Thousands of North Carolina residents living with HIV in North Carolina now have lower out-of-pocket expenses after Blue Cross and Blue Shield of North Carolina changed its pricing formula for dozens of HIV treatment medications. The move came months after advocates accused the state’s largest health insurer of discriminating against these patients by placing nearly all standard HIV medications in drug tiers with the highest out-of-pocket costs.

In December, the HIV+Hepatitis Policy Institute and North Carolina AIDS Action Network raised their concerns in letters to the federal health department and to N.C. Insurance Commissioner Mike Causey. They alleged the insurance giant intentionally made these medications unaffordable to dissuade people from enrolling in Blue Cross NC plans if they had HIV, which can be a costly condition for insurers. Blue Cross NC rebutted this claim.

Once a year, insurance companies release a list of prescription drugs they cover, known as a formulary, along with corresponding “drug tiers.” Generally, the higher the tier, the more patients should expect to pay out-of-pocket for the medication. Insurers often place pricey, name-brand drugs in the highest tiers to encourage patients to opt for cheaper generic medications.

However, for its 2022 and 2023 formularies, Blue Cross NC put not only name-brand HIV medications in its top tiers but also several inexpensive generic medications. For example, the generic version of Truvada — used for HIV treatment and prevention — was in the second-highest tier despite costing about $1 per pill at some pharmacies. The only HIV medications on lower tiers either couldn’t be used on their own or were no longer recommended, according to an analysis from the two advocacy groups.

Last month, Blue Cross NC published an update of its six-tier formularies that showed it had moved 48 HIV-treatment drugs to lower tiers since January. In an email Monday, Blue Cross NC said its clinical team changed these formulary tiers in April as part of a quarterly review process that also affected the tiers of certain non-HIV medications. “This change streamlined drug tiering across multiple drug and condition categories, and, as a result of the changes, some members may have lower out-of-pocket costs when purchasing a prescription,” wrote Blue Cross NC spokesperson Sara Lang.

Law professor: Blue Cross practiced ‘Adverse Tiering’

However, HIV/AIDS advocates noted this shift was made four months after they had alerted government officials to Blue Cross NC’s previous high-tier policy.

“The formulary had dramatically changed,” said Carl Schmid, executive director of the HIV+Hepatitis Policy Institute. “But that means people were paying more money all this time.” At the end of 2021, there were 35,632 North Carolina residents living with HIV, according to the state Department of Health and Human Services. Black men had the highest rate of newly diagnosed HIV that year.

In December, the HIV+Hepatitis Policy Institute and North Carolina AIDS Action Network accused Blue Cross NC of violating a section of the Affordable Care Act, which bars providers from discriminating against patients “based on race, color, national origin, sex, age or disability.” Its letter to the U.S. Department of Health and Human Services was directed to the department’s Office of Civil Rights.

Strategic drug tiering is common in the health care industry. A 2015 study from the New England Journal of Medicine found that a quarter of insurance companies used discriminatory drug tiering for HIV medications, which cost people with the condition several thousands more dollars per year than those enrolled in other plans. Yet in North Carolina, Blue Cross has most aggressively practiced “adverse tiering,” said Allison Rice, an emeritus law professor at Duke University who publishes annual reports on HIV insurance coverage in the state.

“Absolutely they’re the worst,” she said in December, before Blue Cross recategorized its HIV-treatment medications. “There is no other company that has all the HIV drugs essentially at 50 percent coinsurance.” Under this coverage, patients paid half their health care costs after reaching their deductible. The insurance company said it always makes decisions about tiers “using clinical and cost information.”

“Blue Cross NC stands against discrimination of any kind, including discrimination based on health status, sexual orientation or gender identity,” Lang said this week. “The methodology used to determine tiers for our members’ medications remains consistent across health conditions.”

Blue Cross Responds to State’s Questions

The North Carolina Department of Insurance, which reviews and negotiates insurance rates, initially reached out to Blue Cross NC on Dec. 12, four days after the advocates sent their complaint. The state department asked the insurer for “a full explanation and justification of the company’s position.” A week later, Blue Cross’s corporate compliance division responded. The company highlighted that it had not placed all HIV medications on high drug tiers, including having one drug on Tier 1 and five drugs on Tier 2. Blue Cross also noted its medications for HIV prevention, though not treatment, were offered at “a zero-dollar cost share for all members, regardless of which tier the drug is on for treatment.”

In February, NCDOI reached out to Blue Cross to ask whether its HIV medication tiering process was similar to the tiering systems used in individual market plans. The insurance company said its tier system is comparable, though added that the complexity of Blue Cross NC’s formularies make “direct comparison difficult.”

In an interview this week with The News & Observer, NCDOI Spokesperson Jason Tyson said his department “backed off” from taking any potential further steps after learning the U.S. Department of Health and Human Services was “handling” the matter. “We’re glad to see it resolved, and we didn’t want to duplicate any efforts,” Tyson said. It is not clear what actions, if any, the federal health department took to address the complaint.

According to Lang, Blue Cross NC did not have any discussions with Health and Human Services before changing its tiers in April. On Dec. 14, the federal department’s Office for Civil Rights sent the HIV+Hepatitis Policy Institute a letter confirming it would review the organization’s concerns. Schmid said this was the only correspondence his organization received from the federal department. 

The News & Observer asked Health and Human Services and its Office of Civil Rights if either reached out to Blue Cross NC regarding the advocates’ complaint. The federal department has not yet responded.

This story appears courtesy of our media partner The Charlotte Observer.

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