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Should double-charging patients be legal?

Imagine going with a friend to your favorite restaurant. When the bill comes, your friend offers to cover it — and plops down a gift card. The waiter charges the card without issue. But as you get up to leave, the waiter demands more cash.

“What do you mean?” you stammer. “We just paid!”

“You’re not supposed to benefit from your friend’s gift card,” the waiter curtly responds. “We also need you to pay the check, in cash.”

That scenario sounds ridiculous. Restaurants aren’t allowed to double charge patrons. But in the health insurance industry, double charging is not only legal, it’s becoming standard practice.

Over the summer, the Department of Health and Human Services issued a rule allowing health insurers to implement “accumulator adjustment programs,” which allow insurers to effectively double charge customers for drugs. Several states have banned these programs, which seriously harm patients’ health. The feds should follow suit.

Every year, pharmaceutical companies offer billions of dollars in coupons, which help patients afford the co-pays and co-insurance required by most plans. This benefits poorer patients who’d otherwise struggle to afford the out-of-pocket costs.

Consider a hypothetical patient, Susie. She needs a $10,000-per-month cancer treatment. Her insurance has no deductible and covers 75 percent of that tab.

Susie, and most Americans, would struggle to come up with $2,500 every month. To ensure she can fill her prescription, the drug’s manufacturer might offer a coupon that covers 90 percent of Susie’s out-of-pocket obligations. Susie would spend just $250 of her own cash each month.

Traditionally, health insurers have counted these coupons toward patients’ deductibles and out-of-pocket maximums. Once individuals hit this annual out-of-pocket maximum — around $8,500 for most in 2021 — insurers start covering the full cost of any additional care.

Between her coupons and her own contributions, Susie would hit her annual out-of-pocket maximum in less than four months.

Thanks to accumulator adjustment programs, some insurers have stopped counting coupons toward out-of-pocket maximums. They pocket the coupons, but only count patients’ own cash contributions when calculating deductibles and out-of-pocket spending.

As a result, patients keep paying larger bills, for longer. Susie would continue to shell out $250 each month, never reaching her out-of-pocket maximum.

Accumulator adjustment programs force many patients to stop filling their prescriptions. After one large insurer imposed an accumulator adjustment program for autoimmune medications, refill rates dropped 12 percent within one year, according to a 2019 study. The number of patients who stopped taking the drug entirely increased 400 percent.

When patients cease treatment, they get sicker. Drug non-adherence accounts for about 10 percent of hospitalizations. Annually, it causes some 125,000 deaths and costs the health care system up to $289 billion.

Arizona, Illinois, Virginia and West Virginia have all banned accumulator adjustment programs. The federal government would be wise to follow their lead.

Tomas J. Philipson, former acting chairman of the White House Council of Economic Advisers, is the Levin Professor of Public Policy at the University of Chicago.

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