Friday, October 02, 2009

Fallout from New Healthcare Plans ... Yet Again?!

Last year, I lamented (see here and here) about a new healthcare provider, and many people commented. As I may have mentioned, on June 1, 2009, my employer switched healthcare plans and providers for the third time in the past 3 years. That's why I laugh at President Obama's speeches where he says if you like your doctor, you won't have to change with healthcare reform. He can't make such claims, because it's not necessarily true. Anyway, I can't really blame my employer's decision to switch again this year, as the company has done it's best to contend with healthcare costs which have consistently risen much faster than the rate of inflation. To add to this, as a relatively small employer (fewer than 50 employees), those costs have jumped significantly faster than they have for larger corporations, who can negotiate better deals because their business is big enough to be missed. This year, my employer decided upon a high-deductible ($2,500.00 for both medical and pharmacy benefits, with certain exemptions which I'll address in a minute, but I hadn't realized there were two separate deductibles that had to be met) plan that has out-of-network healthcare coverage, so at least I didn't have to find a new endo or any other doctors, as I did when I was switched to Empire Blue Cross/Blue Shield, part of the Anthem family which is owned by the for-profit corporation Wellpoint, Inc. The new plan is from Emblem Health, which is the product of a merger between two New York-based insurers: Group Health Incorporated (GHI) and Health Insurance Plan of Greater New York (HIP).

While high-deductible plans sound pretty bad, the fact that my employer is picking up the cost of anything over my individual deductible amount of $500.00 means they are paying the 500.01 to $2,500.00 (they are picking up a deductible portion for family coverage as well, but that's not relevant for me, so I don't recall the amount) not covered by my insurer, so it's not as bad as having to meet all of that out-of-pocket. But anything applied towards the medical deductible (or the pharmacy deductible) is not based on the billed amount (or the retail Rx price in a pharmacy) amount, but my new healthcare plan's "usual and customary" plan allowance amounts, which are often much less than the provider's billed (or, as I'll explain in a minute, the retail price of some drugs).

My employer's decision was based on simple mathematics, as the decision to cover the deductible amounts over my $500.00 medical and pharmaceutical deductibles is still far cheaper than it was to renew with the old provider (Empire/Anthem/Wellpoint). However, the administative component of this decision has been cumbersome to say the least. Since June, I've been required to submit claims to my insurance company, as well as to a Health Reimbursement Arrangement (HRA) administrator, who fortunately also handles my Flexible Spending Account (FSA) administration, but sometimes my insurer is slow to process the claims and send out an Explanation of Benefits (EOB), which I then need to send to my HRA and FSA administrator to get my money back and receive the benefits of my employer's assuming some of the costs. Fortunately, I can scan the various documents and send them to the administrator via e-mail, so there aren't extensive delays on that end of things. My insurer does send out an EOB automatically for all medical claims, but does NOT do so automatically for pharmacy claims, so I am forced to request pharmacy EOBs in order to submit them. Now, I can barely keep track of all these acronyms, let alone the claims, so it's kind of an administrative hassle, and yet we wonder why the U.S. "system" is so inefficient?

Fortunately, refills of my prescriptions were transferred from my old insurer's in-house pharmacy benefits manager ("PBM", yet another acronym!), WellPoint NextRx (which was sold in March to Express Scripts) and transferred automatically to my new insurer's PBM, so I was able to order refills without much difficulty or interruption. Fortunately, I ordered a last round of supplies with my old insurer Empire before my coverage with them was terminated, so I was stocked up with a 90-day supply of insulin, needles, testing supplies as well as an ACE inhibitor prescribed to preserve my kidneys, and a statin which my lab results suggest really isn't necessary, but I've been compliant nevertheless as long as I don't have to endure any annoying side-effects like muscle-aches, which I did experience with Zocor (simvastatin). I used Lipitor (know generically as atorvastatin calcium) which was on Empire's most costly drug tier, but had no side effects. My former insurer from 3 years ago also encouraged me to order a strength that was twice of what is required, then simply split the tablets in half (apparently the cost of a 20 mg tablet sells for the same as a 40 mg tablet) which cut my co-payments in half as well. But that isn't even on the formulary for my new plan, so I wanted to find something else, which fortunately are growing (by 2013, Lipitor itself will go generic).

But with my new healthcare plan, I discovered that (fortunately) insulin, syringes and the like are not subject to my new plan's pharmacy deductible, and are priced at a very low co-payment amounts, even though there are no generic insulins sold. I'm not sure why this is the case, but it may be a New York State law that mandates it. If we were allowed to shop for healthplans across state lines, that protection might disappear, as employers could theoretically "shop around" for states that have few insurer mandates. I learned about the separate pharmacy deductible since I'd assumed the new plan would work in a similar manner to my old one, and sent all my prescriptions (including testing supplies) to Medco Health Solutions, the PBM for Emblem Health (my new insurer). I quickly discovered that first, Medco cannot even fulfill orders for diabetes testing supplies for Emblem Health, so I asked my endo for a new script (I suppose I could have asked Medco to return it to me or transfer it to a yet-to-be-identified supplier), and then I made a few calls to my new insurer. I discovered that Emblem Health had an arrangement with CCS Medical, which is a Clearwater, FL based direct-to-consumer provider of medical supplies, with particular focus on diabetes supplies -- CCS is now operating under bankruptcy protection, but it's reorganization plans are focused almost exclusively on direct-to-consumer diabetes supplies and services, as well as ostomy supplies for those who require them. (The company also handles insulin pumps and other related supplies, such as IV prep and the like). CCS handled my testing supplies, and charges no co-payment and covers 100% of the cost, although the company does not carry Agamatrix Wavesense meters, which I would prefer if given a choice, so it's back to the One Touch products. However, Medco still handles drugs for Emblem Health, and I was rudely alerted to the fact that the "usual and customary" price for the ACE inhibitor (used to protect the kidney function in many patients with diabetes) lisinopril or statins are NOT exempt from the deductible as diabetes medicines and syringes/pen needles are.

Aside from the extraordinary markup on generics, I also discovered the brutal world of economics at work here. For example, in addition to the ACE inhibitor, my endo prescribes a statin, but the one I was using was not even on the formulary of my new plan (Lipitor was in the most expensive drug tier of my old plan, but it was still covered), but I averted what would have been a bill for $294 by cancelling the order as soon as I saw it on Medco's website and learned that certain prescriptions aren't covered until the deductible is met. I avoided a bill for almost $300.00 and quickly asked my endo about a generic alternative OTHER than Zocor (simvastatin). He suggested pravastatin (brand-name Pravachol), and I ordered it via the mail-order (virtually all scripts with this new plan must be filled via mail-order, as there is a $500.00 annual cap on scripts filled in retail pharmacies like Walgreens or CVS) and I submitted that via mail-order. When I got Medco's invoice, I also learned just how profitable generics really are for PBMs like Medco. $119.00 for a 90-day supply of a generic statin, and pretty much the same for a generic ACE inhibitor, and that's at Emblem Health's negotiated price. But after doing the math, I've decided that regardless of how close (or far away) I am to the pharmacy deductible amount, it simply isn't worth ordering a generic from Medco again -- even if it does apply towards the pharmacy deductible. Even if I never reach the pharmacy deductible amount, I'd still save quite a bit of money by filling those prescriptions elsewhere.

For example, generics are available at Target, Wal-Mart and even many supermarkets for $4.00 each, so even if I have to pay that out-of-pocket each month (or once per quarter), that's still less than half as costly ($48.00) as my recent 90-day fill of just one generic prescription with Medco.

Fortunately, I am able to absorb the prices using pre-tax dollars with my FSA, but since my employer's HRA only applies to medical benefits (not pharmacy benefits), the wise choice is to fill all of my prescriptions for generic drugs at one of these places. In fact, Wal-Mart's mail-order pharmacy sells a 90-day supply of lisinopril and pravastatin for $10.00 each, which amounts to $80.00/year for a year's supply of both, which even less than the $96.00 it would cost at retail pharmacies. Even though Wal-Mart doesn't have a single retail store anywhere in New York City, I can order these via the Wal-Mart's mail-order pharmacy as easily as I can order from Medco, and let's face it, I would have to use a LOT of costly prescription drugs other than insulin, syringes and testing supplies to meet the $2,500.00 deductible amount, so next time, I'm ordering from Wal-Mart's mail-order pharmacy, and Medco will have to find some other sucker to pay those outrageous prices. That's one reason, I believe, Adam J. Fein, Ph.D., who is founder and president of Pembroke Consulting, Inc., a Philadelphia-based management advisory and business research firm (he also has an informative blog at and he forecasts that Wal-Mart is expected to grow even more in the coming years, largely at the expense of smaller chains. Right now, Wal-Mart is not even among the top 3 (those are CVS, Walgreens and Rite Aid), He writes that "Wal-Mart has made price matter by starting a generic prescription price war. Wal-Mart is willing to accept lower-than-normal profits on generic scripts in exchange for market share." He also notes that "Walgreens is moving in this direction, too." I live a block from Walgreen's, but I prefer mail-order, as it's easier.

I wish this kind of story wasn't so commonplace, but the simple reality is that my story is hardly unique. I don't know what the future will bring, but for the foreseeable future (at least until June 2010), I will order from a host of different suppliers: insulin and needles from Medco, generic drugs from Wal-Mart's mail-order pharmacy, and diabetes testing supplies from CCS Medical. I will submit these claims to my insurer, my HRA (at least my pharmacy orders), and my FSA, and and I'll have to see what, if anything, happens with plans on healthcare reform. I'm not holding my breath that we'll see any meaningful reform to address runaway costs, because right now, the only thing Congress seemst to care about is universal coverage, not runaway cost containment.


Crystal said...

Dude. My head is spinning.
Insanity. Glad you have it figured out though.

Wait. Congress cares about something? Hmmm.

wv: duppe
Yup. Congress sure likes to duppe us.

Jenny said...

Obama's claim that you won't have to change insurance referred to the idea you won't have to change from your employer's plan just because the Feds added coverage options for the rest of us who don't work for employers that provide health care.

No one can currently keep your employer from changing what plan they supply. You are lucky yours didn't just drop coverage completely, figuring that with jobs so scarce they could find people to work even without supplying health insurance.

I have not been able to move from Massachusetts for years because I could not get insurance in most of the other places I was interested in moving thanks to the diabetes and bad back on my records. In states with high risk pools, my insurance would have cost $1,000 a month, with deductibles.

The new law with its prohibition on denying coverage to self-employed people with diabetes will give me freedom again to live where I want to live.

My premiums this year in Massachusetts went up $9 a month, as opposed to $70-$150 each year as has happened in past years. This is the first sign that extending coverage to almost everyone in the state IS having a positive impact on costs. We have nonprofit insurance coops exclusively in my region, run by hospitals.

Unknown said...

Would you say overall that you do like Emblem Health Insurance? We are trying to make a decision and it was hard to follow your blog. Would love to know.

Scott S said...

terrilovito, to be honest, my experience so far hasn't been really great with EmblemHealth. They are still trying to integrate GHI and HIP, and its often difficult to determine which part of the company does what, even employees aren't sure half the time. I waited for over 8 weeks to get a letter that a pre-certification request had been denied, something that NYS law mandates be sent out within 5 days of rendering a decision. It was sitting on some woman's spreadsheet and she was gone on vacation for 2 weeks, so it never was sent. Plus, its almost impossible to reach a real person by telephone, and when you do, you are likely to be transferred repeatedly, wasting hours on the phone. In time, these issues may be ironed out, but in the interim, its a hassle to deal with them.