Like provider directories, drug lookups have many data quality problems

Part of helping consumers shop for health insurance is helping them determine which plans offer the coverage for their medication needs with the lowest cost and the fewest hassles.

 

Health insurance companies create lists called formularies that show which prescription drugs are cover by each health plan. Right now, these formulary lists have a lot of problems that make them confusing and inaccurate. While people have talked a lot about problems with provider directories, the issues with formularies haven’t gotten as much attention.

 

 

This post discusses some of these problems and offers some potential solutions. For those interested in the technical version, click here for our comments on the HTI 2 rule the ASTP at HHS put out in the fall of 2024.

 

Here are the key problems that we’ve found in our work:

1. 1. There’s no clear way to tell which formulary list belongs to which insurance plan. Often, insurance companies use the same formulary for many different plans, but there’s no easy way for people to be sure they’re looking at the list that goes with their own health plan.
   2. It’s not clear which drugs should be included on each list. For example, some specialty medications might be covered under different rules (i.e. on a separate formulary or under another benefit of the health insurance plan), but this isn’t explained well. When people search and don’t find a drug, they might think it’s not covered when actually it just belongs on a different list.
   3. Only covered drugs are listed. When a drug isn’t on the list, people don’t know if it’s definitely not covered or if the insurance company just left it off (by accident or for some other reason). Non-covered drugs are major source of problems for consumers, so getting a definitive and accurate no is as or more important than just a yes (the same is true of doctors, BTW).
   4. There are technical problems when converting between different drug coding systems. Insurance companies use one system (NDC codes), but sometimes need to convert to another system (RxCUI codes). This conversion can cause errors or confusion.
   5. The drug lists don’t include all the important coverage rules. For example, they might not explain that you need to try certain drugs first, or that some drugs require special approval. They also might not mention rules about where you can get your prescriptions filled.

To fix these problems, we suggest:

Creating Standard IDs for Drug Lists

• • Every insurance company would need to give each of their drug lists a unique identification number. We’ve previously proposed a similar unique identifier for health plan’s provider networks and described the benefits for healthcare shopping and price transparency.

• • This ID would be like a serial number that appears on insurance cards, benefit summaries, and websites

• • Consumers could use this ID to quickly verify they’re looking at the right drug list

• • Third-party apps and websites could use these IDs to accurately show drug coverage information

• • This would be especially helpful when shopping for insurance plans

 

Clarifying Which Drugs Should Be on Each List

• • Insurance companies would need to clearly state which types of drugs are or are not included on each list.

• • They would need to specify if certain drugs (like specialty medications) are on separate lists

• • They would need to explain where to find information about drugs not on the main list

• • This would help prevent confusion when people search for drugs and can’t find them

• • It would also make it easier to compare drug coverage between different insurance plans

 

Clear Statements About Non-Covered Drugs

• • Instead of just listing covered drugs, formularies should explicitly state which drugs they don’t cover. This would eliminate guesswork – if a drug isn’t found, people would know whether it’s truly not covered

• • The lists would need to explain why certain drugs aren’t covered (for example, if they’re considered experimental). Formularies would need to include links to other relevant drug lists (like specialty drug lists)

• • This would help people make more informed decisions about their healthcare

 

Better Use of Drug Codes

• • Insurance companies and regulators need to do more testing of the systems that convert between different drug coding systems (NDC to RxCUI)

• • Creating clear ways to handle situations where the same drug code is associated with different costs

• • Ensuring that new drugs are consistently added to formularies in all of the ways that they are published (online searches, printed/PDF formulary lists, JSON data published for federal regulators,

• • Making sure archived or discontinued drugs are handled appropriately

• • Developing better ways to track different versions of the same medication

 

Including All Coverage Rules

The digital versions of drug lists would need to clearly state:

• • Which drugs need prior authorization (advance approval)

• • Whether you need to try certain drugs before others (step therapy)

• • Rules about using specific pharmacies

• • Coverage of over-the-counter medications

• • Rules about compound medications

• • Policies about experimental drug use

• • Any special requirements for specific drug types

 

These improvements would help:

• Consumers better understand their drug coverage
• Doctors make more informed prescribing decisions
• Insurance companies maintain more accurate information
• Third-party apps and websites provide better tools for comparing plans
• Reduce confusion and surprises at the pharmacy
• Make it easier to shop for health insurance plans
• Ensure everyone has access to clear, accurate information about their prescription drug coverage

 

The ultimate goal is to make drug coverage information as clear and accessible as possible, reducing frustration and unexpected costs for everyone involved in the healthcare system.