by US Rx Care | Sep 4, 2019 | Health care costs
It’s looking more and more likely that a
federal appeals court will strike down the Affordable Care Act’s individual
mandate, which requires Americans to carry health insurance, either through
coverage they receive from their employer or buying it themselves.
The case challenging the landmark health
insurance law is currently before the 5th U.S. Circuit Court of
Appeals and is being heard by a three-judge panel.
Two of the judges, appointed by
Republicans, have signaled that they would strike down the individual mandate
but not the remainder of the law, including the employer mandate, because of
the lack of an individual penalty.
The Justice Department would normally be
defending the law of the land, but it has stepped away from the task and
signaled that it would prefer to see the law abolished. At issue is the repeal
by Congress in late 2017 of penalties for individuals that do not secure
coverage as required by the law.
Attorneys general from Republican states
banded together to challenge the entire law after the individual penalty was
abolished after Trump signed a tax bill that reduced the tax penalty to zero
dollars. They argued that if that penalty is no longer applicable, the rest of
the ACA is null and void.
According to trade press reports, the two
Republican-appointed judges probed the contention by Republican states’
attorneys general that the getting rid of the individual penalty nullifies the
entire law. The two judges’ line of questioning hinted at their skepticism of
that argument.
The background
The case is before the 5th
Circuit after a federal district court judge sided with the argument by Republican
state attorneys general that the individual mandate is unconstitutional and
could not be severed from the rest of the ACA, and hence the entire law must be
invalidated.
When the Justice Department declined to
defend the law, attorneys general from several Democratic states House
representatives appealed the ruling.
Lawyers for the Democratic states said that
the plaintiffs needed to prove that Congress intended for the entire ACA to be
struck down when it passed legislation to get rid of penalties.
The court has not made a decision on the
case yet, but whatever its ruling, it will be appealed to the U.S. Supreme
Court. Attempts to overturn the ACA at the Supreme Court have met stiff
resistance.
In 2012, a divided U.S. Supreme Court
upheld most of the law’s provisions, including the individual mandate, which
requires people to obtain insurance or pay a penalty.
The Supreme Court’s conservative majority
found Congress could not constitutionally order people to buy insurance. But
Chief Justice John Roberts joined the court’s four liberal members to hold that
the mandate was a valid exercise of Congress’s tax power.
by US Rx Care | Sep 4, 2019 | Pharmacy Benefit
The Self-Insurance Institute of America’s National Educational Conference is right around the corner and we hope to see you in San Francisco 9/30 – 10/2.
Please contact Mark Mincy at mmincy@us-rxcare.com to schedule a meeting to discuss how we can save your clients up to 50% in pharmacy spend without changing Benefits (or PBMs).
by US Rx Care | Aug 27, 2019 | Health care costs
Diabetes is a devastating illness – and not just for those with the disease. Employers are also shouldering massive and increasing direct and indirect costs due to diabetes.
Diabetes afflicts more than 11% of the adult population, including about 6.3% of full-time workers and 9.1% of part-time workers.
Adults with diabetes incur more than $8,480 in direct treatment costs, on average. Those who are insured spend even more.
A 2016 report from the Health Care Cost Institute estimated that insured workers with diabetes spend more than $16,000 on health care costs per year. Those without diabetes, on average, generate about $4,396 in medical costs per annum.
Indirect costs
Employers aren’t just paying more in direct health care costs and insurance premiums. They also pay via lost productivity.
On average, those with diabetes miss an extra week of work – 5.5 days – compared to other workers, according to Gallup estimates. All told, that adds up to 45 million missed workdays and productivity costs to U.S. employers of $4 billion.
And for employers, these costs may represent just the tip of the iceberg. The Centers for Disease Control (CDC) estimates that more than 114 million adults in the U.S. – a third of the workforce – have undiagnosed diabetes or prediabetes.
What can employers do?
The CDC recommends that employers design wellness programs that specifically target improvements in the following areas:
- Exercise and activity levels
- Smoking
- Hypertension
- Blood cholesterol
- High blood glucose
- Weight/obesity
There also are a number of measures employers can take to help mitigate some of the costs to the organization.
- Offer ongoing counseling with professional dieticians. Employees that regularly meet with dieticians who can help them set small, manageable goals for themselves, make significant and measurable health improvements, according to a 2016 study. The research found that they lost 5.5% of their body weight and reduced blood glucose levels.
- Start a walking club. The American Diabetes Association’s Stop Diabetes @ Work program recommends that employers encourage company walking clubs to attend diabetes walk-a-thons like Step Out: Walk to Cure Diabetes, or host a Community Walk to Cure Diabetes.
You can find resources, including posters, newsletter articles, training plans, and walking guides, at diabetes.org. - Encourage self-assessment and screening. According to the CDC, 30% of people with diabetes aren’t even aware of it. Workplace screenings are easy and effective. Many employers provide incentives for workers to participate via reduced insurance copays or even cash payments. All screenings should be confidential and employers should not penalize employees who have diabetes, as this could violate the Americans with Disabilities Act.
- Encourage smokers to quit. Diabetics who smoke have far higher medical costs on average than non-smoking diabetics or non-diabetic smokers. Discouraging tobacco use can pay off in the long run.
With so much at stake, a robust workplace program to fight diabetes can generate a significant return on investment.
The American Diabetes Association estimates that preventing or delaying the onset of diabetes in just one prediabetic employee can generate more than $50,000 in direct and indirect cost savings over five years.
by US Rx Care | Aug 20, 2019 | Uncategorized
A new report by Sun Life Insurance Co. highlights
the top high-cost claim conditions that plague the U.S. health care system and
account for more than half of all catastrophic or unpredictable claims costs.
The top 10 costliest claim conditions
comprised over half (51.8%) of the $3 billion that Sun Life reimbursed to stop-loss
policyholders from 2014 to 2017.
Stop-loss insurance (also known as excess
insurance) is a product that provides protection against high-cost claims. It
is purchased by employers that self-fund their own health plans, but do not
want to assume 100% of the liability for losses arising from the plans.
The “2018 Stop-Loss Research Report,” which Sun Life has been publishing annually for the past six years, provides a glimpse into the kinds of claims that can have an outsized effect on both insured and self-insured employers’ health plans and can drive overall expenditures.
Here are some of the other main highlights
from the study:
- Cancer treatment costs comprised 27% of all stop-loss claim reimbursements between 2014 and 2017.
- The number of health plan enrollees that had claims costing more than $1 million increased by 87% during the four-year study period. In 2017, this group comprised 2.1% of claims but accounted for 20% of all stop-loss claims reimbursements.
- The aggregate costs of injectable drugs that were part of claims that cost more than $1 million grew 80% from 2014 to 2017.
The most expensive catastrophic claims and
the amounts Sun Life paid out in the aggregate between 2014 and 2017 are as
follows:
- Malignant neoplasm (cancer) – Total paid out: $564 million (portion of total catastrophic claims: 19%)
- Leukemia, lymphoma, and/or multiple myeloma (cancers) – $235 million (8%)
- Chronic/end-stage renal disease (kidneys) – $153 million (5%)
- Congenital anomalies (conditions present at birth) – $115 million (4%)
- Transplant – $103 million (3.5%)
- Septicemia (infection) – $88.5 million (3%)
- Complications of surgical and medical care – $78 million (2.5%)
- Disorders relating to short gestation and low birth weight (premature birth) – $74 million (2.5%)
- Liveborn (short gestation/low birth rate, and congenital anomalies) – $69 million (2%)
- Hemophilia/bleeding disorder – $68 million (2%)
Injectable drug costs
Injectable drugs (which include those
delivered by IV or that are self-administered injectable medications) accounted
for 8.5% of the total paid out for high-cost claims.
But that’s just the average for the
four-year period. Injectable drugs are accounting for a greater share of
overall catastrophic claims costs, reaching 9.3% in 2017.
In 2017 alone, 418 drugs contributed to the
total $186.3 million that was spent on injectable medications for high-cost
claims. But, 62% (or $114.7 million) of the cost was attributed to the top 20.
The top five medications accounted for nearly 30%.
Please note that the injectable drugs on
the high-cost list are there for different reasons. Some are on the list
because of the frequency (how often they are used and how many patients are
given the drugs) that they are administered, and others are there because their
cost is extremely high.
As an example, the report points to the two
top injectable treatments – cancer drugs Yervoy and Neulasta.
Neulasta (used to reduce the chance of
infection in patients undergoing chemotherapy) was administered to 354 patients
and cost on average $33,800 per dose.
On the other hand, Yervoy, used to treat
melanoma that has spread or cannot be removed by surgery, was administered to
just 43 patients, but the cost per dose was $323,000.
by US Rx Care | Aug 13, 2019 | Uncategorized
The IRS has announced new health savings
account contribution maximums for the 2020 health insurance plan year.
Employees who have an HSA linked to a
high-deductible health plan (HDHP) will be able to contribute to their HSA up
to a certain level to help pay for health care and pharmaceutical expenses.
Funds going into your employees’ HSA accounts are deducted before taxes during each paycheck and the balance can be carried over from year to year.
Many HSAs also allow employees to invest
the funds like they would with a 401(k). Because of this, HSAs have become a savings
vehicle of sorts for people who are saving for health care expenses they are
expecting in retirement.
HSAs can only be offered with an attached HDHP.
If you as an employer also contribute or
partially match your employees’ contributions, they benefit even more,
especially when compounding investment returns build up in the long term.
The IRS adjusts contribution limits for
HSAs yearly based on inflation. For 2020, those limits will be:
- $3,550 for individual coverage
under an attached HDHP (up $50 from 2019).
- $7,100 for family coverage (up $100
from 2019).
Also, remember that individuals who are 55
or older can make an additional $1,000 in catch-up contributions.
Besides the contribution maximum
increasing, the deductible requirement for an attached HDHP will also climb for
2020:
- For individual HDHPs, the
deductible amount must be between $1,400 and $6,900. That’s compared with
$1,350 and $6,750 in 2019.
- For families, the range is
$2,800 to $13,800. That’s up from $2,700 and $13,600 in 2019.
Long-term benefits
One of the best benefits from an HSA is the
long-term advantage of being able to carry over balances year after year and
let it build up for medical expenses in retirement. But, one of the key points
that your employees should know is that if they use the funds in their HSAs for
purposes other than qualified medical expenses, they have to pay a 20% penalty.
The website Investopedia recommends that your employees:
- Max out their HSA contribution
each year. If they do so, the amount they can save over the long term only
grows through compounding.
- Hold off on spending
contributions now, and try to not use HSA funds for current medical expenses.
- Make sure they only use the
money for qualified medical expenses, so they don’t have to pay penalties of
20% plus regular income tax on their withdrawals.
- Invest contributions for the
long run. For example, if you’re currently invested in a mix of 80% stocks and
20% bonds, you should probably invest your HSA that way, too.
- Use the account once they’re 65
or older. An added benefit to waiting until you’re at least 65 to spend your
HSA balance is that the 20% penalty for withdrawing funds for purposes other
than qualified medical expenses doesn’t apply. But, you will have to pay income
tax if you don’t use the funds for qualified medical expenses.
by US Rx Care | Aug 8, 2019 | Uncategorized
In 2015, spending on prescription drugs grew 9%, faster than any other category of health care spending, according to the U.S. Centers for Medicare and Medicaid Services.
The report cited increased use of new medicines, price increases for existing ones, and more spending on generic drugs as the reasons for this growth. Increasingly, though, observers of the health care system point to one player – the pharmacy benefit manager.
PBMs are intermediaries, acting as go-betweens for insurance companies, self-insured employers, drug manufacturers and pharmacies. They can handle prescription claims administration for insurers and employers, facilitate mail-order drug delivery, market drugs to pharmacies, and manage formularies (lists of drugs for which health plans will reimburse patients.)
Express Scripts, which provides network-pharmacy claims processing, drug utilization review, and formulary management among other services, is the best-known PBM. CVS Caremark and UnitedHealth Group’s OptumRx are other major players.
A PBM typically has contracts with both insurers and pharmacies. It charges health plans fees for administering their prescription drug claims, and also negotiates the amounts that plans pay for each of the drugs.
At the same time, it creates the formularies that spell out the prices pharmacies receive for each drug on the lists. Commonly, the price the plan pays for a drug is more than the pharmacy receives for it. The PBM collects the difference between the two prices.
It can do this because the health plan does not know what the PBM’s arrangement is with the pharmacy, and vice versa. Also, a health plan does not know the details of the PBM’s arrangements with its competitors.
A PBM could charge one plan $200 for a month’s supply of an antidepressant, charge another plan $190 for the same drug, and sell it to a pharmacy for $170. None of the three parties knows what the other parties are paying or receiving.
In addition, drug manufacturers, who recognize the influence PBM’s have over the market, offer them rebates off the prices of their products.
Questionable transparency
In theory, the PBMs pass these rebates back to the health plans, who use them to moderate premium increases. However, because these arrangements are also confidential, the extent to which these savings are passed back to health plans is unknown. Many observers believe that PBMs are keeping all or most of the rebates.
To fund the rebates, drug manufacturers may increase their prices. The CEO of drug-maker Mylan testified before Congress in 2016 that more than half the $600 price of an anti-allergy drug used in emergencies went to intermediaries.
The PBMs argue that they help hold down drug prices by promoting the use of generic drugs and by passing on the savings from rebates to health plans and consumers.
They reject the notion that they are somehow taking advantage of health plans and pharmacies, pointing out that they are “sophisticated buyers” of their services. They also argue that revealing the details of their contracts would harm their ability to compete and keep prices low.
Nevertheless, PBMs are now attracting scrutiny from Congress, health plans and employers. At least one major insurer has sued its PBM for allegedly failing to negotiate new pricing concessions in good faith.
In addition, businesses such as Amazon are considering getting into the PBM business. Walmart is already selling vials of insulin at relatively inexpensive prices.
PBMs earn billions of dollars in profits each year. With the increased attention those profits have brought, it is uncertain how long that will continue.
