Copay Accumulator Confusion

Have you tried to read your annual health benefits handbook and given up after a couple of pages? Most people just check their yearly deductible and total out-of-pocket amounts but the formula behind that calculus is beyond the first few pages. Health plans and employers that offer insurance collect premiums, but they also try to share the direct costs through copays for doctor appointments and medications.

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Have you tried to read your annual health benefits handbook and given up after a couple of pages? Most people just check their yearly deductible and total out-of-pocket amounts but the formula behind that calculus is beyond the first few pages. Health plans and employers that offer insurance collect premiums, but they also try to share the direct costs through copays for doctor appointments and medications. Healthcare cost-sharing mechanisms are mystifying, and the back-and-forth policy changes from different administrations and the courts do nothing to alleviate the confusion. A recent court ruling on “copay accumulators” is a perfect example. 

Health insurers created copay accumulators in 2016 to minimize the impact of drug manufacturer coupons on their total drug spending. Here is how it works: the value of any copay assistance provided by drug manufacturer coupons is not counted towards a patient’s deductible or out-of-pocket maximum. Patient advocacy groups did not like this policy and sued. Since then, the regulatory environment has been dynamic, to say the least.

Here’s a timeline:

January 2020: The Health and Human Services (HHS) finalized regulation on Copay accumulator programs goes into effect. It permits accumulator programs only when a generic medicine is available but not used. 

January 2021: HHS reversed course, allowing private health plans to apply copay accumulators to manufacturer copay assistance regardless of a generic’s availability.  

August 2022: Patient advocacy groups sued, arguing the 2021 final rule conflicted with the Affordable Care Act’s statutory definition of “cost-sharing” and was arbitrary and capricious.

September 2023: The U.S. District Court for the District of Columbia struck down the 2021 final rule, agreeing with the plaintiffs that it was arbitrary and capricious because it adopted different and contradictory readings of the same statutory and regulatory text.

November 2023: HHS filed a motion in response to the court order, indicating the agency would take no enforcement action on accumulators until new rules are issued through rulemaking. 

December 2023: The District Court clarified its September 2023 vacatur of the 2021 final rule, stating that the 2020 prior rule allowed copay accumulators to be used when a generic equivalent is available. 

January 2024: The Biden Administration confirmed this stance by withdrawing its appeal to the September court ruling and effectively reinstated the 2020 NBPP rules that require copay assistance to count towards cost-sharing limits if no generic drug alternative is available, but no enforcement is intended. 

Present day: While the 2020 rule is legally in effect, the agencies do not intend to enforce the generic exception, so it is unclear if the industry will follow the 2021 rule or the 2020, meaning more lawsuits and rulemaking are inevitable.

Why the Fighting?

From an insurance provider’s perspective, copay accumulators are a financial management tool designed to ensure that the cost-sharing works as intended for out-of-pocket calculations. The approach maintains plan integrity and avoids unintended subsidization of high-cost medications. 

Employers, particularly those with self-funded health plans, have adopted copay accumulator programs to mitigate the financial impact of high-cost prescriptions and control rising health benefits costs. This practice, which prevents the counting of manufacturer copay assistance towards deductibles, helps manage premiums and maintain overall benefits for their workforce. According to Segal Consulting, employers can save between 10% to 15% on prescription claims.

However, looking at copay accumulators from the patient’s side, especially those dependent on high-cost specialty drugs, these programs may lead to significant financial strain. Copay accumulators reset a patient’s contribution once the copay assistance is exhausted, potentially increasing out-of-pocket expenses mid-year. Here are two examples of how this has impacted people:

Mary’s situation:

Mary has multiple sclerosis, a chronic health condition. She found a manufacturer coupon to cover $6,000 monthly medication costs for six months. Her out-of-pocket costs were less over the six months, but when the coupon expired, she faced the full medication cost. Without the copay accumulator, the deductible would have been met, and she would have lower costs instead of higher costs after the coupon. Further, over the six months, she had other health expenses that she paid for. If she had not used the coupon, she would have met her deductible after three months instead of six. The coupon + accumulator cost her more out of pocket. 

Bill’s story:

Bill has rheumatoid arthritis, and he relied on a copay card to afford a biologic medication costing over $5,000 per month. Mid-year, after the copay assistance was exhausted, he owed the full amount because his payments did not count toward the deductible due to the accumulator program. The sudden financial burden forced him to switch to a less effective medication, negatively impacting his health. 

Patient advocacy groups criticize copay accumulators for penalizing patients who rely on manufacturer assistance to afford their medications. They claim that these programs hurt patients relying on coupons to afford necessary medications because once the coupon value is exhausted, the patient sees a sudden increase in out-of-pocket expenses. Medication non-adherence goes up, leading to serious health repercussions and, ultimately, higher healthcare costs.

The Crohn’s and Colitis Foundation graphic shows how patients pay higher out-of-pocket for their meds when an accumulator program is in place.

HealthTech to the Rescue 

In some cases, using a coupon saves patients money, but often, the total out-of-pocket annual cost is higher. HealthTech companies like RazorMetrics are developing algorithms to define strategic medication management, including what coupons are potentially available and if they will lower or raise costs for a patient depending on their plan’s copay accumulator policy. RazorMetrics’ proprietary technology optimizes prescription choices, ensuring affordability without compromising care quality. 

Since many patients are unaware of an accumulator program’s impact until they are suddenly faced with a hefty bill at the pharmacy, high-quality communication with patients is needed to prevent an unpleasant shock. HealthTech can mitigate the financial impact and help manage out-of-pocket expenses more effectively, so patients are not left confused and hurt by the financial hardship. Communication strategies with patients should include the following: 

  • Monthly Text / Email Including:
    • Copay Accumulator: Helps patients understand their health plan uses a copay accumulator and updates the patient each month on their drug coupon’s availability.
    • Deductible and Out-of-Pocket Max: Updates the patient on how much deductible and out-of-pocket max are left to help them plan their budget.
  • Manufacturer Coupon Options: Alert patients to coupon options that would decrease their annual costs as well as therapeutic alternatives that may offer similar efficacy at a lower cost.

As legislative and judicial decisions continue to shape copay policy, the role of HealthTech companies is critical to quickly determine how the changes impact annual out-of-pocket costs and maintain transparency. For employers and health plans grappling with copay accumulator adjustments, partnering with technology-driven firms like RazorMetrics offers a balanced approach to managing healthcare costs while ensuring access to potential savings through manufacturer coupons. RazorMetrics assists employers and health plans by offering software solutions that provide transparency and predictability in patient’s healthcare expenses.

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