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BIO Urges States to Use CMS Grants to Combat Discrimination by Health Plans

June 27, 2016
On June 15, the Centers for Medicare and Medicaid Services (CMS) announced $22 million in Affordable Care Act (ACA) funding for state insurance departments.  The Agency’s announcement noted that States are meant to utilize the funding to ensure that plans comply with “key consumer protections,” listing among them: essential health benefits, preventive services, parity in mental health and substance use disorder benefits, appeals processes, and bringing down the cost of health care coverage (also known as the medical loss ratio provision).  Yet there is a key patient protection missing from this list: ensuring issuers comply with the ACA’s prohibition on discrimination on the basis of health status.

This type of discrimination can take many forms, and regulators may need to look at plans closely to detect it.  For example, CMS has noted that placing all of the therapies that treat a specific disease or condition on the highest cost-sharing formulary tier is a form of discrimination.[1]  Another example may be a plan that does not cover certain types of prescription drugs (e.g., those indicated to treat complex, chronic conditions), since this practice would effectively dissuade patients who may need those therapies from enrolling in that plan.

There is a patchwork of federal and state efforts to ensure issuers’ compliance with existing nondiscrimination requirements, but more needs to be done to protect these patients.  At the federal level, CMS’s measures for identifying and combating potentially discriminatory plans are evolving, but not fast—or consistently—enough.  For example, while CMS’s annual guidance to issuers on federally-facilitated Exchanges often includes a discussion of compliance with nondiscrimination standards,[2] the Agency’s nondiscrimination-focused rulemaking, concluded in mid-May, omitted any mention of protecting patients from plans that discriminate on the basis of health status.[3]  What’s more, CMS has been clear that much of the responsibility to protect patients who enroll in Exchange plans from discriminatory benefit design is up to the States.

Concerns with regard to discrimination are not theoretical: evidence continues to come to light that shows that patients are facing discrimination today. For example, a recent assessment of 2016 Qualified Health Plans in the Exchange Marketplace in 14 states, conducted by Harvard’s Center for Health Law and Policy Innovation (CHLPI), raises significant concerns, noting “there is increasing evidence that some QHPs are structured to make specific medications, such as HIV and HCV medications, disproportionately expensive” (see BIO’s post on the Harvard study for more information).  Additionally, Avalere Health recently released a detailed analysis of patient access to medicines in the Exchange plans, finding that some plans require up to a 70 percent coinsurance for certain medicines.[4]

Rather than use the newly announced funding just to review issuers’ proposed premium rates, as the CMS press release suggests, we encourage States to devote a significant portion of funding to oversight and enforcement of the ACA’s prohibition on discrimination on the basis of health status.  Premium rates are an important factor for patients when deciding what plan to enroll in, but they are not the only—or necessarily the greatest—out-of-pocket cost patients will face.  Discriminatory benefit designs can require patients with certain conditions (e.g., rheumatoid arthritis, HIV/AIDS, rare diseases) to pay onerous sums out-of-pocket for the treatments they need, even when the physician, patient, and insurer all agree that the treatment is the best one for the patient. In other words, patients are paying for insurance coverage, but without rigorous nondiscrimination enforcement, they may not be getting their money’s worth.

Prohibiting discrimination on the basis of a patient’s underlying health is a cornerstone of the ACA.  To uphold this critical patient protection, states and the federal government must do more to ensure robust oversight of issuers’ compliance with existing nondiscrimination standards.  States should take advantage of this newly announced funding to exercise the needed oversight to ensure that greater insurance coverage translates to greater access to health care.

[1] 80 Fed. Reg. 10,750, 10,822 (February 27, 2015).

[2] For example, see CMS, 2017 Letters to Issuers in the Federally-facilitated Marketplaces, available at: https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Final-2017-Letter-to-Issuers-2-29-16.pdf (February 29, 2016).

[3] See 81 Fed. Reg. 31,376, 31,405 (May 18, 2016).

[4] Avalere Health. 2016 (April). PlanScape® Review of Patient Access to Medicines in Exchange Plans, By Condition Prepared for PhRMA, p. 39, available at: http://phrma.org/sites/default/files/pdf/avalere-planscape-2016-by-condition.pdf.