Coupon programs can live under Obamacare, at least for now

HHS says that private insurance plans under the federal exchange program are not prohibited from making use of them. UPDATED 11/6*

Without explicitly giving copay cards or patient assistance programs a clean bill of health, HHS Secretary Kathleen Sibelius has signaled that such programs are permissible for patients in “qualified health programs” (QHPs) or other types of insurance accessed through the new health exchanges (or rather, “will be” accessed once all the ugly computer problems are solved). The reason: these QHPs are ruled not to be federal healthcare programs. (States have their own requirements; until a year ago, Massachusetts forbade even private-sector plans from making use of the incentives.)

As has been the case for many years, Medicare and Medicaid patients are generally not allowed to make use of copay cards or other benefits, because they are considered an inducement under the federal anti-kickback statutes. With the new exchanges and programs under the Affordable Care Act, it has been an open question whether the statutes would apply. That question generated a letter from Rep. Jim McDermott (D-WA) to HHS, and Sibelius replied; that letter is now on McDermott’s site.

“Will a QHP offered on the Exchange … be permitted to offer certain beneficiary inducements … which would otherwise be proscribed under the Anti-Kickback Statute,” asked McDermott. Sibelius’ reply was in the negative, adding that this conclusion was “based upon a careful review of the definition of "Federal health care program" and an assessment of the various aspects of each program under Title I of the Affordable Care Act and consultation with the Department of Justice.” She also noted that all the programs will continue to receive close oversight from the Office of Inspector General of HHS, the Dept. of Justice and other federal agencies.

Pharmacy benefit managers (PBMs) are generally opposed to use of copay cards, reasoning that their main purpose is to encourage patients to use higher-cost branded drugs (a position that industry disagrees with). Mark Merritt, CEO of the Pharmaceutical Care Management Assn. (PCMA; Washington, DC), is quoted in the Nov. 4 Wall Street J. saying that the incentives “will mean higher premiums … [and] higher cost-sharing.” The programs are not insignificant: estimates range from $4-6 billion in how much is currently being spent on them. And while PBMs don’t like them, prescribers, who want to be in a position to aid their patients, generally do. More recently, the new incentives for healthcare systems to improve medication adherence (under the Medicare Star program) are seen as being helped by copay cards and patient assistance.

*11/6 UPDATE: on Nov 6, PCMA highlighted a memo, from the Center for Consumer Information and Insurance Oversight (an office of CMS, which of course is part of HHS) that "appears to pivto away" from the Sibelius letter, as PCMA puts it. The memo, in the form of a Q and A, responds to the question "Are third party payors permitted to make premium payments to health plans on behalf of enrolled individuals?" and answers it thus:

It has been suggested that hospitals, other healthcare providers, and other commercial entities may be considering supporting premium payments and cost-sharing obligations with respect to qualified health plans purchased by patients in the Marketplaces. HHS has significant concerns with this practice because it could skew the insurance risk pool and create an unlevel field in the Marketplaces. HHS discourages this practice and encourages issuers to reject such third party payments. HHS intends to monitor this practice and to take appropriate action, if necessary.

It's worth noting that neither the CMS memo, nor the Sibelius letter, specifically deals with copay programs. Expect more on this topic from HHS and the payer community.