Unfunded medicines - You don't know it as well as you think
If you're involved in medical insurance, you will be familiar with coverage for unfunded medicines on most new medical policies.
Thursday, June 13th 2024, 2:00PM 
14 Comments
by Jon-Paul Hale
On the face of it, you have two flavours of cover: cancer-only and non-cancer-included versions for chemotherapy and immunotherapy.
However, when you dig into the policy wordings, some technical terminology emerges that is deeply concerning.
Specifically, that wording is "MedSafe indicated", which, on the face of it, most of us, and the public, will say; Yeah, the medication needs to be listed for the treated condition.
However, that's not the whole story.
That "indicated" term is a technical clinical term, and relates to the specifics of the medicine's use, including conditions of use that likely make no sense to the average person on the footpath.
Generalising: everyone knows cancer treatments are only effective for so long, where the more aggressive cells survive, and a new treatment is needed to control cancer.
This is where "MedSafe indicated" in policy wordings, comes into play. It significantly limits access to treatment under most current medical policies.
Four out of the big five current medical policies will not fund all of your MedSafe-approved cancer treatments, as you expect.
Those four you need to be mindful of: Accuro, AIA, nib, and Southern Cross.
This is because phrases like "indicated first-line treatment" in MedSafe guidelines mean the medication is only authorised for use as THE first treatment for THE condition.
MedSafe approvals for medicines also include a range of other constraints or use guidelines, which are what the "MedSafe indication" in policy wordings refers to.
If a patient has had cancer treatment that has stopped working and the oncologist wants to use a different medication that has this "first-line" criteria, then it's not MedSafe approved for that use, and four out of five insurers won't pay the bill for it.
Partners Life has a similar first check with its wording, but it is the only insurer with alternative assessment criteria to approve use outside the MedSafe criteria.
To be clear, I am viscerally angry about insurers' use of nuanced minutiae to avoid claims. This level of omission of information and mechanics is not in line with our good faith expectations of insurers and behaviour like this deeply impacts our faith in them.
We advisers are the meat in the sandwich here. The insurers are under informing us of the details involved in claim management and setting us alight with "unfunded cancer medications are covered." Knowing full well that when we get down to the detail, the insurer can wriggle out and avoid paying these claims.
Which is likely to leave us facing the music with a professional complaint about misleading or inaccurate advice to clients impacted.
I understand that these medicines are expensive, at the same time, they are also part of the intended coverage.
It is up to the insurer to ensure that the policy is fit for purpose, reasonably priced and that they act in good faith when it comes to claims.
Given that thousands of medicines MedSafe approved and not funded by Pharmac are now available, the lack of guaranteed policy wordings for many medical policies will be an interesting discussion in the future as more pressure comes to bear on this area.
I'll come back to my point on omission by the insurers.
If the client impacted here, and the others I have since been made aware of by many people and clinical providers, had known the full story of what claims would do when presented with a claim for follow-up treatment, they would have likely taken a different approach with their treatment.
* This is also a concern for clinicians advising patients, as treatment funding has a significant impact on treatment success.
If the client here had known, or the clinician had advised their patient, that the options presented they choose from could have a different response from claims, they would have likely taken a different route.
In this case, the client was presented with three options. They chose the most aggressive approach, which was Pharmac funded.
They are dealing with stage 4 cancer, and their oncologist knows they are not surviving this; treatment is only extending life.
This means they know full well that this is not a one-and-done thing and other treatment(s) will follow.
If the client knew what they know now, they would have potentially taken the unfunded "MedSafe indicated, first-line treatment" and had this paid for by their insurer.
Knowing that the patient's insurer will pay for the subsequent treatment being funded by Pharmac without question or games on MedSafe guidelines. Because Pharmac-funded trumps MedSafe guidelines with claims.
If you are an adviser or clinician, please spread the word by sharing this article.
Upfront, informed patients navigating this will make better decisions on their treatments, and insurers will lose their ability to be difficult on our most sensitive claims.
The questions for clients to ask their clinicians:
* What medications are funded by Pharmac?
* What medications are not funded by Pharmac?
* Of the medications not funded by Pharmac, what are the MedSafe guidelines and criteria for use?
Where the MedSafe indication is first-line, these medicines must be considered for use first. If you don't use them first, your insurer is unlikely to approve them for use later.
* Where the MedSafe indication is for use after trying XYZ treatment, that guideline on use must be followed.
Yes. This will interfere with the clinician's preferred approach as the medical professional best qualified to advise their patient.
Yes. This is an American claims management style that is creeping into our market.
No, I'm not happy about this. It is an underhanded omission-based approach that is impacting people's lives at a time when they least need it!
To those four insurers: Do Better!
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Comments from our readers
You suggest informing clients by sharing your example - surely that is not good either as could cause panic at a time when clients probably cannot move to the one with better wording.
I would have thought as a huge group of Advisers we could be lobbying these companies to either pull up there socks or be far clearer with their wording with both us Advisers and Clients.
Thank you for finally naming companies as often your articles allude to problems/issues but who knows which companies you are referring to so appreciate the clarity :-)
I think it is fair for an insurer to choose the extent of cover they decide as long as it is very clear and very clearly defined to avoid any client confusion. Their brochures should also be very clear as well.
Then you would demand of any research supplier the same. That is, if I am paying for research make it abundantly clear, not just a star or tick or some confusing score, clear wording describing differences.
Avoiding Adviser and Client confusion should be key!
I have significantly socialised this issue with provider staff, clinical people involved, pharmaceutical companies, advisers, and product research providers.
I don't light this fire lightly or without ensuring my facts are straight. And I have limited words to fully explain what is a very complex part of medicine. Don't believe me? Go ask some pointed questions with scenarios and find out.
The indicated wording is very specific terminology, and it's not just indicated; it is the additional criteria, like first-line treatment, that follow.
Now, in terms of perspective, MedSafe is there to determine if the medicine is safe for use and to provide guidance to Pharmac on funding.
So, first-line treatment would be a reasonable guideline for what Pharmac will fund. As I mentioned, there are criteria for using the medicine after another treatment fails with these MedSafe guidelines.
From the perspective of Pharmac funding guidance, this makes a lot of sense.
However, that doesn't exclude the medicine being used for other purposes that are clinically indicated.
In the case of "off-label use", the term used for this use, for cancer we have other regulatory bodies and clinical resources that have government oversight and guide what's allowable for clinical use here in NZ. This is the primary place clinicians use for current and up-to-date treatment plans.
There is a difference between off-label and experimental. The insurance providers like to run with the latter term for off-label.
Part of the problem here is the basis for determining clinical appropriateness has moved on from just being MedSafe, and the medical insurers have not kept up.
The other piece here is that we and the insurers are sitting in judgment of the clinicians who are specialists in their areas, working under guidelines and guidance of clinical research. We do not have either the skills or information access to make decisions on how appropriate a client's treatment recommended may or may not be.
The average CMO is a qualified doctor, but they are not field specialists up to date with every new thing, which is also dangerous when it comes to these decisions and restrictions.
We can suggest questions when things don't seem to add up, but we're not qualified to make the call on this stuff at this level.
Re FANZ, possibly; however, that avenue with providers hasn't been a traditional pathway used. That pathway has typically been via the dealer groups with limited
success.
I agree that there may be client angst about this, but at the same time, advisers have a professional duty and liability regarding their recommendations.
If clients have been told their unfunded cancer meds will be covered without the additional qualification of MedSafe indicated and an understanding of that, a complaint process could find them liable.
Please refer to Steve Wright's recent article discussing the features and benefits of trauma policies. I disagree with the article's assertion that it would also apply equally to advisers, but the principle discussed applies here to what the adviser has or has not said in relation to how unfunded medicines work.
In terms of the advisers lobbying this, you're relying on two things:
1. There are enough advisers experiencing this that understand it to say something
2. They have a platform that allows them to connect and coordinate.
That last bit; this is my contribution to point 2 to raise awareness and bring forward the issue for all advisers to both understand and respond.
In terms of naming companies, I do where there is a distinct reason to, where we have a more general issue that is across the industry; there is no point with the name and shame; I'm talking about everyone.
In this case, I am talking about a specific group; I haven't looked at the Police Scheme or UniMed with this subject, and given its technical nature, defining who I am talking about is most appropriate to put advisers on notice.
For clarification on my nib comments, I haven't looked specifically at the nonPharmac Plus benefit or the older OnePath Major Medical Deluxe as I focused on current on-sale products with my comments.
This isn't just an adviser or client issue; it is about the insurers' delivery of market expectations.
The box may say "covers unfunded medicines" It may even say it "covers MedSafe approved unfunded medicines". The reality is the decline happening here are MedSafe-approved medicines.
In the case on my desk the clinician wrote "(medicine) is not PHARMAC funded but is medsafe approved for your indication" yet the indication also had "first-line" as the qualifier and thus the cause of the decline.
I will say this isn't just any old client either; this is a client that deeply understands our products and industry, so it is very much an issue for Joe on the footpath.
Partners Life took the approach "This is a claim we should be paying", paid the claim and updated the wording to add the off-label assessment in their claims process.
This approach is commendable of Partners Life in following through on their public statements of doing the right thing for policyholders.
This is what I expect from the rest of the medical providers I have named.
Full credit after legal opinions they paid a Med safe approved non indicated drug $117,000.
Clients medical provider went direct was declined. We looked at it - it’s a ex Onepath Major medical after working together and with higher management at NIB it was approved yet only because those wordings allow for non indicated.
This is a 45 year old mum who has been living with a terminal illness for three years.
She is such an inspiration and is alongside her amazing oncologist working hard at being here. This drug was prescribed after her med safe indicated drugs have stopped working.
The science is working faster than Medsafe can keep up. These wordings allow her time and as her adviser we are so grateful we could walk the journey with her.
Is the issue policies don’t allow as much as Medsafe can’t keep up. Is this the issue with the 9 or 11 so drugs the government are looking to approve which is taking time to work through.
You are right though as advisers we do need to understand this issue when advising policies. We have gone from needing to advise non pharmac approved policies to now non pharmac med safe non indicated policies. It’s a minefield we didn’t create.
Thanks for highlighting the issue JP
David Seymour has recently commented publicly on this issue, and like JP he is not impressed with the "indicated use only" limitations of current medical insurance coverage for non-Pharmac funded treatments. Rob Hennin (nib CEO) has responded in the NZ Herald on 19/04/24, and his words seem carefully chosen to imply that their policy limitations are solely due the delays with Medsafe approval timeframes:
"Member safety is our top priority and we must follow guidance from regulators like Medsafe to ensure treatment options are safe and effective. Like other health insurers, nib is unable to cover off-label drugs prescribed beyond the initial use approved by Medsafe... the cart cannot come before the horse. If Medsafe can first approve off-label medicines, we’ll be able to give our eligible members access to them."
The "cart before the horse" idiom here misleads the reader into thinking that there is an immutable natural order to things: Medsafe approved for indication X first, insurer coverage second, and that's just the way it is. But insurance contracts are not a matter of natural order, they are an artificial construct. Partners Life gets this: they have constructed wording that covers off-label uses which have "significant research and clinical proof of effectiveness for the treatment of the condition in Partners Life's sole opinion." No horse, not cart, just a better contract (in that specific respect).
Katrina shares the interesting case of nib paying a claim for a non-indicated use on an older OnePath MMD product, because those wordings allowed for non-indicated uses. Here is the wording (v4.1 2014, because this is the copy I had lying around):
"For the purposes of this Protection Benefit Sheet, non-PHARMAC drugs means any drug that has been approved by Medsafe but is not listed as a government subsidised drug by PHARMAC."
The wordings allow for non-indicated uses, in virtue of not expressly excluding such uses. So contrary to Rob Hennin's public pronouncements, nib can cover off-label uses and already does (at least on the OnePath MMD).
All of this aside, I don't feel as strongly as JP that all current policies, with the exception of Partners Life's offering, fail to provide fit-for-purpose non-Pharmac coverage. (At least, that's what I take the visceral anger to amount to.) The limitations are clearly stated in the policy wordings, and I don't think that the limitations are inherently "underhanded" or symptomatic of an "American claims management style". They are just an exercise in line drawing, carving out the things a policy will cover from all those things it doesn't. It is our job to help the clients see the line clearly.
All insurers draw lines, it just happens that Partners has drawn the line in a place that allows claims where others don't. What would be really interesting to know is
(a) the total value of claims Partners Life has paid under the "discretionary" wording as a % of the total value of non-Pharmac claims paid to date, and
(b) how many claims under the "discretionary" wording have been declined due to Partners Life not being satisfied that the proposed use has "significant research and proof of effectiveness", as a % of claims made under that wording. The higher the first number and the lower the second, the worse others look in comparison.
It would be great if Partners Life could provide this data.
I agree with Rob Hennin that the insurers have a line here of not becoming liable for experimental and unsafe treatments, but that isn't something to be used to hide behind at claim time.
At the same time, we are quite some way from the experimental days of early immunotherapy medicines and lacking good research on treatments. We now have the situation of MedSafe and Pharmac being the bureaucracy moving significantly slower than the confirmation of the science, which the insurers are using to avoid claims. Expensive claims.
I, too, looked at the Major Medical wording, and the "any" in that wording allowed the claim.
What may not have been clear is that lawyers had to be engaged to get that claim paid. nib was trying to decline it under a similar approach to their main on-sale product, and lawyers, not advisers, had the final word in getting the claim paid. That's not how this should work for clients facing these treatments, where delays can significantly impact life.
You're right that's where my anger on this is coming from. The distinction on the fine point of the wording when both the insurers are not communicating this and advisers are not aware of it when the insurers damn well know. My anger comes not from the case on my desk but the realisation that the case on my desk is neither unique nor infrequent and no one until now has said anything.
Back to my earlier comment, PL has taken the attitude of is this a claim we should pay? against the position of the others, does the working allow us to decline it? It is this distinction towards claims the insurers have that ultimately determines if the claim will go smoothly or if you end up with lawyers involved.
The other aspect is the omission of information, both in the distribution of products and the management of claims. If my client, the patient, and/or clinician were aware of the claims approach, they might have made different decisions on how to proceed with treatment, which could have been funded for the whole lot.
That's the issue here: the lack of information to understand the claim process effectively without having to have a medical degree.
Secondary is the wording, which I think is problematic, but that is the contract we presently have and have to work with, and that applies to the four companies I have named.
All of the insurers have the ability to offer effective coverage here without choosing to use fine print to avoid claim situations that are expected to be covered.
@VFA what, EXACTLY do you suggest FANZ should do / have done here?
Be specific now.
Because FANZ neither made, nor contributed to, nor has responsibility for this situation. It is not a lobby group, it is a professional body.
If you were a member, you should know that.
Medications that are used in a number of countries scubas the UK, USA, France, Germany, Australia etc are either not funded by Pharmac (surprise surprise!) or Med Safe approved in New Zealand.
I have a rare condition (wild type amyloidosis), one of about 25 people diagnosed with this in New Zealand each year.
While this a condition that is not curable, the medication appears to be life extending. The cost is $250K per year.
The media always pounces on Cancer, but we need to remember that there are a number of other conditions that are also often terminal.
Most of the Insurers do not really listen or engage with Advisers in this space but perhaps would with an Industry body but perhaps I belong to the wrong one.
Secondly thought my post was fairly clear as our Industry Body I see FANZ as the voice of advisers? and where we are having these big issues with lack of clarity I would have thought they could as our voice assist us by getting all the health companies feeding back our concerns and perhaps FANZ would have the power of member numbers to demand some changes.
I did not say nor infer that FANZ were responsible it was merely a suggestion that perhaps they could as our voice assist to ensure we all remain professional and knowledgeable not only about the products but the lack of clarity in the wording and understanding of what this wording means.
As a member I believe that FANZ does lobby for our benefit with the regulators etc with submissions etc and meeting with and reporting back - I feel it would also be extremely helpful if this was extended to Product Providers.
I appreciate that this is not your viewpoint/opinion but do believe we are all entitled to voice our opinion in this forum :-)
It doesn't help that the cover for non-cancer medicines is somewhat limited on existing policies, with Old MajorCare, Major Medical Deluxe, current Accuro Smart+, nib, and Partners Life being the only providers in this area. (There is some limited cover on some group medical too)
This "fine print wording" issue is very much an issue for non-cancer medicines as well. The challenge with the media is cancer, especially women's cancers, gets a significantly more emotive engagement with the public, and this is what sells papers and grabs eyeballs.
We don't see the same response with prostate or other men's health issues in the same way, which means that we continue to push the barrow on change with the issues that grab the headlines.
It's not how it should be, but forward is still forward, and the theory of a rising tide lifting all boats applies, and that's still progress.
Where this issue lands, the jury is out; at the same time, we advisers need to be aware of the hidden fishhooks if we are to keep ourselves out of trouble while the insurers play silly games looking for stupid prizes.
In some ways, it's a shame Fair Go has gone west, as this would be one of those stories that would help awareness and potentially drive change from the consumer direction that is no longer there.
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Here's another example for Mabthera (https://www.medsafe.govt.nz/regulatory/ProductDetail.asp?ID=8039), which is indicated to treat both cancers and auto-immune conditions.
I believe that the intent here is to exclude off-label or experimental use, which feels completely reasonable to me.
I will say, though, that for various reasons, MedSafe can lag other regulatory bodies in approving medicines so it would be nice to see indication extended to the PBA (Australia), FDA (USA), or EMA (Europe).
Would be good to hear more from the companies here.