New Humana drug benefit consumer-driven

The plan wants doctors and patients to talk about the potential savings of drug alternatives.

By Robert Kazel, amednews staff. Aug. 4, 2003.

Humana's new prescription insurance program is designed to compel patients to become aware of drug costs, and it counts on doctors to be open to discussing the relative costs of various medicines.

Louisville, Ky.-based Humana says its new drug plan alternative, named RxAllowance, will help employers who are struggling with providing drug coverage by motivating patients to decide carefully which drugs they want -- with cost a much greater consideration than before. Humana Inc. introduced the plan to its own employees this summer and plans to offer it nationally in 2004.

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RxAllowance offers virtually unlimited choice of medications but aims to constrain patient selection of drugs by making plan members sensitive to the impact on their wallets.

Under the new drug plan option, Humana reimburses patients for each prescription with a pre-designated flat-fee payment, and the patient will be responsible for paying for the balance of the pharmacy bill. For example, an employer plan might pay $30 for all antibiotics. If the prescriptions cost $120, the patient would be required to pay a balance of $90. But if it cost just $30, the drug would be free. No co-pays are involved. Neither are formularies: Any drug approved by the FDA will be available to the patient if prescribed.

Replacing co-pays with allowances could become very costly for patients who are on several expensive medications, although depending on how the employer sets up its coverage structure, the cost burden is likely to be mitigated by a per-prescription cap. For example, Humana employees who already are signed up for the RxAllowance option generally don't need to pay more than $200 toward any one prescription.

In a complex four-tiered pricing system, Humana is grouping drugs according to their expected value in combating short-term or long-term health problems, with drugs that fight immediate, serious medical crises probably being most likely to be matched with the highest allowances. For its employees in the program, Humana is choosing to pay up to $30 per prescription for drugs that address urgent needs such as asthma, bacterial infections or type 1 diabetes; $20 for drugs for chronic illnesses or conditions such as AIDS, heart disease, cholesterol, cancer and multiple sclerosis; $10 for drugs that alleviate everyday suffering, such as antihistamines for allergies or arthritis medicines; and $5 for "lifestyle drugs" -- defined as those that can improve the well-being of patients -- including medicines for acne, impotence, obesity and tobacco addiction.

Humana offers a 4-tiered drug pricing system.

Employers may be attracted to the program because it lets them customize the tiered coverage levels according to their own desires, said William Fleming, PharmD, Humana vice president of pharmacy management and emerging technologies.

Those enrolled in RxAllowance will have access to an Internet Web site for reviewing and calculating the cost of prescriptions before they ask their doctors for them. The goal is to encourage "consumerism in the health care world," Dr. Fleming said.

Other plans operate tiered drug programs, although generally they are based on generics vs. brand names, rather than on specific conditions.

"I'm not at all opposed to my patients being aware of the cost of medications they have to pay for and being better consumers, if you will," said Bill Monnig, MD, a urologist in Edgewood, Ky., and chair of the managed care committee of the Kentucky Medical Assn.

Still, dramatically shifting financial responsibility to patients for many drugs might lead to unproductive "bargaining with the patient for a lower-cost drug during the patient visit," he said.

"I applaud Humana for doing it," Dr. Monnig added, saying innovative approaches to coverage might be necessary. "But it will certainly strain the physician-patient relationship."

One doctor, however, gave unqualified praise to Humana's approach. "Anything that can be done to educate the patient about how much drugs really cost obviously is a plus," said Stephen Richards, DO, a family practice physician in Algoma, Iowa, and a former pharmacist.

Physicians with uninsured and Medicare patients already are accustomed to taking time during office visits to compare the costs of medications, he said. Having similar talks with insured patients who are shopping for affordable options wouldn't be any more time-consuming or awkward, he said.