Four Steps for Evaluating Your Plan’s Diabetes Coverage

November is National Diabetes Month. Since diabetes affects one in eight adults in the United States and is a major driver of health plan costs, it may be a good time to review whether your health plan is designed to provide the best care for participants with diabetes.

A panel of four experts discussed the state of diabetes care and coverage, marketplace dynamics influencing diabetes care and costs as well as plan designs to control diabetes costs during an International Foundation webcast, “Diabetes and Chronic Disease Management Strategies That Reduce Plan Cost and Improve Care”

One in four health care dollars spent is either directly or indirectly related to diabetes, said Aaron Turner-Phifer, director of health policy for JDRF.

“There are follow-on effects of poorly controlled diabetes, and the impact is progressive over time,” Turner-Phifer explained. Diabetes can lead to conditions such as diabetic retinopathy, heart disease, kidney failure and lower-limb amputation. It is also the cause of 16 million emergency room visits and 7.8 million hospital stays annually, which panel members noted is alarming for a patient population of 34 million.

Advancements in Diabetes Care

New medications and technology have dramatically improved care for people living with diabetes.

Medications

 “Over the last 20 years, we’ve had an explosion of new categories of medications,” said John E. Anderson, M.D., a medical advisor to the Diabetes Leadership Council (DLC). These medications are focusing not just on controlling blood sugar but also lowering blood pressure and improving cardiovascular risks and are giving doctors another tool to protect the kidneys of people with diabetes.

Technology

New devices are game changers for monitoring glucose and administering insulin, explained Donna B. Ryan, a registered nurse and DLC board member.

New glucose monitoring devices are much smaller, offer continuous monitoring and can be synched with an app on the patient’s smartphone, which allows them to see the impact of their behaviors on their glucose levels, Ryan said. For example, a patient could see how eating French fries at lunch causes their glucose to rise while exercising may cause it to fall.

Studies have shown that continuous glucose monitoring (CGM) improves glycemic levels regardless of the insulin delivery method. A recent study of 571 people with Type 2 diabetes showed patients had a net savings of $424 per month when using continuous glucose monitoring, driven by reduced inpatient hospital costs.

Insulin delivery devices also have improved. People with diabetes who use syringes can now administer insulin with little to no pain via a “smart pen” that even connects to an app that helps them determine how much they need. Insulin pumps are also much smaller and slowly infuse insulin throughout the day. They can sync with the continuous glucose monitors and come close to mimicking the activity of a properly working pancreas.

Barriers to Better Care

Despite these advancements in technology, people with diabetes can face many hurdles to getting the best care, including the following.

Costs of Insulin and Medications

The cost of insulin and diabetes medications are major issues. In fact, one in four patients reports rationing insulin because of the cost, said George Huntley, DLC chief executive officer.

From 2012 to 2021, the list price of insulin—what patients may pay— increased 143% to $334 per vial but the cost to insurance plans has actually dropped by 54% to around $85, Huntley noted.

The reason for increasing patient costs is that health plans’ pharmacy benefit managers (PBMs) negotiate large rebates from manufacturers for particular medications but often do not pass the savings on to participants, Huntley said. Rebates on some insulin brands are 70-80% of their cost. The average rebate on a branded drug is 48%.  “If you don’t pass through the rebate at the point of sale, the patients pay twice what the insurance plan pays for the same drug,” he said.

There are similar challenges with diabetes drugs. Metformin, the most commonly prescribed medication for patients with type 2 diabetes, can be purchased for $4 at many pharmacies, but many health plan participants must pay a $20 copay for it because of their plan design.

High Deductibles

Participants also may have high deductibles to meet before their health plan picks up the cost of their insulin, medications or doctor visits. The average person with diabetes spends only 120 minutes with their health care practitioner annually, and that is likely not enough for a condition that requires numerous daily decisions, Turner-Phifer said.

Coverage

The new glucose monitoring and insulin delivery devices are expensive, and patients have had difficulty getting coverage and reimbursement under their health plans. Many plans have stringent rules about who can quality for continuous glucose monitoring, Anderson said.  Panel members noted that the reality is that anyone taking insulin should have access to CGM devices.

What Is the Optimal Health Plan Design?

Huntley said plan sponsors should consider these four key design features.

  1. Provide predeductible coverage. Diabetes management care is preventive care and therefore should be covered without having to meet a deductible, Huntley said. The Internal Revenue Service (IRS) ruled in 2019 that care for chronic conditions can be provided under a high-deductible health plan (HDHP) without cost sharing before the participant meets their deductible.
  2. Offer low, predictable employee cost sharing. Examples include charging low copays for diabetes medication or insulin rather than requiring participants to satisfy a deductible before plan coverage kicks in.
  3. Offer rebate pass-throughs. If the plan is receiving a rebate from its PBM for a drug, it should pass the rebate through to the participant at the point of sale to lower their costs. A recent actuarial study calculates the cost to the plan of doing this as less than 1% overall without considering any inherent savings of reduced hospitalizations.
  4. Allow treatment choice. “This is not a one-size-fits-all disease. This is a case where the patient is monitoring their blood sugar  . . . with very little interaction with the health care provider,” Huntley said. “It is in everyone’s best interest to give them the tools they need that make sense for them.”

Steps to Take Now

Taking the following steps can help plan sponsors evaluate their coverage and how it can improve.

1. Examine the current plan.

  • Does the plan offer at least three of the key features?
  • Where does drug rebate money go?

2. Analyze data on diabetes direct plan costs, including:

  • Prescription drugs: Areas to evaluate include how much is spent annually on what drugs, metrics on persistence/adherence/refills/abandonment
  • Devices and supplies (glucose monitoring, pumps, etc.)
  • Hospitalizations or other major claims
  • Maintenance services.

3. Examine indirect costs data, including:

  • Absenteeism
  • Presenteeism
  • Reduced productivity, for example, is an employee losing worktime due to appealing denials and obtaining prior authorizations, obtaining supplies and on office visits instead of accessing care through telehealth?

4. Simulate the impact of the following plan design options.

  • Preventive coverage for insulin, all prescriptions and products/services.
  • Zero copay
  • Nominal flat copay
  • Rebate pass through.
  • Workarounds, such as timing employer health savings account (HSA) contributions and case management.

Kathy Bergstrom, CEBS
Senior Editor, Publications at the International Foundation of Employee Benefit Plans

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