Commercial prescription programs

Definition

Commercial prescription drug insurance plans are provided by for-profit or non-profit organizations to pay some or most of the costs of medications prescribed by a doctor. In most private prescription plans, participants pay a monthly premium, a co-pay for services, and have an annual deductible. There are generally limitations on drug coverage and selection of pharmacies.

Description

Commercial prescription programs are available to groups as well as individuals. Group and individual plans can be further classified as either fee-for-service or managed care. Fee-for-service plans traditionally offer greater freedom when choosing a pharmacy. Managed care often limits a patient to pharmacies approved by the managed care insurance company. The two main types of managed care are health maintenance organizations (HMOs) and preferred provider organizations (PPOs) . A majority of commercial prescription programs are part of private health insurance programs. Sometimes they are included as part of the coverage while at other times, they are optional add-ons, for which the insurance customer pays an additional premium. A non-commercial rescription program is one that is sponsored by the government, including the federal programs Medicare (Part D), Medicaid , and military health care; the State Children's Health Insurance Program (SCHIP); and individual state health plans. Services under the Medicare Part D prescription drug program are administered by private insurance companies, either as part of overall Medicare coverage or as a stand-alone program only for prescription drugs. Many companies, organizations, and private insurers offer a prescription drug discount card. In most cases, there is a small or no fee. The sponsor negotiates drug discounts with individual pharmacy chains that save the card holder a percentage on each prescription. Often, the discount is higher on generic drugs than name-brand drugs. For example, the CareOne pre-scription drug plan offers members up to a 30% discount on prescriptions at participating pharmacies. There are about 40,000 pharmacies in the CareOne program, including most of the major chains, such as Costco, CVS, Rite Aid, and Sav-On. The plan cost about $15 a month per household as of March 2008.

The nation's largest retail chain, WalMart, offers $4 prescriptions for a 30-day supply on several hundred medications in 18 drug classes, including antibiotics , diabetes, and cholesterol. There is no enrollment fee or monthly premiums. The $4 plan prescriptions are available in most states as of early 2008. The only state not covered by the Wal-Mart discount is North Dakota. States where certain prescriptions may cost more than $4 are California, Colorado, Hawaii, Minnesota, Montana, Pennsylvania, Indiana, Wisconsin, and Wyoming. In nearly all cases, the $4 applies only to generic drugs. For example, the brand-name diabetes drugs Actos, Avandia, Starlix, Glucophage, and Prandin are not covered. The generic diabetes drugs that are covered are chlorpropamide, glimepiride, glipizide, glyburide, and metformin. Target, Wal-Mart's biggest rival, began its own $4 generic prescription program not long after Wal-Mart's began. Some of the larger chain pharmacies are also offering to meet the $4 price for generics.

Viewpoints

In 2005, a national survey found that four in 10 seniors told researchers that they haven't taken all the drugs their doctors prescribed for them in the past year—either because the costs were too high, because they didn't think the drugs were helping them, or because they didn't think they needed them. The survey of 17,685 seniors was conducted by the Kaiser Family Foundation, the Commonwealth Fund, and Tufts-New England Medical Center. Nationally, slightly more than one in four seniors (27%) reported that they did not have any prescription drug coverage at the time of the survey. Coverage rates varied widely across states, with seniors in Louisiana (35%) and Washington (36%) more than twice as likely to lack coverage as seniors in New York (16%). Among low-income seniors (those with incomes less than twice the federal poverty level) nationwide, one-third lacked coverage—and in several states, including Ohio, Louisiana, Texas and Washington, more than 40% of low-income seniors lacked coverage. Drug coverage made a substantial difference in adherence rates (the percentage of seniors who regularly take their prescribed drugs), with 37% of seniors without drug coverage reporting cost-related non-adherence, compared with 22% of seniors with drug coverage. Lowincome seniors without drug coverage generally took fewer drugs than those with drug coverage. Seniors also reported wide differences in the source of their drug coverage across states. For example, nationally 29% of seniors reported having employer-sponsored drug coverage, but state rates for employer-sponsored drug coverage ranged from 24% in Washington to 47% in Michigan.

A controversy erupted in 2006 when some of the nation's largest prescription insurance companies urged patients to buy a higher dose of their medications and then split the pills in half. Drug manufacturers typically charge the same amount for a 30-day supply of a 10 mg pill as for a 20 mg pill. Uni-tedHealth Group, the second largest health insurance company in the country, launched its Half Tablet Program nationwide in early 2006 for 16 drugs used to treat such conditions as diabetes, high blood pressure , and high cholesterol . Many health care professionals said this practice is dangerous because patients do not always split the pills evenly, making one dose higher than prescribed and the second dose lower. The difference in halves is as high as 20%, according to one study. Sometimes the pills crumble during splitting, causing the patient to lose two doses. Kaiser Permanente has urged pill splitting on its customers for years. A lawsuit filed in 2000 against the health insurance giant regarding pill splitting was won by Kaiser. Pill splitting is disapproved of by the California Medical Association.

KEY TERMS

Fee-for-service —A traditional kind of health care policy in which insurance companies pay fees for the services provided to the insured people covered by the policy. This type of health insurance offers the most choices of doctors and hospitals.

Health maintenance organization (HMO) —A type of managed care health insurance that limits the patient's choice of physicians, hospitals, and services.

Managed care —Health plans that that coordinate a member's healthcare through a network of healthcare providers that participate in a specific plan, such as a health maintenance organization (HMO) or preferred provider organization (PPO).

Preferred provider organization (PPO) —A type of managed care health plan similar to an HMO but which offers patients greater choices in selecting physicians, hospitals, and services.

Resources

books

Lankford, Kimberly. The Insurance Maze: How You Can Save Money on Insurance and Still Get the Coverage You Need. New York: Kaplan Publishing, 2006.

Nganele, David, and Wallace Johnson. The Best Healthcare for Less: Save Money on Chronic Medical Conditions and Prescription Drugs. Hoboken, NJ: Wiley, 2003.

Pilzer, Paul Zane. The New Health Insurance Solution: How to Get Cheaper, Better Coverage Without a Traditional Employer Plan. Hoboken, NJ: Wiley, 2007.

Pletzke, Jonathan J. Get a Good Deal on Your Health Insurance Without Getting Ripped-Off. Chapel Hill, NC: Aji Publishing, 2007.

periodicals

Colliver, Victoria. “Prescription for Costly Health Care: Program by Some Insurers to Encourage Patients to Cut Pills in Half Has Critics—Especially Drug Firms That Would Lose Money.” San Francisco Chronicle (May 30, 2006): N/A.

“Despite Benefit, Drug Prices Still High for Seniors.” Harvard Health Commentaries (August 21, 2006): N/A.

Lee, Seina P., and Janice L. Clarke. “Prescription Drugs and the Changing Concentration of Health Care Expenditures.” American Journal of Medical Quality (May-June 2007): 218(2).

Robbins, Chris. “Rising Prescription Costs Versus Quality Health Plans: What the Research Tells Us.” Managed Care Outlook (January 15, 2008): 1(5).

Wojcik, Joanne. “Free Prescription Drugs Boost Usage, Cut Costs; Program Targeting Chronic Conditions Improves Health.” Business Insurance (March 26, 2007): 4.

organizations

AARP Health Care, P.O. Box 1017, Montgomeryville, PA, 18936, (800) 444–6544, http://www.aarphealthcare.com.

America's Health Insurance Plans, 601 Pennsylvania Ave., N.W., Washington, DC, 20004, (202) 778–3200, (202) 331–7487, [email protected], http://www.ahip.org.

Ken R. Wells