Use of Copay Offset Programs Expected to Rise | AMCP Nexus 2024

Laura Huff

Many employers are considering funding programs to offset healthcare costs, which can include copay accumulators, maximizers, and other alternative funding programs. Even though a small percentage (5%) of employers are using alternative funding programs, approximately 60% said they are highly effective at managing healthcare costs, Laura Huff, vice president of Gallagher Research and Insights, said in a session at the Academy of Managed Care Pharmacy Nexus 2024, which is taking place in Las Vegas.

“More than half of all Americans receive insurance from their employers, so the decisions that employers are making about their benefit design have the potential to benefit millions of Americans,” said Kimberly Westrich, MA, chief strategy officer of the National Pharmaceutical Council.

There are three main types of patient assistance programs: copay accumulators, maximizers and alternative funding programs. Copay accumulators redirect the manufacturer’s copay assistance funds from the patient to the healthcare plan, and it is typically offered through the pharmacy benefit manager (PBM). However, the funds do not count for the patient’s deductible or out-of-pocket (OOP) maximum. For copay maximizers, a patient can enroll with a third party that will set costs at the highest funds. Through this, patients would incur the minimum OOP cost, but the assistance funds would not count toward the deductible.

Finally, alternative funding programs can eliminate funding for selected specialty medications, which could leave the patient without coverage for these drugs under the insurance benefits. The patient would be responsible for the full cost of the medication or third-party advocate administer programs. The third-party advocate program would seek out funding from the manufacturer assistance programs or international-based pharmacies.

“All of these programs have ethical tradeoffs and considerations,” Westrich said. “They have been shown to lead to disruptions in access, exposing patients to unexpected [OOP] costs, and reducing medication adherence.”

Cody Midlam, Pharm.D.

Employers know that pharmacy is very variable, so having these plans in place helps to plan cost management and predictability, said Cody Midlam, Pharm.D., director of WTW Health and Benefits. He added that maximizers are the most popular among employers, followed by accumulators, and alternative funding.

In a survey of 106 employers, Huff said that they are most often concerned with the cost of pharmaceuticals for the employer (83%), cost of therapies that are new and have limited or no improvement for the outcomes (57%) and cost to the patient/employee (53%). As of 2024, approximately 42% of employers are using copay offset programs, with the number expected to increase to 50% by 2026. Of those employers, approximately 42% rated these programs to be highly effective for managing costs.

Approximately 36% mandate the use of specialty pharmacies for biologics, expected to rise to 55%, 30% use a biologic preferred drug list, expected to rise to 53% and 25% move all or some biologics coverage from medical to pharmacy benefit, which is expected to rise to 50%. Finally, though alternative funding is used by 5% of employers, 60% said that it is highly effective for managing costs. It is expected to rise to 12% by 2026.

Huff added that there’s not much adoption of the alternative funding plans, but employers are looking into them. In 2023, 64% were not familiar or have not looked into these programs, but in 2024, 30% looked into the programs, but did not adopt them. In 2024, 5% are currently using them and 7% are planning to implement them in the next two years.

“It comes down to complexity. It's going to create a lot of noise for members, who may receive it negatively,” Huff said.

The top three barriers to employers adopting alternative funding programs include the cost savings not worth exposing employees to additional administrative hassle (47%), not worth administrative complexities (41%) and contracting restrictions with existing vendors, such as PBMs (31%).

Furthermore, patients are concerned with the delayed services of alternative funding programs, including an average of a two-month wait time. In the survey, 88% of patients are stressed when medication is denied by their plan, 71% are confused about why the medication was denied and 54% experience discomfort talking with their employer about medication needs are financial burdens to medication access. For specialty medication, 24% of patients reported that delays in receiving medication worsened their condition and 64% reported waiting for medication lead to stress and anxiety.

Alison Falb, JD

Another concern for employers is legalities and ethics of the programs. In the presentation, Alison Falb, JD, vice president of health policy at Applied Policy, said that copay accumulators have been the subject of rulemaking and lawsuits. For federal regulations, the Affordable Care Act, Notice of Benefit and Parameters (NBPP) and a joint legislation from the Departments of Labor, Health and Human Services and the Treasury all apply.

“States can enact laws that are within their jurisdiction, but self-funded plans would not be subject to those laws, so federal legislation or regulation would be needed to affect those plans and standardize independent policy,” Falb said.

However, Falb added that many plans classify some drugs as nonessential health benefits, which can exclude third-party copay assistance from calculation of patient OOP costs. Currently, stakeholders are waiting for a ruling from the Centers for Medicare & Medicaid Services to address copay accumulator policies. In November 2024, NBPP if expected to propose a rule for 2026, with the final rule expected to be released in April 2025.