Featured Health Business Daily Story, Dec. 2, 2013

HHS Communications on Copay Cards Lead to More Confusion Than Clarity

Reprinted from DRUG BENEFIT NEWS, biweekly news and proven cost management strategies for health plans, PBMs, pharma companies and employers.

By Lauren Flynn Kelly, Managing Editor
November 22, 2013Volume 14Issue 22

As qualified health plan (QHP) sponsors prepared for the Jan. 1, 2014, implementation of federally facilitated and state-based exchanges, they received long-awaited clarification last month that the use of copay cards will be allowed in the new marketplace (DBN 11/8/13, p. 8). But several industry observers say opponents of the discount programs shouldn’t throw up their hands just yet, thanks to a second communication from HHS that only muddied the waters. As a result, they advise drug companies sponsoring the cards to proceed with caution.

“Right now the status of copay coupons or cards is pretty up in the air with respect to exchanges,” observes Caroline Pearson, vice president at consulting firm Avalere Health LLC. “At this point, I think we have no idea where we’re going to land.”

In an Oct. 30 letter to Rep. Jim McDermott (D-Wash.), HHS Sec. Kathleen Sebelius indicated that QHPs and other programs related to public exchanges are not considered federal health care programs and would therefore not be subject to fraud and abuse laws, including the federal Anti-Kickback Statute. Since individuals buying insurance through the exchanges are eligible to receive premium tax credits and cost-sharing subsidies, the ranking member of the House Ways and Means Subcommittee on Health had asked Sebelius for clarification on the status of QHPs and other programs participating in the exchanges.

Coupons in Exchanges Are Murky

Several days after the HHS letter, however, an answer to a frequently asked question (FAQ) posted on Nov. 4 to the CMS Center for Consumer Information and Insurance Oversight (CCIIO) website said HHS has “significant concerns” with the suggested practice of third-party providers and other companies supporting premium payments and cost sharing in the plans, “because it could skew the insurance risk pool and create an unlevel field in the Marketplaces.” Moreover, the FAQ stated, “HHS discourages this practice and encourages issuers to reject such third party payments.”

The Pharmaceutical Care Management Association (PCMA) immediately pointed out that the FAQ appears to be a deviation from Sebelius’ letter. The PBM trade group has repeatedly lobbied against the use of copay cards in the exchanges, and argued in a Nov. 5 statement responding to the FAQ that these “and other kickback schemes are designed to induce patients to ignore formularies, networks, and other tools that make benefits more affordable by encouraging patients to choose generic drugs and other less expensive options.” Copay coupons are not allowed in Medicare, Medicaid and the Veterans Affairs pharmacy program because they are considered kickbacks under the statute. “Now regulators need to take the next step and formally determine what everyone already knows: that federal anti-kickback laws apply to the [Affordable Care Act],” added PCMA President and CEO Mark Merritt in the Nov. 5 statement.

While the FAQ can certainly extend to copay cards, Pearson says she believes the greater concern to HHS and to plans is the idea of hospitals attempting to convert “frequent fliers” to an exchange plan through premium assistance. “The rationale was that this disrupts the exchange risk pool, so I think the first question is does HHS really intend to discourage copay assistance or was that mostly focused on premium assistance? And then furthermore, it doesn’t really have any enforceability, so I think either way we’re going to need some more rulemaking or guidance if [HHS] actually intends to prohibit either premium or copay assistance,” Pearson tells DBN.

But some say HHS theoretically can’t ban the cards using the anti-kickback argument because not everyone in the program will qualify for a subsidy. “The reality is there’s just no way that it could be operationalized if they made any other decision,” observed Joel Owerbach, Pharm.D., vice president of health policy and strategy at Alliance Life Sciences Consulting Group, during the Nov. 13 webinar “Health Insurance Marketplaces and Exchanges, Post-Launch: Where Do We Stand?”

“It would be absolutely impossible with the way the marketplace is set up for anyone…to know whether…a person had a federal subsidiary as part of the exchange,” explained Owerbach, who is the former chief pharmacy officer of Excellus BlueCross BlueShield. “It’s not like Medicare and it’s not like Medicaid where it’s uniform and if you’re Medicare, you’re a part of that particular program. It’s 70% to 75% of people in the program that will actually have a federal subsidy tax credit, so in essence the ruling would suggest, as we would suspect, that this is going to be more like [the] commercial [market] and therefore these coupons, copays and subsidies will be allowed.”

Drug Companies Should Protect Themselves

Meanwhile, pharmaceutical manufacturers that try to maintain brand loyalty through the cards should make sure they’re protected in their efforts to promote them in the exchanges, he advised. “I think that the bottom line is the legal departments for any of the companies just need to build a solid foundation from which the company can go ahead and from an opportunity perspective create and re-enhance the subsidies that are there,” said Owerbach. “So should there be any contrary guidance that backtracks from the Oct. 30 [letter], then at least any activity that a company has done has been done on good faith, based on the information that was available and based on the path that the company has set to make sure that the coupons and the subsidy levels are being designed and implemented in an appropriate way.”

“I think most of the drug companies are taking a wait and see approach,” weighs in Pearson. “From what we’re hearing, different legal counsels are assessing that information differently. I think some of them are feeling like even with the HHS letter, they would like an OIG decision before they accept the anti-kickback provision.”

As for the plans, “I think it will be a pretty significant issue if these coupons [are allowed] because people go where the money is, and if these coupons are out there, people are going to use them,” Roy Moore, senior director at Decision Resources Group, tells DBN. But Moore, who regularly monitors prescribing practices and payer coverage across a variety of therapeutic categories as an author of the firm’s U.S. Physician & Payer Forum reports, suggests that the impact will vary by class. For instance, in a recent survey of psychiatrists, Decision Resources learned that nearly all of the physicians expected to tell their patients about coupons if they are allowed in the exchanges, particularly for nonpreferred brand drugs like Abilify (aripiprazole). “A lot of these people weren’t insured before and there’s going to be sticker shock when they find out that they have to pay a $60 copay for a nonpreferred drug, so the physicians view these coupons as getting around that sticker shock,” he explains.

Biggest Plan Worry May Be Specialty Rx Cards

Moreover, where plans may be even less enthusiastic about the use of coupons is in specialty categories where they’ve done some tiering to prefer certain biologics, predicts Moore. WellPoint, Inc., which has several units operating on the exchanges, tells DBN that while it allows copay cards in all of its plans and benefits where not prohibited by law, there can be unintended consequences associated with their use, especially with specialty drugs. “The coupons and copay cards may drive a member to ask their prescriber for a drug that’s not the best option for them. In the case of specialty drugs, some of these drugs may not be meant for first-line therapy,” says Lynn Rossetto, Pharm.D., vice president of pharmacy clinical accounts. “Long-term and widespread use of the cards impact the ability of plans to offer the best premium value for customers.”

Regardless of whether HHS issues additional guidance, plans likely designed their drug benefits with the possibility in mind that the coupons would be allowed, suggests Pearson. “What we’ve seen in the exchanges is that plans are generally not covering all of the drugs, so they’re really taking drugs off the formulary where they can and that is especially focused on these copay cards where they may not think that they are going to be able to enforce the cost sharing,” she tells DBN.

Moore concurs. “A lot of plans went through the fire of Part D where if you had too rich of a benefit you got burned with adverse selection, so we see them being more conservative this time,” he says.

View Sebelius’ letter at http://tinyurl.com/legl96d. To view the CCIIO FAQ, go to http://tinyurl.com/o9ove7n.

© 2013 by Atlantic Information Services, Inc. All Rights Reserved.

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