The Trump Administration recently issued their proposed rule to update the ACA’s benefit payment and parameters for 2021. This proposal governs vital elements of the ACA including the federal and state exchanges and qualified health plan (QHP) benefits. In addition to lowering premiums, the proposal also includes sections related to promoting program integrity, increasing market stability, enhancing the consumer experience and reducing regulatory burden as outlined in the accompanying fact sheet.
Similar to last year, the proposed changes to the risk adjustment program aren’t out of the ordinary, but the Trump Administration did opt to clarify a provision from the 2020 rule related to drug coupons. Drug manufacturers usually offer coupons to help patients offset copayments for brand-name drugs when there is not a comparable generic available to meet their needs. While they are a means of financial assistance, it has not been clear if coupons should count toward the annual limitation on cost sharing. For those not familiar, under the ACA, there is an annual out-of-pocket maximum that QHPs must adhere to as it relates to coverage of essential health benefits.
In the 2020 rule, the Departments of Health and Human Services, Labor, and Treasury (the Departments) noted that amounts paid toward cost sharing using any direct support from drug manufacturers when there is an available and medically appropriate generic do not have to be counted toward the annual limit. There was a good amount of feedback from stakeholders expressing confusion about counting the financial value of drug manufacturer coupons in scenarios other than when there is a “medically appropriate generic equivalent available, particularly with regard to large group market and self-insured group health plans”.
In an attempt to quell confusion about their position on coupons being counted toward the annual cost sharing limitation, the Departments issued guidance in August of last year. In that guidance, The Departments acknowledged that their 2020 rule might have conflicted with previous guidance from the Internal Revenue Service (IRS) for high-deductible health plans (HDHPs) as it relates to coupon values being attributed toward the annual cost sharing limitation other than in instances where a generic is available. Rather than make clarifications to the 2020 rule, the Departments offered to clarify their position in the 2021 rulemaking and stated they would not take any enforcement actions if issuers or group health plans excluded the value of coupons from annual cost sharing limitations even if there wasn’t a medically appropriate generic available.
In the new 2021 proposed rule, the Departments acknowledged that an issuer or sponsor of a HDHP might be forced to either comply with the 2020 rule or previous IRS guidance which was not the intent. As such, the Departments have proposed to modify 45 CFR § 156.130(h) to state that “to the extent consistent with applicable state law, amounts paid toward reducing the cost sharing incurred by an enrollee using any form of direct support offered by drug manufacturers to enrollees for specific prescription drugs are permitted, but not required, to be counted toward the annual limitation on cost sharing.” They added that this proposal would give plans and issuers the flexibility to decide if they wanted to include coupon amounts as part of annual cost sharing “regardless of whether a generic equivalent is available”.
In addition, the Departments also proposed to “interpret the definition of cost sharing to exclude expenditures covered by drug manufacturer coupons” which in turn would ensure that the financial value of said coupons doesn’t have to be counted toward annual cost sharing limitations. While I’m sure this clarification might still be confusing, it does underscore the Departments’ position that coupon values are not costs directly incurred by enrollees. Therefore, coupons could be treated differently depending on the issuer or plan as it best meets their business practice so long as it’s consistent with applicable state and federal law. I understand that coupons serve a crucial role, but I also acknowledge they introduce a number of complexities to the system (you can read more on that by clicking here.)
Nonetheless, one thing that I hope the Departments clarify in the final rule are expectations as it relates to transparency. Enrollees deserve to know if their coupons will be considered as part of their cost sharing because it will impact their out-of-pocket costs.
Comments on this proposed rule are due on March 2, 2020.
If you’re curious about how this proposal compares to last year’s payment rule, check out my previous blog on it by clicking here.