by US Rx Care | Nov 13, 2019 | Health care costs
A new study has found that while group health plan
costs will continue growing at the same rate as in the last few years (about 4%
a year), the increases would be far less were it not for the spiraling costs of
high-cost specialty prescription drugs.
The 2020 “Segal Health Plan Cost Trend Survey,” which
polled health insurers, third party administrators, pharmacy benefit managers
(PBMs) and other payers, found that chemotherapy drugs and other specialty
pharmaceuticals are having an outsized effect on overall health claims
payments.
Unfortunately, this is forcing plan sponsors to figure
out how to balance coverage of life-saving drugs with plan affordability. But
there are steps you can take to rein in drug cost inflation.
Payers expect that pharmaceutical costs will increase by 7.1% in 2020 from this year and that the cost of specialty drugs will double that inflationary rate at 15.4%.
Rebates account for a significant part of the
pharmaceutical equation. Survey respondents said that they expect the average impact
of rebates would reduce overall drug price inflation by about 1.5%.
The rising cost of brand-name drug expenditures is due
to drug price inflation primarily, although one-third of the increase is due to
more prescriptions being filled.
Other findings in the report by Segal, a health and
retirement consulting firm, are:
- Price increases are the primary driver of medical and drug trends.
- Double-digit specialty drug costs are mostly driven by price increases and the introduction of new and more expensive drugs.
- Reimbursement rates for hospital networks are projected to increase at a higher rate than physician claims.
- Plan cost trends continue to outpace both inflation and wage growth by a factor of more than two.
The study notes that projected costs in earlier
surveys have always been lower than actual inflation of medical treatment and
drug outlays. To deal with these increasing costs, Segal identified the top
health plan cost-containment strategies that are in use in 2019:
- Use of health care transparency tools.
- Expanding pharmaceutical management for non-specialty drugs.
- Expanding pharmaceutical management for specialty drugs.
- Offering telehealth/virtual care.
- Value-based contracting.
What you can do
Segal recommends the following tactics for managing drug benefit costs, as well as for contracts with PBMs:
Aim for innovative contracting with PBMs ― Hold PBMs contractually accountable for
controlling costs. Contract terms can include unique specialty-drug pricing
guarantees, performance-based rebates, direct contracting with regional
specialty pharmacies and adoption of value-based formularies.
Expand clinical checks ― Amend plan terms to include clinical
safeguards like step therapy, targeted prior authorization for high-cost
services and quantity-duration limits based on Food and Drug Administration
guidelines.
Plan benefit design ― Use benefit designs to increase the use of generics
and lower-cost brand-name drugs, in order to help manage drug cost inflation.
This can include the use of tiered designs which place clinically effective,
lower-cost drugs into lower tiers at lower cost-sharing.
Also, more plan sponsors that charge drug coinsurance offer point-of-sale
rebates that lower participants’ out-of-pocket expenses.
Auditing ―
Conduct periodic audits of your PBM and carefully evaluate drug classification
against contract terms and pricing guarantees. This is important because some
PBMs continue to apply complicated pricing reclassifications that can increase
your costs.
by US Rx Care | Nov 12, 2019 | Uncategorized
There are typically two approaches to securing health coverage for your staff – group health insurance or self-funding.
Self-funding, however, can be costly and risky and is usually only done by larger organizations with thousands of employees. But there is a hybrid model that can help small and mid-sized employers provide their staff with affordable health coverage: partial self-insuring.
To understand how partial self-insuring works, we should start with the basics of what a self-insured plan is. In a fully self-insured plan, the employer bears the risk of all costs incurred under the plan for claims and administration.
In essence, the employer acts as the insurer and pays claims from a fund that it pays into along with employees, who pay their share of premiums into the fund.
Also, the employer will usually contract with a third-party administrator or an insurance company to process claims and provide access to a network of physicians and other health care providers.
How partial self-insuring works
Partially self-insured arrangements provide some of the benefits of being self-funded but without all the risks, while plans will have the same benefits as insured plans have. Here’s how they work:
- Employers and their employees still pay premiums, a portion of which goes into an account that will be tapped to pay the first portion of claims that are filed. That means that the employer is acting as the insurer for those claims.
- The other portion of the premium is paid to an insurance company. This is sometimes known as a stop-loss policy.
- Plans have an aggregate deductible for all claims filed by employees, meaning that once that deductible is reached an insurer starts paying the claims instead.
- Premiums are calculated to fund the claims to the aggregate deductible amount. In other words, the employer and employees are paying for the worst-case scenario in each policy year.
- It is possible for the employer to get a refund at the end of the policy year if the total claims come in at a level that is less than expected. The employer can either be reimbursed for this amount or use those funds for the next policy year.
Lower risk than fully self-insured plan
Typically, an employer should have at least 25 workers if it is considering a partial self-funded arrangement, but we’ve seen plans with fewer enrollees.
Many employers will opt for a partially self-insured plan to save money, but these types of plans also allow an employer to design a more useful and valuable plan for its workers.
The key to making this work is cost control, without which claims can spiral and drive up premiums at renewal.
Knowing exactly how much to set aside for reserves and how much you should set your employees’ premiums, deductibles and other cost-sharing can be complicated.
But with the right mixture of benefits, plan design and education, you can control behavior, which drives claims, in order to keep renewal rates from increasing too much each year.
The fine print
That said, there are some reasons partial self-insuring isn’t for all employers:
- There is additional responsibility, as the employer basically becomes an insurer or sorts.
- There is additional paperwork for these plans since the employer also becomes a payer.
- There are compliance issues that the employer needs to consider (ERISA and the Affordable Care Act, for example).
- There is some additional risk to the employer, as it is paying claims.
- If you have too many claims, you could face a non-renewal by your stop-loss insurer. If you are cancelled, it may be difficult to seamlessly enter the insured market.
by US Rx Care | Nov 8, 2019 | Health care costs
By now you should be prepared and ready to go for your 2020 employee benefits open enrollment. You should have all your plan documents and have prepared or held presentations for your staff to explain the benefits package and any major changes to the plans that you offer.
Employees should be familiar with how to use the enrollment portal and who they should talk to if they have questions.
To be on the safe side, there are a few things you should do to make sure you maximize enrollment, that your employees have the correct materials and that you are in compliance with the law.
Take an active role — Most of the policy selection is done online, but that doesn’t mean you can’t support your employees and let them know you are there in case they have any questions or are confused about any aspect of the benefits package.
You should want all of your employees to choose the package that best fits their individual needs. To ensure they make the best possible choices and have a successful experience, motivate them to take an active role in their education by encouraging questions and showing them where they can find answers in the online enrollment platform.
Last-minute blasts — You’ve probably sent a few e-mail reminders to your staff, but most certainly some of them still missed those communications. Make sure you send a few extra blasts at different times of the week, like Tuesday at 10 a.m. and another on Thursday at 2 p.m.
You should also have all of your employees’ mobile phone numbers, and sending them reminder text messages is a sure-fire way to get in front of the ones who may not be as diligent about monitoring their e-mail.
Double-check your plan materials — Do a final review of your plan documents for any necessary updates regarding member eligibility, plan benefits, new vendors and name changes to ensure that the current state of your benefits offerings is complete and accurate.
Also, do a final review of your summary of benefits and coverage (SBC) and your summary plan description (SPD) to make sure they reflect any changes from the prior year. This is crucial as both documents are required under the law.
The SPD may include the elements necessary to meet the requirements of the SBC, but it also needs to be a separate document that can be handed out with respect to each coverage option made available to the participants.
To account for the annual open enrollment window, double-check your open enrollment schedule, deadlines, documents and forms, coverage options and changes, phone numbers, and website and mobile information for contacting resources, statement of current coverage, and plan-specific summaries and rates.
Identify staff that didn’t enroll last year — To make sure you maximize participation and that nobody misses out, run a list of all your staff who didn’t sign up for benefits last year so you can approach them individually and convey the importance of securing health coverage.
While you’re at it, make sure that all of your new hires in the past year have also signed up for coverage and that you didn’t miss them when sending out reminders about open enrollment.
Check compliance with ACA — If you are an “applicable large employer” under the Affordable Care Act, meaning that you have more than 50 full-time or full-time equivalent employees, you are obligated under the law to provide health coverage to your staff that is “affordable” and covers 10 essential benefits.
There is a figure for what is considered affordable, which changes every year. For your plan to be considered ACA-compliant, it must not cost an employee more than 9.78% of their household income.
ACA refresher — The ACA remains as controversial and misunderstood as ever and most people only know what they have heard about it from their favorite news outlet, which can result in a skewed, and often incorrect understanding of the law.
Also, there have been a number of changes to the law during the last few years, the biggest of which is the elimination of the penalties associated with individuals not securing health insurance as required by the individual mandate portion of the law.
Give your staff a last-minute refresher to help them understand how the ACA affects their health insurance — and what the employer’s and their obligations are under the law.
by US Rx Care | Oct 29, 2019 | Health care costs
President Trump has issued a multi-faceted executive order to reduce costs and increase pricing transparency in the health care and insurance system.
The parts of his order that could affect benefits that are part of employer-sponsored plans include:
Helping people with chronic conditions
The order directs the Treasury Department to issue guidance that can help people with chronic conditions who are enrolled in high-deductible health plans (HDHPs) with attached health savings accounts.
The guidance, which was issued in July, requires HDHP insurers to pay for a number of preventative services and medications with no copay or outlay by the enrollee.
Increasing health FSA carryover amount
The current maximum amount that someone can carry over on a flexible savings account is $500.
Under these arrangements, a portion of the employee’s pre-tax salary is transferred to their FSA, which can be used to pay for medical services, including copays and any out-of-pocket payments, as well as medications and other health-related services and items.
FSAs have a “use it or lose it” provision which means any funds that are left in the account at the end of the year are forfeited. This means that if, for example, you contribute $1,000 in 2019 and spend $500 during 2019 on qualified medical expenses, the unspent $500 would roll over into 2020.
Now it seems that this sum could be increased even further under the president’s executive order, which requires the Treasury Department to issue new guidance by Sept. 22.
This development is welcome news to individuals who do not always exhaust their FSA accounts as anticipated.
Increasing price transparency
The executive order also required the Treasury, the Department of Labor and the Department of Health and Human Services to seek comments on a proposal that would require hospitals and health care providers to publish their rates for various procedures, in an effort to improve pricing transparency.
In July, the Medicare Outpatient Prospective Payment System proposed new rules that would require hospitals to not only publish their list prices, but also the prices they have negotiated with various health insurance plans for a set of services that they could theoretically shop for ahead of time (think MRIs or knee surgeries).
This comes after a Centers for Medicare & Medicaid Services (CMS) order in January requiring hospitals to publish their list of retail charges for health care services.
By putting prices out there, the Trump administration believes that hospitals will be keener to compete on price, which could reduce overall pricing for these types of services.
The new rule goes into effect on January 2020. At that time, hospitals will be required to post negotiated rates for at least 300 services (which can be both inpatient and outpatient services) and prices for all patients (those in health plans and those on Medicare).
Of the 300 services, 70 will be pre-chosen by the CMS and each individual hospital will be free to choose which other services it wants to show rates for, as long as the total amount is 300 different services.
by US Rx Care | Oct 22, 2019 | Health care costs
A new survey has found that many American
workers are struggling with medical bills even though they have
employer-sponsored health plans.
The good news from the survey was that 81%
of respondents said they had health insurance, which meant they were 19% more
financially fit than people without insurance. They were also happier.
The survey found that:
- One in 10 employees who have
insurance and pay part of the premiums, also have annual out-of-pocket medical
bills of more than $10,000.
- 33% of insured employees carry
medical debts that they are trying pay down.
- Insured employees that carry
medical debt are 42% less financially fit than those who do not have such debt.
Carrying debts related to medical care also
affects employees’ health. The survey found that workers with money problems
are:
- Three times more likely to
suffer from anxiety and panic attacks.
- Eight times more likely to have
sleep problems.
- Four times more likely to
suffer from depression and have suicidal thoughts.
Stress from medical debts can also affect
worker productivity. Of employees with medical debt problems:
- 24% have troubled relationships with co-workers.
- 22% cannot finish their daily tasks.
Lost productivity from these two issues costs businesses up to 14% of payroll expenses, the survey found.
What can you do
Given that health care costs show no signs
of abating, what can you do for your low-wage employees and also ensure that
your own health insurance premiums don’t spiral out of control? Here are some
options:
Vary premium level – If you have a mix of highly paid staff and lower-wage workers, you can create a tiered system where the latter receive greater premium contributions from you than do the former. About a quarter of large employers vary employee health insurance premiums. This is something that’s not feasible for all businesses, particularly if money is tight.
Offer plans with generous benefits – You can offer a slate of plans, from ones with larger copays and deductibles to those with low or no out-of-pocket costs for those employees willing to pay more in premium. This way, your low-wage workers have a choice of health plans which include lower deductibles and lower variability in potential out-of-pocket liability.
Offer skinny plans – Skinny plans still cover the 10 benefits required by the Affordable Care Act, but they typically have a narrow network of providers in exchange for low out-of-pocket costs for the enrollee. While this option is good for your younger and healthier worker, it is often a non-starter for those who have existing health issues.
Carefully review incentives and subsidies – Employers should design wellness incentives that do not penalize low-wage workers, who are more likely to smoke, (many employers impose a tobacco surcharge averaging $600 a year). Employers should couple tobacco surcharges with tobacco-cessation programs, and waive surcharges for employees who are trying to quit.
Offer plans with modern attributes – Telemedicine services can reduce health care costs, as they reduce the worker’s need to take time off for an appointment and also lower the cost of delivery of care.
Push for lower prices and costs – You should coordinate with us, so we can work with your health plans and providers to reduce costs.
by US Rx Care | Oct 15, 2019 | Health care costs
Short-term Health Plans Skimp on Medical Payments
A new report by the trade publication Modern Healthcare shows just how little short-term care plans spend on enrollees’ medical claims.
The report found that some plans spent as little as 9 cents of every premium dollar they collected on medical care.
The average paid out among the short-term plans analyzed in a report by the National Association of Insurance Commissioners was 39.2%. That’s a far cry from the 80% of premiums health plans are required to spend on medical care to comply with the Affordable Care Act.
The figures shine a harsh light on just how little short-term health plan policyholders benefit from the plans they purchase.
The Trump administration issued regulations in 2018 that extended the amount of time someone can enroll in a short-term health plan to 12 months, and policyholders can renew coverage for a maximum of 36 months.
These plans do not have to comport with the ACA, like not covering 10 essential benefits and not having to cover pre-existing conditions – and they can even exclude coverage for medications.
2018 short-term health plan medical outlays*
Cambia Health Solutions: 9.3%
Spectrum Health: 36.1%
Genève Holdings: 36.2%
UnitedHealth Group: 37.3%
Medical Mutual of Ohio: 40.4%
Blue Cross and Blue Shield of SC: 44.2%
* As a percentage of premium charged
The above chart means that for every dollar collected in premium, the average short-term plan spent 39 cents on medical care for policyholders – with the rest spent on administration or kept as profit.
Short-term plans usually lack the consumer protections found in ACA-compliant plans and they have gaps in coverage that may not be readily apparent in marketing materials, which makes it difficult to compare plans and understand the full scope of coverage.
Importantly, as stated above, they are not required to and usually don’t cover the 10 essential health benefits that the ACA requires compliant plans to cover at no cost to the enrollee.
This scant coverage makes these plans much cheaper than ACA-compliant plans.
Here are some of the features of short-term plans that ACA-compliant plans are not permitted to offer:
Use health histories to determine who can get coverage – Applicants for short-term plans must often answer a health questionnaire used to screen out applicants with symptoms of an illness or condition – even if not yet diagnosed or treated. Some plans also exclude coverage for conditions for which medical advice, diagnosis, care or treatment was recommended or received in the prior 12 months.
Exclude key service categories from covered benefits – Few if any short-term plans cover maternity. Prescription drugs are not always covered, or they are only partially covered. Some plans exclude coverage for mental health, substance use disorder services, and tobacco cessation treatment.
No pre-existing conditions – Few short-term plans cover any pre-existing conditions. Typically, they cover only what’s listed in the Schedule of Benefits. If one of those is a pre-existing condition, it will likely have a cap of no more than $30,000. Also, insurers will often deny claims or cancel coverage for conditions they consider to be pre-existing.
Covered services limited – Many short-term plans have covered benefit limits like:
- $1,000 per day for a hospital room and board
- $1,250 a day for intensive care
- $50 a day for doctor visits while in hospital
- Total benefits are often capped at little more than $100,000 per year.
Renewal not guaranteed – Short-term plans will rarely guarantee renewal. If an enrollee suddenly develops a new health condition, the plan will likely not renew them.
