As far back as the 13th century, European craft guilds set and maintained standards for the quality of goods in their trades (e.g., carpentry, masonry). Masters would train apprentices, and apprentices would ultimately produce a “masterpiece” as proof of their mastery of a craft and qualification to be a master. Today, physicians must pass a series of exams to be licensed to practice medicine, and they must acquire additional training from specialists and pass a rigorous exam to become board certified in a particular specialty. Masters and specialists provide assistance to apprentices and residents as they acquire knowledge and skills, but individuals must meet specific requirements to become a master or specialist.
Payers have increasingly used copays and coinsurance to share the spend and bend the trend. In response, manufacturers have increasingly offered patients assistance with out-of-pocket costs, largely through the use of copay cards for commercially insured patients. As a counter-response, payers have increasingly used two approaches to excluding the value of manufacturers’ copay support — copay accumulator and copay maximizer programs.
Copay accumulators and maximizers exclude a manufacturer’s copay assistance from a patient’s contributions toward a deductible and annual OOP cost maximum; so, effectively, the copay assistance does not reduce a patient’s cost-sharing obligations. Whereas the accumulator accumulates the value of a manufacturer’s copay assistance until the maximum value of the assistance is reached, the maximizer applies the maximum value of a manufacturer’s copay assistance evenly throughout the benefit year. With a maximizer, the patient’s OOP cost can be as low as $0 for specialty drugs on an exclusive list. While this may sound too good to be true, this great “deal” is based on a restricted drug list, which is invariably supported by aggressive rebates from manufacturers. How else would drugs get on an exclusive list? So, maximizers are also maximizing manufacturer rebates. Clearly, restrictions has its rewards.
The tension between payers and manufacturers regarding these programs is based on differing worldviews on out-of-pocket (OOP) costs and cost-sharing obligations.
Payers’ take
To payers, OOP costs that reduce utilization of some products could be good — especially when these costs encourage utilization of generic or alternative, clinically appropriate products that are less expensive. They think patients have a responsibility to meet their own cost-sharing obligations. Payers view copay assistance programs as attempts to circumvent one of their tools to manage utilization and costs, and not some sort of charitable act.
In essence, the impacts of plan design are by design. Further, premiums are, in part, based on these assumed impacts. Without copay accumulators and maximizers, premiums would be higher because utilization of more costly products would be higher.
Manufacturers’ take
To manufacturers, OOP costs that reduce utilization of their products is bad. Manufacturers think accumulator and maximizer programs are inappropriate and view these programs as ways of generating savings for the plan but hurting the consumer.
In most financial transactions, the supplier of a product or service only cares about getting paid in full, and not whether the buyer received financial assistance. Some manufacturers fail to recognize that payers do not simply want the OOP cost revenue — they also want changes in behavior and utilization that will reduce costs.
CMS’s take
CMS initially issued a rule in 2019 that restricted the use of accumulator programs but suspended the rule after a few months because of conflicting IRS rules. Now, get this: CMS then issued a rule in 2020 that reversed its position in 2019, permitting plans to use accumulator programs. Remarkably, the rule goes one step further and actually encourages payers to consider excluding manufacturer support from annual cost-sharing limits.
Complicating matters further, CMS issued another rule in 2020 requiring manufacturers to determine whether the full value of their patient-assistance programs is passed on to the consumer or patient, or whether the pharmacy or other entity receives any price concession. Beginning in 2023, if the patient doesn’t receive the full value of the benefit, then the Medicaid Prescription Drug Rebate Program best price and Average Manufacturer Price (AMP) are reduced. How will manufacturers effectively and efficiently monitor and track whether the full value of their assistance is passed on to the consumer? And how will manufacturers respond to the risk of inaccurate reporting and related penalties? While some reporting of this rule suggests that the type of manufacturer support affected is limited to copay-assistance programs (e.g., copay cards/coupons) at the point of sale, it affects all forms of financial assistance to patients including patient refunds after the point of sale (which, by the way, would be subject to gift taxes).
States’ take
A growing roster of states have laws prohibiting fully insured plans from using accumulators and maximizers or restricting their use (e.g., applicable only for drugs with a generic equivalent). As of spring 2022, laws in 15 states and Puerto Rico require any payment or discount made by or on behalf of the patient be applied to a consumer’s annual out-of-pocket cost-sharing requirement. (Importantly, such mandates do not apply to self-insured plans.) Political pressure from patient and provider advocacy groups may result in the passage of additional state laws that govern accumulators and maximizers. In a sense, state mandates are a workaround to payers’ workaround to manufacturers’ workaround.
Underlying tensions
Beyond the predictable conflict between payers’ and manufacturers’ views on cost sharing, these issues heighten tensions about individual and corporate rights and obligations. If an individual qualifies for and receives assistance from a drug manufacturer or other entity, should his or her individual deductible and OOP spending obligations be lessened? There are compelling arguments on both sides.
While we’re waiting for political processes (and possibly court proceedings) to thread the needle regarding accumulators and maximizers, a sizable and growing proportion of patients are, sadly, finding it difficult to afford medically necessary drugs. Some of these access challenges result in poorer outcomes and, ironically, higher costs. Copay assistance programs and accumulators and maximizers are symptoms of an underlying problem. The increasing OOP cost burden is, after all, the larger problem that needs to be addressed.
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