Implementing Coverage of Over-the-Counter Contraceptives

The federal government has clear authority to require private health plans and Medicaid expansion plans subject to the Affordable Care Act’s (ACA’s) contraceptive coverage provision to cover over-the-counter (OTC) contraceptives without cost-sharing and when obtained without a prescription. Such a requirement would have numerous benefits for enrollees, including quicker and more affordable access to contraceptive care, improved reproductive equity, and improved reproductive health outcomes and autonomy. However, for the full potential of this coverage to be realized, federal officials will need to define scope of coverage for OTC contraceptives and also address potential implementation issues, provide education to consumers and other stakeholders, and provide oversight and enforcement. 

To ensure that OTC contraceptive coverage is comprehensive and as easy to navigate as possible for enrollees, coverage should be offered without limitations that would interfere with OTC access and consistent contraceptive use, including inappropriate quantity and frequency limits, network requirements, and formulary requirements.

Quantity/Frequency Limits

Consumers will only be able to take full advantage of OTC contraceptives if they are not subject to restrictive quantity and frequency limits. Therefore, federal officials should require health plans to cover a 12-month supply of contraceptives at one time. This should specifically include Opill and any other OTC oral contraceptive approved in the future. 

In addition, health plans should be barred from placing limits on a patient’s ability to switch contraceptive methods (e.g., so that receiving a 12-month supply of oral contraceptives should not prevent a patient from switching to an IUD six months later). Similarly, health plans should be required to offer additional coverage in cases when a consumer’s supply of contraceptives is lost or damaged. These protections would help ensure that health plans do not undermine enrollees’ health with limitations in the name of preventing fraud and abuse, and would reinforce the health benefits detailed above.

Setting these requirements would build on earlier federal guidance, which encouraged (but did not require) plans to cover a 12-month supply of contraceptives. That recommendation echoed that of numerous medical experts and researchers, including the Centers for Disease Control and Prevention (CDC). 

These recommendations are based on a sizable body of research findings that “dispensing a 12-month supply at one time can increase the rate at which use of contraceptives continues, decrease the likelihood of unintended pregnancy, and result in cost savings.” For example, a 2011 study by Foster and colleagues found that dispensing a one-year supply of oral contraceptives helped women reduce their odds of an unplanned pregnancy by 30%, compared with dispensing only 1-3 packs at a time. Similarly, a 2019 study looking at the Department of Veterans Affairs estimated that one-year dispensing would help veterans avoid unplanned pregnancies (by 24 pregnancies per 1,000 women per year) and in the process also generate substantial savings for the department ($87 per woman per year, amounting to more than $2 million). 

A 2023 report found that improvements in contraceptive use and reductions in unplanned pregnancies accrue from eliminating unnecessary trips to a healthcare provider, which may require time off from work, travel costs, child care, and other expenses. These hurdles may be particularly problematic for people living in rural areas, as well as for low-income and uninsured people.

There are strong state-level precedents for requiring coverage of an extended supply of contraception. To date, 25 states and the District of Columbia have required private insurance plans and/or Medicaid plans to cover the dispensing of an extended supply of contraceptives, usually a 12-month supply. The Department of Veterans Affairs has also changed its policy as a result of this research to allow for one-year dispensing.

Similar benefits would accrue from covering an extended supply of OTC methods, including OTC oral contraceptives. Notably, a 2022 KFF survey found that 33% of hormonal contraceptive users report gaps in contraceptive use because they were unable to obtain their next supply on time—a clear indication that coverage of an extended supply would be beneficial. 

The full potential of OTC access to effective contraceptive products will only be reached if consumers can obtain them anywhere that OTC drugs and devices are sold, using their insurance and without any upfront out-of-pocket costs. Therefore, the federal government should require health plans to cover OTC contraceptives in as many locations as possible—ideally, anywhere that OTC drugs and devices are sold. 

At a minimum, this must include anywhere consumers can use their prescription benefit, including a drugstore pharmacy counter, an insurer’s mail-order pharmacy service, and any manufacturer’s sales site that connects to insurance. Health plans should be able to implement coverage at these locations with minimal changes to their claims procedures, discussed further below.

Additionally, the federal government should work with health plans and retailers to develop ways for consumers to obtain OTC contraceptives with no cost-sharing and no prescription at non-pharmacy retailers, which do not have the ability to process pharmacy claims. Ideally, enrollees would be able to use their insurance at the check-out register at any major retailer that carries these products—for example, by using a plan-issued OTC benefit card or an electronic coupon via a QR code. To make this work, health plans might need to partner with specific retailers, at least at first, so that they can negotiate prices and test out new technologies and procedures.

As a last resort for consumers, plans should also be required to cover the full cost of OTC contraceptives when an enrollee buys the product up front without their insurance, at any location, and then submits the receipt for after-the-fact reimbursement. However, after-the-fact reimbursement must never be used by health plans as a substitute for true point-of-sale coverage.

Setting these minimum requirements would help ensure that OTC contraceptive coverage is workable for enrollees and retailers. Moreover, they are needed to prevent coercion and ensure basic equity: Insurance red tape must not be allowed to push enrollees toward prescription products over OTC products or to negate the value of OTC coverage entirely.

The federal requirement to cover OTC COVID-19 tests provides proof-of-concept that these suggested policy changes are viable. Just weeks after the federal requirement was first announced, a KFF survey of the 13 largest insurance companies found that six of them were already providing direct coverage of OTC tests at in-network pharmacies, without any out-of-pocket costs, via special partnerships with specific retailers. The others were providing after-the-fact reimbursement for enrollees.

Developing ways for consumers to access coverage of OTC contraceptives at non-pharmacy retailers would help unlock the full potential of OTC contraceptive access. Consumers would be able to get OTC contraceptives and other covered OTC products at a wider variety of retailers, greatly expanding access and convenience. A debit card-like system, a payment app like Apple Wallet, or other mechanisms for point-of-access coverage would eliminate the bureaucracy around submitting claims and receipts that is frustrating for consumers and expensive for insurers. 

The use of benefit cards for coverage of OTC medical products without a prescription is already common in Medicare Advantage plans, with 87% of such plans offering some kind of benefit for OTC items in 2022. Benefit cards are also commonly used for health savings accounts (HSAs) and health flexible spending arrangements (health FSAs), which federal guidance has previously singled out as an option for OTC contraceptives. Benefit cards are also in use in other benefit programs, such as the Supplemental Nutrition Assistance Program (SNAP). 

Coverage for OTC contraceptives will not be workable if plans are allowed to restrict coverage to specific brands of OTC products or otherwise allowed to negate or undermine OTC contraceptive coverage through the use of formularies. Therefore, the federal government should require health plans to cover all brands of OTC contraceptive products. In addition, federal officials should make it clear that plans may not exclude coverage of OTC contraceptives because they are covering an “equivalent” prescription-only product. 

These recommendations would prevent health plans from excluding ground-breaking new OTC contraceptive products from their formularies and ensure that coverage of OTC products like oral contraceptives, condoms, and emergency contraceptives is not denied based on what specific brands a drugstore has in stock that day. 

Notably, health plan practices around OTC contraceptives are in some ways already in line with these recommendations. For example, several major health plans and pharmacy benefit managers (PBMs) did not list specific condom brands on their 2023 formularies (as they did for prescription products) but instead simply listed “condoms” or “male condoms” as being covered.

To make a new coverage requirement of OTC drugs meaningful to consumers, federal officials must determine clear parameters for implementation and must prioritize education, oversight, and enforcement. Health plans, PBMs, retailers, pharmacists, and others are key stakeholders and must be consulted on how to make it work smoothly. Specifically, the federal government must define clear processes for consumers to use their health insurance to cover OTC contraceptives at pharmacies (brick-and-mortar stores and online, including from the manufacturer). Further, federal officials must work with stakeholders to establish seamless processes to implement coverage at non-pharmacy retailers. Innovative approaches to pharmacy and non-pharmacy coverage could enable health insurance plans to negotiate prices lower than retail for OTC products, as they do for prescribed products. 

Pharmacy Claims

A uniform approach to processing OTC claims is particularly critical for claims processed at a pharmacy counter, according to a 2023 KFF report describing lessons from states that have required OTC coverage without a prescription. At its core, connecting pharmacy claims systems to a consumer’s insurance is a relatively simple technology fix. Specifically, the current processes, designed for prescription drugs and requiring a National Provider Identifier (NPI) number to indicate who has prescribed the drug, can be leveraged to include OTC products and easily connect a purchase to a consumer’s insurance. To date, where private or Medicaid plans are covering OTC products without a prescription, pharmacists have already employed a wide array of practices (e.g., using their own NPI, the pharmacy’s NPI, a dummy or blank NPI, or a state-specific universal NPI) that could be scaled and standardized. 

A clear nationwide standard, such as a national universal NPI for OTC products, would vastly reduce confusion and eliminate related problems (such as liability fears for pharmacists using their own NPI for a drug they did not prescribe). Federal officials should work with other expert bodies, including the National Association of Insurance Commissioners and the National Council of Prescription Drug Programs, to develop these types of standards and work out any necessary modifications to electronic claims systems.

Online Pharmacies

Nationwide standards would also be helpful for expanding OTC coverage without a prescription through online mail-order pharmacies. Health plans and PBMs will already have strong incentives to streamline this process for their own mail-order services. Federal officials should work with stakeholders to ensure that other online pharmacies—including the websites of major pharmacy chains, online contraception-focused services, and birth control manufacturers’ own websites—can accept a wide range of private and public insurance plans nationwide and can do so for OTC contraceptives specifically. 

Non-pharmacy Retailers

Ideally, health plans, PBMs, and retailers will partner to develop new ways of utilizing health coverage for OTC contraceptives and other OTC items away from pharmacy counters and online pharmacy services. Federal agencies will need to help facilitate these partnerships and help identify the technologies and procedures needed to make it work.

Some technological options are already in practice in other areas. As described above, most Medicare Advantage plans have limited-use OTC benefit cards that enrollees can use at participating retailers, and similar debit card-like technology is used by HSAs and FSAs and by programs like SNAP. A mobile app solution, using technology similar to Apple Wallet, or other electronic payment methods might provide similar advantages. Additional options might involve coupons delivered by QR codes or similar technologies that enrollees could use at retail stores to obtain covered OTC products without out-of-pocket costs. Federal officials should work with stakeholders to encourage this type of innovation and help promulgate models that work well. 

After-the-fact Reimbursement

As noted above, after-the-fact reimbursement should be a last resort for enrollees, because requiring the enrollee to pay up-front out-of-pocket undermines the goals of the ACA’s preventive services requirement. If health plans make coverage work well at in-network locations, enrollees will have little reason to go out-of-network and face the numerous disincentives involved with that process, including up-front costs, keeping and submitting receipts, filling out claims forms, and following up in case of a denial. 

However, reimbursement must be an option, and health plans should be required to make this process as easy for enrollees as possible. For example, they should adopt best practices used by HSAs and FSAs, including electronic apps to easily scan and submit receipts. In addition, plans should be required to provide coverage for purchases even at out-of-network locations. That is because having to pay up-front out-of-pocket would already be a major access barrier for the enrollee, and an enrollee might not even realize they were at an out-of-network location until the claim was denied, weeks or months later. 

Education

As federal agencies help stakeholders work through these implementation issues, they will also need to take an active role in educating consumers, pharmacists, retailers, and health plans about federal requirements and how they are being implemented. Consumers will need to learn that their plan covers OTC contraceptives without a prescription, where they can access coverage for these OTC products, and how to navigate that process depending on their point of access. Pharmacists and other retail staff will need to learn new procedures for how to process claims for OTC products, check out consumers using OTC benefit cards or insurance coupons, or use other electronic payment methods.

In some cases, federal agencies will need to provide that information directly, such as offering clear and thorough information to health plans and PBMs about their obligations under the ACA. In other areas, agencies should partner with stakeholders to ensure that they are providing that communication. For example, they should require health plans to provide enrollees with information about how to use their benefits; encourage retailers to help customers understand where and how to purchase OTC products with their insurance; and work with national trade associations and industry groups to educate and train pharmacists and pharmacies about how to process OTC claims. Federal agencies should also consider investing in and supporting multilingual public education efforts about coverage of OTC contraceptives.

Oversight and Enforcement

Finally, the federal government will need to work with state regulators to monitor compliance, clearly communicate the consequences for health plans and PBMs that fail to comply, and take corrective action against companies when necessary. One tactic that may be helpful would be for federal agencies to publicly announce violations and enforcement action, as a warning and a reminder to other companies. The government cannot simply trust that health plans and PBMs will follow federal requirements, given their poor track record in meeting their obligations under the ACA’s preventive services requirement. 

If the federal government can help stakeholders work through these implementation and communication challenges and provide the necessary oversight and enforcement, the benefits would go well beyond coverage for OTC contraceptives and other OTC preventive items. Rather, federal officials should view this as an opportunity to help transform the way the health insurance system treats OTC products, consistent with the ACA’s clear design to make preventive products and services affordable and accessible.

Coverage of OTC contraceptives received a major boost in early 2024 when CVS Caremark—the largest of the big three PBMs that dominate the U.S. market— announced that many of its drug plans would cover Opill without cost-sharing and without a prescription. Opill will be covered by default on the PBM’s preventive drug list, and will be included in insurance plans offered by Aetna (which is also part of CVS Health). Self-insured employers using CVS Caremark as their PBM could opt out, as could employers with religious exemptions to the ACA’s contraceptive coverage requirement. All told, given the reach of CVS Caremark and Aetna, this decision will impact up to 100 million people.

Notably, CVS Caremark’s notice to its network of pharmacies is simple and overcomes an operational question that some states have faced in implementing state laws that require coverage of OTC contraception: when insurance covers non-prescription products, whose prescriber number does the pharmacy use in the insurance claims system? CVS Caremark solves this issue by directing pharmacies to use the pharmacy’s National Provider Identifier (NPI) number in lieu of a prescribing provider’s NPI. The notice also provided a brief instruction on how to override a potential rejection of the claim. For consumers and pharmacy staff, the end result should be an experience that is nearly identical to what they are used to for prescription drugs.

CVS company officials reported to the Contraceptive Access Initiative that they were providing training on processing Opill claims to CVS Caremark call center staff and have also briefed their employer clients on the new coverage benefit. Consumer education would be left up to individual plans/employers. If coverage of OTC contraceptives is to be successful, consumers will need to learn about this new benefit and how to access it.

Last updated: May 2024