Health plan copay reform is in the news. Healthcare is a fundamental aspect of modern life, and access to quality medical services should not be a financial burden. However, many adults have only a surface understanding of their healthcare benefits. They may be in the dark when it comes to the intricacies of their coverage. This lack of knowledge can have profound implications for their physical, mental, and financial well-being.
Unfortunately, many discover only too late how their health insurance works. They may be surprised by the amount of money they are expected to pay out-of-pocket. However, a new court ruling may introduce changes in the way copays are structured within health plans. This should make it more affordable for plan members to receive the care they need.
You may be unsure what impact copay reform will have on you or your company. A quick chat with an Insurance and Benefits Consulting Firm could provide insight. Contact us at FBC for advice.
What Are Copays and Why Do They Matter?
Copayments, commonly referred to as copays, are fixed amounts that plan members pay for healthcare services at the time of the visit. These fees are typically predetermined by the health plan and can vary depending on the type of service or medication.
Copays are designed to share the financial responsibility between the plan member and the insurer, with the intent of making healthcare more affordable. Due to high deductibles and cost-sharing, many people rely on copay assistance from their drug’s manufacturer in order to afford their medications.
What Is Copay Assistance?
Copay assistance refers to financial aid programs or initiatives that help individuals pay for their out-of-pocket prescription medication costs, such as copayments or deductibles. These programs are often provided by pharmaceutical companies, nonprofits, or foundations to alleviate the financial burden on patients, making essential medications more affordable.
The use of copay accumulators by pharmacy benefit managers (PBMs) and insurers has greatly affected those depending on high-cost prescription medications for chronic conditions.
What Are Copay Accumulators?
Copay accumulators are insurance policies or programs employed by health insurers to exclude the financial support provided by copay assistance programs from counting towards a patient’s deductible or out-of-pocket maximum. This practice can result in patients having to pay more out-of-pocket for their medications despite receiving copay assistance, ultimately benefiting the insurer.
Copay Accumulator Lawsuit
Until recently, Trump administrative rules allowed health insurers to disregard copay assistance from drug manufacturers’ when calculating a person’s out-of-pocket expenses. One consequence of this was that patients had to personally pay more to meet their annual deductible.
This rule was particularly problematic for individuals requiring expensive drugs to treat their chronic diseases, as it resulted in more out-of-pocket costs for those who were receiving copay assistance.
In response to this concerning issue, three patient advocacy groups – the HIV+Hepatitis Policy Institute, Diabetes Leadership Council, and the Diabetes Patient Advocacy Coalition – joined forces to challenge the U.S. Department of Health and Human Services in court.
Their core argument centered around the notion that “copay accumulator” policies employed by health insurers were permitting these companies to benefit from copay assistance programs. Instead of relieving the financial strain on patients, as the assistance programs were originally intended, these policies were allowing insurers to profit at the expense of patients.
Health Plan Copay Reform Moving Forward
Recently, the U.S. District Court for the District of Columbia overturned the Trump-era administrative rule. Drug manufacturers’ copay assistance will now be counted as cost-sharing for drugs without generic equivalents. Additionally, copay accumulators are now allowed only for brand-name drugs that have a generic alternative, subject to state law regulations.
As the executive director of the HIV+Hepatitis Policy Institute, Carl Schmid, said, “We are thrilled that the Court has taken the side of patients who have been struggling to afford their prescription drugs due to the greedy actions of insurers and their PBMs.”
This is undoubtedly a win for plan members, as it represents a significant step toward a more equitable and accessible healthcare system, where plan members can receive the care they need without the worry of exorbitant copayments. It is a positive change that not only benefits plan members but also contributes to the overall improvement of the healthcare system as a whole.
With 20 states having already passed laws regulating copay reform, many hope to see immediate changes. Contact FBC for more information.