Oscar Health stopped covering Walgreens, plus some Duane Reade and Rite Aid locations, as part of its New York pharmacy network Jan. 1.
Instead it is directing New York members to CVS as its preferred retail pharmacy and startup pharmacy Capsule, which it formed a partnership with last month. Its network also includes independent pharmacies.
Oscar customers cannot access in-network negotiated rates for prescriptions at the out-of-network pharmacies, and purchases there don't count toward members' deductibles or the annual limit on their out-of-pocket medical costs.
For Oscar members in plans with low monthly premiums, those deductibles can go up to about $8,000 before the insurer begins to pay for certain medical services. In plans with higher premiums, consumers can have no deductible at all.
By cutting out some pharmacies, Oscar is betting that members won't mind the inconvenience seeking out a CVS, Capsule or local drugstore over their neighborhood Duane Reade or Walgreens.
Oscar has expanded quickly since it debuted on New York's Affordable Care Act marketplace in 2013, and it is selling plans in 15 states this year. It now has about 250,000 individual and small-business customers, according to its website. The company was founded by Mario Schlosser, Joshua Kushner and Kevin Nazemi. Kushner, a venture capitalist, is the brother of Jared Kushner, adviser to President Donald Trump.
The company has attracted customers by offering free telemedicine calls and a dedicated customer service team that helps resolve member issues. After incurring significant losses in its early years, Oscar reined in its network, partnering with only a few major health systems and independent hospitals to negotiate competitive prices. In New York its partners are Mount Sinai Health System, Montefiore Medical Center and Catholic Health Services of Long Island.
The insurer now appears to be replicating that model in the pharmacy space.
This article was originally published in Crain's New York Business.