Seyfarth Synopsis: Recently, the Trump Administration issued its proposed Notice of Benefit & Payment Parameter for 2021 regulations. While these regulations primarily impact insurance carriers participating in the Health Insurance Marketplaces/Exchanges (outlining services that must be covered and rules surrounding that coverage), employer plan sponsors had been anticipating these rules to see how the Administration would address manufacturers’ coupons and their applicability toward cost-sharing limits (i.e., plan deductibles and out-of-pocket maximums).
For background, plan sponsors had been increasingly grappling with participants veering toward extremely high-cost drugs, despite the sponsors’ plan designs imposing higher cost-sharing for those drugs, because manufacturers were offering participants coupons to offset those participants’ cost-sharing obligations. In those cases, the plan was on the hook for its share of the high cost of the drug, but the participant paid no more than a typical prescription. In response, many employers had implemented programs excluding the value of manufacturers’ coupons from the participants’ cost-sharing obligations under the plan. The rationale here was that if the participant didn’t actually pay the cost (because the manufacturer did), there should be no crediting under the plan’s accumulators.
A prior iteration of the Administration’s rules had suggested that if a participant used a manufacturer’s coupon to pay for a portion of his or her cost-sharing obligation, the value of the coupon would have been required to count toward the plan’s out-of-pocket maximum, except where a generic drug was available. This potentially impacted plan sponsors’ ability to effectively mold a value-based insurance design incentivizing participants to use a lesser-cost drug where available. Further, it was in direct conflict with IRS rules for high deductible health plans (“HDHPs”), which generally prohibited plans from counting the value of coupons toward a participant’s cost-sharing obligation in order to preserve health savings account (“HSA”) eligibility.
In response to feedback, the Administration temporarily halted the application of the prior rules in order to solicit additional comments. Based on those comments, the new rules provide plan sponsors the ability to choose whether to count or exclude the value of coupons in determining whether a participant has satisfied his or her cost-sharing obligations. We suspect that most plan sponsors (and especially those with an HDHP that is intended to be HSA-compatible) will move to exclude the value of coupons in response to this rule (if finalized in substantially the same form).
The Administration invites comments on this rule, which are due no later than March 2, 2020.