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HMOs May Lose Ability To Limit Medication Choice

Proposed regulations in California would give patients and physicians legal tools to ensure access to prescription drugs.

Health care advocates are cautiously optimistic about proposed new regulations that would require California HMOs to cover medically necessary prescription drugs.

Last month the California Department of Managed Health Care (CDMHC) issued the proposed regulations, which stipulate that prescription drug benefits be designed by "qualified medical and pharmacy professionals."

If the regulations are finalized, the HMOs must establish and document a process for "ongoing review by qualified medical and pharmacy professionals of the safety, efficacy, and utilization of outpatient prescription drugs."

Exclusions of prescription drugs from the list of those available must be in "accordance with evidence-based outcomes and published, peer-reviewed medical and pharmaceutical literature."

Jack Lewin, CEO of the California Medical Association, said, "This is a very positive step forward. The new regulations allow a wide array of choice and assure that the right medication is available for the right patient. At the same time, there is no disincentive for the use of generics or a lower-cost drug that has the same effectiveness."

Cindy Ehnes, CDMHC's director, said, "With these new regulations there will be no doubt in a patient's mind as to which drugs are covered, and the vast majority of drugs will be available to California HMO consumers."

A plan could require step therapy in which less-expensive medication or an over-the-counter alternative is prescribed first. If that treatment is ineffective, however, the medical practitioner would be able to prescribe a more expensive medication.

Plans could exclude drugs that are prescribed for cosmetic reasons and for "non-medical conditions" including hair growth and sexual performance. Drugs for mental performance would be covered when they are used to treat diagnosed mental illness, including dementia or symptoms of Alzheimer's disease.

According to the Los Angeles Times Web site on January 5 at <www.latimes.com>, HMOs would be required to seek prior approval from the CDMHC to limit access to a drug, as opposed to waiting to decide coverage disputes when a patient complains. HMOs also would be required to list all drug exclusions and limitations on their Web sites.

Randall Hagar, director of government affairs for the California Psychiatric Association, said, "We are very pleased with the proposed regulations. Patients should have the right to walk out of pharmacies with medication that they and their doctors agree is medically necessary. We will work to guarantee that copays and other issues do not impede accomplishment of that goal."

In fact, the only issue of the proposed regulations that raised major concern among the advocates is the potential problem of high copays. Some advocates argued that the regulations would allow insurers to limit access by increasing copayments.

The regulations would require that the HMO have prior approval of the CDMHC for the level of copayments and that they not exceed 50 percent of the HMO's cost for the medication.

The impetus for the regulations was legislation passed in 2002 to clarify the power of the state government to regulate coverage of prescription drugs by insurance companies. The regulations would apply only to managed health care plans that provide prescription drug coverage.

The Los Angeles Times Web site also reported on January 5 that most of the 22 million Californians who belong to managed health care plans have prescription drug coverage.

The proposed regulations were subject to a public comment period that ended January 31.

"Outpatient Prescription Drug Copayments, Coinsurance, Deductibles, Limitations, and Exclusions" is posted at <www.dmc.ca.gov/library/regulations/proposed/2002_0019/4640.pdf>.

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