New Suit Claims Copay Accumulators Violate ACA, but Will Judge Agree?

In a newly filed lawsuit, three patient groups are challenging a federal regulation that allows what they call an “evil money grab” by health insurers and PBMs: copay accumulator adjustment programs. The lawsuit contends that the rule violates both the Affordable Care Act and the Administrative Procedure Act, and legal experts tell AIS Health that it’s still an open question whether those claims will prevail.

The rule in question is the 2021 Notice of Benefit and Payment Parameters (NBPP), an omnibus regulation issued annually that chiefly sets ground rules for the ACA marketplaces. It drew the ire of groups that represent patients with chronic conditions by allowing individual and group health plans to implement copay accumulator adjustment programs, which prevent patients from counting the value of drug manufacturer coupons toward their deductibles or out-of-pocket payment limits. Drugmakers often offer coupons for pricey branded drugs — a practice that they say helps increase access to vital medications. But insurers contend that such coupons push consumers toward high-priced medicines, forcing health plans to raise premiums across the board to compensate.

The policy in the 2021 NBPP represented a reversal from the 2020 version of the payment rule, which banned the use of such programs except in cases when a generic equivalent of a coupon-eligible drug is available. Guidance issued by the Trump administration, however, delayed enforcement of that part of the 2020 rule, citing stakeholder confusion. As a result, copay accumulator adjustment programs effectively never were curtailed by CMS. And that’s precisely the problem, according to the HIV+Hepatitis Policy Institute, the Diabetes Leadership Council (DLC), and the Diabetes Patient Advocacy Coalition.

Copay Accumulators Have Proliferated

During an Aug. 30 press briefing, representatives from those groups and their legal counsel said they asked the Biden administration repeatedly to limit copay accumulator adjustment programs, to no avail. And all the while, such programs become more and more prevalent.

In fact, the Kaiser Family Foundation’s 2021 Employer Health Benefits survey, released last November, found that one in four large companies is now employing a copay accumulator adjustment program. They’re also prevalent in the ACA marketplaces: A 2021 report from the AIDS Institute found that in 32 states, at least two-thirds of plans include a copay accumulator adjustment policy. Some states have prohibited copay accumulator adjustment programs, but patient advocates want the federal government to curtail the practice.

“We cannot wait any longer and be ignored any longer while people struggle to afford to pay for their prescription medicines and insurers and PBMs take excess money from patients,” Carl Schmid, executive director of the HIV+Hepatitis Policy Institute, said during the press briefing.

In an email to AIS Health, a division of MMIT, Schmid says that the groups sued over the 2021 NBPP because the 2022 and 2023 versions of the annual regulation “were completely silent on copay accumulators. This was despite patient groups raising it in our comment letters and meeting with CCIIO [the Center for Consumer Information and Insurance Oversight], OMB [the Office of Management and Budget], the HHS Secretary’s office, and the White House. We were completely ignored.”

Since the issue “was not mentioned in either the 2022 or 2023 NBPP and there were no revisions, the existing rule (NBPP for 2021) stands,” Schmid says. “That is the current regulation, and that is what we are complaining about.”

And the regulation as currently written is harmful to patients, George Huntley, CEO of the Diabetes Leadership Council and the Diabetes Patient Advocacy Coalition, said during the press briefing. “Accumulator adjustment programs are frankly an evil money grab by insurance plans and pharmacy benefit managers, and are a blatant — and we strongly believe — illegal cost shift back toward patients,” which can increase their out-of-pocket costs substantially, he said. “Patients are struggling to afford their medications now more than ever. Rising inflation in general, and rising drug costs in particular, have created a perfect storm that has far too many Americans rationing their drugs or forgoing care altogether.”

In their lawsuit, the patient groups present a three-pronged argument against the decision to allow copay accumulator adjustment programs, saying it “conflicts with the plain language of the Affordable Care Act that it purports to implement,” is “irreparably inconsistent with the agencies’ existing regulations” and “is arbitrary and capricious for a whole host of reasons.”

Regarding the violation of the ACA, the suit argues that copay accumulator adjustment programs run contrary to the statute’s definition of cost-sharing, which includes “deductibles, coinsurance, copayments, or similar charges; and any other expenditure required of an insured individual which is a qualified medical expense.” The statute does not specify where the money used for cost sharing originates — whether from patients’ own pockets, a GoFundMe campaign or a drug manufacturer coupon, the lawsuit states. “Yet the 2021 NBPP expressly permits insurers to exclude payments from the annual statutory cap on cost-sharing — notwithstanding that the insurer ‘requires [those payments] of’ the insured — just because the insured obtains assistance from the drug manufacturer in satisfying that obligation,” the complaint says. “It must therefore be set aside as contrary to the statute.”

Do Claims Against Rule Stand Up to Scrutiny?

It’s “not an open-and-shut question” whether the plaintiffs’ argument holds water, but their case “could certainly prevail,” says Timothy Jost, an emeritus professor at the Washington and Lee University School of Law and an expert on the ACA.

Essentially, the case hinges on the question of, “if you do get assistance from the drug company and get a coupon…whether that should count towards your cost sharing or not,” Jost tells AIS Health. The plaintiffs argue that if patients’ parents or siblings paid their copay, it would count under the statute, “so why doesn’t it count if somebody else helps?” he says. But the opposing argument is that manufacturer coupons represent a reduction in price, “and you shouldn’t get credit for having paid something if you’re getting a discount.”

“I think the biggest problem for the government in this case is not so much that the statute is absolutely clear one way or another — and usually regulatory agencies have some authority to interpret the statute themselves if it’s not perfectly clear,” Jost says. Rather, “it is really a screwy regulation” on the part of HHS to essentially say, “we aren’t clear one way or another on this, and so we’ll let the insurance companies do whatever they want, and we’ll trust them…that they won’t change anything.” In reality, insurers are incentivized to do whatever they can to reduce their premiums and remain competitive, he adds. Copay accumulator adjustment programs help accomplish that goal.

Meanwhile, Jost says the patient groups may “have a pretty good case” when it comes to their claim that the 2021 NBPP is arbitrary and capricious and thus violates the Administrative Procedure Act. Part of that argument centers on the fact that HHS engaged in “flip flopping” when it limited copay accumulators in the 2020 NBPP and then walked back that policy, said Paul Hughes, a partner at the law firm McDermott Will & Emory, during the Aug. 30 press briefing. “There needs to be particular consideration paid when the agency so abruptly changed course,” said Hughes, whose firm is representing the plaintiffs. He added that “we don’t believe the agency undertook the analysis that was required,” and in particular, the impact on patients.

However, attorney and research professor Katie Keith says the patient groups will likely need to convince a judge of more than just an Administrative Procedure Act violation to achieve the relief they’re seeking.

“Even if a court finds a problem there, often the remedy is [the government has] to explain themselves better,” says Keith, who took over Health Affairs’ “Following the ACA” article series from Jost. “It doesn’t necessarily even mean you get the policy change that you want. So I would say [the case] sort of hinges on this cost-sharing argument.”

Looking ahead, the plaintiffs in the case expect to file a motion for summary judgment — and the federal government may also do so, Hughes said during the press briefing. “We certainly have an interest in expediting this case and getting before our judge as reasonably quickly as possible,” he added.

Contact Keith at and Jost at

This article was reprinted from AIS Health’s biweekly publication RADAR on Drug Benefits.

© 2024 MMIT
Leslie Small

Leslie Small

Leslie has been working in journalism since 2009 and reporting on the health care industry since 2014. She has covered the many ups and downs of the Affordable Care Act exchanges, the failed health insurer mega-mergers, and hundreds of other storylines spanning subjects such as Medicaid managed care, Medicare Advantage, employer-sponsored insurance, and prescription drug coverage. As the managing editor of Health Plan Weekly and Radar on Drug Benefits, she writes and edits for both publications while overseeing a small team of reporters who also focus on the managed care sector. Before joining AIS Health, she was a senior editor for the e-newsletter Fierce Health Payer, and she started her career as a copy editor at multiple local newspapers. She graduated with a dual degree in journalism and political science from Penn State University.

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