AIDS Institute: 'Copay Accumulator Adjustment Programs – Putting Insurance Company Profits Over Patients'

WASHINGTON, Sept. 3 -- The AIDS Institute issued the following white paper entitled "Copay Accumulator Adjustment Programs: Putting Insurance Company Profits Over Patients" by Stephanie Hengst, manager for policy and research:

Introduction

Patients with rare, complex, and chronic diseases often need high-cost specialty medications to manage their conditions and maintain their health. The cost of these specialty medicines can be in the thousands of dollars every month.

Annual limits on the amount patients must spend out of pocket for their health care help but are insufficient given current insurance benefit designs to ensure that patients with severe, chronic diseases can afford the medication they take on a daily basis. Many patients with complex chronic diseases - including those with health insurance - must rely on financial assistance. Charitable foundations and drug manufacturers provide this assistance through copay assistance cards to help patients cover their copayments or coinsurance./1

Copay assistance cards have provided a true financial lifeline for many people living with and at risk for chronic conditions. Although the ACA included an annual out-of-pocket limit on the overall amount of money that patients must pay toward their health care each year ($8,150 in 2020 for individuals), that limit increases every year.

Because most insurance plans are structured with a deductible and cost-sharing requirements that can be particularly high for brand name drugs, patients who rely on "specialty" medications/2 are often faced with significant health care charges all at once at the beginning of the year. Copay assistance plays a crucial role in helping patients who rely on expensive medications meet those cost-sharing obligations and afford their medication throughout the year.

However, insurance companies are increasingly undermining this assistance by not counting the amount of money covered by manufacturer copay assistance cards toward enrollees' annual deductibles and out-of-pocket limits./3,/4

This little-known practice is called "copay accumulator adjustment programs" (sometimes referred to as CAAPS). This shifts the costs of expensive prescription drugs to the patients who most rely on them. And while these programs have become more common in recent years, enrollees often do not know what these programs are or whether their own insurance plans include such a program.

The widespread adoption of copay accumulator adjustment programs in the individual and group health insurance markets puts patients who rely on brand-name specialty medications at risk, and strips away a key protection for these patients against the very high cost of breakthrough treatment innovations used to treat their conditions. Patients who rely on these medications rarely have a choice about whether to take the drug that was prescribed by their doctors or to take a different drug. Research has shown that 87% of copay assistance programs are for brand-name drugs that do not have a generic equivalent. Absent a clear prohibition on these programs from the U.S. Department of Health and Human Services and/or states, or another solution to the high out-of-pocket burden of prescription drugs, patients already grappling with severe chronic diseases will increasingly be unable to afford the medication they need to treat their conditions.

Methodology

Copay accumulator programs can have an enormous impact on whether patients with HIV/ AIDS and viral hepatitis, as well as other serious and chronic illnesses, can afford their medicines. To find out how common these programs are and how they affect patients' insurance, The AIDS Institute conducted original research, reviewing individual market/5, health plans across all 50 states and Washington, D.C. In addition, we selected several states to review in more detail, examining the policy documents of all issuers offering plans in the state for the specific language regarding enrollee cost sharing and copay accumulator programs.

The results of our review demonstrate that copay accumulator programs are now widespread throughout the individual market across the U.S. Our research also found that the language health insurers use in their policies that explains their copay accumulator programs is ambiguous and difficult to find, and some policy documents are not available until a person is enrolled in the plan. This leaves patients who rely on copay assistance with very limited options when they try to select a plan that best fits their health care needs.

This report provides an analysis of copay accumulator programs to set the stage for our research and review of 2020 health insurance plans available in the state marketplaces. The report examines:

* How Copay Assistance Works with Copay Accumulator Adjustment Programs

* Insurers Have Changed Plan Designs and Patient Cost-Sharing, Affecting Patients' Health

* The Impact of Copay Accumulator Programs on Patients and Insurers

* The Administration's Inconsistent Position on Copay Assistance and Copay Accumulator Programs

* States' Actions to Protect Patients' Access to Prescriptions

* The Results of Our Research

Together, the background report and the marketplace plan review (provided as Appendix 1) give context to why advocates have been working hard to raise awareness of this issue and protect patients' ability to afford their medicines.

How Copay Assistance Works with Copay Accumulator Adjustment Programs

When a patient who uses copay assistance has a health insurance plan that uses a CAAP, they may be confused when they have to pay the full cost of their medicines or their full deductible at the pharmacy counter several months into their plan year when their copay assistance has been spent.

At that point, the insurance plan will require that the patient pay their entire deductible before being given their prescription. This can amount to a bill at the pharmacy for several thousand dollars. Many patients cannot afford that cost, and thus walk away empty-handed. Copay accumulator programs put patients with chronic conditions in a tough position - forcing them to choose between their health and other financial obligations.

Example 1 is a simplified overview of how Copay Accumulator Adjustment Programs work for patients using copay assistance.

Example 1

* Patient has a $1,000 deductible

* Patient has $500 in copay assistance

No Copay Accumulator Program

The $500 copay assistance will count toward the patient's deductible.

$1,000 - $500 = $500. The patient only has to pay the $500 remaining to reach their deductible.

Copay Accumulator Program

The $500 copay assistance will not count toward the patient's deductible.

$1,000 - $0 = $1,000. The patient has to pay the full $1,000 to reach their deductible.

Insurers Have Changed Plan Designs and Cost-Sharing, Affecting Patients' Health

To truly understand copay accumulator programs, it is important to look at the larger context of how insurance plans are designed and how that affects patients' out-of-pocket costs, as well as how well patients understand their plans and the associated costs.

Health insurance has become more complicated in recent years, which makes it more difficult for patients with high medical needs to choose a plan that meets their healthcare needs. Even very high-quality plans often include significant costshifting to patients who need expensive specialty medications, and the way those costs are shifted is not always clear to patients.

Significant changes in health insurance include the following:

Insurance is Complicated

Many patients are unfamiliar with basic health insurance terms, such as the difference between a copayment and coinsurance. And most patients have never heard of copay accumulator adjustment programs, which can be described using complicated language that is buried deep in insurance plan documents. These factors make it difficult for patients who rely on specialty medications to identify which plans available to them include a CAAP, or to shop effectively for a plan that does not include a CAAP.

Insurers are Inconsistent in Their Communication About Copay Accumulator Programs

Our research found that there is no consistency among health insurance companies regarding if and how they inform potential enrollees about any copay accumulator policies. And insurers are not required to include information on copay accumulator programs in the standardized Summary of Benefits template that is required by the Affordable Care Act (ACA)./6

A patient who does not know their health plan contains a copay accumulator program and who does not understand the complexities of that plan may end up not being able to afford their medicines. This could lead to financial hardship and potentially life-threatening treatment interruptions. In the case of HIV, treatment interruptions can lead to viral mutations that can cause irreversible disease progression and render particular drugs useless in the management of their HIV.

The full white paper can be viewed at: http://www.theaidsinstitute.org/sites/default/files/attachments/AI_CoPay_Accumulator_Adjustment_Brochure_w%20Appendix_FINAL.pdf

Conclusion

Our review of the health plans sold in the individual health insurance market in 2020 provides evidence that use of copay accumulator programs is expanding, with more insurers in more states adopting these programs. As this trend increases, so will the negative impact on patients' health and financial well-being.

If insurers do not significantly change the way they design health plan benefits, patients will continue to need copay assistance to afford their drugs. Copay accumulator programs simply put patients in the middle of the ongoing drug pricing debate among manufacturers, pharmacy benefit managers (PBMs), and insurers. Using patients as leverage in the health care and drug pricing debate does nothing to rein in industry pricing - it puts the most vulnerable patients in harm's way.

This problem can be solved for patients in two ways: HHS can choose to enforce its 2020 Notice of Benefit and Payment Parameters rule requiring insurers to count the value of copayments made by, or on behalf of, patients toward the patients' deductible and annual out-of-pocket limit. Failing that, states can enact legislation that requires insurers to count third-party payments, including manufacturer copay assistance, will count toward a patient's cost sharing limits, to protect patients' access to necessary, life-saving medicines.

* * *

Footnotes:

1/ Copayment and Coinsurance: The money that the health insurance plan enrollee may have to pay for each service, such as a doctor's office visit, prescription medicine, x-ray, or hospital stay. A copayment, or copay, is a set amount (for example $20 for a prescription). Coinsurance is a percent of the cost of the service (20% of the total prescription drug cost).

2/ Specialty Medications: Prescription drugs that are typically characterized as expensive, used to treat complex, chronic health conditions, and/or require special handling instructions.

3/ Deductible: The amount the enrollee must pay for their health care each year before insurance starts to pay for care. The enrollee would be required to pay out-of-pocket up to the deductible amount for health services before the health plan begins to pay for services.

4/ Out-of-Pocket Limit: The upper most amount an enrollee will have to pay each year for care covered by the health plan. Once that limit is reached, insurance starts paying for all covered costs.

5/ Individual Market: The health insurance market for coverage available to people who do not get health coverage through their employer or a government program, which is bought directly from an insurer. Health plans sold on through the Affordable Care Act marketplaces are called "qualified health plans" or QHPs as they have been reviewed for compliance and verified to be sold on the marketplace.

6/ Summary of Benefits and Coverage: A templated form that provides a simplified overview of the plan's benefits and sample out-of-pocket costs for covered services.

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