The enactment of the Patient Protection and Affordable Care Act (PPACA) aimed not only at expanding access to health insurance coverage, but also sought to limit out-of-pocket expenses for individuals that have health insurance. Therefore, beginning on January 1, 2014, PPACA implemented out-of-pocket expense limitations for patients with respect to in-network insurance coverage of Essential Health Benefits (EHB). These out-of-pocket expense limitations are “little known” in the healthcare industry, but may ultimately prove helpful in leveling the playing field between independent specialty pharmacies and PBMs. PBMs typically utilize a tiered copay system to create economic barriers between patients and their independent specialty pharmacy. PPACA’s out-of-pocket expense limitations potentially remove such barriers in some situations.
PPACA’s out-of-network expense limitations pertain to EHB, which encompass an array of healthcare items and services, including, but not limited to prescription drug coverage, emergency services, laboratory services, and hospitalization services. In 2016, PPACA’s out-of-pocket expense limitations for EHB is $6,850 for self-only coverage, and $13,700 for family coverage. Patient out-of-pocket expenses may include deductibles, copayments, coinsurance and similar charges, but do not include costs associated with out of network services. Once an enrollee has reached the out-of-pocket limit for in-network EHB, the enrollee’s health plan will thereafter pay 100% of the costs for the covered EHB. Importantly, these out-of-pocket expense limits apply to non-grandfathered health plans that offer EHB, including individual, small group, large group, and self-insured.
For years, PBMs have used tiered copayments and out-of-pocket expenses as a method to drive patients to their “preferred specialty networks,” which oftentimes consist of pharmacies owned wholly by PBMs. However, PPACA’s out-of-network expense limitations may have undercut PBMs abilities to drive patient traffic, as independent pharmacies can attempt to level the playing field by informing patients about cost-share limitations imposed by PPACA. Indeed, a patient’s financial obligation for costs associated with specialty medicine may be drastically limited under PPACA, and thus the patient may have less incentive to use PBMs’ preferred networks. Contact Frier Levitt today to learn about PPACA, and its effect on specialty pharmacy.
