Part 3: Coverage in the Time of Coronavirus

Breaking down how insurance plans include medical services for coverage

Welcome to part three of the three-part insurance series! Today we’re going to talk about insurance coverage and how exactly procedures, drugs, and tests earn “coverage” statuses from insurers. We’ll try and break down some of the language used in these policies and also examine what burdens of proof exist before patients can get access to new medical technology. 

The American approach to emergency healthcare has always been “treat now, money later.” This has never been more true than now as we find ourselves drowning in COVID-19 cases, struggling to take care of patients. And yet while the media harps on talk of vaccines, antibody testing, and ventilator shortages, no one has really talked about how our healthcare system is going to afford the costs of all this technology later on. The U.S. is already struggling with enormous healthcare costs (~18% of domestic GDP comes from the healthcare sector), and when the disease finally begins to wind down, how we are going to deal with this cost is, yet again, going to become the billion dollar question in the room. A recent report by FAIR health estimates that it will cost $73,300 to treat a COVID-19 patient. 

Typically, when we get ill, we turn towards our health insurance plans to somehow figure out the cost (even if it’s just a smidgen). Insurance companies, however, usually take years to issue “coverage” policies on tests, drugs, etc., basing their decisions on years and years of clinical data and medical guidelines. With the rapid onset of coronavirus, we do not have the luxury of reams of data to help inform decisions. What are we supposed to do now? 

Many insurance companies have issued statements regarding financing COVID-19 treatment. In order to understand how these emergency provisions fit into the larger medical insurance schema, we’re first going to take a look at the traditional criteria insurance companies use when making coverage policy decisions. Then, I’ll be highlighting the approach of particular major medical insurance plans in the U.S. to tackle the high cost of treatment. 

Breaking Down Medical Coverage Policies 

In general, there are three “stages” of coverage a particular service (test, procedure, or drug) can receive: no coverage, investigational, and coverage. “Coverage” statuses are critical to the future of healthcare, because they are what enable technology to actually get in the hands of patients: coverage means patients can actually afford whatever is being pumped out by R&D. In order for this to happen, however, insurance companies look at a variety of criteria. 

Step 1: Are you sick? 

The first thing doctors try to figure out when you come to their office is “what are you sick with?” This always presents as some kind of test, whether that’s clinical, molecular, radiographic, etc. Tests (such as those diagnosing you with the flu, or STDs, or other viruses) must meet four broad requirements:

1. Clinical validity

   1. Clinical validity addresses questions about the technical performance of the test. What’s the accuracy? What’s the precision? What about the positive predictive value (rate of true positives)? Negative predictive value (rate of true negatives)? Most tests lobbying for coverage meet this criteria simply because these are also questions that the FDA asks when assessing for approval. 

2. Clinical utility

   1. Just because the test works, doesn’t necessarily mean it’s going to be useful (have utility) in the clinical setting. Tests must show that not only do they give doctors the correct information, but that this information is valuable because it changed a clinical decision made by the doctor. In order for tests to gain coverage, they must then add value to the clinical setting. 

3. Cost-effectiveness

   1. As always, money matters, even when it comes to matters about life or death. Insurance companies, at the end of the day, are still companies, and they’re going to care about the economics associated with a particular piece of technology. When it comes to coverage, tests should aim to show that, if you use this test, you’ll be able to more accurately and rapidly diagnose your patient, thereby resulting in $X of savings in healthcare costs down the line (this is just one example of how cost-effectiveness can be evaluated). 

4. Chain of Evidence

   1. Many times, products will fail to gain coverage because they do not have data from randomized control clinical trials (RCTs). While these trials can be costly and time-consuming to conduct, they also are considered the gold-standard of “quality, reliable human subjects research” that are able to convince people of results. For coverage decisions, this can be a make-or-break situation, especially if there are competitor tests on the market already. 

Step 2: So you’ve got it… But now what? 

Once your doctor determines what disease you have, there are two ways they can tackle treating it: with a procedure or drugs.

Previously in one of my articles I defined a drug formulary as a list of approved medications covered by insurers. For the most part, very commonplace drugs (i.e., simvastatin, metformin, etc.) are covered because they have become so routinely prescribed and used by the general populous. But what about those medications that aren’t needed by the majority of the population, such as those for cancer or Alzheimer’s? Neither of these conditions is so rare that you’ve never heard of them, but nor are they common enough such that most people will need them in their lifetime. Conditions such as these also have huge R&D budgets devoted to innovating and creating new drugs that will continuously require approval. 

I think one of the biggest misconceptions people have about drugs is that once they’ve been approved by the FDA, that means they’re going to be used by patients. The FDA, however, only looks at the safety and efficacy of the medication; approval simply means that pharma companies are now allowed to sell this drug on the market. Whether or not patients actually use them is then determined by whether or not insurance companies cover (and thus pay for) the drug to be administered. 

Insurance companies consider drugs and procedures similarly to how they consider tests/devices, looking at clinical efficacy, changes in health outcomes with use (extended life spans, greater quality of life, decreased post-surgical complications), and the health economics of use. In general, they will be covered for the patient populations in which there is abundant clinical trial information on (RCTs strike again!). 

Off-label usage of drugs, or usage for indications not currently approved by the FDA will at best be granted investigational/experimental coverage statuses. For example, trastuzumab (a breast cancer treatment) is approved for coverage when used in breast cancer patients, but would not be automatically covered if a doctor were to prescribe it to a patient with high cholesterol (this would definitely be bizarre, but there is “technically” nothing barring this physician from doing so because the drug is now available on the market). (This is not necessarily applicable to procedures, as you’re unlikely to have a surgeon operate on your heart if you need a knee transplant). 

“Medical Necessity”

If you look at any insurance policy document, you’ll notice that they all have in big, bold letters the words “medically necessary” highlighted. This is just an insurance company’s way of guaranteeing that patients aren’t randomly receiving these treatments, even if their policy provides coverage. Insurance carriers will always define “medical necessity” by highlighting the indications and settings that coverage is provided. For example, if you look at Blue Cross Blue Shield’s Oncotype DX policy, in order for the test to be covered, patients have to be:

• Using it for a specific reason (“for the determination of the recurrence of risk for deciding whether or not to undergo adjuvant chemotherapy in women with primary, invasive breast cancer”) AND

• Have a particular type of breast cancer

  • No lymph nodes OR only 1-3 ipsilateral axillary lymph nodes

  • Hormone (estrogen or progesterone) receptor positive

  • HER2 negative

  • Have a tumor size > 0.5cm

  • Have ductal, lobular, mixed, or metaplastic histology

  • Be staged as pT1, pT2, or pT3 AND N0 or N1mi

Only for those patients for whom there is an abundant amount of research and proof (patients who have been demonstrated to have a “medical necessity” for the technology) will insurance companies provide coverage for the service. Basically, even if you and Jill down the street both have breast cancer, there’s a chance that Jill gets an Oncotype test and you don’t. 

Who Gets a Seat at the Table? 

When it comes to coverage, insurance companies do not make their decisions in isolation. They are turning to a variety of sources for data and information in order to determine what their patients need in order to have good health. This includes medical associations (American Medical Association, American Society for Clinical Oncology, American Dental Association, etc.), published peer-reviewed research, and governmental organizations (CDC, NIH, WHO, NICE/NHS from the UK, etc.). One of the key organizations influencing private insurance companies is actually CMS, the Centers for Medicare & Medicaid Services. CMS decides which tests, drugs, or procedures are going to be covered by Medicare and Medicaid, and can set the tone for coverage by private insurance given that Medicare and Medicaid beneficiaries make up 46.2% of all patients seeking healthcare annually (source). 

Coverage in the Time of Coronavirus

The AHIP, a health coverage advocacy group, has published this resource collating all of the known insurance carrier responses to the COVID-19 crisis. Here are some notable statements from large insurance companies, with key stipulations in bold:

• Aetna

  • Waive co-pays for COVID-19 related diagnostic testing

  • Waive member cost-sharing for inpatient admission at in-network facilities for treatment of COVID-19 or related health complications on admissions through June 1, 2020. This policy is for Aetna-insured commercial plan sponsors (plans sponsored by an employer)

    • Read: if you have Aetna coverage through your employer and happen to land yourself into an out-of-network facility due to emergency, you may be in trouble

  • Waive member cost-sharing for inpatient admissions at all facilities (both in- and out-of-network) for treatment of COVID-19 or related health complications for Aetna Individual and Group Medicare Advantage members on admissions through June 1, 2020

• Anthem

  • Covers cost of coronavirus testing with no out-of-pocket cost

  • No prior authorization needed for diagnostic services related to COVID-19 testing, or use of medical equipment critical to treatment

  • Waive cost sharing payments for COVID-19 treatment received through May 31, 2020 

• Cigna

  • Cover cost of coronavirus testing

  • Waive out-of-pocket costs for COVID-19 testing-related visits with in-network providers through May 31, 2020

  • Waive cost-sharing/co-pays for COVID-19 treatment through May 31

  • Waive prior authorizations for transfer of non-COVID-19 customers from acute inpatient hospitals to in-network long-term acute care hospitals

    • Cigna policies apply to all U.S. customers covered in employer/union-sponsored insured group health plans, U.S. based globally mobile individuals, Medicare Advantage, and Individual and Family plans

• UnitedHealthcare

  • Waive costs for COVID-19 testing at approved locations in accordance with CDC guidelines

  • Waive co-pays, coinsurance, and deductibles for visits associated with COVID-19 testing. Applies to Medicare Advantage, Medicaid, and commercial members

  • Waive member cost-sharing for treatment of COVID-19 through May 31, 2020 for fully-insured commercial, Medicare Advantage, and Medicaid plans

I just sampled three carriers who are larger in domestic coverage. Feel free to check the link above for your specific insurance company’s policy, as well as further details on the three mentioned above as well. 

As you can probably see, coverage decisions are much more complicated than just “this works, so we can pay for it.” There is a high burden of proof placed on biotech companies to demonstrate the value of their technology, as well as many other stakeholders involved in influencing decision-making. As the coronavirus situation continues on, particularly past the May and June deadlines that companies have mentioned thus far, it will be especially interesting to see how the healthcare system copes long-term with these high costs of treatment, and how companies will think about coverage decisions given the lack of scientific data surrounding coronavirus and COVID-19.