Health plan payments for OTCs. Expert perspective from K&L Gates

Oct 30

The US Department of Health & Human Services is considering making certain health plans pay for OTC preventive treatments even without a prescription. I asked Gina Bertolini, partner at K&L Gates to answer my questions about this proposal. Her answers are below.

1. What is HHS proposing? What services will be covered?

HHS has issued a Request for Information (RFI). The RFI seeks comments and feedback on a new requirement that certain health plans cover over-the-counter (OTC) preventive items and services without (a) requiring a prescription and (b) requiring cost-sharing by the individual. The RFI contemplates covering “OTC preventive items and services,” which could include contraceptives, including the progestin-only OTC pill recently approved by FDA. Other examples noted in the RFI include certain types of tobacco cessation pharmacotherapy; folic acid supplements; and breastfeeding supplies.

Note that, under the Affordable Care Act, currently health plans must cover certain OTC preventive services, but they are not offered for free unless they are prescribed by a health care provider. The new proposal would require OTC preventive services to be provided with no cost-sharing obligations (i.e., for free), without a prescription.

2. What is the rationale for the proposal and how does it fit in with other initiatives?

Under the Affordable Care Act, many health plans must cover recommended preventive services at no cost to the consumer. Some of these services do not require a prescription under relevant laws and regulations, but currently they require beneficiary cost-sharing unless prescribed by a health care provider. The RFI seeks to assess the potential benefits and challenges for various stakeholders, including consumers, healthcare providers, pharmacies, and insurers, of providing free coverage for OTC preventive products without a prescription.

Over the last two years, President Biden has issued four Executive Orders that direct various federal agencies, including Labor, Treasury, and Health and Human Services, to improve access to and affordability of reproductive health services, including contraceptives. Specifically, these Executive Orders seek to improve Americans’ access to and affordability of high-quality health care, protect against low-quality coverage, protect and expand access to reproductive health care services, and further Americans’ ability to access contraception without out-of-pocket expenses. Additionally, in July of 2023, FDA approved a progestin-only birth control pill, Opill, for non-prescription use. This is the first daily oral contraceptive approved for use in the U.S. without a prescription and, according to HHS “could reduce the number of unintended pregnancies” by improving access and use if the product is affordable and/or covered by insurance without cost sharing obligations.

The RFI states that requiring health plans to cover OTC preventive products without a prescription and without cost sharing “is an important option to consider for expanding access to contraceptive care,” and would align with the goals of the Affordable Care Act and the President’s Executive Orders. HHS also emphasizes that, in light of the Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization, “it is especially critical to ensure women’s access to reproductive health care and contraceptive services without cost sharing.” Lastly, HHS highlights FDA’s approval of Opill, for use without a prescription to prevent pregnancy, which according to HHS “could reduce the number of unintended pregnancies” by improving access and adherence if the product is affordable and/or covered by insurance without cost sharing.

3. What are the main benefits and challenges?

The main benefits are, for individuals, easier access to and more affordability of contraceptives, a reduction in unintended pregnancies, and improved health outcomes based on improved access (not only to contraceptives, but also to breastfeeding and smoking cessation supplies). Additionally, HHS believes that removing the prescription requirement and prohibiting cost-sharing will have a positive impact on health equity, as cost and regular visits with a health care provider to write the prescription are two major impediments to access. Removing the prescription requirement should reduce cost of the drug, over time, although initially retail prices may go up, and also would reduce the overall cost of care in that physician visits will not be required.

For insurers, challenges will be cost, as well as operational aspects of implementation, for example informing beneficiaries of coverage availability, reimbursement vs payment at the point of sale, etc. General challenges will be ensuring safety of the items, including source of origin, and mitigating fraud and abuse. On those latter points, the RFI specifically points to the health care industry’s experience operating coverage requirements for OTC COVID-19 tests, which health plans and issuers were required to cover without a prescription or any other individualized clinical assessment during the COVID Public Health Emergency. Although COVID 19 tests are not considered OTC preventive products subject to the Affordable Care Act’s requirements and the RFI, “interested parties’ recent experiences operationalizing coverage requirements for OTC COVID-19 diagnostic tests without cost sharing and without a prescription by a health care provider are relevant to the considerations included in this RFI.”

4. How do benefits and challenges vary by stakeholder, e.g., retailer, provider, payer?

Retailers will benefit in terms of providing OTC preventive products to a ready and willing health plan beneficiary population that is not obligated to pay for the product; those retailers that are able to contract directly with health plans to facilitate reimbursement will benefit the most. Note that this may raise unique privacy and security considerations of what is considered “health care” and who is a “health care provider” under HIPAA, and will impose operational challenges in terms of payment.

I believe by and large health care providers will be in favor of this proposal and will be aligned with the RFI’s comments regarding improving access to health care and reducing unintended pregnancies; challenges may be communicating with patients and improving health literacy where less clinician contact is a natural result.

Payers, I believe, will not be in favor of removing requirements, though query whether there are those who will factor reduced costs in clinician visits and, if probable, reduced unintended pregnancies?

5. What do you think the main themes of the comments will be?

I think four major themes will emerge: (1) improved accessibility will lead to better health outcomes, fewer unintended pregnancies, and an overall reduction in the cost of care, in particular for non-white and otherwise marginalized communities; (2) caution is important in considering implementation of such a program, in particular as it relates to quality, overuse/misuse, and fraud and abuse; (3) requiring the prescription or, alternatively, cost-sharing obligations each acts as a gatekeeper and ensures medication adherence, and removing the requirement of a prescription in exchange for cost-sharing will result in significant costs to insurers with no demonstrably improved outcomes; (4) birth control pills have dangerous side effects and should not be administered without a physician’s order.

6. Is HHS likely to modify the mandate based on the comments it receives?

Because this is an RFI, there is no “mandate,” rather, the parameters of the requirement are outlined, but with not a lot of detail. To the extent HHS proposes to implement a rule that requires OTC access to these preventive products without a prescription and without cost-sharing requirements, I would expect that it will impose some parameters, specifically related to implementation, medication management/frequency requirements, and costs.

7. Regulators are also seeking information on cost differences between prescribed and OTC treatments. What do you expect they will find?

Costs of prescribed OTC products generally will be higher than those that are not prescribed.

8. If the regulation goes through, what will be the impact on consumers?

Most plans and issuers do not cover OTC preventive products without a prescription, so this would be a significant change, in particular as it relates to contraceptives. Studies have shown that accessibility issues affect use of and adherence to contraceptives and have a disproportionate impact on young and non-white women. Offering contraceptives without copays and without requiring a prescription will remove some of the impediments that currently exist. I believe we will see a significant increase in availability of these products at the retail, mail order, and even telehealth levels, and will further a direct-to-consumer (DTC) approach to the receipt of health care, which generally exploded as a result of the COVID-19 pandemic.

David Williams