We Don’t Cover Specialty Drugs, Wink Wink

Specialty carve-out programs (also known as alternative funding programs) exclude most or all specialty drugs from the plan’s formulary. A patient technically has no coverage for the specialty drug. A third-party carve-out vendor helps the patient apply for the patient assistance funds from the manufacturer’s charitable foundation.

SOURCE: Cobalt Rx | Emerging Alternative Funding Programs

Key Takeaways:

What can make these programs difficult to implement is that not all PBM’s, TPA’s, and Carriers are open to working with Alternative Funding Programs. for various reasons.  One reason is loss of revenue – Specialty drugs can be a large revenue source for all three.  As a result a plan would have to select new health plan partners allowing for the implementation of these programs.

To implement an Alternative Funding Program, the plan must exclude a defined list of specialty drugs from coverage under their pharmacy benefit plan.  This exclusion is specifically outlined in the plan’s Summary Plan Document and these specialty drugs would be an automatic denial at point of service.

An HRA (Health Reimbursement Account)or MERP (Medical Expense Reimbursement Plan) needs to be set up to pay for any eligible reimbursement of a defined specialty drug from a list that are drugs excluded from the plan sponsor’s pharmacy benefit plan.

About 40% of specialty claims that have alternate funding available have an individual and household income cap that may limit or exclude a participant’s ability to be eligible for alternate funding.

Group health plans that still rely on their “grandfather status” should not be impacted by implementing an Alternative Funding Program since the program lowers both plan and member cost.

Plan participants covered under federal healthcare programs such as Medicare and Medicaid are excluded from the program.