by US Rx Care | Mar 6, 2019 | Uncategorized
Three in five employers think their contracts with pharmacy benefit managers are overly complex and not transparent, according to a new study.
The study, which found that employers would prefer that PBMs are more transparent with their pricing and would like them to focus less on rebates and value-based designs, comes as PBMs are under increased scrutiny for their opaque pricing practices.
The survey of 88 very large employers, “Toward Better Value: Employer Perspectives on What’s Wrong with the Management of Prescription Drug Benefits and How to Fix It,” was conducted by Benfield and commission by the National Pharmaceutical Council.
The findings drive home some of the common complaints about PBMs:
Poor transparency – Employers said that current pharmacy benefit management models lack transparency:
- 30% said they understand the details of their PBM contracts.
- 40% said they fully understand their PBMs’ performance guarantees.
- 63% said PBMs are not transparent about how they make money.
Complex contracts – Nearly three in five employers surveyed said PBM contracts are overly complicated, ambiguously worded, and often benefit the PBM at the expense of the employer. Tops on employer’s wish list: clearer definitions and simpler contracts.
Focusing less on rebates – Seventy percent of employers said they thought PBMs should offer other ways besides rebates to reduce prices.
Employers also said rebates detract their attention from more important factors, like reducing employee coinsurance or deductibles or getting better access to the most effective pharmaceuticals.
Two suggestions they had: Discounts or point-of-sale rebates, in which patient payments reflect a post-rebate price.
Getting value for employees – Employers want to understand the thought process when PBMs create formularies and exclusionary list decisions, such as the clinical, financial and economic impacts.
Employers had these suggestions:
- Using value-based insurance design, where high-value drugs cost patients less than low-value drugs.
- Setting payments based on the effectiveness of a drug.
by US Rx Care | Feb 26, 2019 | Uncategorized
A new study has found that many people in employer-sponsored health plans are enrolling in plans that are costing them more than they ought to be paying.
Many employees choose pricey plans with low deductibles, which force them to spend more up front on premiums to save just a few hundred dollars on their deductible. As result, many employees are spending hundreds, if not thousands of dollars more on their health care/health coverage than they need to.
A study by Benjamin Handel, a U.C. Berkeley economics professor, found that the majority of employees at one company he studied were in the highest-premium, lowest-deductible plan ($250 a year) their employer offered. This resulted in them spending about $4,500 a year on health care, compared to only $2,032 had they gone with the cheaper plan (which had a $500 annual deductible) and received exactly the same care.
Additionally, the research paper “Choose to Lose: Health Plan Choices from a Menu with Dominated Options,” published in the Quarterly Journal of Economics, found that more choices also didn’t yield more savings for individuals in employer-sponsored plans.
The study examined the health plan choices that 23,894 employees at one large U.S. employer made. They were able to choose from 48 different combinations of deductibles, pharmaceutical copayments, co-insurance and maximum out-of-pocket expenses. All of the plans offered the same network of doctors and hospitals.
As a result, workers paid an extra $528 in premiums for the year to keep their deductible at $750 instead of $1,000. In other words, they paid $528 to save $250.
For nearly every plan with a deductible of $1,000 (the highest deductible available for those seeking single coverage), the additional premiums required to reduce the deductible, with all other plan attributes fixed, exceeded the maximum possible out-of-pocket savings provided by the lower deductible.
The study also found that the lowest-paid workers were significantly more likely to choose dominated plans (the most expensive).
Both of the studies above looked at plan options with relatively low deductibles when compared with high-deductible health plans, which have become more popular with time.
In 2018, the minimum deductible for an HDHP is $1,350 for an individual and $2,700 for a family. But, under current regulations, total out-of-pocket expenses are limited to $6,650 for an individual and $13,300 for a family with a HDHP.
While these plans have gotten a bad rap lately, a study published by the National Bureau of Economic Research found they are often cheaper for employees, as well.
The authors, both from the University of Wisconsin-Madison, found in a study of 331 companies, that at firms offering both a HDHP and a low-deductible plan, selecting the HDHP typically saves more than $500 a year.
Strategies
To help offset the cost of a HDHP, you can offer your staff health savings accounts (HSAs), which offer a tax-advantaged way to save for health care costs. While there are annual contribution limits, HSAs allow your employees to roll over their balance from year to year. The funds they contribute to their HSA are pre-tax, so the savings are significant.
The Wisconsin-Madison authors surmised that many people choose the costlier health plan for two reasons:
- Inertia – It’s easier for consumers to stick with their old plan rather than crunch the numbers to see if a new plan may be more appropriate.
- Deductible aversion – When employees see a low-deductible plan they may associate it with better quality care, even though the network and coverage may be the same.
The best strategy to guide your staff to the plan that best suits them is to educate them. You should have workshops for your staff prior to open enrollment, to help them understand why the higher-deductible plan may often be the best choice for them if they want to save money on their overall premium and out-of-pocket expenses.
Ideally, you could encourage them to set aside the same amount of money in their HSA that would be enough to cover their deductible. This way, your employees would not feel burdened by health expenses they may have to pay for during the year.
by US Rx Care | Feb 19, 2019 | Uncategorized
One of the biggest challenges for employers who offer their workers health insurance benefits is that the majority of U.S. workers are really in the dark about how insurance works, according to a new survey.
Despite employers’ best efforts to provide as much education as possible to their workers before and during open enrollment, it seems the finer points are not sinking in, according to United Healthcare’s “Consumer Sentiment Survey.”
Here are the main findings:
- A mere 7% of those surveyed had a full understanding of all four basic insurance concepts: plan premium, deductible, coinsurance and out-of-pocket maximum.
- More than 60% of respondents could define plan premium and deductible.
- 36% could define out-of-pocket maximum.
- 32% could define coinsurance.
These deficiencies result in more people spending more on coverage than they may actually need to.
Another study, carried out earlier this year by the Kaiser Family Health Foundation, concluded that not having the correct information can lead to dissatisfaction when employees discover they’ve signed up for a plan that doesn’t meet their needs.
The Kaiser survey revealed that employees are most confused when it comes to understanding these factors:
- How to calculate out-of-pocket costs once health insurance claims are processed.
- The concept of providers who are in network vs. out of network at an in-network hospital.
- Understanding deductibles and out-of-pocket annual limits for their plans.
- What a health insurance formulary is (concerning prescription coverage amounts).
What you can do
So, as open enrollment nears, you may want to consider focusing on the foregoing areas to better educate your workers. Also, it’s recommended that you approach the education process with a multi-pronged approach employing technology, meetings and the offers of one-on-one time to cater to people’s different learning styles.
It’s important for your employee morale and their pocketbooks that they understand what their choices are and what they’re buying. The more light you can shine on the process and the more stress you can reduce, the better off your employees will be.
This is especially true in light of one other finding in the United Healthcare study: One-fourth of respondents said they would rather file their annual income taxes than select a health plan.
by US Rx Care | Feb 12, 2019 | Uncategorized
The number of companies offering health insurance to their employees has risen for the first time in a decade, according to new research from the Employee Benefit Research Institute.
In 2017, almost 47% of private-sector employers offered health insurance, up from 45.3% in 2016. The percentage had previously been dropping steadily since 2008, when more than half (56.4%) were providing coverage.
The trend continues that the larger the company, the more likely it is to offer coverage, with 99% of firms with 1,000 or more employees offering health benefits.
Interestingly, the pre-Affordable Care Act numbers are higher than the post-ACA numbers, despite the fact that the law required employers with 50 or more full-time workers to provide most of their staffers with health coverage.
And the fact that numbers started ticking higher in 2017 points not so much to the results of the ACA, but that the labor market is tightening and as competition for talent increases, more employers are adding health coverage to their benefit packages, according the EBRI’s analysis.
The increases have been across all business sizes.
The percentage of employers offering health benefits in 2017, compared to 2015, is:
- Employers with fewer than 10 employees:5% in 2017, up from 22.7% in 2015.
- Employers with 10–24 employees:2%, up from 48.9%.
- Employers with 25–99 employees:6%, up from 73.5%.
- Employers with 100‒999 employees3%, up from 95.1%.
Another interesting development is the percentage of workers who are eligible to receive health coverage at their employer also ticked up to the highest level since 2014, the year the ACA took effect. But the number was still not as high as in 2013.
The percentage of employees eligible for health insurance is as follows:
The takeaway: Coverage matters
The EBRI attributes the increases in both the above metrics on the fact that workers have been migrating to jobs that offer health coverage. It also puts the changes down to the strong economy, the tighter job market and the fact that group health insurance rates have been increasing at a moderate clip of about 5% a year.
It also indicates that more employers are offering coverage to recruit and retain talent.
There has been a significant drop-off among small employers offering coverage since the recession hit in 2008 (when 35.6% of firms with fewer than 10 employees offered it, a percentage that dropped to its nadir in 2016 of 21.7%).
EBRI analysts cite many factors for the larger decline in coverage offering among the smallest employers, including the effects of the recession on their businesses and the fact that their employees could get coverage on exchanges at relatively low rates thanks to government subsidies.
The overall uptick in 2017 was largely driven by small employers, meaning that they are likely having to step up to compete for talent. As competition for talent will likely continue to grow, it’s likely that more employers will continue adding health benefits, in addition to other voluntary benefits, to sweeten the pot.
If you would like to know more about your options, feel free to contact us.
by US Rx Care | Feb 6, 2019 | Uncategorized
An audit carried out for Ohio Medicaid found
that large pharmacy benefit managers that contract with the state’s Medicaid
program have been pocketing a larger and larger share of drug pricing.
In fact, PBMs charged Ohio Medicaid plans
31% more for generic prescriptions than the amount they paid pharmacists for
the drugs, the audit found, shedding light on a practice that observers say is
being mirrored throughout the country.
The auditor found that the two largest PBMs
operating in the state billed Medicaid managed-care plans $223.7 million more
for prescription drugs than they paid pharmacy providers in 2017.
The report comes as pressure grows on PBMs
to be more transparent about their pricing and costs amid complaints by
pharmacies that are barely breaking even or losing money due to the tough contracts
they have to enter into with PBMs. Many critics say that PBMs are not passing
on the savings to payers when they negotiate lower contracts with pharmacies.
“We know that Ohio is not alone,” Ernie
Boy, executive director of the Ohio Pharmacy Association, said in a prepared
statement. “Every state and every payer in the country is grappling with these
overinflated costs.”
What’s going on
Medicaid doesn’t directly pay pharmacists.
Ohio Medicaid pays five private insurance companies to manage Medicaid plans
for the state. The insurance companies contract out pharmacy benefits to
middlemen, which pay pharmacists to fill prescriptions.
Medicaid and most health plans contract
with PBMs to essentially run the drug portion of the health insurance equation.
They are supposed to negotiate volume discounts with drug-makers and rates with
pharmacies to reduce the overall drug spend by the payers.
PBMs make a good deal of their money from a
growing “spread” between what the PBM pays pharmacies and what it charges
payers (in this case, the state Medicaid program). The PBM keeps the spread,
but most PBMs are not transparent about how much the spread is, leaving both
the pharmacies and the payers in the dark.
According to the report, the overall spread
in 2017 in Ohio was $224.8 million – with an average spread of 8.9% per
prescription. Generic drugs, which comprise 86% of Medicaid prescriptions in
Ohio and for which pricing is most opaque, accounted for an overwhelming
majority of the spread.
The report found that during the entire
study period:
- The average spread was $5.71
per prescription.
- The average spread for
brand-name prescriptions was $1.85.
- The average spread for generic
prescriptions was $6.14.
- The average spread for
specialty drugs was $33.49.
Generic drugs account for 86% of Medicaid
prescription claims in Ohio.
The auditor stated in its report that PBMs’
administrative fees typically range from $0.95 to $1.90 per prescription.
“Although this figure may not include all
of services performed by a (pharmacy benefit manager), it suggests Ohio’s
current spread may be excessive and warrants the state taking further action to
mitigate the impact on the Medicaid program,” the report stated.
As part of its findings, the auditor noted
that pharmacies in Ohio have been shuttering at a brisk pace since Medicaid PBMs
have been cutting how much they reimburse them for medications.
Between 2013 and 2017, some 371 pharmacies
closed in Ohio, coinciding with significant reimbursement reductions in their
PBM contracts. The majority of those closures have taken place since 2016.
As a result of the audit, Ohio’s Medicaid
department directed its managed-care organizations to quit their contracts with
PBMs, citing the opaque pricing practices.
The state’s five managed-care plans were
required to enter into new contracts with companies that were able to manage
pharmacy services using a more transparent pricing model by the start of 2019.
by US Rx Care | Jan 29, 2019 | Uncategorized
A series of changes to Medicare programs may
lead to lower drug prices for some Medicare Part D and Medicare Advantage
enrollees, expand services to include transportation and telemedicine, and
bring hospice benefits to Medicare Advantage patients.
Drug plan changes
Under the Part D Payment Modernization
initiative, the Center for Medicare Services is revising the way Medicare
compensates private insurers, with the intent of increasing competition and
creating incentives for companies to lower drug prices and reduce costs for
plan enrollees.
Under the current system, once a patient’s
spending reaches the “catastrophic” threshold, Medicare picks up 80% of the
cost of the individual’s drugs. Insurers have designed their plans to get
patients to the catastrophic threshold as quickly as possible, so they can
qualify for the higher federal subsidies.
As a result, federal spending for drugs under
the catastrophic phase has skyrocketed 17% per year over the last decade,
rising from $9.4 billion to $37.4 billion.
“This structure introduces perverse incentives to push patients
to the catastrophic phase and leave plans with little reason to negotiate lower
costs for the highest spending patients,” said the Center for Medicare Services’
administrator, Seema Verma. “This means that plans are more likely to manage
drug spending for low-cost patients, since plans are responsible for a greater
share of drug costs at their level for the benefit structure.”
Under the new plan, which takes effect in
2020, carriers will be picking up a greater share of the prescription drug tab
for patients in the catastrophic spending category. In return, they will have
some opportunities to share in overall cost savings under the plan. Federal
officials estimate that the initiative will save taxpayers around $2 billion
per year.
The Part D Payment Modernization Initiative is
part of President Trump’s broader Blueprint to Lower Drug Prices and Reduce
Out-of-Pocket Costs. The plan will create more incentives for plan participants,
carriers and care providers to choose lower-cost drugs where possible.
Value-based insurance design benefits expansion
At the same time,
Medicare is expanding a new “value-based” benefits model to all 50 states.
Under the scheme, called V-BID (Value-Based Insurance Design), Medicare
Advantage plans will have more flexibility to offer cost-saving alternatives:
- Lower
copays
- Better
plan design for lower-income beneficiaries
- Assistance
with treatment-related transportation costs
- Incentives
for preventive care and healthy lifestyle changes.
Telemedicine
V-BID would also
allow plans to cover telemedicine consultations – a key change that could lower
overall costs while allowing plans to extend their reach into previously
underserved rural areas where they had difficulty covering because of federal
network adequacy rules.
The change may
help improve competition and choice in underserved areas.
Hospice benefits
Plans are also
afoot to allow Medicare Advantage plans to start offering Medicare’s hospice
benefit beginning in 2021.
Today, the hospice benefit is covered separately under
fee-for-service Medicare, so patients do not have a single provider network
that is managing all of their conditions and taking responsibility for their
overall health.
The change is designed to increase access to hospice services
and encourage better coordination between patients’ hospice services and their
other clinicians.
“These two models ignite greater competition among plans,
creating pressure to improve quality and lower costs in order to attract
beneficiaries,” Verma said.
