By Eleanor Laise
When Mike Gartner was shopping for health-insurance coverage early this year, he did his homework. Gartner, a software engineer in Philadelphia, relies on financial assistance from drugmaker AbbVie /zigman2/quotes/202428675/composite ABBV -0.57% to pay for the Crohn’s disease treatment Humira, and he knew that an obscure provision buried in a growing number of health insurance plans could have severe financial consequences for him. These “copay accumulator adjustment” provisions can sharply increase out-of-pocket costs for people relying on drugmakers’ or other third parties’ financial help to cover the costs of pricey specialty medications, because they don’t count that financial assistance toward the dollar amounts patients must spend before their insurance benefits fully kick in.
Gartner, 31, says he spent many hours comparing plans and calling insurers directly to ask whether they use copay accumulator provisions. But he had trouble finding details on the provisions in the plans’ fine print, he says, and most of the insurance-company representatives he spoke with had never heard of copay accumulators. Finally, he says, he enrolled in a Pennsylvania marketplace plan offered by Independence Blue Cross, after a representative told him the plan did not have a copay accumulator.
After filling a couple of prescriptions, however, Gartner found that his financial assistance of about $1,000 per month was not counting toward his annual out-of-pocket maximum of about $8,500–potentially leaving him on the hook for far more costs than he’d anticipated. He ultimately discovered that the provision he’d worked so hard to avoid was described in a single sentence of his plan’s 200-plus page booklet. Dollar amounts paid by a third party, the booklet said, will not count toward any deductible or out-of-pocket maximum.
“I easily spent 20 hours trying to find this information in advance and failed,” Gartner said. He’s frustrated, he said, not only with the spotty disclosure but also with insurers’ attempts to thwart patients’ use of financial assistance to pay for costly drugs. If a health plan promises to pay 80% of a drug’s cost, for example, “when they say the other 20% can’t be a gift from your grandma, that’s none of their business,” he said. “Money is money. You got the money. What are you complaining about?”
Independence Blue Cross said it couldn’t comment on Gartner’s situation unless he signed a health-privacy waiver, which he declined. A Blue Cross Blue Shield Association spokesperson said copay accumulators were put in place to confront drugmakers’ tactics of offering financial assistance that can promote the use of high-cost drugs.
A widely used weapon in drug-cost war
All but unheard of just five years ago, copay accumulator adjustment programs have become a widely used weapon in an escalating drug-cost war between pharmaceutical companies, insurers and pharmacy benefit managers–middlemen that manage prescription-drug benefits for insurers. Now, several patient advocacy groups are suing the federal government to overturn a 2020 rule–issued under the Trump administration and left in place by the Biden administration–that allowed insurers to use these provisions more broadly. The U.S. government has allowed the provisions to proliferate, patient advocates say, even as some states banned them in light of their negative impact on the health and finances of patients struggling to afford medications for serious chronic conditions. The Centers for Medicare and Medicaid Services, which issued the rule and is a defendant in the lawsuit, has not responded to the complaint in court, and a spokesperson for the agency said that CMS does not comment on pending litigation.
Many individual as well as employer-sponsored health plans in recent years have added provisions that exclude drugmakers’ assistance–and in some cases all third-party financial assistance–when calculating patients’ progress toward meeting their deductible and out-of-pocket maximum costs. In 35 states, at least one Affordable Care Act marketplace plan has a copay accumulator, and in eight states, every marketplace plan has such a provision, according to a study by the AIDS Institute, a nonprofit research and advocacy group. Among companies with 5,000 or more employees offering prescription-drug coverage, about one in four had copay accumulators in 2021, according to the Kaiser Family Foundation.
The provisions are part of a broader trend of health insurance plans shifting additional costs onto consumers through higher deductibles and other out-of-pocket requirements, patient advocates say–and they can cause patients with serious conditions to leave the pharmacy empty-handed. With copay accumulators, patients can burn through all of their financial assistance and still make no progress toward meeting their deductible, meaning they can be blindsided by massive charges for prescriptions or health services. A 2019 study in the American Journal of Managed Care found that copay accumulator programs made people taking autoimmune specialty drugs less likely to fill their prescriptions and put them at higher risk of stopping their treatment.
“This is a battle between pharmaceutical companies, insurers and PBMs, and patients are caught in the middle,” said Carl Schmid, executive director of the HIV and Hepatitis Policy Institute, which is a plaintiff in the lawsuit seeking to overturn the federal government’s copay accumulator rule.
Insurance and PBM industry groups say that drugmakers’ financial help induces patients to take pricier drugs and contributes to higher overall drug spending. Copay accumulator programs “are used to help keep costs down for all patients,” David Allen, a spokesperson for health insurance trade group AHIP said in a statement. “They encourage patients to use the lowest cost options under their health plans,” he said, which helps correct market distortion stemming from pharmaceutical companies providing “coupons to steer patients towards more expensive medications.”
The pharmaceutical industry, meanwhile, says drugmakers’ assistance programs are helping to fill gaps in insurance coverage. “This assistance doesn’t cost insurers and PBMs a penny, and yet they are denying patients the benefit of it,” said Sarah Sutton, spokesperson for pharmaceutical trade group PhRMA.
‘If they can’t afford it, they’re going to the emergency room’
When Kollet Koulianos first spotted an employer-sponsored health plan implementing a copay accumulator for the 2017 plan year, “I knew it was going to be a problem,” she said. Patients with serious conditions “can’t just go without drugs,” said Koulianos, vice president of payer relations at the National Hemophilia Foundation. “If they can’t afford it, they’re going to the emergency room.” She spread the word among drugmakers and patient advocacy groups, she says–but many believed it couldn’t be legal.
By 2018, copay accumulators had become widely known–and controversial–as insurers and PBMs embraced them. The following year, CMS issued a rule specifically permitting copay accumulators only for drugs that have a generic equivalent, but that rule got mired in a technical dispute over whether it conflicted with Internal Revenue Service rules. In 2020, CMS issued another rule, which took effect last year, giving insurers free rein to implement copay accumulators, even when a drug has no generic equivalent. The rule left it up to insurers to decide whether to use the programs, and “economic incentives would suggest that they would,” said Lindsey Fetzer, an attorney specializing in healthcare at Bass, Berry & Sims.
The lawsuit filed in federal court in August by Schmid’s group and two other patient advocacy organizations alleges that rule is unlawful, in part because it conflicts with the Affordable Care Act, which defines cost-sharing to include deductibles, copayments and similar charges as well as “any other expenditure required of an insured individual.”
About a dozen states have already banned or restricted copay accumulators, but many large employer plans are regulated at the federal level and aren’t subject to state insurance laws. Patient advocates are also looking for a legislative solution in Congress. The Help Ensure Lower Patient Copays Act introduced late last year by Virginia Democrat Rep. Donald McEachin, for example, would prohibit copay accumulator programs. The bill “will help reduce out-of-pocket costs and preserve some financial security for the patients who need it most,” McEachin said in a statement to MarketWatch.
Medicare patients aren’t caught in the copay accumulator crossfire because they don’t get direct copay assistance from drugmakers. Pharmaceutical companies risk violating federal anti-kickback laws if they provide direct copay assistance to Medicare patients taking their drugs–an issue underscored by Pfizer /zigman2/quotes/202877789/composite PFE -2.39% ’s failed two-year quest to get a legal green light for a proposed program that would help cover copays for Medicare patients taking tafamidis, a pricey heart drug.
Insurer and PBM industry trade groups cite Medicare’s effective prohibition on drugmaker copay assistance when making the case for copay accumulators in commercial plans. Drugmakers use copay assistance programs that are banned in Medicare “to retain or increase market share for their brand-name drugs once more affordable generics come to market,” PBM industry trade group Pharmaceutical Care Management Association said in a statement.
But patients who have no cheaper alternatives to their pricey treatments often bear the brunt of these provisions, patients and advocacy groups say. Matthew, 36, a landscape architect who lives near Duluth, Georgia and asked that his last name not be published to protect his privacy, relies on financial assistance from several drugmakers to help cover the cost of pricey medications he takes for cystic fibrosis–and like Gartner, he spends a lot of time trying to dodge copay accumulators when changing health plans. None of his medications have effective cheaper alternatives, he said. “I’m kind of stuck with these specialty medicines,” he said. The argument that copay accumulators could steer patients toward lower-cost treatments, he said, “falls apart for conditions like mine.”
Health plans are also implementing a twist on copay accumulators, in which the drugmakers’ financial assistance is spread out evenly throughout the year. As with copay accumulators, these “copay maximizers” don’t count the financial assistance toward patients’ deductibles and out-of-pocket maximums.
Murky disclosure of accumulator adjustment programs can make high-stakes health coverage decisions terrifying, patients and families say. When Tyler MacDonald changes jobs, he pays close attention to employers’ health-coverage options because his nine-year-old daughter has neurofibromatosis, a condition that causes tumors to grow on nerves, and takes selumetinib, an AstraZeneca /zigman2/quotes/200304487/composite AZN -0.48% treatment with a list price of $12,500 per month for an average patient. MacDonald, 42, a tech consultant in Indianapolis, relies on the drugmaker’s financial assistance to help cover the cost, and “it’s always an absolute minefield to know what to expect from the insurance,” he said.
How to find if an accumulator is buried in your plan
During a recent job change, MacDonald said, he peppered the human-resources department and insurer with questions and ultimately determined that the financial assistance would count toward his deductible, but he was still caught off guard because that assistance is accruing toward his deductible in smaller chunks than it did under his previous coverage, leaving him with higher expenses for MRIs and other services his daughter needs. “I went round and round for months–does it have the accumulator? Yes? No?” he said. “It’s incredibly frustrating and stressful.”
An AstraZeneca spokesperson said the drugmaker “has a longstanding commitment to patient affordability and we oppose any programs or initiatives that minimize our savings programs’ ability to deliver savings to patients.”
The phrase “copay accumulator” generally doesn’t appear in plan documents, said Stephanie Hengst, manager for policy and research at the AIDS Institute, who researches ACA marketplace plans’ use of the provisions. She typically tracks down the provisions, she said, by searching plan documents for keywords like “manufacturer” or “third party.”
Schmid, whose organization filed the copay accumulator lawsuit, said he realized just recently that his own health plan has such a provision. “I’m like an expert on this,” he said. “And I didn’t even know” the plan had a copay accumulator until a few weeks ago, he said.
“Health insurance providers are committed to providing their enrollees with clear and transparent information about their plan benefits,” said AHIP’s Allen. “We are always willing to work with patients to improve our communications.”