Discrimination on the Basis of Health Status in Health Insurance: “Market-Norm or Necessity”?

Kate Greenwood Portrait

Cross-Posted at Bill of Health

In recent months, advocates have alleged that discrimination on the basis of health status in health insurance continues, notwithstanding the Affordable Care Act’s attempts to level the playing field for people with chronic health conditions. How the government and industry should respond to the allegations is not clear, however, in part because what constitutes “discrimination” is not clear in this context. As Jessica Roberts has noted, there is an “intrinsic tension between an antidiscrimination framework and the practices of the private, for-profit health-insurance industry.” This tension makes it difficult to pinpoint where permissible cost-consciousness ends and impermissible discrimination begins.

As has been widely reported, at the end of May, the National Health Law Program, along with the Tampa-based organization The AIDS Institute, filed an administrative complaint with the United States Department of Health and Human Services’ Office of Civil Rights in which they allege that four qualified health plans offered through the federally-facilitated marketplace in Florida discriminate by “charg[ing] inordinately high co-payments and co-insurance for medications used in the treatment of HIV and AIDS.” The complainants go on to allege that because “[o]ther issuers vary tiering or place HIV drugs on more affordable tiers,” “the practice of placing all anti-retrovirals on the highest tier is not a market-norm or necessity.”

The complaint’s emphasis on whether the plans’ actions reflect a “market-norm or necessity” tracks the Centers for Medicare & Medicaid Services’ 2015 Letter to Issuers in the Federally-Facilitated Marketplaces, in which CMS writes that “to ensure nondiscrimination in [qualified health plan ("QHP")] benefit design, CMS will perform an outlier analysis on QHP cost sharing (e.g., co-payments and co-insurance) as part of the QHP certification application process.” CMS goes on to specify that, with regard to prescription drugs, a plan will be considered an “outlier” if it has “an unusually large number of drugs subject to prior authorization and/or step therapy requirements in a particular category and class.”

As Sarah Rosenbaum has noted, “CMS does not provide a review methodology or define what is ‘unusually large’.” Even if it had, what if subjecting a large number of drugs to prior authorization or step therapy requirements did not make a plan unusual? Would that mean that doing so was not “discrimination”? A study released in June that was funded by the trade organization PhRMA found, among other things, that:

in seven of 19 classes of medicines for serious illnesses, such as cancer, HIV/AIDS, autoimmune diseases such as rheumatoid arthritis and multiple sclerosis, and bipolar disorder, more than 20 percent of Silver plans require coinsurance of 40 percent or more for all drugs in those classes. Similarly, in 10 of the 19 selected classes, at least 20 percent of Silver plans require coinsurance of 30 percent or greater for drugs in the classes.

A letter sent in late July by the I Am (Still) Essential campaign to the Secretary of the United States Department of Health and Human Services, Sylvia Mathews Burwell, similarly raised concerns that cut across chronic health conditions and might even be considered “market-norms”:

Based on reports of enrollee experiences during the first year of Marketplace implementation, we have identified a number of concerns. These include discriminatory benefit designs that limit access, such as restrictive formularies and inadequate provider networks; high cost-sharing; and a lack of plan transparency that may deprive consumers of information that is essential to making informed enrollment choices.

It seems to me that the benefit designs that PhRMA and the I Am (Still) Essential campaign complain of could be discriminatory even if they were a market-norm. The Affordable Care Act’s prohibition on discrimination on the basis of health status would be much less meaningful if discrimination were defined to exclude actions taken by all or a substantial portion of the issuers in the market, or by a single issuer with regard to all or a substantial portion of chronic health conditions. This raises the question of how to determine if a plan is discriminating if not by reference to whether it is an outlier. In its 2015 Letter to Issuers, CMS suggests an answer, stating that, in addition to performing an outlier analysis, it will review plans for “[d]iscriminatory cost-sharing language,” which, it says, ” would typically involve reduction in the generosity of a benefit in some manner for subsets of individuals other than based on clinically indicated common medical management practices.”

In a policy brief on tiered pharmacy benefit designs released last month, Sally McCarty and David Cusano discuss the potential for such designs  to violate the Affordable Care Act’s anti-discrimination provisions. McCarty and Cusano write that “state insurance regulators do not always have the staff or other resources to detect discriminatory designs during the form review process[.]” They suggest that “advocates and other supportive groups may be able to offer assistance by promoting legislative efforts and developing new and creative resources to examine tiered formularies with specific groups or conditions in mind, much like the analysis conducted by the groups that filed the complaint against the Florida insurers.” To the extent that concerns about cost-sharing are market-wide, however, advocacy groups will likely also want to join together, in efforts like the I Am (Still) Essential campaign, to support state and federal legislative initiatives (McCarty and Cusano highlight a number of these at p. 4 of their brief) that would limit cost-sharing across issuers, across health conditions, and across plan designs.


Kathleen Boozang on Death with Dignity Legislation Currently Pending in New Jersey

dean-kathleen-boozang-176x220There’s a fair chance the New Jersey Assembly will take up the Death with Dignity Act before the legislators head off to the Jersey Shore for the summer.  The topic is appropriate for this blog, entitled Health Reform Watch, because physician-assisted suicide (PAS) is a kind of desperate attempt at reforming end-of-life care.  The frustration with the limited extent to which we’ve been able to improve end-of-life care over the last three decades is understandable.  I suggest, however, that even with the enactment of practitioner orders for life sustaining treatment (POLST) legislation, New Jersey has not been sufficiently creative or aggressive in attempting to change end-of-life care practices in the state, and the legislature should be focused on other initiatives to achieve that end.  Based on the experiences of Oregon, Washington, and Vermont, there is no reason to expect that a Death with Dignity law would contribute meaningfully to an improvement in end-of-life care for New Jerseyans.

First, let’s get one matter out of the way:  I do not believe that the proponents of Death with Dignity legislation are motivated by a desire to reduce the cost of end-of-life care.  The patient suicide movement has been around for a very long time, and has always, in my view, been grounded in the philosophical belief in patient autonomy and an expansive view of a right to control the means and timing of one’s death.  Experience in those states where PAS is legal is that too few people take advantage of physician-assisted suicide for its availability to make a dent in health care costs.  If anything, reducing healthcare costs is more likely to be a reason supporting improvements to end-of-life care, although nationally, it’s not clear one way or the other whether reforming end-of-life care will actually reduce Medicare costs – the labor-intensive care required for several months of hospice is expensive.  New Jersey could be different.  Certain indicators suggest that patients dying in New Jersey receive more aggressive treatment than almost any other state in the country. Because that’s not how the majority of people want to die, it could be that in New Jersey, improving care of the terminally ill would save Medicare dollars.  If that’s a side benefit, all the better.  My primary point in this regard is that I don’t think it’s fair to accuse proponents of PAS of being motivated by potential cost savings; proponents of reforming the care of the chronically and terminally ill are more likely to cite costs as a factor in their search for reform.  Ultimately, I believe that both sides are motivated primarily by the desire to provide patients and their families with compassionate, holistic, and high-quality care in the last years and months of life.  That will not be accomplished by physician-assisted suicide. Read more


The Demographics of Illness and Cost: or, An Old Story About Chronic Conditions

Italian physician and doctor Girolamo Mercuriali, portrayed by Lavinia Fontana (1552- 1614)

Italian physician and doctor Girolamo Mercuriali, portrayed by Lavinia Fontana (1552- 1614)

We’ve reported on the distribution of health care costs among populations on numerous occasions here at Health Reform Watch. Over the last decades, our own Professor John V. Jacobi has been espousing reform, at times as almost a voice in the wilderness, as a matter of dealing in caring and cost conscious ways with chronic conditions.

In January of 2009 I noted, quoting HHS reports:

Twenty-five percent of the U.S. community population were reported to have one or more of five major chronic conditions:

  • Mood disorders
  • Diabetes
  • Heart disease
  • Asthma
  • Hypertension

Spending to treat these five conditions alone amounted to $62.3 billion in 1996. Moreover, people with chronic conditions tend to have other conditions and illnesses. , according to 1996 MEPS data. On an individual level, treatment for the average patient with asthma was $663 per year in 1996, but when the full cost of care for asthma and other coexistent illnesses is taken into account, the average cost was $2,779.

When the other illnesses are added in, total expenses for people with these five major chronic conditions rise to $270 billion, or 49 percent of total health care costs.

Expenses for people with one chronic condition were twice as great as for those without any chronic conditions. Spending for those with five or more chronic conditions was about 14 times greater than spending for those without any chronic conditions. Persons with five or more conditions also have high hospital expenditures. In New York State during 2002, of the 1.3 million different persons admitted to the hospital, the 27 percent with five or more chronic conditions accounted for 47 percent of all inpatient costs.

I have also noted in July of 2009 that

…32% of Medicare costs are attributable to diabetes. It is no stretch to say that if we have a Medicare cost problem in this country (we do), what we really have is a diabetes problem (and, considering Halvorsen’s “we only get it right 8% of the time” figure, a diabetes treatment problem as well).

But first things first. 32% is a mere scooch (yes, that’s the technical term) away from ONE THIRD. That’s an enormous number. If one were to relate this portion of Medicare expense to houesehold expenditures, it occupies a place similar to a mortgage– but an expensive mortgage in a house that no one wants to live in.

And now a further health cost demographic from NPR’s Marketplace in conjunction with WHYY’s Health Desk, Gregory Warner. And yes, it’s about chronic conditions:

Tess Vigeland: Take everything this country spends on health care — the government, employers, patients — and it rounds out to a little over $8,000 per person on average.

But averages don’t really tell the whole story. A study by the National Institute for Healthcare Management found that in 2009, 15 percent of us had no health care costs at all. While at the other end, 5 percent accounted for almost half of all health care costs: $1.2 trillion.


Gregory Warner: Maybe you picture this high-cost patient as someone at the end of life, confined to a hospital bed and hooked up to expensive medical devices. But more likely, you’ll find this person at home or in a nursing home, living with five or more chronic conditions.


Medicaid Incentives for Healthy Behavior: Turning That Cigarette Back Into Cold Hard Cash

V. Van Gogh (1853-1890)

V. Van Gogh (1853-1890)

The Centers for Medicare and Medicaid Services (CMS) recently announced a $100 million program through which states can reward Medicaid enrollees who adopt healthy behaviors. The grant program is part of the Patient Protection and Affordable Care Act and allows states to offer incentives for tobacco cessation, controlling or reducing weight, lowering cholesterol or blood pressure, and avoiding the onset of diabetes or improving management of the condition. The goal of the program is prevention, as spending on chronic conditions is said to account for more than 75 percent of annual healthcare expenditures in the U.S.

According to CMS Administrator Dr. Donald Berwick,

With the right incentives, we believe that people can change their behaviors and stop smoking or lose weight. Not only can preventive programs help to improve individuals’ health, by keeping people healthy we can also lower the nation’s overall health care costs.

States are not limited to direct cash incentives– proposed plans could include waiving premiums, deductibles and coinsurance payments, or offering coupons or gift certificates for weight management classes or tobacco cessation counseling.

CMS has based the program on data suggesting a short-term change in behavior when people are offered monetary incentives. Current research shows that while people may be internally motivated to make healthier decisions because of future consequences, they don’t often weigh those delayed outcomes with the immediate reward of engaging in the behavior. For example, knowing that smoking increases lung cancer risk 20 years from now isn’t always going to stop someone from smoking a cigarette. The benefit of monetary incentives is therefore their immediacy– they replace one unhealthy reward with another less harmful one. In short, CMS is betting that someone would put down that cigarette right now if you just paid them to.

But the experience of making healthy decisions seems to align more with what Mark Twain opined in Following the Equator,

He had had much experience of physicians, and said “the only way to keep your health is to eat what you don’t want, drink what you don’t like, and do what you’d druther not.

Though an individual may make a healthy choice now because they would prefer a cash incentive, that doesn’t automatically change their instinctual behavior. Someone could theoretically be convinced to take a grocery store gift card instead of buying a fast food dinner, but that does not change how much they enjoy the taste of a cheeseburger. In many circumstances, people engage in certain behaviors simply because they like to. For this very reason, critics are quick to point out that monetary incentives are unlikely to spur long-term changes in unhealthy habits. Critics also note that there is little research on whether these incentives will be successful in the Medicaid beneficiary population.

What may redeem the initiative from these criticisms is that CMS is candidly calling it a  ”demonstration program,” designed to figure out which strategies produce long-term behavioral changes. By allowing states to develop their own programs and keep data on the experience, CMS seems to be hedging its bets, wagering that at least one program will provide a successful model. Further, CMS can use the data to evaluate other factors such as the administrative costs incurred by states in rendering the programs.

Could $100 million federal grant dollars be used to support preventative health in a different way? Of course. But as long as this money is being set aside to incentivize healthy behavior, we may get an answer to whether external motivators spur long term behavior change. I, for one, would love to know just how much money it costs to convince someone to stop smoking, or to consistently trade in that Big Mac for some broccoli. It almost has to be cheaper than what we’re doing right now.


Childhood Obesity: A Problem Worth Solving

regina-ram-crop[Ed note: We are pleased to welcome Regina Ram to Health Reform Watch. Regina is finishing her first year as a law student at Seton Hall. She graduated from Drexel University with a B.S. in Biological Sciences and minors in Psychology and Anthropology. She completed a Masters in Public Health from Boston University in 2010 with a focus on Health Law, Bioethics and Human Rights. As a graduate student, Regina worked as a legislative advocate for Dana-Farber Cancer Institute and also supported a SAMHSA funded research program to integrate substance abuse treatment into primary care settings. As an undergraduate, she worked as a healthcare writer and authored emerging technology evidence reports on health devices and procedures.]


Confectioner's shop (candy store), woodcut 1810

Just recently, the New York Times published an article describing the attempt of parents in Philadelphia to change the poor eating habits of the city’s children. A concerned group of parents in a North Philadelphia neighborhood takes turns standing outside of corner stores near a K-8 school in the mornings. They don safety vests and walkie-talkies, and their goal is to discourage kids from stopping at corner stores to buy snacks like soda and candy before school. The article likens the parents to foot soldiers fighting in a national battle over the diets of children.

As dramatic as that may sound, statistics from the Centers for Disease Control and Prevention (CDC) support the metaphor. Nationwide, obesity rates have more than tripled over the past 30 years in both children and adolescents. Long-term consequences include higher risk for heart disease, type 2 diabetes, stroke, several types of cancer, and osteoarthritis in adulthood. More immediate effects include social and psychological problems like stigmatization and poor self-esteem. Further, caring for these health conditions has significant economic effects on the U.S. health care system. All of these statistics portray a battle well worth waging.

But is a group of parents patrolling a convenience store at 8:00 A.M. going to stop childhood obesity? Probably not. Even if the program dissuades kids from buying morning snacks, that behavior is unlikely to continue once parents are gone. Is it a step in the right direction? Certainly. The Surgeon General’s report on overweight and obesity notes that “families and communities lie at the foundation of the solution to the problem.”

However, any successful solution to decrease childhood obesity rates has to involve parents and communities as components of more comprehensive interventions. The causes of obesity in children are multi-factorial, ranging from diet and exercise to genetic and social factors including socioeconomic status and the built environment. The wide array of contributing factors points to the need for an interplay between public and private action to address childhood obesity.

Outside of the home, schools are a key setting for public health efforts to reduce childhood obesity rates. In particular, the National School Lunch Program can be an effective tool in improving the diets of school-age children. Just this year, the U.S. Department of Agriculture announced recommendations to overhaul the nutrition criteria of food programs for the first time in 15 years. The recommendations include limiting salt intake and the use of starchy vegetables, offering only reduced fat milk and using whole grains. Introducing children to healthier foods can help them understand what to eat and why, and that goes much further towards changing future patterns of behavior.

External factors like marketing and advertising also weigh on children’s decisions to eat certain foods. Recent litigation cases (one noted by Jennifer Jascoll here on the HRW website) have focused on the effectiveness of this advertising on children, as well as the disproportionate impact of such advertising on children of lower socioeconomic status. A New York City Councilman recently proposed a bill to ban fast food toys for meals over 500 calories. Children are generally more vulnerable to social messages, and restricting marketing is a case where benefits clearly outweigh the costs.

While involved parents and communities like the one in Philadelphia are undoubtedly an asset, it is going to take a more orchestrated effort to decrease rates of childhood obesity. Parents need to be empowered to make healthy choices and encourage healthier lifestyles for their children. At the same time, schools need to be working hand in hand with the community to ensure that the messages given at school correspond with the messages children hear outside. However unwieldy the issue seems, any action is to be applauded as preferable to no action at all.

(Note: for a more in-depth discussion of the economic consequences of obesity, see Michael Ricciardelli’s article here on HRW)


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