EP459: Cost Containment by Co-Pay Maximizer or Co-Pay Accumulator: Points to Ponder, With Bill Sarraille

If you have zero clue what co-pay maximizers and/or co-pay accumulators are and the financial incentives involved for PBMs (pharmacy benefit managers) and plan sponsors here, after you’re done listening to this episode, go back and listen to the show with Joey Dizenhouse (EP423). Also, the episode called “Game Theory Gone Wild” with Dea Belazi, PharmD, MPH (EP293). Both these shows could fill in some blanks.

For a full transcript of this episode, click here.

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Here’s the micro mini of the co-pay maximizer/accumulator deal. These are vehicles that are designed by vendors who are also sometimes called maximizers or sometimes they’re also PBMs. But these programs are designed to get as much money out of Pharma as possible in the form of co-pay support.

So, here’s how the maximizers are supposed to maximize plan sponsors getting pharma money. Say, for some drug, the pharma company has, I don’t know, $12,000 max in co-pay support available to patients in total per year. Pharma does always cap the dollars that are available for patients. So, in this hypothetical, $12k a year is available.

What a forthright or well-run maximizer will do is figure out, you know, if there’s $12k max available, then they’ll set a co-pay—so there’s variable co-pays for patients—so they’ll set a patient co-pay of, like, $1000 a month, which adds up to $12k over 12 months of the year. Get it?

Every single month, the patient has a $0 co-pay, but the plan maximizes the dollars that the plan gets. Or, you know, maybe they’ll charge $1,025 a month so the patient has some small “skin in the game,” and the plan sponsor just banked $12k. Sounds great, right? Well, sure, when it works as promised … and we’ll get to this in a moment.

Accumulators, on the other hand, have no such “Hey, let’s make sure the patient actually gets their meds” guardrails. They hear that the Pharma is offering $12k, and the accumulator vendor and their plan sponsor clients also are like, “Cool, let’s get that money as fast as possible.” So, they make the co-pay for that drug, I don’t know, like hypothetically $3000.

Great, now the patient runs out of that co-pay money in May. And don’t forget and/or let me inform you, for both maximizers and accumulators, dollars paid by the Pharma generally don’t count to the plan deductible for the patient.

So now, the patient walks into the pharmacy, if in an accumulator or in a poorly run maximizer program, they walk into the pharmacy in May and are told that if they want their drug, they’re gonna need to pay the $3000 co-pay that was set out of pocket every month until they reach their deductible.

With some of these co-pay maximizer/accumulator plans, the plan sponsor may be a little bit out of the loop relative to what is actually going on here. The plan sponsor may think that members are doing fine—you know, they’re getting their drug every month—so they may be surprised to learn about this running out of money in May issue.

And what is true more often than it’s not true, this $3000 or whatever—hundreds or thousands of dollars—payment due co-pay, the patient learns about it at the pharmacy counter or while trying to get chemo. It comes as a complete surprise, the fact that they owe three grand or whatever.

What patient just shrugs and pays up in that moment because they happen to have their entire deductible or thousands of dollars lying around and at the ready? What a shock to find this out at the pharmacy counter or at the infusion clinic.

Some of these maximizer programs are also starting to veer back into accumulator zones, like they’re doing things such as saying that the member must pay their out-of-pocket max or their deductible or 30% of the cost of the drug, right, like some number before the plan will allow the patient to use the co-pay reimbursement program to begin with.

So, there’s other things that are emerging right now, which, again, cause the patient to have a very, very large out of pocket in order for them to get a drug which they have been prescribed and—ostensibly, at least—need.

Allegedly, and sometimes for sure, dollars raked in from Pharma make it across the PBM/maximizer, vendor, middleman trench all the way over to the plan sponsor. For sure, especially for the administrative only maximizer vendors … yeah, you’re gonna have the dollars actually making it to the plan sponsor.

But sometimes the vendor running these programs is paid spread, right? So, the more expensive the drug and the richer the co-pay card program, the more the vendor will make because they take a percentage of savings. So, the more expensive, the more savings, therefore, the more the vendor is gonna make. In these cases where the vendor is paid a spread, can I take Perverse Incentives for $600, Alex? Right?

But in sum, again, there’s a lot to this conversation with Bill Sarraille, so please do listen to the whole thing.

Bill offers five main pieces of advice, so I’m just gonna cover them right here up front—spoiler alert, I guess, but just to keep them all in one place.

1. Look into what is going on with a maximizer and/or accumulator program. First of all, is the plan sponsor paying spread? And also, how are these programs being marketed to members and how aggressively? Because there are a lot of plan sponsors having way more negative impact than they suspect they are. So, that’s point of advice #1: Really look into actually what is happening on the grounds with some of these programs.

2. Eliminate surprise. Any plan sponsor listening, and Brian Reid also says this very crisply in an episode a month or so ago (EP456). If a plan sponsor wants to do stuff like this—like force a patient to pay hundreds or thousands of dollars out of pocket—if at any point during the year they are gonna wind up with thousands of dollars in co-pay or coinsurance to get their Crohn’s disease med or cancer med or whatever, be really up front about this at least. It’s really important if we really want to make sure that patients are taking maintenance meds and getting the medications that they’re prepared for the reality that, at a certain point during the year, they are going to have a really big bill.

3. There is legal risk here. So also, Bill’s advice is check into whether accumulators and/or maximizers are unlawful under the ACA (Affordable Care Act) and/or by deceptive practices rules when maximizers or accumulators are teed up as a benefit.

And it, again (reference point of advice #2), it’s not explained that dollars they get from Pharma will be taken by the plan and not applied to the patient deductible. I was just reading about the crazy aggressive marketing tactics that some of these vendors are using to get members to sign up and … yeah, definitely look into deceptive practice rules.

4. If it’s utilization management that we’re trying to achieve here, then your utilization manager should be utilization managing. These maximizers are not meant to impact utilization management. Patients really cannot differentiate, as per study after study, it’s very difficult for patients to differentiate high-value from low-value care or meds.

So, pretty much the impact of having a patient with thousands or hundreds of dollars of out-of-pocket spend to get a med isn’t going to be to ensure that the right people are taking the right med. Point is, use the right tool for the right job. So, if we’re trying to keep patients away from low-value meds, the tool for that is utilization management.

Also be aware, if the PBM says it cannot do utilization management or you’ll lose your rebates and/or is pushing into a maximizer accumulator program to do this instead, that’s kind of a clue that they cannot do it because they are taking money from Pharma to not have any restrictions on a drug.

Read the article in the New York Times (you’re welcome) about how PBMs took secret payments for the free flow of opioids, and Chris Crawford also talks about this sort of same-ish thing in an upcoming show relative to GLP-1s. But if you’re trying to do utilization management, then do utilization management.

5. Use our understanding of this whole goings-on as a rationale or a way to tamp down perverse incentives. We want to wind up with patients getting charged a percentage of net prices, not a percentage of some wildly inflated list price with this whole accumulator maximizer contributing to, you know, just more wildly inflated list prices so the co-pay programs can be bigger and someone can make even more money off of the percentage of savings.

And plan sponsors addicted to rebates now have another bucket of cash. Like, this is just another example of how perverse incentives pervade the system. And we should certainly be aware of that.

Bill Sarraille was a healthcare attorney for many years. He retired from his law firm on the first of last year, and now he’s doing the things he wanted to do before but couldn’t because his billable rate was too high.

Bill is teaching at the University of Maryland Law School and doing some regulatory consulting, etc. He’s working with a variety of patient groups.

Also mentioned in this episode are University of Maryland Francis King Carey School of Law; Joey Dizenhouse; Dea Belazi, PharmD, MPH; Brian Reid; Chris Crawford; Marilyn Bartlett; Scott Haas; Paul Holmes; and Tom Nash.

You can learn more at University of Maryland Francis King Carey School of Law and by following Bill on LinkedIn.

You can also sign up for his Substack.

Bill Sarraille is a professor of practice at the University of Maryland Francis King Carey School of Law, a regulatory consultant, and a retired senior member of the Healthcare Practice group at Sidley Austin LLP.

Bill is a nationally recognized expert in healthcare, life sciences, drugs, medical devices, and patient access to treatments. He is widely known for his expertise in a broad array of healthcare matters, including rare disease treatment access barriers, pharmaceutical pricing, Anti-Kickback Law compliance, the 340B program, and managed care and PBM issues.

During his years practicing law, Bill was recognized repeatedly by The Best Lawyers in America in both healthcare law and administrative law. He was also consistently listed as a leader in the field of healthcare law in Chambers USA: America’s Leading Lawyers for Business.

Bill also serves as the general counsel of the charity the Pharmaceutical Coalition for Patient Access, as an advisor to multiple patient advocacy groups on patient access issues, a compliance advisor to a coinsurance patient assistance foundation, and as the director of a rare disease society and Kalderos, Inc., a health IT firm with a focus on effectuating pharmaceutical discounts and rebates.

09:31 What should plan sponsors be aware of right now?

14:01 What is the justification for maximizers, and why is this at odds with the purpose of insurance?

18:05 Where does the issue of “fairness” land within cost containment?

20:00 Brian Reid’s LinkedIn post on insurance company access challenges.

21:30 What are the real legal issues presented by some of these co-pay maximizers and co-pay accumulator programs?

27:06 How are these programs creating perverse incentives?

29:28 EP450 with Marilyn Bartlett, CPA, CGMA, CMA, CFM.

32:16 “If you’re covered by the ACA, I think this is unlawful.”

32:57 What advice does Bill have in regard to these programs?

33:49 What potential litigations does Bill see coming in the near future in regard to these co-pay maximizers and co-pay accumulator programs?

38:38 EP365 with Scott Haas.

38:45 EP397 with Paul Holmes.

@HCLAWComment discusses #costcontainment on our #healthcarepodcast. #healthcare #podcast #pharma #healthcareleadership #healthcaretransformation #healthcareinnovation

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