Md. to virtually cut required drug benefit in minimum health plan for small firms


Proposed changes to the small employer health insurance policies that cover 450,000 Marylanders would virtually eliminate required prescription coverage under a plan outlined yesterday by state regulators.

The proposed changes would not only eliminate any mandated coverage for brand name medications but also would raise deductibles as much as tenfold for drugs - to $2,500 for individuals and $5,000 for families, officials of the Maryland Health Care Commission said. That's far more than most patients would ever spend on generic drugs.

While small employers would no longer be required to offer drug coverage beyond that the minimum, most are expected to offer more, the officials said. Parts of the plan were outlined last week and were explained in greater detail at a public hearing yesterday.

The commission is scheduled to vote on the plan, called PharmFlex, today.

Dr. Rex W. Cowdry, executive director of the commission, said while "core" policies would cover only generic drugs and impose the high deductibles, "Our expectation is that almost every policy won't be the core."

Insurers, however, would have wide latitude to offer prescription plans with varying levels of benefits and out-of-pocket charges.

Stephen J. Salamon, chairman of the commission, said the changes would likely lead insurers to offer "more cost-effective alternatives."

All small employers (up to 50 workers) who provide group health insurance must offer the minimum standard package approved by the commission but can offer enhanced benefits if they choose. About 50,000 Maryland employers buy the state-regulated policies.

More than 90 percent of participating small employers currently pay extra to improve benefits, Cowdry said, and he expects them to continue to do so.

Currently, prescription coverage kicks in after a $250-per-person deductible. Co-payments are $15 for generic drugs, $25 for preferred brand-name drugs and $50 for other brand-name drugs.

Cowdry said the commission wanted to preserve "a minimum benefit" so that drug coverage would still be subject to rules set by Maryland's small-employer law. Those rules say that all employees, regardless of their health history, are able to buy and renew coverage, at rates based only on age.

If there were no pharmacy benefit at all - an alternative the commission had been considering as a way to reduce costs - then insurers would be able to deny or drop coverage for people because of their medical history or condition.

Those rules also set a standard for affordability, requiring that the average premium not exceed 10 percent of the state's average wage. With a mix of individual and family coverage, the cost of the average policy this year came in at $4,335 this year - $77 over the limit - obligating the commission to take action to bring down projected costs in the future.

Reaction to the plan was muted at yesterday's hearing. Only four people testified, with three expressing qualms about the change.

Jeff Levin, general manager of Fields of Pikesville, a retail store selling cosmetics and greeting cards, suggested making the policies more affordable by raising the deductible but "not disturbing the basic plan."

"There are many medications that only come in brand name," said Gail Hiller, who works for Reisterstown Glass, Inc., a distributor of mirrors owned by her husband. For people who depend on brand-name drugs, she asked, "What's going to happen to them?"

Also questioning the plan was an insurance broker, Rodger A. Bayne, chairman of Client First Brokerage Services Inc. of Towson. "We can't keep cutting benefits as a way to attract people into small-group [policies], because it does the opposite," Bayne said.

The commission has been concerned because the number of participating employers has been dropping, with about 58 percent of small businesses not offering group coverage.

The plan was supported at yesterday's session by Paul Brayshaw, a board member of the Hemophilia Foundation of Maryland. His group had opposed an earlier proposal, which would have ended required coverage of blood products - an important benefit for hemophilia patients - and would have removed prescriptions entirely from the standard benefit package.

The commission had five comment sessions around the state after its earlier proposals, and came up with PharmFlex after considering the comments.

Changes would take effect July

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