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.

This New Insurance Loophole Could Affect People on HIV Meds, including PrEP

Guest Blog By: John Peller, President & CEO, AIDS Foundation of Chicago

Reprinted with Permission from AIDS Foundation of Chicago

Do you use a copay card to help pay for name-brand HIV drugs for treatment or PrEP? If you do, watch out: your insurance company might have a new policy that doesn’t let your copay card (a.k.a. your copay assistance card) help you afford your medications.

We’re talking about “copay accumulators” — policies some insurance companies are using that could make your health care more expensive, perhaps unaffordable. Read on for an overview of the problem and some steps you can take to make your medications affordable.

We are very concerned about the impact that these new insurance company policies will have on people’s health. We’ll do everything we can to fight them – but need your help. Are you having trouble getting medications because of insurance company policies? Tell us what’s going on by contacting www.speakup.hiv. We also recognized that insurance companies have put these policies in place because brand-name drugs are just too expensive. We’re committed to fighting for more affordable prices for life-saving medications.

What are copay accumulator programs?

Copay accumulators are relatively new policies that some insurance companies are using to stop counting drug company copay cards toward a person’s deductible or out-of-pocket maximum.  Note: These policies apply to drug manufacturer co-pay cards only, and not charitable assistance programs like the Patient Advocate Foundation, AIDS Drug Assistance Programs, or state-run programs that help pay for PrEP.

Which insurers are using copay accumulators?

Cigna, United Healthcare and pharmacy benefit managers CVS Caremark and Express Scripts have implemented these policies nationally for some plans. Warning: this list could grow.

Which medications are affected?

This new policy can apply to any brand-name drug with a copay program for any health condition, not just HIV for treatment or PrEP.

What does this mean for people in this situation?

Here’s where it gets complicated: Before copay accumulators policies were in place, the value of your copay card could be counted toward your deductible and out-of-pocket maximums. These cards could potentially save you a lot of money and make access to the health care you need easier and less stressful.

But if your insurance company has a copay accumulator policy and you are using a copay card to help pay for your medicine, when you reach your limit on the copay card, the total value on the card will not count toward your deductible or annual out-of-pocket maximum. If this policy is in place with your insurance company, you will need to pay your full deductible out of your own pocket before your insurance actually kicks in. This could mean that you’d be responsible for thousands of dollars to cover the cost of your health care and prescriptions.

Let’s walk through an example.

You start your new health plan year in January and you take a name-brand (non-generic) medication that costs $1,500 a month. Your plan has a $6,000 deductible (the amount you pay before the insurance plan starts paying for some care), and the deal is, you pay the full cost of all care (including drugs) before you meet your deductible. After you meet your deductible, your insurance company kicks in and starts paying for stuff.

The name-brand medication you take has a copay card, and that card is worth $6,000 per year. You use that copay card in January, February, March and April at the pharmacy to pay for your drug. By the time May arrives, your copay card has run out ($1,500 X 4 months=$6,000).

• The old way (no accumulator): Previously, the insurance company would have counted what the copay card paid towards your deductible. In this scenario, your deductible would be fully met by using the card. So, depending on the details of your insurance, you might not have to pay anything after meeting your deductible, or you might have to come up with a small fee for your medication, or a small fee for other things like office visits.

• The new way (with an accumulator): With a copay accumulator policy in place, the insurance company doesn’t count the amount of the copay card towards your deductible. When you go to fill your prescription in May, you will owe the full $1,500 cost of the drug, because your $6,000 deductible has not been paid down. You’ll need to keep paying the full cost of those  drugs yourself, out of your pocket, until you pay a total of $6,000 (four more months of drugs) and meet your plan’s deductible.

Will you be ready for an unexpected out-of-pocket cost?

We are very concerned that people may not know their insurance companies have changed their policy and may not be prepared to pay the full cost of their deductibles. While you might have received a letter from your insurer talking about copay accumulators, it may not have been completely clear what this new policy would mean for you.

So what can you do?

• Consult your health plan materials or call your insurer to ask questions. If you have been affected by this type of policy and have had to switch to another drug or have been unable to fill your prescription, tell your insurer. Ask your insurer to waive the policy (it never hurts to ask).

• Apply for help. The Patient Advocate Foundation (www.copays.org), Patient Access Network Foundation (www.panfoundation.org) or similar organizations can help you get your HIV medications for treatment or prevention. If you’re taking PrEP, you can also get help from PrEP4Illinois (www.prep4illinois.com), a state program that provides free PrEP medications.

• Tell us! We want to know about your experience so we can be better informed when we are advocating for you. Contact us at cgoode@aidschicago.org.

• Tell your employer, too. If you are employed and receive health insurance through your job, tell your employer. They may have adopted this program thinking of it as a cost-savings strategy without truly understanding the negative impact it could have on their employees.

Some helpful definitions:

The term accumulator refers to the running total of a person’s costs that apply toward their deductible and out-of-pocket maximum.

A deductible is the amount a person pays for health care services before insurance kicks in. For example, an individual with a $2,000 deductible would pay for their first $2,000 of care (including things like medications, office visits, lab tests) before health insurance begins to cover costs.

A copayment is a fixed amount a patient pays for a covered health service after they’ve paid their deductible. For example, you might pay a $20 copayment when you pick up medications at the pharmacy. Some insurance plans have copayments; some do not.

An out-of-pocket maximum is the most amount of money a person has to pay for covered services in a plan year. After this amount is spent on out-of-pocket costs (deductibles, copayments and coinsurance), a health plans pays 100% of the cost of covered benefits.

A high-deductible health plan is a plan with a higher deductible than a traditional insurance plan. The monthly premium is usually lower, but people pay more health care costs out of their own pocket before the insurance company starts to pay.

A pharmacy benefit manager is a third-party administrator of prescription drug programs contracted by health plans, employers and government entities to manage prescription drug programs.

A copay card can be provided by a pharmaceutical company (a.k.a. a manufacturer like Gilead) or a charity. These cards help patients afford the cost of their prescriptions. The amount of the patient’s copayment may be reduced or covered completely if they use a copay card.

Thanks to Cancer Support Community and The Arthritis Foundation for providing a version of this information. https://www.cancersupportcommunity.org/blog/2018/04/copay-accumulator-programs-whats-stake-patients



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.

Rhode Island Advocates Score 'YUGE' Victory Against Insurance Company Gimmicks

By: Brandon M. Macsata, CEO, ADAP Advocacy Association

Last month, advocates in the Ocean State fought back against proposed legislation in the Rhode Island General Assembly that would have prohibited patients from utilizing manufacturer coupons and drug discount cards to lower their out-of-pocket drug costs. S.2532 was a thinly veiled threat orchestrated by the insurance companies and other private health plan payers, which would have resulted in patients paying more for their prescription drugs. Such gimmicks disproportionately impact people living with chronic health conditions who rely on specialty drugs, such as HIV/AIDS or Hepatitis C.

In early March the legislation was introduced in the Rhode Island General Assembly and referred to the Senate Health and Human Services Committee. The Committee, however, ultimately recommended the measure be held for further study after strong pushback from the HIV community (and others).

On March 27th, opponents testified against S.2532 during a hearing convened by the Committee. The HIV Health Care Access Working Group (HHCAWG) — which is part of the Federal AIDS Policy Partnership (FAPP) — also sent a letter opposing S.2532, and the state legislators took notice.

Manufacturer coupons and drug discount cards, commonly known as accumulator adjustment programs, were highlighted in a recent ADAP Blog, "Rx Drug Coupon Concerns Pit Prices Against Patients." The smoke and mirrors being perpetrated against patients is fueled by the insurance industry's misinformation, as well as their hopes that most patients don't take the time to read, and let alone understand, their policy documents.

Photo Source: Patients Rising

The AIDS Institute (TAI) has been actively monitoring efforts by insurance companies to restrict access to care and treatment for people living with HIV/AIDS — including efforts to limit accumulator adjustment programs. Carl Schmid, TAI's Deputy Executive Director, summarized concerns over limiting such programs:

“It is already difficult for people living with HIV and others who want to take PrEP to access their medications due to insurance benefit practices such as high co-insurance and deductibles, this will just compound the situation. It is time for us to be loud and strong, and fight back. People lives are on the line.”

What happened in Rhode Island was a victory for people living with HIV/AIDS, as well as patients in general. But this issue isn't going away any time soon.  The ADAP Advocacy Association has expressed strong concern over the ongoing gimmicks by the insurance industry and health plan payers on this policy issue.

Related articles of potential interest:

• Opponents: Bill limiting drug coupons, discount cards would endanger lives, published on 03/28/18 in the Providence Journal
• New Let’s Talk About Cost ads highlight how copay accumulator programs could leave patients financially exposed, published on 03/27/18 in The Catalyst.
• Have You Heard of the Co-Pay Accumulator, published on 03/26/18 in Patients Rising.
• Copay Accumulators: Costly Consequences of a New Cost-Shifting Pharmacy Benefit, published on 01/03/18 in Drug Channels Institute