Lack of Transparency and Higher Costs

Patient Co-pay Clawbacks

Under almost all health care plans, patients are responsible for a certain level of cost sharing usually in the form of a fixed co-payment or a percentage of the cost, known as co-insurance. The patient assumes they are paying a portion of the cost and their insurance company is paying the remainder.

The practice known as "copay clawbacks," turns this premise upside down. Instead, the cost of the medication is lower than the patient's co-payment, but the insurer's PBM instructs the pharmacy to charge the patient an inflated co-pay, and later the PBM "claws back" the excess from the pharmacy, keeping it for themselves.

In some instances, the pharmacy's usual and customary (U&C) price is lower than the patient's co-pay. Typically, the pharmacy is prohibited by their PBM contract from telling a patient what the pharmacy is being reimbursed by the PBM, so if the PBM inflates the patient's co-pay above the pharmacy's U&C pricing then the pharmacy would be prohibited from telling the patient unless the patient specifically asks about the cost without insurance.

New Orleans investigative reporter Lee Zurik exposed this practice in a series of stories including "Zurik: Cigna faces class action suit amid 'Medical Waste":

A spreadsheet given to FOX 8 News by a pharmacist in the Midwest shows Cigna Health Insurance overcharged at least 70 customers for prescription medication in one month, at just one community pharmacy. The spreadsheet details how the insurance company paid the pharmacist $25 for an acne cream. But Cigna instructed the pharmacist to collect a $187 copay, overcharging the customer $167. That money went right back to Cigna.

Patients were unaware of the practice and several lawsuits have been filed by affected consumers against PBMs and insurers who engaged in this practice.

Not all PBMs practice co-pay clawbacks, but consumers could benefit if they proactively ask about the cost of their medications without insurance and decide for themselves which option is most beneficial to them.

View the following articles for more information on co-pay clawbacks:

Items from NCPA's Blog The Dose