Obamacare loophole that strands Americans financially in bull's-eye

[Editor's note: This story originally was published by Real Clear Health.]

By Peter J. Pitts
Real Clear Health

As we delve into open enrollment season, it’s more crucial than ever to be aware of some of the fine print in your health plan. It’s essential. But what does that mean, exactly?

Webster’s defines “essential” as something “extremely important and necessary.” But what makes a medicine “essential?” Unfortunately, when it comes to prescription drugs, it means something entirely different. Welcome to the arcane world of the Affordable Care Act, the issue of Essential Health Benefits (EHB), and the specter of the bottomless deductible.

Here’s the problem: The sickest and most vulnerable patients in our healthcare system, those with serious, complex chronic illness, are being unfairly targeted by health insurance practices that undermine the benefits of copay assistance for medicines. These assistance programs take many forms. The best known and most widely used are manufacturer copay support, including copay cards.

Patients with serious, chronic health conditions face multiple barriers to the therapies their physicians have determined are best to treat their conditions. These hurdles include administrative delays such as prior authorization and cruel alternatives like “fail first” requirements both designed to delay or deny access to lifesaving specialty medications.

But wait, it gets worse. After a patient and their doctor have successfully fought and received approval for the medication, they face skyrocketing deductibles and steep cost-sharing responsibilities. With no other options to afford the medicine they need to stay alive and thrive, many patients turn to manufacturer copay assistance programs to afford their drugs. Good news? Not so fast.

Enter Essential Health Benefits (EHB), a requirement in the Affordable Care Act to ensure health insurance plans cover a set of 10 categories of services, including prescription drugs. Some plans, however, have applied a loose interpretation by defining some categories of prescription drugs as “non-essential” – even when they are life-saving or medically necessary for people with serious pre-existing and chronic conditions. When such drugs are deemed “non-essential,” the patient’s insurer will not count any cost-sharing toward the patient’s deductible and out-of-pocket maximum.

Here’s how Express Scripts, our nation’s largest Pharmacy Benefit Manager puts it in their Summary of Benefits: “Specialty medications are not one of the ten Essential Health Benefits under the Affordable Care Act (ACA) and are therefore considered non-essential health benefits.” Ouch.

The very real-world result of this EHB “loophole” is this: patients pay hundreds or even thousands of dollars out of their own pockets for life-saving medicines and never hit their out-of-pocket maximum. That’s not a “loophole,” it’s a black hole for too many American patients who have nowhere else to look for help.

Consider the impact. An overwhelming share of medicines that are subject to these insurance programs have no generic alternative available to patients. The EHB loophole disproportionately impacts the most vulnerable patients who rely on certain medicines. A recent survey found that 69% of those who depend on such assistance make less than $40,000 a year. But HELP is on the way.

HELP, the bipartisan Help Ensure Lower Patient Copays Act (sponsored by Representatives Donald McEachin (D-VA), Rodney Davis (R-IL), and seven other members across parties) is designed to eliminate the EHB loophole, ensuring that patients can afford their necessary, life-saving medications.

The legislation clarifies the ACA definition of cost sharing to ensure that payments made “by or on behalf of” patients count towards their deductible and/or out-of-pocket maximum. The HELP Copays Act also closes the EHB loophole, ensuring that cost-sharing for any covered item or service within one of the ten EHB categories (yes, even specialty medications) must be counted towards patients’ annual cost sharing limits. This will close the loophole and ensure all payments – whether directly out of a patient’s pocket or through the help of copay assistance—count towards a patient’s out-of-pocket cost requirements.

It’s open enrollment time. Patients should be sure to read the small print. But they should also know that HELP is on the way.

Peter J. Pitts, a former FDA Associate Commissioner and member of the United States Senior Executive Service, is President of the Center for Medicine in the Public Interest (CMPI) and a Visiting Professor at the University of Paris Medical School.

[Editor's note: This story originally was published by Real Clear Health.]

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