In early 2019, Jennifer Hepworth and her husband were stunned by the unexpectedly large bill they received for prescription medication for their daughter's cystic fibrosis. Their payments had increased from the usual $30 per month to $3,500.
That must be a mistake, she told the pharmacy. But that wasn't the case. It turned out that the health insurance plan she received through her husband's job had a new program that stopped applying financial aid received from drug companies to her family's annual deductible.
Insurers and employers can take advantage of funds that drug companies provide to patients through copay assistance programs. Co-pay assistance programs are designed by companies to help patients afford increasingly expensive drugs. However, these payments no longer count toward the deductible, so patients often have to pay out-of-pocket for the same drug. These deductibles and other out-of-pocket costs can easily reach thousands of dollars.
Here's what that means for Hepworth, who lives in Utah. Before the change, Hepworth and her daughter needed expensive medications, and the drug company's co-pay assistance almost immediately met her family's annual deductible. As a result, her family ended up paying only 20% of her medical expenses out-of-pocket, rather than 100% of her co-payments as required by the plan, until the deductible was met. By the middle of this year, families will reach nearly the plan's $10,000 out-of-pocket maximum and no longer have to pay out-of-pocket costs.
Hepworth didn't want to give up the treatment that could prolong her daughter's life, so she ended up paying the pharmacy $3,500, the family's annual deductible. “We were struggling and paying for everything with credit cards.”
Why did the insurance company do this?
Employers and their health plans can use these copay accumulation programs to reduce the cost of prescription plan claims by 10 to 15 percent, said Edward Kaplan, senior vice president at benefits consulting firm Segal. % savings. Still, Kaplan is not recommending that his clients, including public and private employers, take advantage of the program because of growing pushback from lawmakers and advocacy groups. But the vast majority of insured people are enrolled in plans managed by this type of program, according to consulting firm Abarere.
Currently, 19 states restrict copay accumulation programs in some insurance plans. And patient advocates won a favorable court ruling against the program. However, state restrictions on this practice do not apply to the largely self-insured, job-based insurance that many Americans purchase.
Bipartisan bills have been introduced in both chambers that would require financial aid to count towards deductibles and other out-of-pocket costs. The legislation, called the Helping Patients Ensure Lower Out-of-Pocket Costs Act, would govern which plans are exempt from state regulations.
Change is unlikely to come soon.
Insurers and employers have long complained that copay assistance programs are primarily a pharmaceutical industry marketing ploy to encourage patients to continue using expensive drugs despite the availability of lower-cost alternatives. Ta. Insurers argue that by collecting the funds themselves, they can reduce premium increases.
In a recent letter to regulators, the Blue Cross Blue Shield Association said the practice is “an important tool for keeping health insurance affordable.”
Patient advocacy groups, including the HIV+Hepatitis Policy Institute and two diabetes groups, disagreed and filed a lawsuit against the copay accumulation program in federal district court last fall.
And “we won,” said Carl Schmidt, the institute's executive director. The groups argued that this practice could cause some patients to skip their medications because they have to incur unexpected costs.
Some critics argue that this is a kind of second-hand claim, because even though the patient did not personally pay the co-pay, “the payment was made, and it was made for you.” They claim that it is heavily pickled. I think it should be counted,” said Rachel Klein, deputy executive director of the advocacy group AIDS Research Institute.
Schmidt said the court's decision essentially overturns a 2021 provision of Centers for Medicare and Medicaid Services regulations that allowed insurers to expand coverage to nearly all drugs. Previous rules from 2020 are still in effect, and those rules should include copay assistance as a deductible for all drugs for which no medically appropriate generic substitute exists, Schmidt said. He said that.
Still, bill changes for many insured patients can take time.
The Biden administration withdrew its appeal of the court's decision, but filed a motion saying it “does not intend to take any enforcement action against issuers or plans” until regulators develop new rules, the center said. said Ellen Montz, administrator and director. to CMS Consumer Information and Insurance Oversight in a written statement to KFF Health News.
The versions of these programs used by insurance companies (sometimes called “maximizers”) work slightly differently.
Under the Maximizer program, insurers partner with outside companies such as PrudentRX and SaveOnSP. The program allows certain drugs or classes of drugs to be declared “non-essential,” circumventing some Affordable Care Act rules that limit patient costs. This allows insurers to collect the maximum amount from a drug manufacturer's assistance program, even if it exceeds what the patient pays through deductibles or out-of-pocket maximums, as long as the drug maintains essential efficacy. become. These partner companies also work with leading pharmacy benefits managers who oversee prescription services for their employers.
These maximizer payments do not count toward the patient's deductible. Many insurance companies do not charge patients additional co-pays for drugs that are deemed non-essential as a way to encourage patients to enroll in programs. If a patient chooses not to enroll, the “non-essential” designation could result in a much higher co-pay than usual.
“This is a loophole in the ACA that they're exploiting,” Schmidt of the HIV+Hepatitis Policy Institute said, referring to the Affordable Care Act. In 2022, Johnson & Johnson filed a lawsuit in federal court in New Jersey, alleging that it forced patients to participate in such Maximizer programs, leaving them with higher out-of-pocket costs if they did not participate. The drug company warned that the practice was becoming increasingly common and could reduce the overall amount of support available to patients.
But now, a provision in the proposed 2025 federal regulations governing health insurance companies says plans must consider covered drugs as “essential benefits.” If ultimately enacted, this provision would impede the ability of insurance companies to receive maximum assistance from drug companies.
Employers are closely monitoring the outcome of the lawsuit and proposed federal regulations, but it's not yet clear how the ruling or regulation will affect their programs, says ERISA, which advocates for large-scale policies. said James Gelfand, Chairman and CEO of the Industrial Commission. Employers who are self-insured.
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(KFF Health News is a national newsroom that produces in-depth journalism on health issues, one of KFF's core operating programs, and an independent source of health policy research, polling, and journalism. is.)
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