The redesign of consumer cost sharing for specialty drugs at the California Health Insurance Exchange

This paper describes the redesign of health benefits at Covered California-the nation's largest health insurance exchange, which covers 1.3 million individuals, and its benefit designs extending to hundreds of thousands more enrollees through insurance products sold outside the exchange-with respect to specialty drugs for the 2016 enrollment year. The catalyst for benefit redesign came from advocacy organizations representing patients suffering from HIV, multiple sclerosis, epilepsy, hepatitis C, and other chronic conditions. The first component of the benefit redesign creates a separate deductible for pharmaceutical expenditures, with a commensurate reduction in the deductible for other (medical) expenditures. The second component requires health plans to assign at least 1 specialty drug for each therapeutic class to a nonspecialty tier, offering patients a treatment option for which they are not exposed to coinsurance. The third component imposes a monthly payment limit of $250 for each specialty drug prescription, thereby buffering patients using these drugs against the $6250 individual, or $13,500 family, annual medical payment limit. The pharmacy deductible and monthly out-of-pocket payment limit are substantially lower for low-income enrollees in the subsidized silver-tier products. The Covered California redesign indicates that patients can be shielded from the most onerous cost-sharing burdens while keeping premiums affordable for the entire enrolled population; however, sustainable access to care requires reductions in the underlying cost of new clinical technologies.