CMS Co-Pay Accumulator Rule Aims to Increase Consumer Costs

By: Marcus J. Hopkins, Policy Consultant & Guest Contributor

Co-Pay Accumulators are management tools used by health insurance companies, Pharmacy Benefit Managers (PBMs) and other health plans that excludes co-pay assistance coupon and program payments from counting toward patients’ deductibles (Schweitz, 2019). The Centers for Medicare & Medicaid Services (“CMS”) recently promulgated new rules potentially excluding drug manufacturer co-pay assistance programs towards patient out-of-pocket cost sharing and deductibles.

I wrote about this issue, last September, for the ADAP Advocacy Association (read blog, here), and have been asked to take another look at this issue after CMS decided, after some deep soulless searching and poor timing, to put this program fully into place in the middle of a pandemic outbreak.

Here is the rule in question:

1. See, Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2020, Final Rule, 84 Fed. Reg. 17454 (April 25, 2019) (the “Final Rule”).2. 45 C.F.R. § 156.130(h) reads in its entirety as follows:“(h) Use of drug manufacturer coupons. For plan years beginning on or after January 1, 2020:(1) Notwithstanding any other provision of this section, and to the extent consistent with state law, amounts paid toward cost sharing using any form of direct support offered by drug manufacturers to enrollees to reduce or eliminate immediate out-of-pocket costs for specific prescription brand drugs that have an available and medically appropriate generic equivalent are not required to be counted toward the annual limitation on cost sharing (as defined in paragraph (a) of this section).”3. In general, “accumulator programs” are a relatively recent component of pharmacy benefit designs offered by many health insurers and PBMs for commercially insured enrollees. Accumulator programs track utilization of drug manufacturer-sponsored copay or other assistance to ensure that the drug manufacturer contribution no longer counts toward an enrollee deductible. Accumulator programs tend to reduce the health insurers’ or plan sponsors’ overall contribution to the total spend on high-cost branded prescription medications as opposed to shifting more cost toward them when accumulator programs are not in effect. There are many variations of these programs depending on plan design and other factors.4. See, Final Rule at 17544 - 17545.5. See, The Center for Consumer Information & Insurance Oversight, Affordable Care Act Implementation FAQs - Set 12, Q1 and Q2 (February 2, 2013), and Affordable Care Act Implementation FAQs - Set 18.

Looking for a bit more insight, I turned to JD Supra, a great source of press releases and legal analysis for those looking at government rules and regulations. Here was their finding in May 2020:

The Final Rule states that consistent with specific state law, coupons, and copay cards offered directly by drug manufacturers may be, but are not required to be, counted towards a patient’s annual cost-sharing limit under the plan. This is a notable change from CMS’ prior proposal that would prohibit copay accumulator programs for branded drugs without therapeutic alternatives. (Fox, Atkins, & Trunk, 2020)

Essentially, what a co-pay accumulator attempts to do is increase the amount of money consumers pay in order to decrease the amount of money insurers have to pay, once their annual deductible and/or Out-of-Pocket Maximum (OPM) is met. When consumers are allowed to count co-pay assistance cards against their deductible/OPM, they reach those limits sooner, meaning that insurers are then on the hook for every pharmaceutical fill after that date.

But the rule change at CMS is trickier than that, according to another JD Supra author:

"In conclusion, the Final Rule prohibits individual market, small group, large group and self-insured group health plans from using accumulator adjustment programs only when there is no generic for a branded pharmaceutical.  However, under federal law, all such health plans may continue pharmacy benefit designs which do not count manufacturer coupons toward an enrollee’s maximum out-of-pocket cost sharing (a) when there exists a generic equivalent for a branded drug, and (b) under any circumstances, for more expensive biologics. 

Still, as a final cautionary note, please keep in mind that the Final Rule, by its own terms, does not pre-empt state laws. Some states are considering or have passed legislation that may prohibit the use of accumulator programs regardless of the availability of generic substitutes. However, such state laws, if passed, may be limited to health insurers and may not be able to reach self-funded group health plans which are governed by ERISA. Thus, those subject to the Final Rule must remain cognizant of similar laws in the states in which they offer health benefit plans. (Hanna, 2019)."

The problem with this issue is that the CMS rule is aimed directly at insurers providing plans for the Medicare program. For those unfamiliar with that whole mess, Medicare insurance programs are offered to eligible beneficiaries not by state, but by zip code, meaning that there are well over 1,000 plans and options being offered across America. As a result of this, trends in the general health insurance market tend to follow the standards set by Medicare insurers, because they essentially glut the market (and, frankly, it’s just easier).

And this is the crux of this piece: can State Insurance Commissioners (and thus, state laws) use their influence and sway to essentially force insurance companies to count co-pay assistance cards toward deductibles/OPMs? The answer is a big, “…maybe?”

In most cases, federal law supersedes state law. In this case, that law is the Affordable Care Act (ACA, aka Obamacare). In order for states to engage in the health insurance marketplace (where consumers can buy individual plans), they have to live under ACA rules. As part of that, this new CMS rule would apply to the ACA, as well. That, however, is also unclear.

However, some states, such as Arizona, Illinois, Virginia, and West Virginia, have passed laws that prohibit insurers from using Co-Pay Accumulators in part, or in total. While Arizona and Virginia’s laws have a bit of wiggle room in their language, allowing for insurers to argue that they can use them in certain instances, both Illinois and West Virginia bar their utilization, outright, by not distinguishing between prescription drugs that do or do not have generic equivalents (Aimed Alliance, n.d.).

So, there’s not a lot of real light, here, to guide our way.

Advocates could attempt to get states to push through laws banning the practice (which, I think they should do, regardless of any advocacy), but let’s be honest – most state legislatures are out of session, for the remainder of 2020, and they’re almost all in the middle of an election year. There’s not going to be much movement on this issue until after November 4th.

The real question is whether or not federal rules supersede State Insurance Commission rules. If so, who the hell knows what’s going to happen, next?

References:

• Aimed Alliance. (n.d.) COPAY ACCUMULATORS – ENACTED LAWS. Washington, DC: Aimed Alliance. Retrieved from: https://aimedalliance.org/copay-accumulators-enacted-laws/
• Fox, A., Atkins, E., Trunk, S. (2020, May 29). HHS Clarifies Position on Copay Accumulators? Or Does It?. Sausalito, CA: JD Supra, LLC: Legal News. Retrieved from: https://www.jdsupra.com/legalnews/hhs-clarifies-position-on-copay-19750/
• Hanna, D. (2019, June 18). HHS Issues Final Regulation Of Drug Co-Pay Accumulator Programs:. Sausalito, CA: JD Supra, LLC: Legal News. Retrieved from: https://www.jdsupra.com/legalnews/hhs-issues-final-regulation-of-drug-co-93372/
• Schweitz, M.C. (2019, January). The Cost-Shift Conundrum of Copay Accumulator Programs. Thorofare, NJ: SLACK Incorporated: Healio: Healio Rheumatology: Practice Management. Retrieved from: https://www.healio.com/rheumatology/practice-management/news/print/healio-rheumatology/%7B04769e45-fca4-4ce6-90be-8f441d6afc7d%7D/the-cost-shift-conundrum-of-copay-accumulator-programs

Disclaimer: Guest blogs do not necessarily reflect the views of the ADAP Advocacy Association, but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about public health-related issues and updates.