For at least one more year, health plans, including employer-sponsored plans, will be able to exclude the value of drug manufacturer discounts from participant deductibles and out-of-pocket maximums, even where no medically appropriate generic drug is available. The Department of Labor (DOL), Department of Health and Human Services (HHS), and the Department of Treasury (collectively, the “Departments”) jointly issued a temporary non-enforcement pledge relating to these so-called “accumulator programs” as a result of an apparent catch-22 relating to high-deductible health plans (HDHPs) with health savings accounts (HSAs).
Currently, many employer-sponsored health plans elect to not apply the value of drug manufacturer discounts for purposes of crediting amounts towards a plan participant’s annual deductible and out-of-pocket maximum, on the basis that only the amount actually paid by the participant should be counted toward cost sharing limits. These programs have various monikers, including accumulator programs.
Earlier this year, in its Notice of Benefit and Payment Parameters for 2020 (Notice), issued April 25, 2019, HHS finalized a policy that limits non-governmental health plans’ (including employer-sponsored plans’) use of accumulator programs to prescription brand drugs for which a generic drug is available and medically appropriate for the individual. While the text of the Notice itself didn’t specify that plans were therefore required to include the value of drug manufacturer discounts when calculating participant contributions toward cost sharing if a medically appropriate generic drug was not available, the preamble to the Notice suggested that this was HHS’ intent. However, this guidance created a catch-22 for HDHPs with HSAs, as the new policy conflicted with existing Internal Revenue Service (IRS) guidance requiring HDHPs to exclude the value of all drug manufacturer discounts when calculating participant contributions toward plan deductibles in order for participants to remain eligible to contribute to HSAs.
Employers and pharmacy benefit managers petitioned the Departments to address the conflict between the new HHS policy set to take effect January 1, 2020, and the longstanding IRS guidance. The Departments issued additional guidance on August 26, 2019, in the form of a Frequently Asked Question about the implementation of the Affordable Care Act. The Departments acknowledged that without further clarification, HDHPs with HSAs may not be able to simultaneously comply with the new HHS policy and IRS guidance. As a result, for the time being, the Departments indicated that they will allow all health plans (i.e., not just HDHPs with HSAs) to continue to exclude the value of drug manufacturer discounts when calculating participant contributions toward cost sharing, even in instances where a generic alternative is not available or is not medically appropriate. The non-enforcement of the new HHS policy will remain in effect until HHS, in collaboration with the IRS and DOL, issues and makes effective a revised policy relating to accumulator programs. The Departments indicated that the revised policy is expected to be released in the Notice of Benefit and Payment Parameters for 2021.