Vol 23, 2014 Annals of Health Law 46
THE ACA AND PEOPLE LIVING WITH HIV/AIDS
plan.145 The court held that in doing so, the provider rescinded his
insurance in bad faith, and awarded the insured $10,150,000 in punitive and
Even if a provider does not completely rescind an insured’s coverage
once they are diagnosed, it may deny needed medical treatment.147 For
example, denials of important medical procedures for the HIV/AIDS
community were so pronounced that in 2005 California enacted a statute
that required health insurance providers to stop claiming that transplants for
those with HIV/AIDS were not medically necessary.148 Assembly member
Paul Koretz, the bill’s author, noted that insurance providers regularly
deemed liver transplants for hepatitis C infected patients as medically
necessary, but regularly denied claims by people who were HIV/AIDS
positive.149 These claims were denied despite the fact that they often
resulted in successful outcomes and increased life expectancy.150
2. Specialty Drug Tiers
Another way in which insurance providers shift the burden of high cost
medication onto insured is through drug formularies.151 In essence,
formularies create a tiered system in which providers agree to cover first
tier drugs at the lowest level of cost sharing, second tier drugs at a higher
level of cost sharing, and so on.152 Recently, providers have begun to use
formularies to limit the benefits payable to the insured for specialty
medications by placing them on higher tiers—such as four or five.153
145. Mitchell, Jr., 686 S.E.2d at 176.
146. Id. at 190.
147. See, e.g., Governor Signs Bill Barring Denial of Transplant Coverage to Patients
with HIV, 17 CAL. INS. L. & REG. REP., no. 8, 2005, at 268 (reporting that the Governor of
California had signed into law a measure prohibiting health insurers from denying coverage
for the costs of organ or tissue transplantation services on the basis that the insured is
infected with the human immunodeficiency virus (HIV)).
148. CAL. HEALTH & SAFETY CODE § 1374.17 (West, WestlawNext through Ch. 800 of
2013 Reg.Sess., all 2013-2014 1st Ex.Sess. laws, and Res. Ch. 123).
149. CAL. STATE ASSEMBLY, CONCURRENCE IN SENATE AMENDMENTS A. B. 228, at 2
(2005), available at http://www.leginfo.ca.gov/pub/05-06/bill/asm/ab_0201-0250/ab_228_
151. See Joseph J. Hylak-Reinholtz & Jay R. Naftzger, Is It Time to Shed A “Tier” for
Four-Tier Prescription Drug Formularies? Specialty Drug Tiers May Violate HIPAA’s Anti-Discrimination Provisions and Statutory Goals, 32 N. ILL. U. L. REV. 33, 34–35 (2011)
(noting that drug formularies enable insurance providers to shift substantial costs onto the
insured by limiting the benefits that they will pay for high cost medications).
152. See Gina Kolata, Co-Payments Go Way Up for Drugs With High Prices, N.Y.
TIMES, Apr. 14, 2008, at A1 (explaining how insurance providers utilize specialty drug tiers).