A new proposal was released by the Centers for Medicare & Medicaid Services (CMS) on January 31, 2020, the Notice of Benefits and Payment Parameters (NBPP), which proposes standards for issuers, Exchanges and excepted benefit health reimbursement arrangements sponsored by private insurers that provide government plans. Among other changes, this new proposal includes a revision to the 2020 payment policy on counting a manufacturer coupon for a branded drug toward a member’s annual out-of-pocket (OOP) costs (copay accumulator).      

With an intention of reducing costs and guiding patients to pick a generic over a brand name drug, the 2020 policy allowed insurance plans to stop applying manufacturer copay coupons toward an enrollee’s OOP maximum if a generic equivalent was available. In the 2021 proposed rule, CMS has excluded this provision so insurers have the option of expanding the copay accumulator policy to all drugs—those with and without a marketed generic equivalent product. 

The proposal states: “Amounts paid toward reducing the cost sharing incurred by an enrollee using any form of direct support offered by drug manufacturers for specific prescription drugs may be, but are not required to be, counted toward the annual limitation on cost sharing. We propose to interpret the definition of cost sharing not to include expenditures covered by drug manufacturer coupons.” This means the OOP annual limit will calculate an enrollee’s deductible, coinsurance, copayments and any other qualified medical expenses, but need not include drug manufacturer coupons for a prescription medication, irrespective of whether the brand name drug has a generic option or not.

The NBPP explains that the revision was made following stakeholder feedback about confusion stemming from compliance with both, the 2020 Payment Notice for limits on cost sharing and the IRS rules on minimum deductibles for high-deductible health plans. Subsequently, the rule was not enforced due to lack of clarity. 

With the 2021 payment notice, CMS is expecting issuers and group health plans to be forthright and transparent with beneficiaries about their prescription drug coupon policy—whether it contributes to the annual OOP limit. 

Some states that have banned copay accumulator programs, including Arizona, Illinois, Virginia, and West Virginia, can continue to do so in 2021. Others are considering similar bills: Connecticut, Indiana, Kentucky, North Carolina and Ohio

Copay accumulators are a tremendous challenge for patients, particularly those who suffer from rare and chronic diseases as they may need lifelong or expensive medications or both. If manufacturer coupons do not add to their OOP tally, patients would have to spend more before they hit their deductible, thereby increasing the patient’s financial burden and reducing treatment adherence. This could prove dangerous for patients with chronic conditions such as diabetes. 

Here’s how a copay accumulator program increased the financial burden of an MS patient who was locked into his plan.

CMS is seeking comments on this NBPP by 5 pm on March 2, 2020.