Co-Pay Accumulators & Maximizers: Your Questions Answered, PT. 3

July 27, 2020

Welcome to Part III in our series of Q&A in response to the webcast presented on June 22, 2020 titled The Future of Co-Pay Accumulators and Maximizers.

Over the past few weeks, we have responded to several questions from the webcast audience that we did not have time to answer during the live broadcast. View our previous installments of this series below, along with answers to this week’s set of questions.

Part I – July 1, 2020

Part II – July 8, 2020

Self-funded plans use a drug’s status as a non-essential health benefit to impose a maximizer program against the manufacturer co-pay offer – how does the plan determine which drugs are considered non-essential?

Under the Affordable Care Act, each state must designate a qualified “Benchmark Plan” that will be used to identify drugs that are considered Essential Health Benefits. Insured plans must use the Benchmark Plan in the state in which the insurance policy is issued; self-funded plans have some discretion available to them when selecting a state that will be used to define Essential Health Benefits. Insured plans are required to cover Essential Health Benefits; self-funded plans are not.  To the extent that a self-funded plan chooses to cover a service that is deemed an Essential Health Benefit, the plan must administer that coverage in the manner required by the Act for all plans.

The list of EHB benchmark plans by state can be found on the CMS website. Self-funded plan sponsors that have a presence in multiple states may select the Benchmark Plan that best serves their needs; however, the plan must have a legitimate business connection to the chosen state. For example, simply having one field-based or remote plan member in a state would likely not be sufficient grounds for a plan to adopt that state’s Benchmark Plan.

When a plan incorporates a maximizer program in its benefit design, it may declare a specialty drug to be a non-EHB, and in many cases charge a co-pay amount based upon the available manufacturer assistance amount, which may exceed the co-pay amount allowed for an EHB in the absence of manufacturer funding.  Patients may be required to enroll in the maximizer program in order to receive the drug at little or no cost. If they do not enroll, they may become responsible for the co-pay amount otherwise charged to the manufacturer’s offer. In this arrangement, the plan sponsor then uses the manufacturer co-pay assistance funds to significantly reduce its cost for the drug, while allowing the patent to incur little or no financial obligation.

How do pharmacy benefit managers (PBMs) recognize that a manufacturer co-pay program is being used when cost share is paid?

In certain accumulator programs, patients report the use of their cards in return for an assurance by their health plan that they will not incur any personal expense.  In other programs, described below, pharmacies report patient uses of copay programs to the PBM. This second type of program works as described below.

PBMs will require target pharmacies to report manufacturer coupon redemptions as a condition of participating in the PBM’s pharmacy network.

This reporting works in conjunction with claim processing, as follows:

  • When a pharmacy claim is submitted to the first claim processor, the PBM, a response is received by the pharmacy confirming the amounts payable by the PBM and the patient
  • After claim submission to the first claim processor is complete, the pharmacy will submit a secondary claim to the manufacturer coupon program. The amount payable by the second payer program is also scheduled by the pharmacy as part of its Accounts Receivable portfolio
  • Any amount that remains after the second claim is processed is paid by the patient to the pharmacy

All claims submitted for processing and payable to the pharmacy are scheduled for payment as part of the pharmacy’s accounts receivable portfolio and assigned a payer and a payer type. The payer type data element is used by pharmacies to keep a record of amounts payable by a manufacturer co-pay program. Pharmacies report to PBMs the claim amounts that are payable on claims classified as a “manufacturer co-pay program”. This reporting links this amount payable on the secondary claim with the primary claim processed by the PBM.

A PBM will initially increment a patient’s accumulator value based upon its processing of the primary claim. However, the patient’s accumulator value will be decremented by any amount reported by the pharmacy as payable by a manufacturer co-pay program once the PBM receives that data from the pharmacy.

Drugs covered as a medical benefit have largely escaped exposure to accumulator programs as the more manual nature of claim submission and processing prevents this level of data collection and reporting. This has driven some plans to shift coverage for some drugs away from the medical benefit plan to pharmacy benefit plan, to enable the health plan to impose accumulator programs. It is important for brands that have coverage under the medical benefit to monitor their coverage split to determine if this is occurring with their product.

I heard these programs are prohibited for high deductible health plans. Is this correct?

High deductible health plans can incorporate accumulator programs in their benefit design under the guidelines established by the 2021 Notice of Benefit and Payment Parameters rule. However, plan sponsors must consider potential implications for patient health savings account eligibility if they choose to implement accumulators.

Q&A-9 of IRS Notice 2004-50 states that an individual covered under a high deductible health plan may still contribute to an HSA if using a discount card “if the individual is required to pay the costs of the health care (taking into account the discount) until the deductible of the HDHP is satisfied.” This criterion establishes an “either-or” scenario regarding how plans choose to handle manufacturer co-pay offer benefits. If a plan has an accumulator adjustment in place, the patient will not receive credit for the manufacturer support funds and thus would remain eligible for HSA contribution as outlined by the IRS guidance. However, if the plan does credit the value of the manufacturer’s offer to the patient’s cost-sharing obligation, the patient could lose HSA eligibility due to not having directly paid the costs to meet their deductible.

Why do PBMs use third-party providers to administer variable co-pay programs?

There are several factors that might motivate a health plan or a PBM to engage a third party to operate these programs. Operational efficiency could be one reason.  Many companies find it more effective to engage an external vendor to perform a specific service rather than building and managing the capability within their own organization. Some PBMs lack the resources, structure, and/or focus to implement programs that can be labor-intensive. Larger PBMs need to compete with offerings from smaller, nimbler PBMs and may use third parties to pick up where large PBMs do not wish to allocate resources. Preventing potential conflicts with other business relationships could also be a consideration in the decision to outsource the management of these programs.

Will co-pay assistance programs be more limited or restricted in 2021 or 2022?

On the surface, it is unlikely that manufacturer co-pay assistance programs themselves will be less prevalent in years to come. Manufacturers view patient cost-sharing support as a key tenant of enabling access to therapy, and multiple studies support the notion that manufacturer coupons are critical in helping patients afford much-needed medications, many of which do not have generic alternative options.

It is entirely likely, however, that accumulator and maximizer tactics designed to diminish the effectiveness of these programs will increase in prevalence. The 2021 Notice of Benefit and Payment Parameters rule gives health plans broad flexibility to employ them in benefit designs, regardless of whether a drug has a generic alternative. This, combined with current COVID-19-related economic conditions, are driving many plan sponsors, especially in self-funded employer plans, to seek cost-saving opportunities.  Accumulator and maximizer designs provide that vehicle.

A “wild card” in this situation is whether the CMS Proposed Rule on best price revision, issued in June 2020, will be implemented as proposed, revised, or withdrawn altogether. The proposal places responsibility on pharmaceutical manufacturers to ensure the benefit of their co-pay assistance offer goes only to patients in order to maintain exclusion from best price calculations. In accumulator situations where the benefit of the offer would go to a health plan to reduce its cost for a drug but not be credited to the patient, a broad interpretation of the rule would require the manufacturer to include the full value of the co-pay offer in its best price calculation. This change could cause significant disruption to the financial viability of many co-pay assistance programs that have very generous benefit amounts, like specialty medications.

Jason Zemcik, Senior Director, Product Management at TrialCard