Tuesday, September 17, 2019

In 2020, People With Diabetes May Wish to Thank the IRS

Amidst news of several Congressional hearings on the topic earlier in 2019, and continued protests by patient advocates outside of insulin manufacturers' headquarters, as well as persistent patient and caregiver complaints about runaway U.S. insulin prices in the U.S. media, a less-acknowledged change occurred which could impact what many patients with diabetes pay next year for insulin and testing supplies.

It's not often that Americans would actually wish to THANK the Treasury Department and the Internal Revenue Service (IRS), but in 2020, perhaps many Americans with diabetes might wish to do that!

On July 17, 2019, the IRS added care for a number of chronic medical conditions to the list of preventive care benefits that may be provided by high deductible health plans (HDHP). The press release for that change can be seen at https://www.irs.gov/newsroom/irs-expands-list-of-preventive-care-for-hsa-participants-to-include-certain-care-for-chronic-conditions. Details are outlined in Notice 2019-45 (see https://www.irs.gov/pub/irs-drop/n-19-45.pdf for the complete list) lists a number of new types of medical care that are now allowed under IRS rules to be treated as "preventive care" for this purpose. There are important tax implications for healthcare insurance companies for offering these benefits.

The IRS defines a high deductible healthcare plan (HDHP) as healthcare plans which generally do not provide any benefits for any year until the minimum deductible for that year has been satisfied. Currently, the IRS defines a high deductible healthcare plan as one having a deductible of at least $1,350 for an individual or at least $2,700 for a family. However, under IRS rules, a HDHP is not required to have a deductible met for defined "preventive care" services. The tax implication is that healthcare insurance companies may classify the expenses associated with those services as business expenses on their tax returns. But that list has historically been fairly limited. The IRS applies the same general rules to Healthcare Savings Accounts (HSA).

But after all of the Congressional hearings this year, the U.S. Treasury Department and the IRS determined that certain medical care services received and items purchased, including prescription drugs and a few medical devices for certain chronic conditions should therefore now be re-classified as "preventive care" for people living with chronic conditions. Diabetes (all types), asthma and depression were among the major chronic conditions which were recently added to this list. This means that insulin to treat both Type 1 and Type 2 diabetes as well as other drugs to treat Type 2 diabetes (Symlin is the one FDA-approved non-insulin med to treat Type 1 diabetes which is also eligible), plus testing supplies and HbA1c testing should all be covered under these new IRS rules. All told, the new rule has outlined 14 medications and services that now qualify for pre-deductible coverage, several of which apply to people with Type 1, Type 2 and people with known diabetes complications. Among them:

  • Insulin and other medicines to lower blood glucose
  • Retinopathy screening
  • Glucometer
  • Hemoglobin A1c testing
  • Statins for diabetes (previously on the preventative treatment list, but only for cardiovascular disease)

This is a very major development, and it is one which I suggested as something that needed to be adopted back in November 2018 (see my post HERE) might alleviate much of the financial difficulty people with diabetes have faced in affording such very basic treatments as insulin in recent years. This was also one of the suggestions revealed in the Congressional testimony in early 2019. I am very pleased they have finally adopted this.

As noted, because there are important tax implications for insurance companies, most insurance companies willingly cover these preventative treatments. However, the implementation of them will take place based on differing "plan dates" unique to every employer's health plan, so beware it may not happen immediately. I am guessing it will likely apply to everyone starting in 2020 based upon the implementation dates.

It is somewhat curious that on April 3, 2019, health insurance company Cigna (the owner of the PBM Express Scripts) made news with a Patient Assurance Program (see the press release HERE), which it said would ensure eligible people with diabetes in participating Cigna plans would pay no more than $25 for a 30-day supply of insulin. However, Cigna was not telling everyone that it applied only to new employer contracts the company landed in 2019 and later (meaning no existing contracts would get the benefit). But more importantly, if Cigna adopts the new Preventative Care guidelines under the IRS rules, Cigna's Patient Assurance Program will be irrelevant, plus thanks to the change at the IRS, Cigna may actually be getting U.S. taxpayer subsidies to offer that.

I personally called my own insurance company to ask when MY healthcare plan would be adopting the new IRS guidelines. Initially, they were unable to answer my question. But I later learned that the company is in the process of implementing the new preventive care benefits, although they were not yet in place. But this means they will very likely be in place starting next year.

For the Uninsured: Consider 340B Prescription Drug Program

The new IRS rule change will NOT solve Rx access problems for everyone (the uninsured, for example), but for millions, it certainly will. For those outside of the HDHP employer coverage issue, there are still programs which can assist, and I'm not talking about the manufacturers' bogus patient assistance programs -- I've yet to meet anyone who qualifies for those. But suppose you're a person who just turned age 26 and are suddenly no longer eligible to be covered under your parents' health insurance. Maybe you're working various "gig" jobs with no benefits and maybe also waiting tables or working at your local coffee shop as a barista to make ends meet, then it might seem like things look pretty dire as far as diabetes is concerned. These are exactly the types whom the 340B Prescription Drug Benefit are supposed to benefit. But most people aren't even aware this program even exists, let alone know how it works.

Without getting too wonky about exactly how this program works (I'm not certain I could do so even if I wanted to!), just know that this program costs taxpayers next to nothing. But in exchange for access to a massive Medicaid market, the government requires drug companies make prescription drugs be sold under this program at about 50% off list prices. You need not be at or near poverty-level in order to qualify. You simply need to establish a relationship with a doctor at a participating Community Health Center.

To find an eligible Community Health Center, visit https://findahealthcenter.hrsa.gov/. Be advised many Community Health Centers are not in the greatest part of town; some are located in schools. They are intended to serve disadvantaged communities, although they are open to all. But once a patient does visit one, thereby establishing a doctor-patient relationship there, they then become eligible to buy their prescriptions from the Community Health Center's pharmacy. You do not even have to stop seeing your regular endocrinologist, you just need to also establish a doctor-patient relationship with a doctor at a participating Community Health Center. Most will understand the acute need for access to affordable insulin. You might even like the doctor, too!

Most (but not all) of these Community Health Centers contract their pharmacy operations out to third-party pharmacies, which means you'd receive a pharmacy discount card which can be used at a designated pharmacy (usually a Walgreens pharmacy, which is the biggest 340B pharmacy, but only at one specific Walgreens location nearest to the Community Health Center). The rules of this program are not widely known or understood, but it's a very good program for people in need, and provides deeply-discounted prescriptions on things like insulin. More info. about the 340B drug program can be found at https://www.hrsa.gov/opa/. Now, I should acknowledge that technically, the law only applies to in-clinic treatments, but they have always made exceptions for certain ailments like diabetes and asthma since those require patients to self-medicate. Just beware some critics may indicate otherwise; but a doctor at these facilities can explain how it works for their center.

Once you become a patient of a doctor at one of those Community Health Centers, you become eligible to buy prescription drugs from their pharmacies. The program was created in 1992 as part of the Veterans Health Care Act, the 340B drug pricing program requires drug companies to provide discounts — sometimes as much as 50% — to covered entities, hospitals, and clinics that treat low-income and uninsured patients. And those Community Health Centers will see any and all patients in their community—regardless of their incomes (or lack thereof). I do, however, recommend when registering at a Community Health Center for the first time to not provide any insurance info. even if you have it. Tell them you will be paying for services out-of-pocket.

But for these people, programs such as the 340B Drug Discount Program under Medicaid are ones the uninsured individuals can more easily qualify for simply by seeing a doctor in an eligible "Community Health Center". I am not at all experienced with this, but I know many people (even those who are otherwise ineligible for Medicaid) can legally qualify under this program. But you must take steps to ensure you become eligible including visiting a doctor at an eligible Community Health Center, perhaps several times each year (you can ask the doctor you see at the center).

Some big hospitals are trying to cheat the 340B drug program, hence PhRMA wants to punish them. But uninsured patients are exactly the kind of people this program is supposed to help.

2 comments:

Bernard said...

Thanks Scott this is really useful information, well researched as always.

T1DiaMom said...

Thanks for this information. It is interesting and useful.