For a long time, I have discussed the need for unfunded medicine coverage. Ideally, this coverage is baked into your medical policy, but that's not always the case.

In the middle of last year, I wrote this piece for GoodReturns highlighting a significant issue in the way unfunded medicines claims are handled by most insurers.

As I said in the article, this isn't about demanding a change to policy wordings. While it would be nice, we are also talking about an area of claims that is very expensive for insurers.

To open up the policy wordings to be more permissive would result in more claims, which would negatively impact your premiums. We're already seeing this with the 16-22% premium increases being notified for 2025!

With any insurance, there is a balance to be struck: coverage as wide as possible with the best manageable premium.

This requires compromise. There isn't a policy anywhere that covers everything and is the cheapest in the market; it doesn't work like that.

This means insurers need to put constraints and criteria into their policies to focus claim responses on the things they deem important to have covered and filter out the claims they don't want to pay. This is the fundamental nature of insurance.

What does this mean for you?

It's a significant consideration as the policy you have with an unfunded medicines claim you need may not work quite as you expect.

The easy one to grasp is whether the cover covers unfunded medicines or not.

This boils down to; do you have cover?
If so, is it cover for cancer only, or does it cover non-cancer unfunded medicines?

The more challenging issue is when your insurer applies criteria to how that unfunded medicines portion of your cover works.

MedSafe & Pharmac

All insurers require treatments and medicines to be approved by MedSafe for use.

This is a good thing; it ensures that the medicine or treatment is safe for that condition.

The rub is that much of MedSafe's approach to approvals is about informing Pharmac on the funding approach if Pharmac funds it. The challenge here is that we are talking about medicines and treatments that are not funded by Pharmac.

The Technical Bits:

And this is where we jump off into the technical clinical area that's causing us concern.

It used to be that we approached this by saying, "If it's MedSafe approved, you're good to go." This has changed somewhat to "MedSafe approved and meets the indication guideline from MedSafe."

For most people, this technical bit isn't going to mean much. However, it is a significant issue with four out of five insurers paying unfunded medicine claims.

This indicated requirement can mean the difference between you having your claim paid or not.

While the headline "MedSafe approved for the medication needed for your condition" might be correct, this indication nuance could still mean it's declined.

The indicated criteria is MedSafe's guidance to Pharmac for funding purposes, which the insurers are also focusing on as their guide to funding medicines. The problem is that Pharmac doesn't always fund medicines that MedSafe approves in this way.

While I can understand the insurer's approach to cover medicines that MedSafe have indicated a criteria to fund that Pharmac isn't funding to limit their claim exposure to cover what Pharmac isn't funding.

The real challenge arises when the clinician prescribing treatment uses more up-to-date and modern criteria for treatment, which is what is happening in the background.

This background treatment management isn't managed by MedSafe, but it does have a level of government oversight.

Medicine Approvals:

Medicines used for treatment fall into three broad categories.

1. New and experimental medicines and treatments; these do not yet have MedSafe approval for use.
2. MedSafe-approved medicines and treatments; at the top line, these are approved (indicated or not) for use in New Zealand, and clinicians can and do use them for "off-label" uses.
   • Off-label use, when the medicine is approved for use with one (or more) condition, but it's also been found to be effective for another condition.
3. MedSafe is approved and funded by Pharmac, which means Pharmac often limits its funding for medications and treatments based on the criteria outlined by MedSafe.

Many medical insurance policies currently in place providing unfunded medicines support operate with point 3 above where Pharmac is not funding the MedSafe approved and indicated medicine or treatment.

The problem is that our oncology clinicians are operating with point 2 above, and people are coming up short on funding this because Pharmac isn't funding it, and the use being prescribed is not the indicated use.

The specific example that landed on my desk prompting me to launch into print, was for Abraxane. This is a cancer medicine approved for the treatment of pancreatic cancer, and it comes with a MedSafe indication of first-line treatment.

The Clinical Challenge:

The problem arose with the clinician involved here offering their patient three options without this impact context:

• The most aggressive treatment that is Pharmac funded.
• Abraxane, which is indicated for pancreatic cancer as above.
• Another medicine that isn't as effective as the top two but is Pharmac funded.

The patient opted for the most aggressive option because they knew they had the best chance of managing side effects while in their best health, and they proceeded on that basis.

They also knew they had unfunded cancer medicines coverage and would be fine.

• I will make one point here: This wasn't a professional advice complaint for us because we were not involved with this client until the client came to us having trouble with their insurer.
• We were not responsible for this client's understanding or lack thereof before they came to us.

When revisiting treatment with the first treatment no longer effective, the patient's insurer declined the claim because Abraxane is now the second-line treatment.

This was a surprise to everyone and highlighted a significant knowledge gap between clinicians, policyholders, and insurance advisers. Thus, I launched into print and kicked in a few doors.

The problem here is nuanced:

• Clinicians need to understand the impact of presenting clinical treatment options within the context of the insurance response. However, clinicians are not insurance specialists; they are often just as surprised as their patients.
• Clients need to understand there are criteria they may not be aware of with their policy before making decisions on treatment. This is where a good adviser involved in claims management needs to be consulted to help.
• Insurers need to do more to help educate insurance advisers about issues like this to ensure that we are able to address these sorts of concerns and issues before a policyholder lands on the wrong side of a claim decision that can't be changed.

My only answer is to improve awareness and understanding, which is why you have been reading this so far.

As I said earlier, this is a technical, nuanced issue that is off the usual beaten track of medical insurance advice and claims.

At the same time, it is an incredibly important area that impacts people's treatment options and long-term survival with life-threatening conditions.

What's the landscape?

Today, 4 out of 5 insurers operate with point three coverage for MedSafe indicated but not funded by Pharmac cover for unfunded medicines.

• They have varying criteria for how serious a condition is for their response with unfunded medicines, as does the 5th one.
• We have 1 insurer that will operate at point two coverage for unfunded medicine treatment.
  • However, if it is not indicated like the rest for point three coverage, they require supporting clinical advice and research on efficacy before they will approve treatment.
  • They don't want to approve experimental treatments or treatments that don't have a positive impact on the patient.

If all of this has made you a bit frustrated and distrusting of insurers, I understand that. It's been frustrating and concerning for us in the insurance advice industry as well, not to mention the clinicians who have had the same feelings.

Products & Advice:

My challenge here is that we provide advice on the products available, and we can't change them.

At the same time, I understand that opening the door to removing criteria and opening up policies for more claims in this area will put significant upward pressure on claims, which is already resulting in medical insurance premium increases for 2025, the largest seen in the last 10 years.

My only answer is to ensure you have a qualified, competent adviser working with you. One who regularly reviews your coverage to ensure it is appropriate and premiums are managed as best they can.

We are one of those firms that can help. Whether you have existing coverage or not, we're more than happy to help you understand what you have, be that reassuring you your coverage is appropriate, identifying gaps you're unaware of, or simply arranging new cover because you have none.