Re-Formulating the Formulary

How health insurers manage to keep you guessing, and why you should reevaluate your coverage yearly

formularyHealth insurers are constantly looking for ways to control costs. The Affordable Care Act (ACA, or Obamacare) has made it increasingly difficult for them to make a profit. One of the ways they manage the costs associated with paying for prescription drugs is by maintaining what they refer to as a formulary, which is essentially the list of prescription drugs that they will cover.

Formulary design is an art unto itself, with companies maintaining multiple tiers within their formularies that ultimately determine how much of your drug costs the insurance company will pick up. As new (and presumably better) drugs come out, the insurance company has to determine whether or not to include those drugs in their formulary. Ultimately, they have to justify why an expensive drug might not be covered.

Conveniently, insurance companies got together and founded a group called ICER, which stands for the Institute for Clinical and Economic Review. ICER’s charter looks at new drugs as they come to market and basically determine if it’s worth it, based on effectiveness of the drug and it’s cost, for insurance companies to include it in their formulary. Because of this, drugs that are approved by the FDA often don’t end up on the formularies of all insurance companies.

Why is this important to you? Because as a health insurance consumer, you need to understand decisions that insurance companies make that may affect your health. If you have an illness that requires that you have a certain drug, you want to be sure your insurance policy covers it – especially if it’s a pricey drug.

That’s one of the reasons why you should reevaluate your coverage options every year at open enrollment time. Let ColoHealth’s Personal Benefit Consultants help you to look at the details, such as formularies, and lists of doctors and hospitals, to ensure that you’re staying in the coverage that meets your needs. And if you’re not, we’ll help you find coverage that does.

  Date posted: Monday, June 20th, 2016
Category: Health Care Reform, Health Insurance

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