On July 1st, United Healthcare announced they will now offer coverage for Tandem’s t:slim X2 insulin pump. This change affects individual and group payer plans as well as Medicaid and Medicare Advantage.
Prior to this, United Healthcare had an exclusive coverage contract with Medtronic that limited consumer choice to just one brand of insulin pump, a move that was highly criticized within the diabetes community.
The Problem with Exclusive Insurance Contracts
In 2016, United Healthcare (UHC) entered into an exclusive contract with Medtronic that would ‘mutually benefit’ each company.
- Medtronic, one of three main insulin pump manufacturers, would secure a huge chunk of the diabetes market because only their pumps would be available to UHC customers. Since UHC is the largest health insurance provider in America, this was no small gain.
- For UHC, the deal provided access to specialty rebates that drug and durable medical equipment companies often offer insurance providers in exchange for covering their products. In the case of exclusive partnerships, these rebates tend to be even more extravagant.
Disguised Way to Screw the Consumer
In general, the larger the rebate for the insurance company, the more the member will pay out of pocket.
By negotiating for higher rebates instead of lower upfront costs, insurance companies can charge members copays based on inflated prices and still receive a price break from the supplier in the end. This means that while your copay may be just 20% for a new pump, you could actually end up paying over 30% of the rebated price.
You can read more about how this works in Are Exclusive Insurance Contracts Consumer Abuse?.
The real losers in the Medtronic-UHC deal were people insured by UHC.
A Lack of Choice
Price gouging aside, the most obvious reason exclusive contracts are problematic is that they can severely limit the choices available to the member.
There is no one-size-fits-all approach to treating diabetes. Finding the right tools for you and your lifestyle is key to achieving success with your numbers. When an insurance company greatly reduces your ability to access the right tools, they can literally be taking years off your life.
Not only did the exclusive contract with Medtronic cut down pump options by two-thirds, but it also restricted which CGMs pumpers had access to.
Medtronic systems all have their own CGM integrated into the insulin pump, which means if you wanted to pump and use a CGM, you again, were limited to just one brand.
As the world of diabetes tech continues to advance, the bad impact of these choice restrictions becomes even more obvious.
When Medtronic signed the deal with UHC four years ago, they were on top of the market and only months away from releasing the first automatic insulin dosing system (AID) the world had ever seen. But a lot has changed since then.
Now, Tandem and Dexcom have introduced their own combination AID system with many advantages over Medtronic. And Insulet’s Omnipod isn’t far behind, with their tubeless AID system predicted to release by the end of 2020.
A Step In the Right Direction
United Healthcare’s decision to reverse course on their exclusive coverage of Medtronic pumps came after hounding from JDRF’s Coverage2Control campaign, which is focused on expanding treatment choices by pressuring insurance companies away from policies that limit access to diabetes tools.
With this new policy change, UHC members now have the option to choose either a Medtronic pump or the Tandem t:slim X2 which can be combined with their Control IQ technology and the Dexcom G6 CGM for a complete AID system.
But this change doesn’t completely resolve the advantage Medtronic has over the UHC member market.
- Medtronic still has a special agreement with UHC that allows members to more easily access their pumps without preauthorization.
- By contrast, if a member prefers the Tandem pump, they need to seek preauthorization and receive approval to use that pump before they could begin the process of purchasing the product.
Still, this announcement is a positive step toward opening up the market to allow people living with diabetes the opportunity to finetune their treatment based on what works for them.