Navigating the Health Insurance Maze: What the “Rat” Wishes it Knew


Our PSI team participated in the Healthcare Advocate Summit recently, entertaining and informing the attendees about new trends in health insurance. Below you’ll find a list of Frequently Asked Questions related to that presentation.

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PSI programs are diagnosis specific. Our assistance programs, listed by insurance type, and their status is located on the Patient Programs section of our website.

What is a Specialty Carve Out Pharmacy Plan?

There are two answers to this question:

Specialty Carve Out plans separate specialty drugs from the plan’s traditional benefits to contract directly with the PBM for coverage and benefits of those specialty medications.

1. The “bad” Specialty Carve Out plan is when a self-funded employer puts the top 1-2% of high-cost employees into a “specialty drug program” requiring the employee to “try” the drug of choice from the employer. This often narrow network includes free and deeply discounted coupons from a variety of pharmaceutical manufacturers. This is not to be confused with a provider prescribing a specific brand drug and the pharmaceutical manufacturer offering a discount to the patient who may not be able to afford that drug.  This is an attempt from the employer to force the employee on drugs in which they are able to obtain from a PBM. Patients are forced to “fail first” before they can have the medication prescribed by their providers.

We have heard some horror stories from patients that when they switch their medication to the one provided under the SCO plan, they have adverse consequences and sometimes end up in the hospital. The medical bills incurred by these patients cost the employer thousands more in claims than if they simply allowed the patient to get the drug prescribed by their physician in the first place.

Quality Third Party Administrators frown upon this practice.

2. The other “Specialty Carve Out Program” happens when an employer purchases high-cost specialty drugs from an exporter and imports the drugs from a foreign country cheaper than what the employer could negotiate in the US.

So, I enroll in Part A, I’m paying nothing for my Medicare, and I keep my employer sponsored plan but I still don’t have enough money to pay for my medications and treatments, what do I do?

Review your health insurance options. You may be able to enroll in other parts of Medicare. In addition, depending upon income, you may qualify for extra help and the Medicare savings program. You can also visit PSI or other patient assistance programs to find a program to help you.  BUT, when you speak to a patient assistance representative, you must state that you have government or public insurance. Because even though you are not paying anything for your Medicare Part A, the government views you as a part of the government healthcare system.

If I’m eligible for Medicare and my spouse or I still work and have great health insurance through our employer, do I need to enroll in Medicare anyway?

Talk to your benefits administrator to determine how turning 65 may impact group coverage. Some small employers may require you to sign up for Medicare.

What is a coordination of benefits?

This is utilized when someone has more than one insurance. There is a primary and secondary payer. A primary payer pays up to the limits of that coverage and the secondary payer pays only if there are costs left over. However, the secondary payer may not pay for all the uncovered costs.

Please define the self-funded insurance plans you introduced us to at the “Navigating the Healthcare Maze, What the Rat Wishes it Knew” workshop held September 9, 2021, as part of the Healthcare Advocate Summit.

In self-funded plans, the employer is financially responsible for providing health benefits to its employees. Self-funded plans differ from how group plans have traditionally operated which are fully funded. This appears to be a rising trend amongst large employers.

Reference-based pricing: The employer provides health insurance with no specified network. The goal is to negotiate payment at 130-150% Medicare. Much like a Pharmacy Benefit Manager (PBM), someone must negotiate fee-based agreements in advance. The employer then assumes that the provider won’t charge the employee the difference between the employer negotiated rate and the commercial rate but there is no guarantee. Often the employee gets a surprise bill for the difference in addition to their copay. This flies in the face of true value-based pricing and is calculated on a fee-for-service basis, something our healthcare system is trying hard to get away from. We see this model only gaining traction if both the employer and provider sign a contract AND the utilization management team can somehow track which employer each patient belongs to. This may be accomplished in areas with a small provider base and large employers. The infrastructure of creating this model could take some time to catch on. In the meantime, surprise billing continues.

Value-Based Pricing is another self-funded plan option where the employer either has direct contracting with providers or employees’ providers inside their company. Many people may refer to this as concierge medicine or retainer medicine where the employee pays a fee to individual providers, hospitals, and support services. In this case, the employer pays the fee or actually employs the provider and the employee pays nothing or a discounted co-pay.

Self-funded PPO & HMO: these plans are run similarly to a traditional health plan in a small employer, but the employer picks up the tab for all employee healthcare claims up to a specific amount per person. For example, an employer may pay for all healthcare costs for each person on the plan up to $50K per year. Once the employer pays this amount, the “re-insurance” from a traditional commercial insurance company kicks in to cover the rest. The employee is still responsible for the cost-sharing outlined in either the PPO or the HMO, their cost burden does not change.

Narrow Network allows employers to offer discounts to employees if they choose a narrow network of providers and hospitals. For example, an employee may pay a monthly premium of $400 for a network of 100 physicians and 6 hospitals versus a monthly premium of $600 for a broad network of 1000 physicians and 12 hospitals. We’ve heard that employees with an established network of physicians are willing to pay more for their monthly premium to keep their doctors rather than risk changing their healthcare providers through a narrow network. The narrow network approach is gaining popularity among younger employees and those who have lower compensation.

Can I have more than one insurance?

Yes, but coordination of benefits will depend on the type of insurance and other factors. It is important to note that there is no coordination of benefits between Medicare and Marketplace or ACA individual coverage. It is also against the law for someone who knows you have Medicare to sell you a Marketplace (individual ACA) plan. It’s important to review all coverage when you are covered by multiple plans as many individuals are over-insured and could be paying for coverage that is not working for their benefit.

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