Insurance companies may have found a way to skirt one of Obamacare's most popular promises: equal access to insurance coverage for patients with preexisting conditions.
The health care law requires insurers to cover everyone, regardless of their health. It also bans subtler forms of discrimination, such as charging higher premiums, that would have the practical effect of making health insurance unavailable to sick people.
They're some of the Affordable Care Act's most popular provisions — and have been key to Democrats' defense of the law.
But patient advocates say the reality on the ground isn't matching the ACA's intent. They say insurance companies are explicitly breaking the law, as well as undermining its intent, with policies that put life-saving treatments out of reach for many of the patients who need them most.
And, they say, current regulations are letting them get away with it.
In Florida, advocates say four insurance companies are pushing away HIV/AIDS patients by charging out-of-pocket costs that are up to 50 times higher than competing plans. The plans place all HIV/AIDS medications, including generics, on the highest cost-sharing tier. According to the complaint, three of the insurers — CoventryOne, Cigna, and Preferred Medical — require their consumers to pay for 40 percent of the medication costs out of pocket. The fourth, Humana, requires consumers to pay 50 percent out of pocket.
This could mean a bill of more than $1,000 each month depending on the drug cost, in addition to premiums patients are already paying for their coverage. Out-of-pocket costs are prohibited from going above $6,350 per year, but patients could be responsible for that sum in just a short time.
Meanwhile, BlueCross — the insurer with the largest share of mid-level plans in the Florida market — places most HIV drugs on the first or second tier, with a co-pay of $10 to $25 for Tier 1 medication, and between $40 and $70 for Tier 2, according to the complaint. Other insurers reportedly charge co-pays ranging from $10 to $75.
The logic behind the price discrepancy, the advocates say, is to push sick patients away from the high out-of-pocket cost plans and toward the cheaper ones — a de facto denial of the law's protections.
"If a plan is $50 versus $1,500, which would you pick?" said John Peller, interim president and CEO of the AIDS Foundation of Chicago.
The law lets insurers set their own cost-sharing levels; it's a standard part of plan design. But it also prohibits companies from implementing plans in a way that targets specific populations, or has the effect of discouraging enrollment by those with significant health needs. Critics argue that insurers are designing plans to drive away potential customers who have HIV or AIDS, leaving them with only healthier customers — the kind of cherry-picking the health law was trying to curtail by requiring insurers to cover everyone.
"It's clear that this is blatant discrimination," said Carl Schmid, deputy executive director at the AIDS Institute, who worked on a complaint against the four Florida insurers, filed with the Health and Human Services Department's Office of Civil Rights at the end of last month.
Tiering, in general, is a standard cost-control method for insurers — one that allows them to cover higher-cost drugs in a still-profitable way. To be sure, insurers want to be certain their most expensive drugs are paid for, particularly now that they are required to take on these high-cost individuals for the first time. And issuers argue that their plans meet the law's requirements.
"The Coventry formularies meet ACA requirements and provide access to drugs necessary for treatment under the current clinical guidelines," a spokesperson for the insurance company wrote in an emailed statement. The other three insurers gave similar responses.
But advocates say their complaint is strengthened by the fact that other insurers, such as BlueCross, are not engaging in this kind of benefit design, indicating that it's not a marketplace norm or necessity. The complainants reviewed 36 mid-level qualified health plans in Florida and singled out the above four; other plans included a wider range of drug tiering, with more affordable options.
The Florida complaint is not the first time advocates have stepped in to tighten protections related to preexisting conditions. A few months ago, a handful of insurers in Louisiana said they would no longer accept third-party payments — including funding from Ryan White, the largest federal program to help HIV/AIDS patients — until HHS issued a regulation prohibiting these practices.
"Insurance companies have a long history of undertaking practices designed to restrict [high-risk pools] — through preexisting-protection preclusions, and higher premiums," said Robert Greenwald, director of the Center for Health Law and Policy Innovation at Harvard Law School. "All those options are now off the table clearly and explicitly. So what we're seeing instead are other practices — lack of transparency, failing to cover other medications, refusing to accept third-party payments, or the tiering of medicines."
As is often the case, opposition to the ACA is interfering with implementation. In Illinois, the state's insurance department drafted a bulletin to all marketplace insurers, instructing them to include adequate coverage, according to Peller. Other states, including Florida, have declined to get involved.
"There is a formal system in place for oversight; unfortunately, it's often under-resourced, and in states adamantly opposed to the ACA, probably not very aggressive in terms of review," said Timothy Jost, a professor at Washington and Lee University School of Law and an expert on the health law. "The way it's policed is at this point to look for outliers — cost-sharing or benefits outliers — take a quick look over plans, and if something seems weird, require justifications."
The high-cost tiering of specialty drugs extends beyond treatment for HIV/AIDS. A recent Avalere Health study sponsored by the pharmaceutical industry looked at 123 mid-level exchange plans and found that more than 60 percent place all medication for multiple sclerosis and cancer on the highest cost-sharing tier.
The Florida complaint has the potential to strengthen regulations across different illnesses, but advocates worry that guidance will not be set before the next open-enrollment period. The concern is that if insurers are able to continue these plan designs for any prolonged period, companies with more-affordable options could change course and follow suit. If other insurers can get away with higher pricing, why charge less and get stuck with all the high-cost patients?
Greenwald says he is "very confident" that HHS will rule in favor of the complainants, but not that the decision will come quickly. HHS declined to comment.
"I don't expect this complaint to be the silver bullet," Peller said. "It will take watchdogging and carefully monitoring of what's going on around the country."