Healthcare Reform and Access to Prescription Medications

In the Patient Data Analysis Report 2009 prepared by the Patient Advocate Foundation (PAF), PAF reveals that 14.18% of PAF patient cases involve pharmaceutical copayment issues. This lack of access to prescription medications is an issue of immense importance to patients. The new healthcare reform law recently enacted by Congress and signed into law by the President will have a significant impact on this problem. Section 1302 requires the Department of Health and Human Services to create by January 2014, when the new state insurance exchanges are up and running, an essential health benefits package which limits annual out-of pocket spending for consumers to the cost-sharing level in Health Savings Accounts. The HSA level for 2010 is $5,950 for individuals and $11,900 for a family, but it will be adjusted each year for inflation. This limit on out-of-pocket spending will apply to all insurance plans in all markets. Importantly, this cap on out-of-pocket spending will include deductibles, coinsurance and copays associated with the purchase of prescription drugs. Beginning by June 23, 2010 and operating until January 2014 when the state insurance exchanges are up and running, the Secretary of HHS is directed under Section 1101 to create high-risk pools in each state to cover individuals with pre-existing conditions who are unable to get insurance. Within these high risk pools, there will be the same cap on out-of-pocket spending at the Health Savings Account level ($5,950 for individuals and $11,900 for a family) as in the essential health benefits package. Section 1101 does not explicitly state, however, that the cap includes deductibles, coinsurance and copays associated with the purchase of prescription drugs, but allows the Secretary of HHS to establish such a requirement.

The following roman numerals show the corresponding language in the law:

I.Cost Sharing defined in health care reform law.

(3) COST-SHARING- In this title--

(A) IN GENERAL- The term `cost-sharing' includes--

(i) deductibles, coinsurance, copayments, or similar charges; and

(ii) any other expenditure required of an insured individual which is a qualified medical expense (within the meaning of section 223(d)(2) of the Internal Revenue Code of 1986) with respect to essential health benefits covered under the plan.

(B) EXCEPTIONS- Such term does not include premiums, balance billing amounts for non-network providers, or spending for non-covered services.

II.Essential benefits defined in the health care reform law (includes prescription drugs at (F)).

(b) Essential Health Benefits-

(1) IN GENERAL- Subject to paragraph (2), the Secretary shall define the essential health benefits, except that such benefits shall include at least the following general categories and the items and services covered within the categories:

(A) Ambulatory patient services.

(B) Emergency services.

(C) Hospitalization.

(D) Maternity and newborn care.

(E) Mental health and substance use disorder services, including behavioral health treatment.

(F) Prescription drugs.

(G) Rehabilitative and habilitative services and devices.

(H) Laboratory services.

(I) Preventive and wellness services and chronic disease management.

(J) Pediatric services, including oral and vision care.

III.Language in health care reform law establishing high risk pools


(a) In General- Not later than 90 days after the date of enactment of this Act, the Secretary shall establish a temporary high risk health insurance pool program to provide health insurance coverage for eligible individuals during the period beginning on the date on which such program is established and ending on January 1, 2014.

(b) Administration-

(1) IN GENERAL- The Secretary may carry out the program under this section directly or through contracts to eligible entities.

(2) ELIGIBLE ENTITIES- To be eligible for a contract under paragraph (1), an entity shall--

(A) be a State or nonprofit private entity;

(B) submit to the Secretary an application at such time, in such manner, and containing such information as the Secretary may require; and

(C) agree to utilize contract funding to establish and administer a qualified high risk pool for eligible individuals.

(3) MAINTENANCE OF EFFORT- To be eligible to enter into a contract with the Secretary under this subsection, a State shall agree not to reduce the annual amount the State expended for the operation of one or more State high risk pools during the year preceding the year in which such contract is entered into.

(c) Qualified High Risk Pool-

(1) IN GENERAL- Amounts made available under this section shall be used to establish a qualified high risk pool that meets the requirements of paragraph (2).

(2) REQUIREMENTS- A qualified high risk pool meets the requirements of this paragraph if such pool--

(A) provides to all eligible individuals health insurance coverage that does not impose any preexisting condition exclusion with respect to such coverage;

(B) provides health insurance coverage--

(i) in which the issuer's share of the total allowed costs of benefits provided under such coverage is not less than 65 percent of such costs; and

(ii) that has an out of pocket limit not greater than the applicable amount described in section 223(c)(2) of the Internal Revenue Code of 1986 for the year involved, except that the Secretary may modify such limit if necessary to ensure the pool meets the actuarial value limit under clause (i);

(C) ensures that with respect to the premium rate charged for health insurance coverage offered to eligible individuals through the high risk pool, such rate shall--

(i) except as provided in clause (ii), vary only as provided for under section 2701 of the Public Health Service Act (as amended by this Act and notwithstanding the date on which such amendments take effect);

(ii) vary on the basis of age by a factor of not greater than 4 to 1; and

(iii) be established at a standard rate for a standard population; and

(D) meets any other requirements determined appropriate by the Secretary.

(d) Eligible Individual- An individual shall be deemed to be an eligible individual for purposes of this section if such individual--

(1) is a citizen or national of the United States or is lawfully present in the United States (as determined in accordance with section 1411);

(2) has not been covered under creditable coverage (as defined in section 2701(c)(1) of the Public Health Service Act as in effect on the date of enactment of this Act) during the 6-month period prior to the date on which such individual is applying for coverage through the high risk pool; and

(3) has a pre-existing condition, as determined in a manner consistent with guidance issued by the Secretary.

(e) Protection Against Dumping Risk by Insurers-

(1) IN GENERAL- The Secretary shall establish criteria for determining whether health insurance issuers and employment-based health plans have discouraged an individual from remaining enrolled in prior coverage based on that individual's health status.

(2) SANCTIONS- An issuer or employment-based health plan shall be responsible for reimbursing the program under this section for the medical expenses incurred by the program for an individual who, based on criteria established by the Secretary, the Secretary finds was encouraged by the issuer to disenroll from health benefits coverage prior to enrolling in coverage through the program. The criteria shall include at least the following circumstances:

(A) In the case of prior coverage obtained through an employer, the provision by the employer, group health plan, or the issuer of money or other financial consideration for disenrolling from the coverage.

(B) In the case of prior coverage obtained directly from an issuer or under an employment-based health plan--

(i) the provision by the issuer or plan of money or other financial consideration for disenrolling from the coverage; or

(ii) in the case of an individual whose premium for the prior coverage exceeded the premium required by the program (adjusted based on the age factors applied to the prior coverage)--

(I) the prior coverage is a policy that is no longer being actively marketed (as defined by the Secretary) by the issuer; or

(II) the prior coverage is a policy for which duration of coverage form issue or health status are factors that can be considered in determining premiums at renewal.

(3) CONSTRUCTION- Nothing in this subsection shall be construed as constituting exclusive remedies for violations of criteria established under paragraph (1) or as preventing States from applying or enforcing such paragraph or other provisions under law with respect to health insurance issuers.

(f) Oversight- The Secretary shall establish--

(1) an appeals process to enable individuals to appeal a determination under this section; and

(2) procedures to protect against waste, fraud, and abuse.

(g) Funding; Termination of Authority-

(1) IN GENERAL- There is appropriated to the Secretary, out of any moneys in the Treasury not otherwise appropriated, $5,000,000,000 to pay claims against (and the administrative costs of) the high risk pool under this section that are in excess of the amount of premiums collected from eligible individuals enrolled in the high risk pool. Such funds shall be available without fiscal year limitation.

(2) INSUFFICIENT FUNDS- If the Secretary estimates for any fiscal year that the aggregate amounts available for the payment of the expenses of the high risk pool will be less than the actual amount of such expenses, the Secretary shall make such adjustments as are necessary to eliminate such deficit.


(A) IN GENERAL- Except as provided in subparagraph (B), coverage of eligible individuals under a high risk pool in a State shall terminate on January 1, 2014.

(B) TRANSITION TO EXCHANGE- The Secretary shall develop procedures to provide for the transition of eligible individuals enrolled in health insurance coverage offered through a high risk pool established under this section into qualified health plans offered through an Exchange. Such procedures shall ensure that there is no lapse in coverage with respect to the individual and may extend coverage after the termination of the risk pool involved, if the Secretary determines necessary to avoid such a lapse.

(4) LIMITATIONS- The Secretary has the authority to stop taking applications for participation in the program under this section to comply with the funding limitation provided for in paragraph (1).

(5) RELATION TO STATE LAWS- The standards established under this section shall supersede any State law or regulation (other than State licensing laws or State laws relating to plan solvency) with respect to qualified high risk pools which are established in accordance with this section.


The preceding information seeks to simplify and identify the following three areas:

1) the cost-sharing provisions of the new health care reform law;

2) that copays, deductibles and coinsurance connected to prescription drugs are covered under the out-of-pocket cap under the insurance exchanges; and

3) that the newly created transitional high risk pools in the law also have a cap on out-of-pocket expenses, but it is not certain that patient cost sharing related to prescription drugs will be included under the cap.

For further information, please contact National Patient Advocate Foundation at (202) 347-8009.