HHS Clarifies Position on Copay Accumulators? Or Does It?

The Department of Health and Human Services (HHS) attempted to clarify its position on the use of so-called “copay accumulators” with respect to private exchange-based health plans in a final rule published in the Federal Register on May 14, 2020 (the Final Rule). The revisions mandated under the Final Rule go into effect on July 13, 2020.

Under a “copay accumulator,” the value of any copay assistance that a patient may receive directly from a drug manufacturer does not count toward the patient’s deductible or maximum out of pocket payment limit under their health plan. The most common forms of manufacturer assistance are coupons and ‘copay cards’ which cover all or part of the cost-sharing that would otherwise be the patient’s responsibility.

With co-insurance and high deductible health plans growing in popularity, a patient may pay thousands of dollars before reaching their deductible and out of pocket maximum. Under a copay accumulator program, manufacturer assistance does not count toward such deductible and out of pocket maximum. Therefore, patients often are not aware of the true cost of their medication and become shocked when they pick up their medication and find they owe cost-sharing or the entire amount of the medication after the maximum coupon or co-pay card value under the manufacturer’s assistance program is reached. Because of this, some health plans and their pharmacy benefit managers have adopted similar “copay maximizer” programs where the value of the manufacturer coupon or copay card is spread evenly across the plan year so that patients still have some out of pocket obligation each month. 

Accumulator and maximizer programs are controversial. Some plans do not clearly explain to patients that they use an accumulator or maximizer, resulting in patient confusion and frustration.  Others take the position that manufacturer coupons, particularly with respect to high-cost drugs for which a therapeutically equivalent generic and typically less expensive drug is available, inappropriately encourage unnecessary (and expensive) utilization of brand drugs simply because a coupon is available and for no other clinical justification. Pharmaceutical manufacturers object to copay accumulator and maximizer programs because they allow health plans to adopt plan designs that push more and more cost-sharing in the form of co-insurance and deductibles onto patients.

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. The preamble to the Final Rule makes an important caveat: individual states have “the flexibility to promulgate rules that would require direct drug manufacturer support amounts to be counted by health insurance issuers towards the annual limitation on cost sharing…[while] at the same time, [states have the] flexibility to promulgate rules that would mandate exclusion of such amounts from the annual limitation on cost sharing.” Notably, both Virginia and West Virginia have banned the use of copay accumulator programs for health plans operating in their states.

If a state chooses not to act, however, the decision regarding how to account for direct manufacturer support will remain at the discretion of the health plan. The preamble to the Final Rule states that “issuers have flexibility, when consistent with state law, to determine if and how to factor in direct drug manufacturer support amounts towards the annual limitation on cost-sharing, subject to applicable requirements such as federal non-discrimination laws.” The preamble also states that HHS expects plans to be transparent with members regarding the use of copay accumulators by “prominently includ[ing] this information on websites and in brochures.”

While couched as a “clarification” of current HHS policy, the Final Rule actually raises questions about the future use of accumulators and maximizers, as states and individual plans are granted the ability to decide for themselves how, if at all, these tools can be utilized.