Closing the EHB Loophole: Louisiana Leads, But National Action is Needed
"Jason," a Utah AIDS Foundation client, confronted a brutal truth in the wake of his HIV diagnosis: a healthcare system more interested in profits than patients. Faced with a staggering $3,200 co-pay for his HIV medication—well beyond his financial reach—Jason's plight was exacerbated by his insurance company's implementation of a co-pay accumulator policy. This policy effectively nullified the assistance he once relied on, leaving him stranded without his medication for months. "I felt scared and discouraged when I was told I have a $3,200 co-pay to pick up my HIV meds. I don’t even make that much money each month," Jason shared, his voice a stark indictment of a system failing its most vulnerable. His story, spotlighted by The Utah All Copays Count Coalition, underscores a pervasive issue: patients across the nation are cornered into impossible choices between health and financial ruin, casualties of an insurance industry's practices that blatantly prioritize margins over meaningful care.
Understanding the Problem
Jason's heartbreaking story sheds light on interconnected issues fueling the healthcare affordability crisis: co-pay accumulators and the Essential Health Benefits (EHB) loophole. These tactics have a devastating effect on patient well-being, so let's break them down:
Co-pay Accumulators: A Profit-Driven Scheme at the Expense of Patients
These programs allow insurers to take the value of manufacturer-provided coupons or patient assistance and apply it towards an annual deductible, but not towards a patient's out-of-pocket maximum. This means even with generous assistance, patients can face thousands of dollars in additional costs, forcing them to ration medication or abandon treatment altogether. The numbers reveal the widespread impact:
The AIDS Institute reports that co-pay accumulator adjustment programs (CAAPs) are present in a shocking 66% of individual Affordable Care Act (ACA) marketplace plans nationwide, with some states showing 75-100% of available plans utilizing these tactics.
Co-pay Maximizers: A Further Threat to Affordability
Insurers are increasingly employing an even more severe tactic known as 'co-pay maximizers'. These programs set a patient's co-pay to the full amount of available assistance, even if it's intended to cover an entire year's medication cost. Unlike accumulators, which prevent assistance from counting towards the out-of-pocket maximum, maximizers essentially 'use up' all available assistance in a single payment. This leaves patients facing the full, often unaffordable, cost of medication for the rest of the year. The combined use of maximizers and accumulators is becoming increasingly common, leaving patients with limited options and magnifying the financial burden of life-saving treatments. A staggering 72% of commercially insured beneficiaries in the United States were enrolled in plans with co-pay maximizers as of 2023, according to a Drug Channels analysis.
This highlights the alarming prevalence of these practices and the immense pressure they place on patients struggling to manage chronic conditions.
The Essential Health Benefits (EHB) Loophole: Insurers Exploit Gaps in Coverage
Under the ACA, states have flexibility in selecting the 'essential' healthcare services that insurers must cover. Some insurers manipulate this system by classifying necessary medications (especially for chronic conditions) as 'non-essential'. This lets them continue using co-pay accumulators and maximizers on these medications, further undermining patient affordability.
Centers for Medicate & Medicaid Services’ (CMS) data reveals that in many states, critical treatments for chronic disease management are not guaranteed coverage under 'essential' benefits. This means patients could be subject to accumulators and maximizers indefinitely, locked in a cycle of escalating costs even when reaching their out-of-pocket maximums.
The takeaway is clear: these practices prioritize the shareholder profits of insurance companies over the health and well-being of patients, especially those battling chronic and complex conditions.
Federal Action – Progress and Pitfalls
The CMS Notice of Benefit and Payment Parameters for 2025 signals a notable yet incomplete step towards remedying the healthcare affordability crisis. It attempts to close the Essential Health Benefits loophole starting in 2027 by mandating routine, non-pediatric dental coverage as an essential benefit. While seemingly tangential, this amendment serves as a precursor to addressing broader coverage issues, demonstrating the potential to mitigate part of the financial burdens that patients like Jason face. However, it underscores a significant gap in the rule's scope—its silence on co-pay accumulators and maximizers.
Limitations of the CMS Rule Change
The rule change’s failure to directly address co-pay accumulators and maximizers leaves a significant gap in patient protection. These payor-driven barriers systematically undermine patient affordability and access, especially for those managing chronic conditions. The absence of direct action against these schemes allows insurers to deploy cost-containment strategies that, while ostensibly designed to control expenditures, place the financial burden squarely on patients.
This oversight perpetuates financial hardship and deepens healthcare disparities. Accumulator and maximizer practices disproportionately affect marginalized populations, highlighting the limitations of regulatory changes that fail to comprehensively address the complex dynamics of healthcare affordability and access.
Without targeted measures to dismantle these financial mechanisms, efforts to expand coverage and close loopholes may achieve only superficial improvements. A significant portion of the population, particularly those managing chronic diseases, will continue to face insurmountable financial barriers to accessing essential treatments. This situation underscores the need for a more holistic approach to healthcare reform—one that confronts the financial mechanisms impairing patient care and seeks to eliminate systemic practices that prioritize profit over patient well-being.
Court Challenges: A Victory Shadowed by Continued Uncertainty
The battle against co-pay accumulators achieved a notable legal milestone when a federal court ruled these practices violated the Affordable Care Act's mandates. Despite this victory, the landscape remains fraught with ambiguity, largely due to the federal government's tepid response. The government’s retraction of its appeal in 2022, while upholding the court's decision, did not establish a nationwide prohibition on co-pay accumulators, leaving insurers in a legal gray area.
The HIV+Hepatitis Policy Institute has spotlighted the risk posed by the federal government's refusal to enforce the court's ruling against co-pay accumulators, shifting focus instead to addressing insurers' classification of certain drugs as “non-essential health benefits.” While the final 2025 Notice of Benefits and Payment Parameters rule curbs the classification of covered drugs beyond state benchmarks as non-essential, the government's inaction on co-pay accumulators marks a troubling disconnect between legal victories and their practical implementation.
This gap between legal wins and real-world application emphasizes the need for interventions at the state level. Louisiana's SB 210 emerges as a key measure, proposing tangible solutions to bridge the gap left by federal inaction and protect patients from the financial burdens imposed by insurers' exploitative tactics.
State Solutions: Louisiana as a Model
Louisiana's Legislative Response with SB 210
In an assertive move to safeguard healthcare affordability and accessibility, Senator Bob Owen's SB 210 targets the mechanisms of co-pay accumulators and the Essential Health Benefits (EHB) loophole. The legislation mandates comprehensive coverage under EHBs and holistic accumulator protections, ensuring all cost-sharing payments contribute towards the ACA's out-of-pocket maximums.
This legislative approach not only challenges the status quo but also highlights Louisiana's proactive stance in addressing healthcare disparities. By mandating that insurers recognize all federally designated EHB services and medications as essential, SB 210 directly confronts insurers' manipulative practices, ensuring patients receive the comprehensive coverage promised under the ACA.
Addressing the ‘Endless Deductible’
In a letter to the Louisiana State Senate Insurance Committee, CANN President and CEO Jen Laws warns that without robust protections like SB 210, insurers can impose what patients call "the endless deductible." This term illustrates the loophole that allows insurers to employ exploitative accounting practices, negating the ACA's intent to cap patient spending on healthcare. SB 210's provisions aim to close this loophole, ensuring patients are not burdened with exorbitant costs for essential treatments, thus preserving the ACA's core promise of affordable care.
In his letter, Laws reveals that Louisiana's health plan benchmarks do not guarantee coverage for essential cancer treatments such as radiation or chemotherapy, underlining the significance of SB 210. By ensuring that expenditures for such critical treatments are counted towards patients' out-of-pocket maximums, the bill offers a lifeline to those facing the daunting financial implications of treating life-threatening conditions. This measure is pivotal in bridging the gap left by the current healthcare system's shortcomings, providing patients with much-needed financial relief and access to life-saving treatments.
A Blueprint for National Reform
Louisiana's initiative serves as a compelling model for tackling the challenges posed by ambiguous EHB classifications, federal inaction, and exploitative co-pay practices. SB 210's success could inspire a wave of legislative efforts across the United States, advocating for a healthcare system that prioritizes patient well-being over payor profits. This approach highlights the potential for state-level innovations to influence national healthcare policy, paving the way for reforms that ensure healthcare accessibility and affordability for all, especially those living with chronic and life-threatening conditions.
Call to Action
The legislative changes proposed in Louisiana represent a critical juncture in the fight for healthcare affordability and access. To realize the full potential of these reforms, a concerted effort is needed from key stakeholders across the healthcare ecosystem:
For U.S. Policymakers:
Legislators at both state and federal levels must embrace proactive strategies to close the EHB loophole and regulate co-pay accumulator and maximizer use. Crafting and enacting policies that guarantee comprehensive coverage of essential health benefits and ensure all forms of patient assistance contribute towards out-of-pocket maximums are essential steps toward protecting patients from undue financial strain. Supporting state-level initiatives like Louisiana's SB 210 can serve as a foundation for broader national reforms, underscoring the importance of legislative action in safeguarding patient interests.
Healthcare Providers:
Medical professionals and healthcare institutions play a crucial role in advocating for their patients' rights and navigating the evolving insurance landscape. By staying informed about the implications of insurance policies on treatment access and affordability, healthcare providers can better support their patients in accessing the care they need. Engaging in policy discussions and supporting legislative efforts to address the EHB loophole and co-pay accumulator issue are necessary contributions to the broader push for healthcare reform.
Community Advocates and Patients:
The voices of patient advocacy groups and people affected by the healthcare system's complexities are instrumental in driving change. By raising awareness about the challenges posed by the EHB loophole and co-pay accumulators, mobilizing communities to demand reform, and sharing personal stories, advocates can influence policy decisions and encourage insurers to prioritize patient needs. Engaging in public discussions and advocating for policies that protect patients from harmful insurance practices are critical steps in building a more equitable healthcare system.
Actionable Next Steps:
Reach out to state and federal representatives to express support for policies that ensure comprehensive coverage of essential health benefits and address the challenges posed by co-pay accumulators.
Educate oneself and others about the impact of the EHB loophole and co-pay accumulators on healthcare affordability and access, leveraging resources and information provided by reputable patient advocacy organizations.
By uniting in the pursuit of meaningful healthcare reform, stakeholders across the spectrum can contribute to a future where healthcare accessibility and affordability are realities for all, especially for those facing chronic and life-threatening conditions. The journey toward closing the EHB loophole and eliminating unfair insurance practices demands collective action and unwavering commitment to patient well-being. Let's join forces to advocate for a healthcare system that truly serves the needs of its patients, ensuring equitable access to essential treatments and protections against financial hardship.
Making All Copays Count is a Critical Tool in Patient Access to Care
Making sure patients can access and afford the medications that save lives and maintain a dignified quality of life is the singular goal of Patient Access Network Foundation’s programming and advocacy. The primary way patients interact with PAN Foundation is through programming aimed at funding the care needs of patients via grants or linkage to other funds, including covering the costs of transportation and food, if needed. The other work PAN Foundation does is directly aimed address the why the entity is needed in the first place: advocacy around health care policies directly addressing the high out-of-pocket costs of care and medication. To that end, squarely in the target for PAN Foundation’s 2022 agenda is tackling so-called “copay accumulator” programs enacted by private insurers, particularly pharmacy benefit managers, as a means of double dipping into the flow of funds and denying patients the maximal benefit of patient assistance programs.
The Hepatitis B Foundation defines a copay accumulator (or accumulator adjustment program) as "a strategy used by insurance companies and Pharmacy Benefits Managers (PBMs) that stop manufacturer copay assistance coupons from counting towards two things: 1) the deductible and 2) the maximum out-of-pocket spending." In years prior to copay accumulators as a practice, manufacturer copay assistance programs might issue a healthy benefit that would be applied to the out-of-pocket costs or deductibles a patient is required to pay their insurer. This resulted in the patient fanatical responsibility spending down based on the value of the patient assistance program (PAP), rather than the actual dollars spent by patients, extending affordability of accessing care and medications for patients. It was glorious, honestly. Let’s have a “back of the envelope” example:
Deductible: $1500
Out-of-Pocket Cap (In-Network): $3000
Co-pay: $150 per 30-day fill
Patient Assistance Program Benefit: $7500
Previously, a PAP would cover the initial deductible and all of the plan year’s co-pays while counting toward that maximum out-of-pocket cap all counted as something a patient paid into the plan. Now, insurers keep the entirety of the benefit and only count the $150 co-pay toward what a patient has paid into the plan. This process demands patients pay for those costs themselves and the insurer gets to keep all of that $7500 value from the PAP. Ultimately, this tactic increases patient costs.
PAN Foundation executive vice president, Amy Niles, argues “These discriminatory policies reduce access to critical and often life-saving prescription medications.” And she’s right.
Deductibles and co-pays are generally called “cost-sharing”, which is a bit of a misnomer because patients must pay the deductible before an insurer begins paying the benefits the plan offers. This means pre-deductible costs are not “shared” by anyone but patients. With only about 4 in 10 Americans with enough money in the bank to cover an unexpected expense of $1000 or more, one of the tactics insurers are using to minimize patients actually accessing care is by increasing deductibles. PAN Foundation polled adults and seniors on Medicare and found most couldn’t afford even $100 medical emergency. Advocates, myself included, argue insurers are seeking to limit patients even initiating care (or continuing pre-existing care from previous years) by making those initial payments due too expensive to afford in the first. Can’t get your meds if you can’t afford to see the provider prescribing them, right?
This level of insanity is firmly in the realm of the Centers for Medicare and Medicaid Services to regulate and, indeed, the previous administration issued a rule in 2020 that expressly allowed co-pay accumulators and the Biden administration sided with insurers over patients when it came to this same issue in 2021. Despite calls from advocates, the payment rules for 2023 (announced in 2022) do not address this abusive practice. Some states have introduced and even passed legislation that expressly requires some, but not all, insurers to apply the total value of PAPs to patient costs. However, no national law currently exists to prohibit co-pay accumulators.
All of this is why PAN Foundation and numerous other patient advocacy organizations have come together as members of the All Copays Count Coalition and are urging congress to pass H.R. 5801, the HELP Copays Act, which would require all additional payments, discounts, and other financial assistance be applied to the cost-sharing patients are expected to pay into a health care insurance plan.
If we’re to realize the maximum benefit of manufacturer patient assistance programs, family dollars being spent to help patients, and charitable foundation dollars are being appropriately applied in a fashion that maximizes patient access to care, we have to make all copays count.
PAN Foundation has even made it easy to take action today.
[Disclosure: Amy Niles, Executive Vice President of PAN Foundation is a long-standing board member for Community Access National Network]