Coverage of Contraceptive Services: A Review of Health Insurance Plans in Five States

Defining “Reasonable” Medical Management

Prior to the passage of the ACA, “medical management” had been broadly understood to encompass tactics and practices used by insurance carriers’ to “modify consumer and provider behavior to improve the quality and outcome of healthcare delivery.”¹ Health insurance carriers have traditionally used medical management techniques to determine a plan’s pharmacy and medical benefits coverage, including but not limited to prescription drugs and medical procedure costs, availability, and mode of delivery.

Medical management techniques are typically presented as practices which promote the most cost-efficient and effective drug and procedure options while simultaneously allowing the insurer to control expenditures and utilization of comparable drug brands. Examples of medical management tactics include, but are not limited to, categorizing brand and generic drugs and devices in tiers based on either cost, type and or mode of delivery; steering consumers to generic equivalent drug options; requiring provider authorization to acquire a preferred brand drug; and limiting quantity and or supply. Health insurance carriers typically limit coverage of medical services to providers within their contracted provider network. For medical benefits discussed in this report, references to covered benefits imply that they are provided by an in-network provider. The plans are not required to provide no-cost contraceptive services and supplies to policyholders using out-of-network providers unless there are no available in-network providers able to provide the medical treatment.

In making coverage determinations for contraceptives, health insurance carriers customarily cover a specific list of prescription drugs or supplies on a formulary. This list may or may not include medical drugs, which are medications that are administered in a physician’s office or healthcare facility and are typically supplied by a healthcare provider. Drugs on a formulary are typically grouped into tiers. The tier that a medication or a contraceptive is assigned to can determine the consumer’s portion of the drug cost or even if the plan will cover it at all. A typical drug benefit includes three or four tiers.

In some cases, a carrier will require a member to first try a lower tier formulary drug or therapy to treat a medical condition before they will pay for an alternative drug or therapy for that condition. This process is known as step therapy or “fail first.” For example, if Drug A and Drug B both treat a medical condition, a carrier may not cover Drug B unless the member tries Drug A first. Only if Drug A does not work for the member, will they then cover Drug B. Another type of medical management is prior authorization, which requires providers to first obtain approval from a health insurance carrier to prescribe the service or medication before it can be covered.

While these approaches are broadly applied to many medical treatments and interventions, contraceptive choice is a central element of high quality family planning services. The CDC and the federal Office of Population Affairs recently issued a report to provide guidance to health care providers about the core elements of high quality family planning services.² The report specifically states that “Contraceptive services should include consideration of a full range of FDA-approved contraceptive methods, a brief assessment to identify the contraceptive methods that are safe for the client, contraceptive counseling to help a client choose a method of contraception and use it correctly and consistently, and provision of one or more selected contraceptive method(s), preferably on site, but by referral if necessary.” The CDC report emphasizes the importance of contraceptive choice in reducing women’s risk of unintended pregnancy, but does not specifically address how medical management should be addressed or applied in the context of insurance coverage of contraceptive services and supplies.