An Executive Insight on the 2021 Notice of Benefit Payment Parameters

By Matthew Turner, VP of patient affordability solutions, Paysign, Inc.

Each year, millions of gravely ill patients require access to specialty drug therapies designed to treat rare and orphan diseases and face out-of-pocket costs they cannot meet. Enter manufacturer-sponsored patient assistance programs (PAPs). These programs are often the key determiner in whether a patient lives or dies.

Unfortunately, the Department of Health and Human Services (HHS) 2021 Notice of Benefit and Payment Parameters (NBPP) has set a new rule that will ultimately impact the availability of these safety net programs.

The document, published earlier this year, outlines a variety of specialized areas to be affected, all seemingly in an effort to provide more affordable healthcare coverage. However, the new rule allowing insurers to implement copay accumulator adjustment programs (CAAPs), could have precisely the opposite effect.

What exactly are CAAPs? Well, in plain terms, the programs are used by insurance companies to reduce or prevent manufacturer patient assistance programs, often in the form of coupons or vouchers, from counting towards deductibles and the patient’s maximum out-of-pocket spending. These programs can create a breach in accessibility to life-saving therapies and generate a vacuum within the specialty drug manufacturing sector.

So, why is HHS proposing the implementation of CAAPs? The answer depends on who you ask, of course. But the evidence speaks for itself.

Facing the Facts
In early 2020, HHS allowed a limited number of health insurance plans to employ CAAPs, and beginning in 2021, a rule has been added to allow all insurance plan sponsors the choice to implement such a program, a loophole that serves to decrease insurance claim payouts, increase insurers profits, and increase patients’ out-of-pocket expenses.

According to the NBPP, HHS is seeking to afford maximum flexibility for programs in determining whether they wish to count forms of direct manufacturer support – which includes patient assistance programs like coupons, vouchers, and copay cards – toward patients’ cost-sharing commitments.

To justify the decision, the HHS document references direct manufacturer support as a means of market distortion designed to lead patients into choosing brand name drugs rather than less expensive generics. However, under Section § 156.130(h) of the NBPP patient assistance program stipulations, CAAPs are acceptable even in instances when a drug has no available generic equivalent, which greatly impacts the specialty drug sector.

When it comes to specialty drug therapies manufacturers have developed a fine-tuned formula for calculating the costs and grants to research, develop, produce, and distribute them, and thereby set the price paid by the insurance benefit. This formula depends on speed to market, adoption and adherence rates, patient copay assistance, and one more cost paid out in abundance – rebates.

A Matter of Money
Who stands to benefit the most from this new rule? We followed the money and uncovered the most likely culprit, notorious in the pharmaceutical industry for their deal-making and lack of transparency: Pharmacy Benefits Managers (PBMs).

The official job description of a PBM is to manage drug benefit programs on behalf of an insurer or employer. However, PBMs have carved out a very lucrative niche for themselves in the pharmaceutical distribution system, driving up drug costs, and creating new barriers to patient access. PBMs leverage their purchasing power to negotiate drug prices directly with manufacturers, often receiving substantial cash rebates.

There have long been whispers in the industry speculating that PBMs are not passing much of the rebates along to insurers, who might, in turn, keep premium costs down. It’s a subject of debate, to be sure. Insurers are always looking for ways to reduce the amount of money paid out for claims, pure and simple. The HHS rule is shortsighted in that it aims to benefit insurers directly, but relies on them to pass the savings along to individuals and employers in the form of more affordable premiums. I wouldn’t hold my breath on that one.

An Industry Ripe for Regulation
It’s common knowledge among drug manufacturers that as the money paid to PBMs in the form of rebates continues to grow, drug prices are skyrocketing in tandem. There is little to no regulation in this area and PBMs are not required to report how much they receive or how much money trickles down to other players. Honestly, they are most likely pocketing a substantial amount for their own profit while patients, insurers, and drug manufacturers continue to see costs rise.

Understandably, the HHS mandate has not been well-received. Some states, including Arizona, Virginia, West Virginia, and Illinois, have passed legislation prohibiting insurers from operating CAAPs. Still others, such as Nebraska, Ohio, North Carolina, Louisiana, Michigan, New York, Pennsylvania, and Massachusetts, have introduced similar legislation.

It would be great if those measures were enough to stop this in its tracks but state anti-accumulator laws don’t pertain to all plans. Laws prohibiting CAAPs apply only to fully insured plans regulated by the individual state’s insurance commission.

A Dire Outcome Is Looming
The NBPP is problematic, not just for pharmaceutical manufacturers, but for vulnerable patient populations. The patient impact is going to be devastating. It is sure to result in less patient access to critical therapies and could even result in some lives being lost.

Plan providers will have the power to decide how to account for manufacturer assistance, forcing manufacturers to innovate new assistance solutions for an exponential number of benefit plans, including the variability of accumulators applied to any number of products – some of which may even be taken off the market if they are no longer financially sustainable.

This creates a clear-cut impediment for patient assistance programs to proliferate. Moreover, patient barriers to care will increase and specialty pharmacies will be forced to turn away patients. It’s more than bad for business. It’s playing with people’s lives for the sake of profits. And that’s just unacceptable.

There Is a Cure

We at Paysign, along with our hub services partners, have been fighting CAAPs since they were first introduced. The good news is, there are actions you can take to impact change as well.

First, drug manufacturers should address CAAPs in the contracting phase. In my opinion, the creation of contracts detailing the cessation of rebate disbursement while CAAPs are in use will lead to this problem correcting itself. This course of action will work best for formulary unique drugs. PBMs are not compelled by the pain of lost rebates when other manufacturers will similar formulas will continue to play by their rules.

Second, there has to be more transparency around the issue of rebates. Reforms are needed, but when the distribution of money amongst the biggest players is intentionally obscured by one or more parties, policymakers don’t have the information they need to introduce impactful rules and parameters.

Finally, federal, not just state, legislation is needed. Addressing the issue on a state-by-state basis, while a good start, is not going to produce consistent, far-reaching reform. There are just too many variables. A cohesive policy outlining how this practice will be regulated is the only long-term broad solution. Get in touch with your congressperson and support associations who issue guidance that impacts federal policy such as the National Organization for Rare Disorders (NORD). Make the case for legislation to do away with CAAPs.

Paysign is dedicated to providing solutions for the patient affordability space. Contact us at to request additional information.