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CMS Finalizes Rule Expressly Permitting Copay Accumulator Programs

May 15, 2020, Covington Alert

On May 7, 2020, the Centers for Medicare & Medicaid Services (“CMS”) announced that it had finalized the Notice of Benefit and Payment Parameters for 2021 (“2021 NBPP Final Rule”). The final rule, which will go into effect on July 13, 2020, expressly allows certain health plans to determine, to the extent permitted by state law, whether to count pharmaceutical manufacturer assistance with enrollee cost-sharing toward the plan’s annual limit on cost-sharing. This policy applies to health plans sold on the ACA exchanges, as well as non-grandfathered individual and group health plans (including self-insured plans). States could impose different requirements for fully insured plans.

This policy makes it easier for group plans and issuers to adopt so-called “copay accumulator” programs, under which plans exclude the value of manufacturer copay assistance from counting toward an enrollee’s deductible or annual cost-sharing limit, as well as “copay maximizer” programs, under which plans align an enrollee’s copay obligation with available copay assistance from manufacturers and then apply manufacturer assistance to the enrollee’s copay obligation but not toward the enrollee’s deductible or annual cost-sharing limit. In the final rule, CMS provides that plans adopting such programs should apply them “in a uniform, non-discriminatory manner” and provide “clear and transparent” information to enrollees and potential enrollees. CMS indicated that it may consider future rulemaking if plans fail to disclose copay accumulator programs (and, by extension, any accumulator elements included in copay maximizer programs) among other potential rulemaking.


The 2021 NBPP Final Rule follows prior efforts to address accumulator activity under the Notice of Benefit and Payment Parameters for 2020 (“2020 NBPP Final Rule”), issued on April 25, 2019. Whereas CMS had not previously addressed whether plans had flexibility to implement copay accumulator programs, the 2020 NBPP Final Rule set forth a new subsection, 42 C.F.R. § 156.130(h), to expressly permit plans to exclude the value of pharmaceutical manufacturer coupons from the annual limit on cost-sharing “for specific prescription brand drugs that have an available and medically appropriate generic equivalent.” According to CMS, this provision was “intended to address the distortion in the market caused when consumers choose an expensive brand-name drug when a less expensive and equally effective generic or other alternative is available.” The preamble to the proposed rule stated that plans “must” count manufacturer cost-sharing assistance toward annual cost-sharing limits if the assistance is for a brand drug without a generic equivalent or the enrollee was determined through an appeals or drug exception process to require a brand drug

However, due to stakeholder confusion about when plans were required to count manufacturer assistance toward annual limits and the possibility that the new policy might conflict with IRS guidance regarding the eligibility of high deductible health plan (“HDHP”) enrollees to contribute to health savings accounts, on August 26, 2019, the Departments of Health and Human Services (“HHS”), Labor, and Treasury issued guidance deferring enforcement of the policy. HHS stated it would undertake further rulemaking in the 2021 NBPP to resolve any potential confusion

Final Rule

The 2021 NBPP Final Rule revises 42 C.F.R. § 156.130(h) to provide that, in accordance with applicable state law, plans are permitted, but not required, to exclude any form of direct support from drug manufacturers from the annual cost sharing limit, regardless of whether a medically appropriate generic equivalent is available. While the final rule largely adopts the provisions of the proposed rule, CMS ultimately did not adopt its original proposal to interpret the definition of “cost sharing” at 45 C.F.R. § 155.20 to exclude expenditures covered by direct drug manufacturer support. CMS determined that this proposed interpretation would be “inconsistent with the flexibility [it is] seeking to provide to issuers and could be seen as a barrier for issuers” who wish to include manufacturer support toward an enrollee’s annual limit on cost sharing.

For issuers that choose to exclude manufacturer support from the annual cost-sharing limit, CMS notes two requirements:

  • Issuers must apply such policies in a “uniform, non-discriminatory manner” consistent with existing obligations; and
  • Issuers should be “clear and transparent in communications with enrollees and prospective enrollees regarding whether the value of drug manufacturer support accrues to the annual limitation on cost sharing,” and are expected to “prominently include this information on websites and in brochures, plan summary documents, and other collateral material that consumers may use to select, plan, and understand their benefits.”

Failure to disclose sufficient information on such copay accumulator programs may prompt future rulemaking by CMS “to impose robust disclosure requirements.” CMS also notes that while the final rule pertains to direct manufacturer support, it continues to monitor indirect manufacturer support of specific drugs.

The finalized policy provides broad flexibility for issuers to determine whether to count manufacturer support in calculating enrollees’ annual cost-sharing limit, while taking into consideration rules or guidance issued by other agencies such as the IRS guidance for HDHPs. In the final rule, CMS suggests that drug manufacturer cost-sharing assistance should not be counted when determining whether an individual has satisfied his or her deductible for purposes of high-deductible health plans because the “true economic cost to the individual is the net amount incurred.” The 2021 NBPP Final Rule also states that the Departments of Labor and the Treasury will continue to review comments and consider whether to issue additional guidance regarding how manufacturer direct support should be treated for the purposes of the deductible under a HDHP.

CMS opines that issuers already counting manufacturer assistance toward annual limitations on cost sharing likely would continue to do so but acknowledges “the possibility that some issuers or group health plans may make changes to their plan designs to exclude direct drug manufacturer support amounts from the annual limitation on cost sharing” and, separately, “encourage[s]” plans to exclude such support when a medically appropriate generic drug is available. With this formal policy allowing group health plans and issuers to adopt copay accumulator programs, the industry will likely see an increased use of copay accumulator and copay maximizer programs that exclude manufacturer assistance from annual cost-sharing limits. Pharmaceutical manufacturers may choose to reevaluate their copay assistance programs and revisit strategic options related to copay accumulators and maximizers. For instance, some manufacturers might contemplate substantially redesigning copay support rather than attempting to respond to accumulator and maximizer activity at an operational or individual patient level. Pharmaceutical manufacturers should closely monitor plan responses to the 2021 NBPP Final Rule, including the final rule’s encouragement of increased transparency, and continue monitoring regulatory activity at the federal and state level.

If you have any questions concerning the material discussed in this client alert, please contact the following members of our Health Care and Food, Drugs, and Devices practices.

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