Court vacates HHS guidance on copay accumulator programs

On September 29, 2023, a federal district court vacated a 2021 regulatory provision that changed how direct drug manufacturer assistance accrues toward the Affordable Care Act (ACA) annual limits on cost sharing.

Background

The 2021 regulation included provisions regarding how drug manufacturer assistance — such as manufacturer coupons — should count toward a plan’s annual limit on cost sharing. The regulation also provides that any form of direct support from drug manufacturers used to reduce a participant’s out-of-pocket costs for specific prescription drugs may be — but is not required to be — counted toward the ACA’s annual limitation on cost sharing.^[1]

Several individuals and patient advocacy groups sued, contending that the provision conflicted with cost-sharing definitions in the ACA and prior regulations, which they argued unambiguously include drug manufacturer assistance. The groups alleged the 2021 rule allowed health plans and pharmacy benefit managers to collect funds from both participants and drugmakers while not using any of that money to alleviate the financial burden on participants.

Court sets aside drug manufacturer assistance rule

The court vacated the challenged provision, directing the agencies to issue an interpretation of the statutory definition of cost sharing (and to not provide a choice). The court held that the provision is arbitrary and capricious because it interprets the term as having two different meanings, to be chosen at the discretion of the regulated parties (e.g., the group health plan).

This case has important implications for HSA-qualified HDHPs. The now-vacated provision followed an earlier Department of Health and Human Services (HHS) announcement that manufacturer assistance need not be counted toward a plan’s annual cost-sharing limit when a medically appropriate generic equivalent is available. Some viewed this as implying that the assistance must be counted when a medically appropriate generic equivalent is not available. The preamble to the 2021 regulations explained that this change was necessary to avoid a potential conflict with the HDHP rules, under which only amounts actually paid by the individual may be counted toward the HDHP deductible. This case appears to revive that conflict (and adds confusion to compliance).

Going forward

In light of the recent court ruling, employers should:

• Discuss with their legal counsel how to handle any program within their plan where a manufacturer’s support does not count toward a participant’s cost-sharing limits — i.e., a copay accumulator program.
• Consider any future guidance from HHS and the 2020 rule that was in effect before the 2021 rule was issued (and subsequently vacated).
• Watch to see if the agencies issue similar guidance or reaffirm their position from FAQs Part 40, which provided a non-enforcement safe harbor while the government dealt with the issue. Assuming the government will reaffirm its position in ACA FAQs Part 40, group health plans should be able to continue administering their group health plans on this issue just as they did before the ruling while they await future clarity.

Footnote

1. Certain states have enacted laws that require fully insured plans to count the amount of direct support offered by drug manufacturers toward the plan’s cost-sharing limits. These state laws could be problematic for health savings account (HSA)-qualified high-deductible health plans (HDHPs), unless such plans are specifically exempted. Return to article undo