Why isn’t my medication covered by my insurance or why is my copay what it is?

One of the most frequent questions we get in the pharmacy is “Why isn’t my prescription covered by my insurance” or “Why is my copay what it is?”

Often, we are the “face” of your insurance company and bear your frustrations. It is easy to lash out at us because we are the bearers of bad news either on the phone or in person. The truth is, Keystone Pharmacy has absolutely no influence or control over your insurance company. They dictate everything, period.

Let me try to explain a few things to make it easier.

1) Insurance companies work on a formulary system. They determine what will be covered based on internal guidelines and guidelines mandated by law. Formularies are determined by many criterions including 1) cost of the drug dispensed, 2) therapeutic utility of the drug (e.g. how useful a drug will be), 3) alternative therapies that may exist in the market place (e.g. are there lower priced alternatives available) and 4) rebates paid to the insurance company by the drug manufacturer. If a company wants their drug to have preferred status, they must either have a significant therapeutic advantage over competing drugs in the marketplace or make their drug financially appealing to the insurance company. Failure to do so will result in either the drug being left off the formulary or a higher copay being charged for the drug.
2) Insurance companies often work on a tiered copay system. You may have 3 or more tiers of copays for your prescriptions. The lowest tier is often for generic medications. The middle tier is reserved for “preferred” brand name medications and the highest tier is reserved for “non-preferred” brand name medications. Compounds likely fall in the highest tier copay because we do not have a mechanism to provide rebates to the insurance companies.
3) Your prescription should cost the same no matter where you go. I have people calling all of the time asking what our cash price is for a prescription. As is often the case, they have a percentage copay and are trying to find the cheapest source figuring that their copay will be a percentage of the lowest retail price. The truth is, the percentage is based on a “negotiated” price between the insurance company and the pharmacy. All pharmacies have the same contracts so the negotiated prices will be the same no matter where you go. Hence, your percentage copay should be the same wherever you go.
4) Medicare will not cover compounded medications from bulk ingredients. Provisions in the Medicare Part D act of 2005 exclude compounded medications from bulk active ingredients. This was done largely to appease the large pharmaceutical manufactures without input from community, compounding pharmacies or the patients we serve. We believe this to be a travesty and would like it corrected, but the wheels of congress are moving very slowly right now. Compounded medications actually end up costing a small fraction of the amount charged for commercially available manufactured products. Changing the law to allow for compounded medications to be covered by Medicare Part D plans would actually save US taxpayers billions of dollars, yet no change seems imminent.
5) Medicaid will not cover compounded medications. Medicaid works purely on a rebate system. To be included on Medicaid’s formulary, a manufacturer must give rebates to the state. As a taxpayer, I am for this. As a compounding pharmacist, I am obviously opposed. Because we work almost exclusively with non-rebated chemicals, most of what we use in our compounds will not be rebated and therefore excluded from the formulary. Medicaid officials will argue that they do cover compounded medications, but by the time all of the non-rebated chemicals are excluded from the price, they end up not paying anything.

I hope this helps explain why coverage and copays are what they are. I also hope it demonstrates how little control Keystone Pharmacy has over your copay and your insurance company’s decision to cover or no cover your medication.

Thanks for your understanding of this matter. Insurance is not only frustrating for you, it is the most frustrating part of our job, too. We spend almost infinitely more time with insurance issues than we do with patient care. We share your pain.

Dave

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2 Responses to Why isn’t my medication covered by my insurance or why is my copay what it is?

  1. Keystone says:

    Dave,
    Thanks for addressing this concern! Visit our link to the insurance formulary mentioned by clicking on the “insurance coverage” link on our web page footer or under “Prescriber Resources”.

  2. Eric Hoyt says:

    This somehow explains most of my concerns about insurance. Thanks for sharing!

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