The Pharmaceutical Coupon Cat and Mouse Game

Insurance companies developed pharmacy formularies to help steer patients to lower cost medications and try to control overall healthcare cost.  However, some pharmaceutical companies have been bypassing the traditional formulary system and have been providing pharmacy coupons directly to patients.  The coupon provides a financial incentive for the patient to purchase the pharmaceutical’s medication, leaving the insurance company responsible for paying the higher cost drug.  These costly pharmacy expenses are passed on to employers and employees during renewal increases.

In the past, insurance companies were required to accumulate the “discount” into the patient’s out-of-pocket maximum.  This accounting method provided an additional incentive to the patient since the members were receiving credit towards their out-of-pocket maximum, even though the member did not pay for the discount.

Earlier this year, CMS initially issued guidance on the out of pocket maximum rule specifically addressing the accumulator programs for non-grandfathered group health plans.  For plan years beginning on or after January 1, 2020, insurance plans are not required to include the drug manufacturer coupons toward a participant’s out of pocket maximum for drugs that have a generic equivalent that’s available and medically appropriate.  Plans were not permitted to exclude drug manufacturer coupons from a participant’s cost‐sharing limits for drugs that do not have a generic equivalent, for generic equivalents that are not medically appropriate, or for brand name drugs that are covered through a plan’s appeals or exceptions process.

More recently the Departments of Labor, Health and Human Services, and the Treasury (collectively, the “Departments”) granted additional reprieve stating:

Until the 2021 NBPP is issued and effective, the Departments will not initiate an enforcement action if an issuer of group or individual health insurance coverage or a group health plan excludes the value of drug manufacturers’ coupons from the annual limitation on cost sharing, including in circumstances in which there is no medically appropriate generic equivalent available. States may adopt a similar enforcement policy, and HHS will not consider a state to be failing to substantially enforce the annual limitation on cost sharing in cases where a state does so with respect to health insurance issuers.

The new guidance will receive mixed feelings as insurance companies look to implement the new policies.  Individuals that have benefited from the pharmaceutical coupons will be negatively impacted, while those employers and individuals not using coupons will generally like the recent guidance as it helps control future premium increases.