On Thursday, May 7, 2020, the United States Centers for Medicare and Medicaid Services (CMS) released the 2021 Notice of Benefit and Payment Parameters final rule. This rule finalizes the CMS’ proposed modification of existing policy relating to how pharmaceutical manufacturer direct assistance (i.e., coupons) accrues with respect to health plan enrollees’ annual limit on cost sharing. The final 2021 Notice of Benefit and Payment Parameters clarifies the treatment of drug manufacturer coupons and direct cost reductions when tracking in-network deductibles and out-of-pocket (OOP) maximums. CMS finalized its proposal that, to the extent consistent with state law, plans may exclude, but are not required to, the financial support offered by pharmaceutical manufacturers to enrollees from the annual limit on cost-sharing.

As a reminder, under the previously issued Final 2020 Payment Rule, CMS allowed insurers to exclude coupons from an enrollee’s annual limit on out-of-pocket costs only in certain circumstances – specifically, if the plan covered a medically appropriate and available generic equivalent. However, given the confusing way it was written, different interpretations were taken and in August 2019, CMS issued FAQs clarifying – and walking back – the rule. CMS indicated in the FAQs that insurers and plans do not have to count the value of coupons towards the annual cost-sharing limit at all and that they would further address the issue with the 2021 guidance.

Thus, going forward, per the final rule 2021 Payment Rule, group health plans and insurers have the flexibility to determine whether to include or exclude drug manufacturer’s financial assistance from the member’s deductible and OOP maximum, regardless of whether a medically appropriate generic equivalent is available. This allows plan sponsors the flexibility to ensure that the member’s deductible and out-of-pocket maximum obligations that are written into the plan and are required of all enrolled members, regardless of what service they receive, are met by the member and not an outside party.

Several states (Arizona, Virginia, Illinois and West Virginia) have passed laws that prohibit insurers from excluding the value of manufacturer assistance from the member’s cost share accumulators. As a self-funded plan, ERISA preemption would disallow the state laws in favor of the self-funded plan as these laws would have a direct impact on the self-funded plan’s benefits and plan expenses as a result. Thus, any state requirement would likely be preempted as applied to ERISA.

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