Insurance Coverage of OTC Oral Contraceptives: Lessons from the Field

In July 2023, the U.S. Food and Drug Administration (FDA) approved the first over-the-counter (OTC) daily oral contraceptive pill, Opill. Despite years of OTC access to contraception such as Plan B and condoms, there has been little research on how private insurance plans or Medicaid programs cover non-prescribed OTC contraception and whether they do so without cost-sharing. Currently, federal law requires most private health insurance plans and Medicaid expansion programs to cover, without cost-sharing, the full range of FDA-approved contraceptive methods. Health plans usually require a prescription to indicate medical necessity and trigger coverage, including for methods that do not require a prescription to purchase. Traditional Medicaid programs are required to cover family planning services without cost-sharing, though states have flexibility in which contraceptive methods they cover.

Earlier this year, the Biden administration issued an executive order directing the U.S. Departments of Labor, Health and Human Services, and Treasury to consider new actions to improve access to affordable contraception, which includes promoting increased access to and coverage of OTC contraception at no costs to consumers. Currently, the guidance from these three agencies “encourages” private plans to cover OTC contraceptives without cost-sharing but does not require it.

Six states, however, have passed laws requiring state-regulated health plans to cover, without cost-sharing, certain OTC contraception without a prescription and seven states use state-only funds to provide this coverage for Medicaid enrollees. Twenty-seven states and D.C. have expanded pharmacist prescribing of at least some contraceptive methods, which could facilitate coverage of OTC methods but few pharmacists have training or time, and those that do, are not compensated for counseling patients.

This report is based on 35 structured interviews conducted from January to August 2023, with nearly 80 experts and key players such as pharmacists, health plans, and state Medicaid officials involved in the coverage and provision of OTC contraception in seven states with one or more of these coverage approaches (IL, NJ, NM, NY, OR, UT, and WA). It discusses the challenges and opportunities identified by the interviewees that they have experienced regarding coverage under private health insurance and Medicaid and reviews potential options for operationalizing insurance coverage of non-prescribed OTC contraception such as Opill. These experiences are also informed by recent policies that required plans to pay for OTC COVID tests and more recently by interest in expanding access to Narcan, now available without a prescription.

With the imminent availability of Opill and the possibility of a new OTC oral contraceptive pill in the near future, the issue of coverage has been raised by many stakeholders. While some states have moved forward with coverage requirements for OTC contraceptives, operational issues and concerns such as pharmacy and pharmacists’ capacity to submit claims for OTC products, a lack of uniformity and oversight of health plans’ billing protocols, and low awareness of these policies remain as implementation challenges. While required coverage of OTC contraception without a prescription and without patient cost-sharing would increase access, it could also create a precedent for coverage of other OTC treatments, raising issues of cost for insurers and state Medicaid programs.

Key Takeaways

• Across the spectrum of stakeholders interviewed, there is interest and engagement about the potential of an over-the-counter (OTC) contraceptive pill to broaden access to contraceptive options, but many raised concerns about challenges related to affordability, implementation, and coverage options based on experiences in several states.
• In states where OTC methods are currently covered without a prescription by Medicaid or private plans, consumers generally need to obtain OTC contraception at the pharmacy counter, where they can show evidence of coverage and get their pharmacy claim processed. In some private health plans, consumers can pay for OTC contraception up front and then seek reimbursement from the plan, but that could be financially and administratively burdensome for consumers and is rarely used.
• Interviewees indicated that there has been little specific outreach about this covered benefit to pharmacies in states where OTC contraception, such as emergency contraception and condoms, is covered without a prescription in private insurance or for Medicaid enrollees. Health plan interviewees reported that they receive few claims for non-prescribed OTC contraception, which could be due to low awareness of the benefit and how to bill for it. Few plans provide information about the benefit in their enrollee-facing information.
• State Medicaid programs need to submit a State Plan Amendment (SPA) to the Centers for Medicare & Medicaid Services (CMS) to cover OTC drugs and products. After obtaining this authorization, states can determine which OTC drugs and products their Medicaid programs will cover. However, federal Medicaid law requires a prescription to cover all drugs, even those that are available without a prescription. A few states have chosen to use their own funds, without federal matching dollars, to pay for OTC contraceptives for Medicaid enrollees without a prescription. Federal funds will remain unavailable to cover OTC drugs without a prescription unless Congress amends the federal Medicaid law.
• In states where coverage for OTC contraception is provided without a prescription, interviewees noted that billing protocols for OTC contraception vary widely by health insurance plan and even within state Medicaid programs, leading to confusion for some pharmacists. States/state agencies do not usually determine the billing mechanism to be used.
• Some interviewees raised the importance of addressing quantity limits for OTC contraception. Interviewed health plans and a national PBM suggested that quantity limits have the potential to control fraud, waste, and abuse, which they cited as leading to higher costs for insurers.
• There has been limited communication about billing for non-prescribed OTC contraception between pharmacies, PBMs, health plans, and state insurance departments. Many interviewees from these sectors expressed that the mechanics of these state laws and how to operationalize them are unclear.
• While several interviewees expressed confidence that their current billing process for other non-prescribed OTC contraception can easily accommodate, most state-level discussions on insurance coverage of this product are in the preliminary stages.
• In some states, pharmacist prescribing plays an integral intermediary role in access to contraception where a prescription is required for coverage by removing the need to obtain a prescription from a physician or other prescriber. However, challenges and shortcomings with this approach persist, such as pharmacist time constraints, training requirements, and low or no payment from health plans for pharmacists’ services.
• When interviewees were asked what general suggestions they had for how to best implement coverage for Opill without a prescription, many stressed the importance of having a standardized billing process to help facilitate the transition to covering OTC contraception such as without a prescription as well as the role of clearer federal guidance regarding what plans are required to cover.
• While state actions to increase access to non-prescribed OTC contraception without cost-sharing can be meaningful for people with private insurance, the reach of these actions is limited, in large part because the majority of those with private health insurance are enrolled in self-funded employer plans, which are not subject to state insurance requirements.
• The extent to which OTC contraceptive pills can broaden the availability of effective contraceptives to those who seek them will depend on many factors including state and federal policies, pharmacy engagement, pharmacy stocking and signage, religious refusals, affordability, and insurance coverage, as well as public awareness and education.