Recently, the U.S. District Court for the District of Columbia struck down an administrative rule that allowed health insurers not to count drug manufacturers’ copay assistance toward a patients’ out-of-pocket costs.
This ruling will have an impact on affordability for many patients with chronic, high-cost conditions. I’ll give you a real-world example. A few years ago, when I was working as a financial navigator, I had a patient with a chronic blood disease. He had health insurance through his wife’s employer, and I helped him secure drugmaker copay assistance to cover his out-of-pocket costs. So, he began using his copay card for his monthly medications. His insurance plan had an annual deductible of $4,000 before the insurer would start paying 100% of the costs. But once his $4,000 copay card was exhausted, he was hit with a bill he didn’t expect. That’s when he found out that the copay card value did not count toward his health plan’s deductible.
It turned out that his plan had a copay accumulator. These programs exclude the value of third-party financial assistance from counting toward a health plan’s deductible or out-of-pocket maximum. In effect, this meant that the patient’s copay assistance wasn’t saving him the costs we thought it would.
With the new ruling, many commercially insured patients will no longer have to face this frustrating, burdensome situation. Here’s what navigators and other healthcare professionals should know:
1. What was the rationale behind copay accumulators?
The idea behind these programs was to allow insurers to control drug spending, especially for high-cost specialty drugs. The goal was to encourage the use of lower-cost generic medications, when available.
Prior guidance from the Department of Health and Human Services (HHS) only allowed copay accumulators if there was a generic equivalent for a patient’s prescribed drug. However, in 2021, the Centers for Medicare and Medicaid Services (CMS) issued regulations that enabled insurers to use this practice, even in cases in which there were no equivalent generics.
2. What was done in the past to regulate these programs?
While government insurance like Medicare and Medicaid is governed by federal law, commercial insurance is governed on a state-by-state basis. As of last summer, 19 states had banned copay accumulator programs. However, for patients living in other parts of the country, these programs were still permissible.
3. What’s changing with the new regulations?
Several patient advocacy groups, along with three patients, filed a lawsuit to invalidate the 2021 CMS guidance on copay accumulators. At the end of September, the court sided with the plaintiffs and struck down the 2021 regulations.
The ruling has a nationwide effect. Going forward, accumulators will only be permitted for medications that have a generic equivalent, if allowed by state law. If the patient’s branded drug does not have a medically appropriate generic, the practice is no longer allowed.
4. What questions remain about the ruling?
While there is still the possibility of further action from the federal government, an appeal is unlikely. Next, HHS plans to issue guidance in response to the decision. Until then, some uncertainty remains. For example, will insurers have to retroactively attribute copay assistance to patients’ annual limit on cost-sharing for 2023? If so, will they have to reimburse patients whose recalculated cost-sharing amount exceeded their deductible or out-of-pocket max?
5. How can financial navigators and other healthcare professionals help patients who may be affected by these changes?
First, navigators should find out if their state had previously banned copay accumulators. If not, patients with commercial insurance may benefit from the ruling. In a recent survey, 83% of healthcare consumers with commercial insurance were enrolled in plans with copay accumulators. Copay assistance in the U.S. totaled $19 billion last year.
Navigators and other professionals should talk to commercially insured patients to help them understand copay accumulators. They should then discuss how the court’s decision could mean that the patient will pay less for their medications. If the patient has received or will receive manufacturer copay assistance after September 29, 2023 (the date of the court’s decision), encourage them to speak to their insurer about applying this assistance toward their cost-sharing limit. Some plans may not be familiar with the court’s ruling and may not automatically apply this amount to the patient’s annual limit.
Navigators should also make an effort to stay up to date with policy changes that impact patient affordability. By keeping informed of the latest policies, navigators can play an important role in educating patients and helping them maximize potential savings.