Inside Iowa State: Iowa State University

April 2, 2004

ISU Plan lands on temporary pharmacy co-pay rates

by Linda Charles
A computer glitch turned what should have been a simple change to the university's prescription drug co-pay rate into "a nightmare," said Diane Muncrief, benefits manager.

On Feb. 1, prescription co-pay rates for ISU Plan participants were to be $10 for generic drugs, 30 percent of the actual cost for preferred brand drugs, and 50 percent of actual cost for non-preferred brand drugs, with a $1,500 out-of-pocket maximum. The rates apply to faculty and non-merit staff; merit staff participate in a state health insurance plan.

The new structure also allowed those on maintenance drugs to receive three months of prescriptions for the cost of two months. (Maintenance drugs are taken over a long term. Drugs like Lipitor, used to treat high cholesterol, often qualify as maintenance drugs.)

But the plan bogged down when the two companies that handle ISU Plan claims discovered their computer systems couldn't handle co-pays based on dollars and percentages, coupled with the maintenance drug benefit. Wellmark/Blue Cross Blue Shield handles the PPO and Indemnity plans, and Health Alliance handles the HMO insurance.

New rate structure has a price

Since that discovery, university officials have scrambled to offer approximately the same benefit to ISU employees.

The result is a new co-pay rate that will cost most ISU employees about the same as the original plan. In some cases, employees will pay less for their drugs this year. The new rate structure is detailed in letters that employees should have received from their insurance companies in March.

While employees won't be affected much by the change, the university (which is self-insured) will have to cover more of the costs in order to keep the co-payments down. Muncrief estimates it will cost the university about $258,000 more this year than originally planned.

No free month
The new system eliminates the "free" month for maintenance drugs, and charges a lower percentage of the drug's actual cost, Muncrief said.

Under the new plan, those who are on the PPO and Indemnity plans will pay $8 per prescription for generic drugs, 20 percent of the actual cost of a drug for preferred brand drugs, and 33 percent of the actual cost for non-preferred brand drugs. That works out the same, over a three-month period, as the original rate structure did, when a free month for maintenance drugs is figured in.

For example, if the actual cost of a preferred brand maintenance drug is $100, one month would cost $20 at 20 percent, or $60 for three months. The cost of the same drug under the original plan would have been $30 for one month, but only $60 for three months because of the one free month.

Those on the PPO and Indemnity plans will get a price break on their non-maintenance prescriptions this year. They will pay the lower percentages for all prescriptions, not just their maintenance drugs.

The HMO plan continues to distinguish between maintenance and non-maintenance drugs. Percentages for maintenance drugs were lowered to 20 percent for preferred brands and 33.3 percent for non-preferred brands. Generic drugs will cost $20 for a three-month supply. (The cover letter sent by Health Alliance is misleading. Those covered under the HMO will pay $20 for a 90-day supply of generic maintenance drugs.) The cost for non-maintenance drugs under the HMO plan have not changed.

New structure is temporary
Muncrief said the university plans to return to the proposed rate structure next year. It might be necessary to solicit separate bids for prescription coverage.

She said the intent of the tiered prescription drug co-pay is to encourage people to use the less expensive generic drugs, when possible, to hold down coverage costs.

The university spends about $30 million annually on health care, she noted, with $4.5 million of that going to prescription drugs. From Feb. 1 to March 2, 7,954 prescriptions were filled by ISU employees under the PPO and Indemnity plans.

Refunds coming
The new rate structure is retroactive to Feb. 1. Some ISU employees covered under the PPO or Indemnity plan may have overpaid for the prescriptions, and Wellmark will send refund checks in April.

Those with medical Flex accounts who already have submitted claims for their pharmacy should contact Wellmark Flexible Benefits, 800-624-2755, for assistance in reprocessing their credit amounts.