Drug manufacturer coupons and out-of-pocket limits: What employers need to know
For 2020, plans will be able to exclude manufacturer coupon amounts from annual out of pocket maximum accumulators.
When CMS issued its Final Rule for the 2020 Annual Notice of Benefit and Payment Parameters, it included language designed “to encourage enrollees’ use of lower-cost generic drugs.”
Specifically, CMS stated that “beginning in 2020, we will allow individual market, small group, large group and self-insured group health plans to except from the maximum out-of-pocket limit cost sharing amounts paid using drug manufacturer coupons for specific prescription brand drugs that have an available and medically appropriate generic equivalent.”
This well-intentioned release has triggered an avalanche of confusion and conflicting commentary throughout the industry, spanning the entire spectrum from question on what “specific prescription drugs” means (will CMS be releasing some sort of list of drugs?), to what other types of manufacturer/third party assistance, if any, could be included given the specific reference only to “coupons,” to whether this guidance has any impact on situations in which there is not a “medically appropriate generic equivalent” available.
Related: Copay accumulator programs: Are the risks worth the savings?
While a definitive answer to these questions has not yet been (and may never be) made available by CMS, at least on this third issue, the Departments of Labor, Health and Human Services, and the Treasury (collectively, the “Departments”) have granted a reprieve, at least temporarily. In the recent “FAQs About Affordable Care Act Implementation Part 40,” released August 26, 2019, the Departments conceded that the released 2020 rules, as worded, could be interpreted so as to conflict with previous guidance. As such, the Departments indicated that:
Until the 2021 NBPP is issued and effective, the Departments will not initiate an enforcement action if an issuer of group or individual health insurance coverage or a group health plan excludes the value of drug manufacturers’ coupons from the annual limitation on cost sharing, including in circumstances in which there is no medically appropriate generic equivalent available. States may adopt a similar enforcement policy, and HHS will not consider a state to be failing to substantially enforce the annual limitation on cost sharing in cases where a state does so with respect to health insurance issuers.
As this release makes clear, for at least the duration of calendar year 2020, plans will be able to exclude manufacturer coupon amounts from annual out of pocket maximum accumulators without fear of enforcement action from the Departments. Although this is not an official interpretation providing answers to any of the questions posed above, this release is nonetheless huge news for plans and other stakeholders who are already relying on programs that utilize such a practice.
Some important caveats to note: the release does not preclude enforcement actions by a state, noting that states “may” adopt a similar enforcement policy. States are not required to do so, and the possibility remains of enforcement actions by states against plans who are subject to state regulation. Additionally, this policy illustrates a decision by the Departments not to initiate any enforcement actions based on this specific practice—not an official interpretation that this practice is permissible under the law.
The possibility remains of a complaint being brought against an aggrieved individual or group of individuals, which could force the hand of the courts in making a definitive finding on the outer limits of these rules. However, even in the case that occurred, it seems the repercussions to the plan(s) in question would be limited to actual claim amounts, not any sort of regulatory penalties from the Departments.
Andrew Silverio, Esq., is Compliance & Oversight Counsel for the Phia Group, LLC, primary focusing is on the most complex and emerging legal and regulatory issues, both internally and for our clients as a member of Phia Group Consulting. Andrew is also the Phia Group’s HIPAA privacy officer.
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