CMS & HHS Withdraw Appeal to Recent Copay Accumulator Federal District Court Decision: 2020 Accumulator Rule Still in Effect

Firm Publication, AIS Health, Drug Channels

On January 16, the Centers for Medicare & Medicaid Services (CMS) & the U.S. Department of Health and Human Services (HHS) withdrew an appeal to a recent copay accumulator court decision, HIV and Hepatitis Policy Institute et al. v. United States Department of Health and Human Services, in the U.S. District Court for the District of Columbia (Court). The appeal had originally been filed in the case brought by patient advocates against CMS and HHS seeking to set aside the Court’s order after the Court held that the 2021 HHS rule giving insurers discretion to operate accumulator adjustment programs (Accumulator Adjustment Programs) was arbitrary and capricious. With this turnabout by the Biden administration, the 2020 Accumulator Rule is still in effect, which permits insurance plans to exclude only the value of manufacturer assistance from annual out-of-pocket cost-sharing maximum calculations for brand prescription drugs with an available and medically appropriate generic equivalent.

Commercial insurance plans and pharmacy benefit managers (PBMs) have historically utilized Accumulator Adjustment Programs to exclude drug manufacturer-provided copay assistance when calculating whether an enrollee’s deductible or out-of-pocket maximums are met. In recent years, CMS sought to provide clarification on the use of Accumulator Adjustment Programs for qualified health plans under the Affordable Care Act (ACA), which was the subject of HIV and Hepatitis Policy Institute et al. v. United States Department of Health and Human Services.

In 2019, CMS issued the 2020 Notice of Benefit and Payment Parameters (2020 NBPP), which limited plans by only excluding the value of manufacturer assistance from annual out-of-pocket cost-sharing maximum calculations for brand prescription drugs that have an available and medically appropriate generic equivalent (the 2020 Accumulator Rule).

In 2020, CMS issued the 2021 Notice of Benefit and Payment Parameters (2021 NBPP), which changed the 2020 Accumulator Rule to allow that direct manufacturer assistance for specific prescription drugs “may be, but are not required to be” counted toward annual limits on cost-sharing, essentially giving insurance plans (and PBMs) discretion to operate Accumulator Adjustment Programs. The 2021 NBPP did not limit accumulator programs to brand drugs with medically appropriate generic equivalents. For additional Accumulator Rule background, see our prior alert.

On August 30, 2022, three patient advocacy groups filed suit against CMS and HHS in HIV and Hepatitis Policy Institute et al. v. United States Department of Health and Human Services in the Court. The plaintiffs sought to invalidate the 2021 Accumulator Rule (i.e., the rule that permitted health plans to operate Accumulator Adjustment Programs at their discretion) as a violation of the Affordable Care Act (ACA).

On February 2, 2023, the plaintiffs sought summary judgment, asserting the 2021 Accumulator Rule must be voided because it is arbitrary and capricious and conflicts with the statutory definition of “cost sharing” in the ACA as well as preexisting agency definitions.

On September 29, 2023, the Court granted the motion for summary judgment and concluded that the 2021 Accumulator Rule “must be set aside” based on its “contradictory reading of the same statutory and regulatory language” and the fact that CMS and HHS have not offered a definitive interpretation of the language that would support the rule. The Court noted that CMS and HHS had not adopted a single interpretation of the statutory or regulatory definition of “cost sharing” as applied to manufacturer assistance and that allowing insurers to either count or not count such assistance at its discretion is analogous to situations in which the U.S. Supreme Court has rejected the “dangerous principle” that the same statutory text can be given different meanings in difference cases. See HIV & Hepatitis Pol’y Inst. v. United States Dep’t of Health & Hum. Servs., No. CV 22-2604 (JDB), 2023 WL 6388932 (D.D.C. Sept. 29, 2023), appeal dismissed, No. 23-5284, 2024 WL 251555 (D.C. Cir. Jan. 23, 2024).

However, on November 27, 2023, HHS and CMS filed a Motion to Clarify, and both parties filed notices of appeal (defendants on November 28, 2023, and plaintiffs on December 11, 2023, along with a motion opposing the Motion to Clarify). In the Motion to Clarify, CMS and HHS stated their intent to issue new rulemaking and to exercise enforcement discretion pending the issuance of a final new rule.

On December 22, 2023, the Court issued a second ruling in response to the defendant’s Motion to Clarify and expressly stated that the 2020 Accumulator Rule was reinstated by the September 29, 2023 ruling. The Court further noted that it did not purport to interpret the 2020 Accumulator Rule or its legality, as those issues were not properly before the Court. On January 16, 2024, the parties jointly stipulated the dismissal of the government’s appeal.

Implications for Pharmacies, Hubs, Copay Vendors, and Drug Manufacturers

As noted above, in the Motion to Clarify, CMS and HHS stated their intent to issue new rulemaking and to exercise enforcement discretion pending issuance of a final new rule, which likely reduces the associated risk of implementing or operating Accumulator Adjustment Programs in the short term. Patient support groups and drug manufacturers will likely still advocate against Accumulator Adjustment Programs and assert that all manufacturer support for cost-sharing obligations should be applied to the patient. Additionally, because the 2020 Accumulator Rule is currently in effect per the Court’s decision, hubs, copay vendors, and drug manufacturers should prepare to comply with the rule and only utilize Accumulator Adjustment Programs, where allowed by state law, for branded drugs with a generic equivalent.

While this decision may not have a direct impact on pharmacy operations, it may affect the ability of a pharmacy’s patients to afford expensive prescription drugs and purchase from the pharmacy, indirectly affecting the pharmacy’s bottom line. We recommend monitoring for future rulemaking to gain additional clarification on the use of Accumulator Adjustment Programs and for any action taken on the plaintiff’s appeal.

If you have any questions about how this development may impact your business operations, please contact the authors.

This content was referenced in several third-party outlets, including:

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Firm Publication, AIS Health, Drug Channels

On January 16, the Centers for Medicare & Medicaid Services (CMS) & the U.S. Department of Health and Human Services (HHS) withdrew an appeal to a recent copay accumulator court decision, HIV and Hepatitis Policy Institute et al. v. United States Department of Health and Human Services, in the U.S. District Court for the District of Columbia (Court). The appeal had originally been filed in the case brought by patient advocates against CMS and HHS seeking to set aside the Court’s order after the Court held that the 2021 HHS rule giving insurers discretion to operate accumulator adjustment programs (Accumulator Adjustment Programs) was arbitrary and capricious. With this turnabout by the Biden administration, the 2020 Accumulator Rule is still in effect, which permits insurance plans to exclude only the value of manufacturer assistance from annual out-of-pocket cost-sharing maximum calculations for brand prescription drugs with an available and medically appropriate generic equivalent.

Commercial insurance plans and pharmacy benefit managers (PBMs) have historically utilized Accumulator Adjustment Programs to exclude drug manufacturer-provided copay assistance when calculating whether an enrollee’s deductible or out-of-pocket maximums are met. In recent years, CMS sought to provide clarification on the use of Accumulator Adjustment Programs for qualified health plans under the Affordable Care Act (ACA), which was the subject of HIV and Hepatitis Policy Institute et al. v. United States Department of Health and Human Services.

In 2019, CMS issued the 2020 Notice of Benefit and Payment Parameters (2020 NBPP), which limited plans by only excluding the value of manufacturer assistance from annual out-of-pocket cost-sharing maximum calculations for brand prescription drugs that have an available and medically appropriate generic equivalent (the 2020 Accumulator Rule).

In 2020, CMS issued the 2021 Notice of Benefit and Payment Parameters (2021 NBPP), which changed the 2020 Accumulator Rule to allow that direct manufacturer assistance for specific prescription drugs “may be, but are not required to be” counted toward annual limits on cost-sharing, essentially giving insurance plans (and PBMs) discretion to operate Accumulator Adjustment Programs. The 2021 NBPP did not limit accumulator programs to brand drugs with medically appropriate generic equivalents. For additional Accumulator Rule background, see our prior alert.

On August 30, 2022, three patient advocacy groups filed suit against CMS and HHS in HIV and Hepatitis Policy Institute et al. v. United States Department of Health and Human Services in the Court. The plaintiffs sought to invalidate the 2021 Accumulator Rule (i.e., the rule that permitted health plans to operate Accumulator Adjustment Programs at their discretion) as a violation of the Affordable Care Act (ACA).

On February 2, 2023, the plaintiffs sought summary judgment, asserting the 2021 Accumulator Rule must be voided because it is arbitrary and capricious and conflicts with the statutory definition of “cost sharing” in the ACA as well as preexisting agency definitions.

On September 29, 2023, the Court granted the motion for summary judgment and concluded that the 2021 Accumulator Rule “must be set aside” based on its “contradictory reading of the same statutory and regulatory language” and the fact that CMS and HHS have not offered a definitive interpretation of the language that would support the rule. The Court noted that CMS and HHS had not adopted a single interpretation of the statutory or regulatory definition of “cost sharing” as applied to manufacturer assistance and that allowing insurers to either count or not count such assistance at its discretion is analogous to situations in which the U.S. Supreme Court has rejected the “dangerous principle” that the same statutory text can be given different meanings in difference cases. See HIV & Hepatitis Pol’y Inst. v. United States Dep’t of Health & Hum. Servs., No. CV 22-2604 (JDB), 2023 WL 6388932 (D.D.C. Sept. 29, 2023), appeal dismissed, No. 23-5284, 2024 WL 251555 (D.C. Cir. Jan. 23, 2024).

However, on November 27, 2023, HHS and CMS filed a Motion to Clarify, and both parties filed notices of appeal (defendants on November 28, 2023, and plaintiffs on December 11, 2023, along with a motion opposing the Motion to Clarify). In the Motion to Clarify, CMS and HHS stated their intent to issue new rulemaking and to exercise enforcement discretion pending the issuance of a final new rule.

On December 22, 2023, the Court issued a second ruling in response to the defendant’s Motion to Clarify and expressly stated that the 2020 Accumulator Rule was reinstated by the September 29, 2023 ruling. The Court further noted that it did not purport to interpret the 2020 Accumulator Rule or its legality, as those issues were not properly before the Court. On January 16, 2024, the parties jointly stipulated the dismissal of the government’s appeal.

Implications for Pharmacies, Hubs, Copay Vendors, and Drug Manufacturers

As noted above, in the Motion to Clarify, CMS and HHS stated their intent to issue new rulemaking and to exercise enforcement discretion pending issuance of a final new rule, which likely reduces the associated risk of implementing or operating Accumulator Adjustment Programs in the short term. Patient support groups and drug manufacturers will likely still advocate against Accumulator Adjustment Programs and assert that all manufacturer support for cost-sharing obligations should be applied to the patient. Additionally, because the 2020 Accumulator Rule is currently in effect per the Court’s decision, hubs, copay vendors, and drug manufacturers should prepare to comply with the rule and only utilize Accumulator Adjustment Programs, where allowed by state law, for branded drugs with a generic equivalent.

While this decision may not have a direct impact on pharmacy operations, it may affect the ability of a pharmacy’s patients to afford expensive prescription drugs and purchase from the pharmacy, indirectly affecting the pharmacy’s bottom line. We recommend monitoring for future rulemaking to gain additional clarification on the use of Accumulator Adjustment Programs and for any action taken on the plaintiff’s appeal.

If you have any questions about how this development may impact your business operations, please contact the authors.

This content was referenced in several third-party outlets, including:

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