Can't Meet Your Deductible? Insurers Are Using a Loophole to Make it Even Harder

When Jenny Freeborn was 17, a primary care physician sat across from her and her mother and said the words that would leave her worried about medical bills for the rest of her life: You have Type 1 diabetes. 

Now a 36-year-old music teacher in Lee’s Summit, a suburb of Kansas City, Mo., Freeborn is still worrying. She has a good job, relatively good health, and, by most measures, good health insurance. But she’s still shelling out $2,700 for a three-month supply of Humalog insulin, at least until she reaches her $4,000 deductible every year.

Unfortunately, the mother of three, whose own dad died from diabetes when she was six, can’t use one of the less expensive generics, which don’t work for her. Because of the form of insulin she requires -- vials and a pump rather than injections -- she also doesn’t qualify for the drug manufacturer’s patient assistance program.

Making matters worse is a little-known loophole in her health insurance plan that prevents Freeborn from applying any financial break she might get toward her Blue Cross Blue Shield deductible. Called a copay accumulator adjustment program, or CAAP, it basically forces a patient to pay in full for a medicine upfront or pay later in the form of other out-of-pocket costs that insurers have decided can count toward deductibles.

So until Freeborn has met her deductible, there’s no real benefit to, say, going through GoodRX, where she would pay $1,200 rather than $2,700 for the same supply of insulin. It’s a bind patients of all kinds have increasingly found themselves in and are fighting back against.

 “It’s a double-edged sword,” Freeborn said. “I get to my deductible faster [without coupons or other assistance], and then it’s covered 100 percent. But at the same time, I can’t use the savings that are out there. It’s counterproductive.”

It’s also spurred a movement to ban the practice by insurers and pharmacy benefit managers, the middlemen who manage drug benefits for health insurance companies, particularly at the state level. 

Outlawing Copay Accumulators One By One

So far, six states have passed legislation that requires health plans to count the value of any copay assistance -- manufacturer coupons, nonprofit assistance programs, or prescription discounters such as NeedyMeds, toward patient deductibles. Prodded by the dozens of research, disease and advocacy organizations that compose the All Copays Count Coalition, another 20-plus states are considering similar bans on copay accumulators. 

The surge in local legal action comes in the wake of a federal decision in 2020 that gave certain health plans, including those sold on the Affordable Care Act exchanges, the ability to exclude copay assistance from counting toward deductibles. 

The decision effectively rubber stamped copay accumulator programs without restriction, said Steven Schultz, director of state legislative affairs for the Arthritis Foundation and co-chair of the All Copays Count Coalition. The government doubled down in May 2021 in a new Health and Human Services report that left the copay accumulators intact. 

“It’s a way for several parties in the supply chain, whether the insurer or the pharmacy benefits manager, to shift the cost onto the patient and away from themselves,” Schultz said. “But when it comes down to it, [CAAPs] just mean negative health outcomes overall -- more emergency room visits, more surgeries, more doctor’s visits. It doesn’t cover the costs.”

Ashley Pounders, director of medical affairs at the Tuberous Sclerosis Alliance, says the policies interfere directly with patient care, and can cost lives. While insurers encourage patients to choose less costly generic options, she says almost 87 percent of the drugs used to treat rare diseases are available in name-brand form only. That can force patients to switch medications to ones that might not control their illnesses or symptoms as well once their copay assistance runs out and they find they are no closer to hitting their deductible.  

“That’s when insurance starts dictating even further about what medicine you can really have,” Pounders said. “It’s not really about evidence-based practice. It’s out of the hands of providers at that point ... It’s 100 percent dictated by your insurance.”

So far the fight against copay accumulators has taken the form of letter-writing campaigns that ask state insurance commissioners to demand language that makes the programs easier to identify, and petitions asking for them to be banned altogether. State senators have seemed receptive, advocates say. 

For instance, Sarah Procario, advocacy and communications manager at the Hemophilia Foundation of Michigan, says Senate Bill 215 has full bipartisan support in her state and is expected to become law. She adds that there’s a special urgency because 100 percent of the plans on Michigan’s ACA exchange have copay accumulators, any law wouldn’t take effect until 2023, and many patients don’t have the time or money to wait.

Oregon is another state considering a ban. Its bipartisan bill, sponsored by Democratic Sen. Sara Gelser and Republican Sen. Tim Knopp, would end CAAPs across the board and require that all assistance to purchase medicines count toward deductibles and out-of-pocket maximums. The only opposition to the ban that Gesler says she has seen came in the form of a letter from an alleged patient advocacy group that she suspected was backed by insurers.

“It's just another form of surprise billing,” Gesler said. “Patients are left holding the bag, making sacrifices to other parts of their lives to afford their medicines.”

On the Lookout for Copay Accumulators 

In the meantime, proponents of ending copay accumulators are working to educate patients and other insurance policyholders on how to spot CAAPs in their plans, since they are often hidden by jargon and difficult to discern. Typically, they aren’t even called copay accumulator plans; instead they might be referred to as a copay benefit program or in similar terms that imply something beneficial to the patient. 

As Procario noted, “It gets confusing.”

Procario recommends searching for keywords such as “copay”, “out-of-pocket maximum,” and “copay benefit” to determine if a plan has one. If that doesn’t work, call the company directly -- although many health insurance employees aren’t aware of the plans, either. 

Advocates and legislators say they are trying to make the language on bans as inclusive as possible, so insurers can’t claim that a particular form of copay assistance still can’t count toward the deductible. They want all of it to work in the patient’s favor, reduce out-of-pocket expenses, and hold insurance companies accountable. 

“We just don’t know what the next level of escalation is going to be, whether it’s this type of assistance, or it could be GoFundMe pages,” said Schultz of the Arthritis Foundation. “It could be any number of things that they could try to counteract [patients being able to get] third-party help.”

Rachel Murphy is a freelance journalist based in Kansas City, Mo.

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