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While some employers with high-deductible health plans linked to health savings accounts have decided to exempt some "preventive" pharmaceuticals from the deductible, others with HSA-qualified HDHPs are holding back, waiting to find out how the Internal Revenue Service reacts.
Although many health plans and pharmacy benefit managers say they have had "conversations" with the IRS, the federal tax authority has yet to say whether the aggressive drug lists these vendors have compiled meet the definition of "preventive" the federal tax authority put forth in August 2004.
The health care industry had sought clarification from the IRS as to which medications would be considered preventive and therefore exempt from the deductible in HDHPs. Many employers had concerns that if they offered HSAs without some sort of prescription drug coverage, plan members would forego vital treatments because of cost.
The National Business Group on Health, a Washington-based consortium of the nation's largest employers, encourages its members to cover prescription drugs considered to be preventive outside the deductible in HSA-qualified health plans, according to Helen Darling, the organization's president.
"It helps get people over the hump of higher out-of-pocket costs," which could encourage more employees to sign up for the plans that cost employers less than traditional health plans, she said.
And while the additional benefit may increase plan costs slightly--experts estimate costs are approximately 1% to 2% higher than the typical HSA-qualified HDHP--the move should lower the plan's net costs by reducing claims for the conditions the drugs are intended to prevent, Ms. Darling said.
Preventive drugs are an estimated 27% to 29% of an employer's total prescription drug costs, said Robin Downey, head of product development at Aetna Inc. in Hartford, Conn. Aetna was one of the first HDHP insurers to cover preventive drugs outside the deductible.
Most employers that do provide coverage for preventive prescription drugs in their HSA-qualified plans generally treat them as if the deductible has already been met, Ms. Downey said. Such drugs may be subject to copays or coinsurance.
Express Scripts had developed a predictive modeling tool to help plan sponsors calculate the cost of providing first-dollar coverage for select preventive medications before the HDHP member meets the plan's deductible.
The St. Louis-based PBM estimates about 25% of its HDHP clients are providing such coverage.
But most employers are not yet covering drugs outside of the deductible in their HSA-qualified HDHPs, either because of cost or uncertainty about IRS guidance, industry experts say.
"Many of the employers that aren't covering drugs as preventive are doing so because of cost," Ms. Downey said. "Then there are some employers who...wouldn't consider this if it wasn't OK with Treasury."
Sarah Novak, director of benefits at Plexus Corp. in Neenah, Wis., is among the latter group.
"I have seen the IRS give the OK, but I have not seen a list, so I am concerned about the potential risk to the qualification of the HDHP if we were to implement this right now," she said in an e-mail.
"The IRS guidance hasn't been specific enough," said Sander Domaszewicz, a principal and head of the consumerism group at Mercer Health & Benefits in Newport Beach, Calif. Still, "the industry has moved ahead and is going to do something until someone tells them they can't. Some have created pretty broad lists, while others have been much more conservative. We have a client offering two health plans, one from (UnitedHealth Group Inc.) and another from (Aetna Inc.), but their lists are different. This adds a whole other layer of complexity. "If there were one definitive list that has been preapproved (by the IRS), that would make things easier," he said.
Part of the reason for so many different drug lists is ambiguousness of IRS guidance that suggests "the definition of preventive is up to the employer and the insurer," said Tom Hricik, national director of HSA product distribution at ACS/Mellon Financial Corp. in Pittsburgh. As a result, "we're seeing a broadening of preventive services being exempt from the deductible in high-deductible health plans."
Both statins and antidiabetics are included in Medco Health Solutions' more aggressive drug lists, said Tracy Grunsfeld, vp of consumer solutions at the Franklin Lake, N.J.-based PBM.
Ms. Grunsfeld said Medco has three lists, one that contains drugs that can be considered preventive 100% of the time, one that contains drugs that may be considered preventive some of the time and a third that has drugs that hardly ever are considered preventive. About 20% of Medco's 100 HDHP clients are covering preventive drugs outside the deductible, she said.
Aetna has only one list, which is being used by 78 Aetna HDHP plan sponsors, according to Ms. Downey.
Both Medco and Aetna presented their lists to IRS officials, but neither received any formal approval that the drugs they included met regulators' definition of preventive.