Lawmakers Clarify Appeals Process for Patients with ‘Step Therapy’ Insurance

Published October 4, 2016

Patients in Illinois and Missouri may now appeal their health insurers’ refusal to pay for drugs under certain conditions, usually after they have endured failed treatment by a different drug.

Some insurers include in their plans a process called “step therapy,” which requires patients to try cheaper drugs than their doctors prescribe to treat certain medical conditions. Step-therapy insurers will pay for the costlier, prescribed drug only if the less expensive substitutes fail as treatments.

In Illinois, the Managed Care Reform and Patient Rights Act now requires insurers to make exceptions to their step-therapy policies when patients submit documentation from their doctor that they have tried a drug substitute and found it ineffective. Insurers must also make exceptions for new customers already undergoing stable treatment with a drug covered by their previous carrier’s plan.

The bill passed each chamber with zero nay votes in May and was signed into law by Gov. Bruce Rauner (R) on August 12, with an effective date of January 1, 2018. Missouri Gov. Jay Nixon (D) signed similar legislation into law on June 8.

Out of Step

Josh Archambault, a senior fellow at the Foundation for Government Accountability, says step therapy keeps treatment costs low but can take its toll on patients in other ways.

“Step therapy can be an effective method for cost containment, but like all cost containment measures, the devil is in the details for how well it is implemented,” Archambault said.

Step therapy interposes insurers between doctors and patients, potentially obstructing patients from receiving necessary treatments, Archambault says.

“How quickly a doctor and a patient can move up the steps if needed really matters,” Archambault said. “Having a robust and open line of communication between a doctor and the insurance company matters. If there is a breakdown, then patient care can suffer.”

Third-Party Payer Misstep

Patrick Ishmael, director of government accountability at the Show-Me Institute, says step therapy involves insurers hijacking treatment decisions best left to doctors.

“Having insurers insert themselves into care decisions is highly problematic,” Ishmael said. “The root problem is that the top-down structure of our health care system, reliant on third-party management, makes this sort of intervention common.”

Government policies have created an incentive for insurers to focus on manipulating courses of treatment instead of on helping patients pay for health care, Ishmael says.

“Insurance should be insurance, not a maintenance plan,” Ishmael said. “When government incentivizes a health care system where we pay a third party to manage our health spending, it should be no surprise that the manager’s priorities will often diverge from our own.”

Health insurance and government policies should center on expanding treatment options and access for patients, Ishmael says.

“The solution is individual choice and the leveraging of market forces that disincentivize health insurer behaviors that run against the interests of the patients whose care they’re managing,” Ishmael said.

David Grandouiller ([email protected]) writes from Cedarville, Ohio.

Image via Thinkstock