Discrimination on the Basis of Health Status in Health Insurance: “Market-Norm or Necessity”?

By Kate Greenwood
[Cross-posted at Health Reform Watch]

In recent months, advocates have alleged that discrimination on the basis of health status in health insurance continues, notwithstanding the Affordable Care Act’s attempts to level the playing field for people with chronic health conditions. How the government and industry should respond to the allegations is not clear, however, in part because what constitutes “discrimination” is not clear in this context. As Jessica Roberts has noted, there is an “intrinsic tension between an antidiscrimination framework and the practices of the private, for-profit health-insurance industry.” This tension makes it difficult to pinpoint where permissible cost-consciousness ends and impermissible discrimination begins.

As has been widely reported, at the end of May, the National Health Law Program, along with the Tampa-based organization The AIDS Institute, filed an administrative complaint with the United States Department of Health and Human Services’ Office of Civil Rights in which they allege that four qualified health plans offered through the federally-facilitated marketplace in Florida discriminate by “charg[ing] inordinately high co-payments and co-insurance for medications used in the treatment of HIV and AIDS.” The complainants go on to allege that because “[o]ther issuers vary tiering or place HIV drugs on more affordable tiers,” “the practice of placing all anti-retrovirals on the highest tier is not a market-norm or necessity.”

The complaint’s emphasis on whether the plans’ actions reflect a “market-norm or necessity” tracks the Centers for Medicare & Medicaid Services’ 2015 Letter to Issuers in the Federally-Facilitated Marketplaces, in which CMS writes that “to ensure nondiscrimination in [qualified health plan (“QHP”)] benefit design, CMS will perform an outlier analysis on QHP cost sharing (e.g., co-payments and co-insurance) as part of the QHP certification application process.” CMS goes on to specify that, with regard to prescription drugs, a plan will be considered an “outlier” if it has “an unusually large number of drugs subject to prior authorization and/or step therapy requirements in a particular category and class.”

As Sarah Rosenbaum has noted, “CMS does not provide a review methodology or define what is ‘unusually large’.” Even if it had, what if subjecting a large number of drugs to prior authorization or step therapy requirements did not make a plan unusual? Would that mean that doing so was not “discrimination”? study released in June that was funded by the trade organization PhRMA found, among other things, that:

in seven of 19 classes of medicines for serious illnesses, such as cancer, HIV/AIDS, autoimmune diseases such as rheumatoid arthritis and multiple sclerosis, and bipolar disorder, more than 20 percent of Silver plans require coinsurance of 40 percent or more for all drugs in those classes. Similarly, in 10 of the 19 selected classes, at least 20 percent of Silver plans require coinsurance of 30 percent or greater for drugs in the classes.

letter sent in late July by the I Am (Still) Essential campaign to the Secretary of the United States Department of Health and Human Services, Sylvia Mathews Burwell, similarly raised concerns that cut across chronic health conditions and might even be considered “market-norms”:

Based on reports of enrollee experiences during the first year of Marketplace implementation, we have identified a number of concerns. These include discriminatory benefit designs that limit access, such as restrictive formularies and inadequate provider networks; high cost-sharing; and a lack of plan transparency that may deprive consumers of information that is essential to making informed enrollment choices.

It seems to me that the benefit designs that PhRMA and the I Am (Still) Essential campaign complain of could be discriminatory even if they were a market-norm. The Affordable Care Act’s prohibition on discrimination on the basis of health status would be much less meaningful if discrimination were defined to exclude actions taken by all or a substantial portion of the issuers in the market, or by a single issuer with regard to all or a substantial portion of chronic health conditions. This raises the question of how to determine if a plan is discriminating if not by reference to whether it is an outlier. In its 2015 Letter to Issuers, CMS suggests an answer, stating that, in addition to performing an outlier analysis, it will review plans for “[d]iscriminatory cost-sharing language,” which, it says, ” would typically involve reduction in the generosity of a benefit in some manner for subsets of individuals other than based on clinically indicated common medical management practices.”

In a policy brief on tiered pharmacy benefit designs released last month, Sally McCarty and David Cusano discuss the potential for such designs  to violate the Affordable Care Act’s anti-discrimination provisions. McCarty and Cusano write that “state insurance regulators do not always have the staff or other resources to detect discriminatory designs during the form review process[.]” They suggest that “advocates and other supportive groups may be able to offer assistance by promoting legislative efforts and developing new and creative resources to examine tiered formularies with specific groups or conditions in mind, much like the analysis conducted by the groups that filed the complaint against the Florida insurers.” To the extent that concerns about cost-sharing are market-wide, however, advocacy groups will likely also want to join together, in efforts like the I Am (Still) Essential campaign, to support state and federal legislative initiatives (McCarty and Cusano highlight a number of these at p. 4 of their brief) that would limit cost-sharing across issuers, across health conditions, and across plan designs.

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