Dear Chairwoman Foxx:
The Cystic Fibrosis Foundation thanks the House Committee on Education and Workforce (Committee) for the opportunity to respond to the Request for Information (RFI) on issues related to employer-sponsored health insurance under the Employee Retirement Income Security Act (ERISA). The Cystic Fibrosis Foundation is a national organization dedicated to curing cystic fibrosis. We invest in research and development of new CF therapies, advocate for access to care for people with CF, and fund and accredit a network of specialized CF care centers.
Cystic fibrosis is a rare, genetic disease that affects close to 40,000 children and adults in the United States. CF causes the body to produce thick, sticky mucus that clogs the lungs and digestive system, which can lead to life-threatening infections. As a complex, multi-system condition, CF requires targeted, specialized treatment and medications. If left untreated, infections and exacerbations caused by CF can result in irreversible lung damage, and the associated symptoms of CF lead to early death, usually by respiratory failure. Through careful, aggressive, and continuously improving disease management, the average life expectancy for people with cystic fibrosis has risen steadily over the last few decades. This milestone reflects over 50 years of hard work to improve CF treatments, develop evidence-based standards of care, and encourage adherence to a lifetime of chronic care. However, this system of care and the improvements in length and quality of life for those with CF can only be realized if patients have access to adequate and affordable insurance.
Background on Cystic Fibrosis and Employer-Sponsored Insurance:
The CF Foundation has seen an erosion of the once gold standard employer plan and with each plan year, employers offer less and less generous options. Employers have sought to combat the rising cost of health care prices by shifting the financial burden to employees through a combination of higher cost-sharing, benefit restrictions, and limited provider networks. According to the Kaiser Family Foundation, about a third of working adults covered through employer-sponsored insurance face an annual deductible of about $2,000 or more, and employee premium contributions have risen by about 300% since 1999. In 2022, fewer than half of employers offering health benefits believe their provider network in the plan had a sufficient number of behavioral health providers to ensure timely access to services for their workers, and one-third reported that they did not know. For people with CF that are trying to manage a complex, chronic condition, this shift is extremely problematic.
Self-funded, or self-insured, insurance plans governed by ERISA are especially concerning. According to a recent Kaiser Family Foundation study, 65% of covered workers are in a plan that is self-funded and as fully insured risk pools, they are incentivized to adjust their benefits when even one enrollee has a high-cost condition. Many offer a prescription drug benefit, which is subject to some ACA EHBs regulations. However, under current law, employer health plans are allowed to deem certain categories of prescription drugs as “non-essential.” When a covered drug is deemed “non-essential,” the payer will not count any cost-sharing towards the enrollee’s deductible and out-of-pocket maximum. In this system, people with CF in an employer plan could pay thousands of dollars in out-of-pocket costs for necessary medicines and never hit their out-of-pocket maximum. Further, we are seeing some employer plans eliminate coverage of certain specialty medications altogether. Cystic fibrosis treatments rarely have lower-cost generic alternatives and, when employer plans refuse to cover specialty CF medications, people with CF face the difficult choice of foregoing these necessary treatments, changing to an often more costly insurance plan from the ACA marketplace, or in some cases making career sacrifices and seeking alternate employment.
Over the last 20 years, plan issuers, pharmaceutical manufacturers, and pharmacy benefit managers (PBMs) have been ratcheting up subversive tactics, with patients caught in the middle. As a result, patients have turned to manufacturer copay assistance to hit their deductible and lower their out-of-pocket spending. In response, employers are now implementing the programs that limit the effect of copay assistance for patients financially at the same time, drug manufacturers can dictate the amount of copay assistance is available for patients, making this an unsustainable option as there maintains a risk of running out of assistance and being unable to afford medications. Self-insured plans are at the forefront of the programmatic changes because they operate differently from other types of payers and have more ability to directly control cost. This systemic debate between payers, PBMs, and pharmaceutical manufacturers about drug pricing puts patients’ health and financial wellbeing at risk and forces patients to consistently need to adapt and navigate a confusing, opaque, ever-changing landscape. As a result of these practices, people with CF are left with few options. In a study conducted using the Cystic Fibrosis Foundation’s case management data, people with CF enrolled in self-funded employer plan regularly experienced gaps in care, lack drug coverage, or the need to change insurance due to cost. The Foundation asks the Committee to work with administrative agencies to establish better standards for employer coverage, including self-funded plans, and to better regulate the norms and practices of pharmaceutical manufacturers, insurers, and PBMs that put patients at risk.
In response to the questions in the RFI, the CF Foundation provides the following comments:
Fiduciary Requirements
ERISA plan sponsors as named fiduciaries have a responsibility to, in part, ensure that plan costs are reasonable as well as to exercise prudence in the selection and monitoring of service providers, such as pharmacy benefit managers and alternative funding programs. Under the Consolidated Appropriations Act (CAA), there are new transparency requirements, putting greater scrutiny on the reasonableness of drug and other health plan costs, including new transparency into how plan sponsors are evaluating and monitoring these aggregate costs or monitoring their service providers who are administering plan benefits.
Employees who pay to participate in their employer group health plan have a reasonable expectation that their employer will use their payments and manage the plan and its assets with the goal of providing them with benefits. This expectation aligns with one of many fiduciary responsibilities owed by plan sponsors to employees. Unfortunately, and in direct contradiction of their fiduciary responsibilities, employers contract with third parties, such as Alternative Funding Programs (AFPs), to avoid providing benefits to participants and beneficiaries so the plan can reap benefit of saving money. AFPs in particular impose harmful barriers and limitations on participants’ and beneficiaries’ access to specialty medications in violation of fiduciary responsibilities, including, but not limited to:
- Providing inaccurate, incomplete, untimely, and/or misleading plan information to participants and beneficiaries;
- Claiming the plan excludes coverage of specialty medications but failing to provide plan documents detailing non-coverage;
- Implementing automatic denials of prior authorization without reviewing and making a determination on the merits of the request;
- Sending or authorizing written notifications to participants and beneficiaries stating the plan’s third-party vendor is a patient advocate acting solely in the best interest of participants and beneficiaries;
- Making statements to participants and beneficiaries that implementing an AFP does not change the participants’ or beneficiaries’ process for accessing specialty medications,
- Requiring participants and beneficiaries to sign a power of attorney as a prerequisite to accessing specialty medications;
- Requiring participants and beneficiaries to provide financial and other personal information as a prerequisite to accessing specialty medications;
- Requiring participants and beneficiaries to misrepresent their insured status on applications to patient assistance programs (PAPs) as a prerequisite to accessing specialty medications;
- Providing participants and beneficiaries with illegally imported, non-FDA approved medications that pose a health and safety risk to participants and beneficiaries;
- Delaying participants’ and beneficiaries’ timely access to specialty medications by requiring the completion and submission of applications and supporting materials to PAPs, potentially causing negative health consequences to participants and beneficiaries;
- Delaying participants’ and beneficiaries’ timely access to specialty medications by requiring a denial of eligibility from PAPs before reversing the plan’s previous noncoverage decision and approving coverage of the specialty medication as a medical necessity, potentially causing negative health consequences to participants and beneficiaries;
- Delaying participants’ and beneficiaries’ timely access to specialty medications by requiring a denial of eligibility from PAPs before approving the plan’s previous automatic denial of prior authorization without reviewing and making a determination on the merits, potentially causing negative health consequences to participants and beneficiaries;
- Providing participants and beneficiaries with less than the full course of treatment prescribed by the clinician, potentially causing negative health consequences to the participants and beneficiaries; and
- Mismanaging participants’ and beneficiaries’ premium (i.e., plan assets) payments held in trust.
Recommendation: Employers need to engage in a prudent process when selecting and monitoring their service providers, take an active role, and set up oversight. The CF Foundation recommends Congress work with the Department of Labor (DOL) to strengthen ERISA Section 404(a)(1) “…in the interest to the participants and beneficiaries and for the exclusive purpose of providing benefits to participants and their beneficiaries,” to include not only financial interest, but also the medical interests of those beneficiaries. Exclusionary language that restricts a beneficiary’s ability to receive evidence-based, medically necessary treatment is not acting in their best interest. We would also ask Congress to apply the standard of what a prudent person would expect when defining coverage requirements as they apply to the fiduciary responsibility of trustees and plan sponsors.
Furthermore, the CF Foundation recommends Congress work with DOL to amend ERISA and hold all parties involved in plan design implementation, operation, and oversight to the fiduciary obligations, not just plan trustees. This includes trustees, plan sponsors, administrators, third-party administrators, insurance broker-agents, pharmacy benefit managers, and any other third-party entity involved in the process of securing or operationalizing benefits on behalf of a member. Without this, third parties such as AFPs are able to undermine the fiduciary protection requirements, leaving plan beneficiaries and participants without the coverage they believed they had when entering into the plan as well as putting unnecessary “cost avoidance fees” on the plan assets.
Direct and Indirect Compensation
A significant CAA provision regulates direct and indirect compensation. In the case of PBM and plan agreements, ERISA prohibits plan fiduciaries from contracting on behalf of the plan if the arrangement constitutes the furnishing of goods, services or facilities between the plan and a party in interest. However, ERISA also codifies specific exemptions from the prohibited transactions rule. Plan fiduciaries may contract with PBMs for “services necessary for the establishment or operation of the plan, if no more than reasonable compensation is paid therefore.” It is the responsibility of the plan fiduciaries to ensure the PBM contractual arrangements are reasonable under ERISA.
Brokers and consultants often receive compensation or incentives from PBMs, and it is not uncommon for brokers to get paid more as the plan sponsors total drug spend increases. PBMs often pay brokers per member per month fees and other consulting fees that prevent brokers from acting on the plan sponsors best interest, or in the best interest in the plan enrollees. Brokers and consultants must also tell employers the various forms of direct or indirect compensation they receive from vendors associated with the health plan. The disclosure must take place at the time the employer enters into the agreement with the broker or when it’s renewed. The act also requires brokers to disclose their compensation to individuals who purchase insurance plans
Recommendation: Plans must require full descriptions of direct and indirect compensation as well as the sources of compensation, that the PBM, affiliate, and or subcontractor will receive related to performing under the contract. It is important for plan sponsors and fiduciaries to understand the nature and amount of indirect fees associated with their prescription drug benefits plans, and to ensure that they are reasonable. This will allow plans to safeguard their rights and promote transparency in PBM-Plan agreements, providing increased transparency on key aspects of plan design. This financial information should also be available to plan enrollees prior to enrollment.
ERISA Advisory Council
The ERISA Advisory Council’s (“Council”) scope is simultaneously broad and narrow. While ERSIA itself touches on a range of benefits, as currently composed, the Council does not have the capacity or expertise to provide reports and recommendations on issues affecting employer-sponsored health benefits. ERISA establishes the primary framework for regulating employee benefit plans, including pension and retirement plans, and health and welfare plans. However, health insurance has largely been an afterthought during the enactment and implementation of the law, focusing most of the attention on ERISA’s retirement plan provisions. This is demonstrated through the DOL as the primary agency implementing and enforcing ERISA and the basic standards for governing plan fiduciaries' actions, and the Council’s role is to provide reports and recommendations to DOL, not to the Department of Health and Human Services (HHS) or Congress. This structure is problematic because most covered workers, approximately 65%, are in plans regulated by ERISA. Ultimately this gives employer significant latitude when it comes to terms of the plans.
Unlike other federal health and insurance laws, which tend to set a regulatory floor on which states and build, ERISA contains provisions broadly preempting states from regulating employer health plans, even when no federal rules otherwise apply. This relatively hands-off approach to regulating health plans has created an environment where there is minimal oversight of employer-sponsored health plan actions that now are negatively impacting enrollees.
The Medicare Payment Advisory Committee (MedPAC) is an instructive example here, as MedPAC is commissioned as an independent, non-partisan legislative branch agency established to advise Congress on issues affecting the Medicare program. In addition to advising the Congress on payments to private health plans participating in Medicare and providers in Medicare’s traditional fee-for-service program, MedPAC provides information on access to care, quality of care, and other issues affecting Medicare. MedPAC is comprised of 17 members whose expertise is tailored to financing and delivery of healthcare services. Further, MedPAC issues two reports annually, in addition to submitting comments on reports and proposed regulations issued by HHS, testimony, and briefings for congressional staff. Finally, MedPAC frequently meets with individuals interested in the Medicare program, including staff from congressional committees, HHS, health care researchers, health care providers, and beneficiary advocates.
Recommendation: Given the branches of government in which the Council and MedPAC are respectfully situated, it would not be possible for the Council to provide the same breadth of work as MedPAC. However, there are elements of the MedPAC structure and reporting we believe would greatly increase Congress’ and DOL’s understanding of how employer-sponsored health plans are operating and the impact that has on enrollees.
First, we recommend establishing two separate ERISA councils — one that focuses solely on pensions and retirement (“ERISA Pension Council”), the second focusing on health and welfare plans (“ERISA Health Council”). These Councils may continue to advise the Secretary of Labor and submit written recommendation on issues regarding the Secretary. Given the number of individuals reliant on employer-sponsored health benefits and the growing complexities of our health care system, there is a need to create this separate ERISA Health Council exclusively charged with the goal to address issues affecting employer-sponsored health benefits, and the employees and beneficiaries that rely on them.
Like MedPAC, we recommend the ERISA Health Council issue two reports (one spring, one summer/fall) as the primary outlet for council recommendations. In addition to these reports, council members and DOL staff should seek input on employer-sponsored benefit issues through frequently meeting with individuals interested in the program, including staff from congressional committees and HHS, health care researchers, health care providers, and beneficiary advocates.
Finally, we recommend a more diverse and specific composition of ERISA Health Council membership. As of now, council consists of 15 members appointed by the Secretary of Labor. Three members are representatives of employee organizations (at least one of whom represents an organization whose members are participants in a multiemployer plan). Three members are representatives of employers (at least one of whom represents employers maintaining or contributing to multiemployer plans). Three members are representatives of the general public. We believe there should be more specificity to the general public as these are most likely members that are consumers of employer-sponsored health benefits. Therefore, these membership slots should be renamed as consumer representatives. Recently HHS proposed restructuring of the Medical Care Advisory Committee to be more inclusive of patients who have lived experience in the Medicaid. The new structure would focus on representation beneficiary advocacy organizations for a specific category, (i.,e. disability, illness, functional status), to better determine how these plans are impacting the beneficiaries and the participants. We would strongly support recategorization of the general public membership slots to reflect these specific categories.
Specialty Drugs
The CF community has experience with coverage and access for high-cost specialty therapies known as CFTR modulators, which address the underlying cause of the disease. We are seeing signs that the cost of some prescription drugs is not sustainable, and there is growing resistance from plans to cover some specialty drugs. People with CF are too often caught in the middle of this conflict between payers and manufacturers, often resulting in significant administrative and financial burdens and sometimes delays in accessing their medications. Below we identify several barriers to access currently experienced by those with CF and we anticipate these trends will continue to escalate as more expensive cell and gene therapies come to market.
Coverage Barriers and the Cost to People with CF
People with CF are facing growing cost burdens related to their treatment, demonstrating ERISA and other commercial plans growing resistance to covering specialty drugs and that coverage of a therapy does not necessarily guarantee access. When a person is ultimately able to navigate their health plan’s utilization management requirements and gain approval of their necessary medications, they are routinely subject to high cost-sharing. Brand-name specialty drugs are often placed at the highest tier of benefit design, thus putting financial strain on people with CF, who require multiple specialty drugs and have no lower cost alternatives available.
Some plans are particularly problematic with their coverage criteria for high-cost, specialty medications — such as CFTR modulators — and implement clinically inappropriate coverage criterion related to restrict access and minimize their costs. For example, we have seen payers restrict access to CFTR modulators for those with a lung function within a certain range. This criterion requires those who are healthy and could have their lung function stabilized by modulators to experience a health decline and excludes those with advanced lung disease, of which there is ample evidence supporting the clinical benefit of modulator initiation.
In addition to the direct financial harm, patients going without medication can be detrimental to their overall health. Studies indicate gaps in CF medication adherence are associated with higher respiratory exacerbation, increased hospitalizations, longer hospital stays, increased number of pulmonary exacerbations requiring intravenous antibiotics, and lower baseline lung function.7 These secondary and tertiary effects cost patients and the health care system thousands of dollars, as well as cause irreparable harm to a patient’s health.
Cost Containment Strategies
ERISA and other commercial plans are increasingly implementing accumulator programs —which prevent third-party payments from counting towards deductibles and out-of-pocket limits and therefore increasing out-of-pocket costs for patients. While the vast majority (93%) of people with CF have health insurance for the entire year, having insurance does not protect many people with CF from experiencing significant cost burden. Seventy-four percent of people with CF use at least one additional form of financial assistance — including nonprofit grants and manufacturer assistance programs – to afford their care. The CF Foundation recognizes that copay assistance programs mask bigger cost and affordability issues; however, cost containment strategies like accumulator programs that further burden people with CF are unacceptable.
Another example of plans growing resistance to covering high-cost therapies is the proliferation of supply chain intermediaries involved in insurance coverage for people with CF, creating confusion and administrative barriers when people try to access treatment. There is a lack of transparency on the role of PBMs, insurers, and subcontracted third-party entities in coverage and cost-sharing decisions, especially in the self-funded insurance market. This causes confusion on the appropriate point of contact for appealing coverage decisions, increasing administrative burden on both patients and their care teams, and causing gaps in access to important therapies. New coverage tactics emerge frequently, requiring patients and care teams to consistently learn and adapt to new, opaque, and confusing policies.
Third-party entities such as AFPs and maximizers add complexity to an already opaque system. These entities exist to lower costs to the plan. Maximizers often outsource a patient’s drug coverage to a third-party entity that sets the patients’ cost-sharing at a level to maximize use of manufacturer copay assistance. As mentioned above, AFPs also rely on third-party entities that seek to enroll patients in manufacturer patient assistance programs that provide free drugs, which are usually intended for people without insurance. AFPs cause consumers to experience financial losses and lose access to critical medications while they navigate these programs. When a patient is forced to enroll in a third-party program, any financial assistance the patient receives will not be counted towards meeting their deductible or out-of-pocket limit, increasing the cost burden for the patient. These programs illustrate the current coverage landscape for patients taking high-cost therapies and challenges that may worsen as more costly treatments come to market.
Recommendation: As Congress seeks to address the current barriers to coverage and access of specialty medications in employer-sponsored health benefit plans, the CF Foundation provides the following recommendations:
- To address cost containment strategies implemented by plans, Congress should pass the Help Ensure Lower Patient Copays Act (HELP Copays Act; H.R. 830/S. 1375). This bill reduces patient administrative and financial barriers imposed by PBMs and plans by 1) requiring plans to apply third party assistance to out-of-pocket maximums and other patient cost-sharing requirements; and 2) ensuring any item or service covered by a health plan is considered part of their essential health benefits (EHB) package. Together, these policies would prohibit accumulators and maximizers, and significantly limit AFPs in federally-regulated insurance plans, including ERISA regulated employer-sponsored health benefit plans.
- PBM reform will have a direct impact on how patients access their specialty medications and the cost of those medications. We strongly urge Congress to finish the efforts started last year and pass comprehensive reform that prioritize patients by addressing misaligned incentives that contribute to high prescription drug costs for patients, improve access to pharmacies, ensuring transparency, and increase oversight of the prescription drug supply chain.
- As expensive cell and gene therapies come to market, the CF Foundation believes there is great value in exploring alternative payment arrangements for these therapies, such as a subscription model which has been used to provide access to gene therapies in other countries.
- When considering coverage models for specialty medications as well as cell and gene therapies, there must be a balance between policies to manage overall health care costs and actions that results in inappropriate delays or restrictions to treatment.
- Coverage models for specialty drugs and gene therapies should utilize analysis of effective tools to foster and support utilization and adherence to evidence-based care regimens and exclude cost-sharing programs that burden people who can benefit from these therapies and can result in skipping or delaying vital aspects of the treatment protocol and supportive care.
- Congress should with DOL and HHS to assess a range of financing arrangements as different markets and different therapies may lend themselves to different payment models.
Thank you for the opportunity to provide information on the experiences of people with CF as they navigate coverage and access in ERISA employer-sponsored health plans. The Cystic Fibrosis Foundation stands ready to serve as a resource as the Chairwoman explores solutions to improve affordability of coverage and increase quality and access to care.