In a surprising move, on November 28, 2023, the Biden-appointed Department of Health and Human Services (HHS), and Centers for Medicare & Medicaid Services (CMS) Secretary and Administrator filed a notice of appeal to the U.S. Court of Appeals for the D.C. Circuit. The notice opposed the District Court’s September 29th ruling in favor of patient advocacy groups, which eliminated a Trump-Era parameter that allowed health plans to expand the use of co-pay accumulators and exclude manufacturer assistance program contributions from commercially insured patients’ yearly cost sharing obligations.
The decision to file the notice of appeal has caused confusion among patient advocacy groups as it is perceived to reflect the Biden administration siding with insurers and against patients who depend on manufacturer assistance to obtain needed prescriptions drugs. Reinstating the exclusion of copay assistance from a patient’s cost-sharing obligations would allow insurers to continue the use of copay accumulators to extract more money from patients and drug manufacturers while not actually alleviating a patient’s financial burden.
Originally, patient advocacy groups and manufacturers touted the September 29th ruling as a victory that would alleviate some of the financial burden on commercially insured patients, while CMS argued that manufacturer coupons had the potential to “add significant long-term costs to the healthcare system.” The Court found that the definition of cost sharing obligations was arbitrary and capricious, and while benefiting individual patients is one purpose of the Affordable Care Act, the statute was also intended to decrease the cost of health care. Accordingly, the court vacated the 2021 rule, reinstating a previous 2020 rule that allowed the exclusion of manufacturer copay assistance from a patient’s cost sharing obligation only if there is an “available and medically appropriate generic equivalent.” Further, the court encouraged HHS and CMS to provide a clear interpretation of the statutory definition of a patient’s cost sharing obligations.
Before submitting the notice of appeal, HHS submitted a motion to clarify in which it stated that it intended to address the Court’s opinion through rulemaking, however pending the issuance of a new final rule, HHS did not intend to take any enforcement action against health insurance issuers and group health plans based on their treatment of such manufacturer assistance. In essence, by ignoring its enforcement responsibility, HHS was stating that it would disregard the Court’s determination to revert to a 2020 rule, and signaled to issuers and health plans to keep operating as they wish with regard to manufacturer assistance.
Compliance and Ongoing Monitoring
Stakeholders including manufacturers and plan sponsors such as employers should retain competent healthcare counsel to monitor regulatory changes as HHS is likely to revise the definition of “cost sharing.” Additionally, these stakeholders should monitor their patient assistance programs carefully and remain aware of how HHS intends to enforce the rules because without such enforcement, it leaves these stakeholders with little recourse if insurers take advantage of the ambiguity surrounding cost-sharing obligations.
How Frier Levitt Can Help
Frier Levitt stays abreast of regulatory changes and represents manufacturers, plan sponsors, providers, and patient advocacy groups. We evaluate each parties’ obligations, reporting obligations, and compliance with current rules, and we draft and negotiate PBM rebate agreements, and are ready to assist in litigation against PBMs that effectuate co-pay accumulator programs. If you have questions about reporting obligations, are looking to develop a compliant co-pay assistance program, or challenge an existing accumulator program impacting your program’s benefits, contact us today.
