It's no secret that employee health benefits are expensive. And understandably, employers and their benefits advisors are looking for ways to curb that spending. But in the pursuit of short-term savings, some are turning to an “insurance” scheme that shifts financial risk onto employees, disrupts essential medical care, and can ultimately result in higher long-term costs for businesses. Benefits professionals would be wise to recognize these schemes for what they are — and avoid them.
Here's how they work: Some employers contract with insurers working alongside pharmacy benefit managers and third-party vendors, who designate certain covered specialty drugs as "non-essential health benefits" ("non-EHB"). It's no coincidence that the drugs selected are the ones whose drug manufacturers offer copay assistance to patients. One vendor, SaveOnSP, which works with the PBM Express Scripts, classified more than 480 specialty medications under this designation.
But that's not because the drugs are unnecessary. They're often vital for managing chronic or life-threatening conditions like cancer or hepatitis. But by labeling the drugs as non-EHB, the health plan can sidestep Affordable Care Act protections on patient cost-sharing and set employee copays far above the allowed limit.
To avoid those unaffordable copays — which can total well over $1,000 a month after deductibles — patients are coerced into enrolling in a special program with the third-party vendor. That entity takes the patient's information and signs them up for the copay assistance program offered by the drug's manufacturer. Instead of applying that assistance to the patient's out-of-pocket maximum or deductible, the PBM, vendor, and insurer split the extracted copay assistance amongst themselves.
This scheme is known as a copay maximizer program. Patients can choose not to enroll, but they'd then incur prohibitively high co-insurance or be forced to pay the full list price for needed medications. And that spending still wouldn't be applied to their out-of-pocket maximums or deductibles, since the medication was designated as non-EHB.
These programs are enormously lucrative for PBMs and the third-party vendors. One report found that these bad actors pocketed over $4 billion in cost-sharing assistance in 2024, thanks to this practice. And without government intervention, this practice is growing. In fact, nearly half of commercially insured people had a plan with a copay maximizer program as of 2024.
In 2022, CVS Health — one of the nation's largest PBMs — reportedly saw an 11% increase in specialty drug utilization in plans without a copay maximizer program. In plans with a copay maximizer program, specialty drug utilization decreased by 13%.
That kind of reduction may look like savings on paper; but in reality, it often means patients are not receiving the medications they need to manage serious conditions.
Nearly 40% of Americans are already worried about affording their prescriptions. For many, the added financial pressure of covering the full cost of medical care could be the tipping point that leads to medication non-adherence. And when chronic diseases go unmanaged, it can lead to severe, even deadly, consequences.
Consider HIV. When patients skip their HIV medications because of cost, they're significantly more likely to end up in the emergency room or hospitalized. Those outcomes lead to more time away from work and higher costs not only for the patient, but also for the employer, insurer, and health care system at large.
Thankfully, the federal government has begun to take steps to prevent patients from getting swept up into these sorts of schemes. In 2024, the Centers for Medicare & Medicaid Services finalized a rule that closed the EHB loophole for small group and individual market health plans. The scope of that rule was limited for administrative reasons. But the Department of Labor promised to issue a similar rule in the future to clarify that covered drugs in large group and self-funded plans are essential health benefits, too.
So far, that rule still hasn't been proposed, but pressure is mounting. Eighty organizations, including mine, recently sent a letter to the Secretary of Labor, urging her to quickly issue the promised rule and protect patients in large group and self-funded plans.
The use of these "non-EHB" schemes is one reason why drugs in the United States cost more than in other countries. We urge Secretary Lori Chavez-DeRemer to finish the job and close the "non-EHB" loophole. Copay assistance is meant for patients who desperately need the money, not unscrupulous profiteering middlemen.
Carl Schmid is executive director of the HIV+Hepatitis Policy Institute.
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