Patients Overpay For Prescriptions 23% Of The Time, Analysis Shows

From Kaiser Health News: 

As a health economist, Karen Van Nuys had heard that it’s sometimes cheaper to pay cash at the pharmacy counter than to put down your insurance card and pay a copay. 

So one day, she asked her pharmacist how much her prescription would cost if she didn’t use her health coverage and paid cash. 

“And sure enough, it was [several dollars] below my copay,” Van Nuys said. 

Van Nuys and her colleagues at the University of Southern California Schaeffer Center for Health Policy & Economics decided to launch a first-of-its-kind study to see how often this happens. They found that customers overpaid for their prescriptions 23 percent of the time, with an average overpayment of $7.69 on those transactions. 

The USC study, released Tuesday, analyzed the prices that 1.6 million people paid for 9.5 million prescriptions in the first half of 2013, based on data from Optum Clinformatics, an organization that sells anonymized claims data for analysis, and National Average Retail Price (NARP) data, which contained drug prices paid by insurers and was based on a national survey of pharmacists. 

It showed that the overpayments totaled $135 million during that six-month period. 

The practice of charging a copay that is higher than the full cost of a drug is called a “clawback” because the middlemen that handle drug claims for insurance companies essentially “claw back” the extra dollars from the pharmacy. (The middlemen, known as pharmacy benefit managers, include Express Scripts, CVS Caremark and OptumRx. Express Scripts and CVS Caremark say they don’t use clawbacks. OptumRx declined immediately to comment.) 

Here’s how it works: After taking your insurance card, your pharmacist says you owe a $10 copay, which you pay, assuming that the drug costs more than $10 and your insurance is covering the rest. But unbeknownst to you, the drug actually cost only $7, and the PBM claws back the extra $3. Had you paid out-of-pocket, you would have gotten a better deal. ...