What is a Copay Accumulator Program and How Does It Work?

A copay accumulator – or accumulator adjustment program – is a strategy used by insurance companies and Pharmacy Benefits Managers (PBMs) that stop manufacturer copay assistance coupons from counting towards two things: 1) the deductible and 2) the maximum out-of-pocket spending. What does this mean?
Previously, a person could receive financial assistance from companies that make a drug, and that would count towards their deductible and/or out-of-pocket costs, depending upon the insurance plan. Pharmaceutical companies often provide financial assistance (such as a co-pay card) to help underinsured individuals afford expensive medications. This means that the person paying for the drug would end up saving money, often thousands of dollars.
 
Why Is This an Issue?
As the AIDS Institute explains it, “ … the trend in health insurance benefit design is to shift more of the cost of health care to patients through high deductibles and coinsurance rates …In order to afford the medicine they need, patients increasingly rely on manufacturer copay assistance.”

Tyrone’s Commentary: 

Blanket statements like, “with copay accumulators, the individuals who need assistance the most will be unable to receive it, and will end up paying more for their treatments” are misleading. In many cases, the patients pay less than what was intended by the benefit design. But, if there was no actual out-of-pocket why should it [copay assistance] count toward the deductible? It seems no one will be happy until employers are on the hook for 100% of the cost.
 
As a copay program provider, TrialCard believes accumulators have a negative effect on a pharmaceutical manufacturer’s ability to deliver patient assistance for high-cost specialty medications, many of which do not have generic alternatives.
“We’ve been educating employer groups on the impact of copay accumulators beyond just financial savings tools and have analyzed their effects on employee productivity and long-term healthcare costs,” Zemcik explained. “Our role as a copay program provider working on behalf of our manufacturer clients is to help design their programs in a way that’s going to best address all of the complex issues.”

Reference Pricing: “Gross” Invoice Cost vs. AWP for Popular Generic and Brand Prescription Drugs (Volume 342)

This document is updated weekly, but why is it important? Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs, and MCOs pursuant to health care reform.

How to Determine if Your Company [or Client] is Overpaying
 
Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.
 
Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement. It’s impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our acquisition costs then determine if a problem exists. When there is more than a 5% price differential for brand drugs or 25% (paid versus actual cost) for generic drugs we consider this a potential problem thus further investigation is warranted.

Multiple price differential discoveries mean that your organization or client is likely overpaying. REPEAT these steps once per month.

— Tip —
 
Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.

Tuesday Tip of the Week: 3 Ways for Employers and HR Pros to Know If They Have Selected the Right Insurance Broker for Pharmacy Benefits

About 15% of employers change brokers each year and likely double that stay with their broker even though they are not satisfied with the ROI. At the point when you consider the effect of the Covid-19 pandemic on staff, HR groups need now, like never before, to know their employee benefit brokers are genuine advocates and fully aligned in accomplishing HR goals. Here are three tips for employers and HR professionals to help pick the right insurance broker for pharmacy benefits.

1. Broker relies on technology.

Requests for proposals (RFPs) are often cumbersome and time-consuming, which is why organizations must leverage an RFP tool to streamline the response process. Certainly, there are lots of RFP tools and resources available. But, when people talk about investing in an RFP tool, generally they mean RFP software. Cloud-based RFP software solutions eliminate inefficiency in the RFP process by centralizing response content and automating scoring. Manual RFP response processes are time consuming and costly. As digital transformation brings efficiency to the proposal review process, opportunities for automation are plentiful. When considering the best insurance broker for you, it’s wise to explore how RFP automation can be incorporated into your process.

2. Ask about conflict of interests.

If you’re reading this and work in HR or finance for a self-funded employer, never retain the services of a broker or PBM consultant who benefits when your pharmacy costs increase. Should you do so, be sure to have signed a conflict of interest disclosure form.

  • Do you have the expertise within your company to evaluate PBM contract language?
  • Do you have the skillset to design a pharmacy benefit plan? Or do you need additional training in pharmacy benefits management?
  • Do you have the expertise and resources to manage the plan design or do you need to build in the incentives for the PBM to manage your program?
  • How do you want to be involved in the management of the plan after it is set up?

A potential or actual conflict of interest exists when commitments and obligations are likely to be compromised by the broker’s other material interests, or relationships (especially economic), particularly if those interests or commitments are not disclosed. In other words, hire consultants not because you lack the requisite knowledge to design or manage the pharmacy benefit plan in-house, but because you lack the time or human capital to go it alone.

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3. Check the credentials.

Many employers, unions, and government agencies pay large consultancies and brokerage firms to help them avoid overpaying for pharmacy services. So then how does this keep happening? There are a number of reasons including misaligned incentives, inefficient procurement and overall lack of a pharmacy benefits strategy just to name a few. But, the primary reason is without question a wholesale lack of education around pharmacy benefits management in general. It is education which leads employers to leveraging the four pillars to better PBM performance. When you hear an insurance broker say, “I know just enough about pharmacy benefits to be dangerous” run for the hills!

Education is key to use of lowest net cost drugs in pharmacy benefit plans. Only the most sophisticated purchasers of PBM services will have the knowledge and confidence to bind lowest net costs for prescription drugs into contract language and benefit design. Hence, your competitive advantage includes executing good analysis of the correct information then deciding what all of this suggests for your organization. Those who seize the chance and develop a good plan that may reasonably be accomplished have a higher probability of getting to lowest net cost.