lists
Formulary exclusion lists are lists created by insurers and pharmaceutical benefit managers of specific medicines they will not cover, as well as naming alternative drugs with similar therapeutic benefits they will cover. By denying access to more effective but expensive medications, payers might ultimately move patients towards ineffective treatment regimes.
Between 2014 and 2017, the exclusion list for CVS Caremark, one of the nation’s two largest pharmaceutical benefit managers, more than doubled.
Onerous Conditions for Physicians
Insurers have set low reimbursement rates for physicians or have ceased accepting new doctors into their networks. This concern is especially acute for physicians treating mental health concerns, and can deter psychologists and psychiatrists from joining health care networks and result in fewer therapist options and increased out-of-pocket costs. For example, NPR has reported that insurers pay less than half of the market rate for therapy in San Franciso and Los Angeles.