by US Rx Care | Apr 3, 2019 | Uncategorized
A ruling by a U.S. District Court judge in December 2018 that the Affordable Care Act is unconstitutional is not expected to stand but, if it does, the moves that have been made in the health insurance space to reduce costs, deliver better care outcomes and make the system more efficient would be expected to stay.
For those employers that were offering health coverage to their employees before the ACA and have continued since, the marketplace dynamics would likely not change much if the ruling were not overturned on appeal.
Additionally, since there has been some success in the employer-sponsored health care space in keeping cost inflation relatively tame, there would likely be no incentive for health insurers and providers to abandon those efforts.
The more likely outcome is that a higher court (and eventually likely the U.S. Supreme Court) overturns U.S. District Judge Reed O’Connor’s ruling that because Congress eliminated the individual mandate portion of the ACA, the rest of the law is also invalid and cannot stand. That means all aspects of the law, including health care exchanges, the employer mandate, and the requirement that policies cover 10 essential benefits, and much more. The individual mandate was repealed at the end of 2017.
Several states such as Massachusetts, New York and California have since intervened to defend the law. They argue that, if Congress wanted to repeal it, it would have done so. The Congressional record makes it clear Congress was voting only to eliminate the individual mandate penalty in 2019; it indicates that they did not intend to strike down the entire ACA.
The original lawsuit against the ACA was brought by 20 attorneys general from Republican states, and now 17 attorneys general led by California’s Xavier Becerra have filed a notice of appeal with the 5th U.S. Circuit Court of Appeals in New Orleans.
Interestingly, the Trump administration filed a brief early in 2018 encouraging the court to uphold the ACA but strike down the provisions relating to guaranteed issue and community rating.
There have been more than 70 attempts to invalidate the ACA in courts across the country, and two of those cases made it to the Supreme Court. The last time the ACA was upheld was in 2012 and all five justices who voted at that time to uphold the law are still on the bench today.
Additionally, the ACA is an extremely expansive piece of legislation, which has been on the books since 2010. Legal pundits say it’s unlikely the Supreme Court would want to strike down a law that affects millions of people in the country. In fact, because of this the court may decide not even to take up the case if the 5th Circuit has overturned O’Connor’s ruling.
Employer effects
While this case is under appeal the law will stand, meaning that all parts of it, except the individual mandate, will remain. That means all employers who are considered “applicable large employers” under the ACA, will be required to continue offering health insurance to their workers.
If you are one of them, you need to continue complying with the law of the land as it stands. And remember, while Congress eliminated the penalties associated with not complying with the individual mandate, the penalties for not complying with the employer mandate are still very much in place. Fines can be severe for non-compliance.
This ruling is not expected to affect those penalties, reporting requirements, or any other applicable ACA requirement at this time.
by US Rx Care | Mar 26, 2019 | Uncategorized
What started out as a way to help many pharmacy benefit managers (PBMs) to control costs has turned into a major sticking point in the health care system: pharmaceutical rebates.
Attention is growing regarding the role that rebates play in actually increasing the price of brand-name drugs, which is adding a heavier burden on health plan enrollees. Calls are growing to jettison rebates altogether. The problem is that insurers often get to keep the rebates and not pass them on to their enrollees.
A study by Benfield, a division of benefit consulting firm Gallagher Benefits, found that 69% of employers surveyed would welcome an alternative to rebates, such as discounts or point-of-sale rebates, in which patient payments reflect a post-rebate price.
Employers acknowledged focusing on rebates as a revenue stream rather than focusing their attention on other important factors such as reducing employee coinsurance or deductible payments, or providing access to the most effective medicines.
The issue of rebates even has the attention of the Trump administration.
When Department of Health and Human Services Secretary Alex Azar testified before the Senate Health Education Labor & Pensions Committee in 2018, he said: “We may need to move toward a system without rebates, where PBMs and drug companies just negotiate fixed-price contracts. Such a system’s incentives, detached from these artificial list prices, would likely serve patients far better, as would a system where PBMs receive no compensation from the very pharma companies they’re supposed to be negotiating against.”
How rebates work
Drug rebates are redeemed after the transaction has taken place, but it’s not the end user (the plan enrollee) who is receiving the rebates. Instead, the PBM, the insurer or sometimes the employer receives the rebate.
The big debate is that these rebates do nothing to help the enrollee, who is often having to pay a higher cost-sharing burden for medications.
Under the current system, drug makers set a list price for their products, then negotiate with some PBMs over how much of a discount they will provide off that list price.
The size of the rebate depends on a number of factors, like how many drugs are used by the health plan enrollees, and how much of the medicine cost is covered under the drug formulary.
Companies that offer bigger rebates are often rewarded with better access, like smaller copayments.
What happens if rebates are jettisoned?
Nobody can accurately predict what would happen if rebates were eliminated.
Their elimination could potentially increase expenditures for brand drugs if payers do not find an alternative tool that reduces drug costs (for example, negotiating lower prices to begin with).
A report by Altarum, a not-for-profit health care research and consulting organization, estimated that $89 billion in rebates went to payers in 2016. Altarum found that state Medicaid plans received $32 billion of the total, followed by Medicare Part D plans ($31 billion), commercial health plans ($23 billion), and other payers ($3 billion).
Eliminating rebates will have the most significant effect on patients. Medicare and commercial insurance rebates totaled $54 billion in 2016, according to the Altarum report. The big unknown is exactly how much of that total directly benefited patients and how much flowed to the insurers and the Centers for Medicare & Medicaid Services.
by US Rx Care | Mar 20, 2019 | Uncategorized
A ruling by a U.S. District Court judge in December 2018 that the Affordable Care Act is unconstitutional is not expected to stand but, if it does, the moves that have been made in the health insurance space to reduce costs, deliver better care outcomes and make the system more efficient would be expected to stay.
For those employers that were offering health coverage to their employees before the ACA and have continued since, the marketplace dynamics would likely not change much if the ruling were not overturned on appeal.
Additionally, since there has been some success in the employer-sponsored health care space in keeping cost inflation relatively tame, there would likely be no incentive for health insurers and providers to abandon those efforts.
The more likely outcome is that a higher court (and eventually likely the U.S. Supreme Court) overturns U.S. District Judge Reed O’Connor’s ruling that because Congress eliminated the individual mandate portion of the ACA, the rest of the law is also invalid and cannot stand. That means all aspects of the law, including health care exchanges, the employer mandate, and the requirement that policies cover 10 essential benefits, and much more. The individual mandate was repealed at the end of 2017.
Several states such as Massachusetts, New York and California have since intervened to defend the law. They argue that, if Congress wanted to repeal it, it would have done so. The Congressional record makes it clear Congress was voting only to eliminate the individual mandate penalty in 2019; it indicates that they did not intend to strike down the entire ACA.
The original lawsuit against the ACA was brought by 20 attorneys general from Republican states, and now 17 attorneys general led by California’s Xavier Becerra have filed a notice of appeal with the 5th U.S. Circuit Court of Appeals in New Orleans.
Interestingly, the Trump administration filed a brief early in 2018 encouraging the court to uphold the ACA but strike down the provisions relating to guaranteed issue and community rating.
There have been more than 70 attempts to invalidate the ACA in courts across the country, and two of those cases made it to the Supreme Court. The last time the ACA was upheld was in 2012 and all five justices who voted at that time to uphold the law are still on the bench today.
Additionally, the ACA is an extremely expansive piece of legislation, which has been on the books since 2010. Legal pundits say it’s unlikely the Supreme Court would want to strike down a law that affects millions of people in the country. In fact, because of this the court may decide not even to take up the case if the 5th Circuit has overturned O’Connor’s ruling.
Employer effects
While this case is under appeal the law will stand, meaning that all parts of it, except the individual mandate, will remain. That means all employers who are considered “applicable large employers” under the ACA, will be required to continue offering health insurance to their workers.
If you are one of them, you need to continue complying with the law of the land as it stands. And remember, while Congress eliminated the penalties associated with not complying with the individual mandate, the penalties for not complying with the employer mandate are still very much in place. Fines can be severe for non-compliance.
This ruling is not expected to affect those penalties, reporting requirements, or any other applicable ACA requirement at this time.
by US Rx Care | Mar 12, 2019 | Uncategorized
The Trump administration is moving ahead with new regulations that would make it easier for employers to enter into health reimbursement arrangements (HRAs) with their employees, a practice that can be severely penalized under the Affordable Care Act.
Under the proposed regulations – issued by the departments of Labor, Treasury and Health and Human Services – employees would be allowed to shop and pay for their own coverage using tax-free HRAs that are set up by their employers.
Under the proposed rule, employers that offer traditional health insurance would be allowed to fund an HRA with up to $1,800 per year. The money in the HRA could be used to reimburse employees for certain medical expenses, as well as for premiums for health insurance policies or stand-alone dental benefits.
And offering HRAs used to help employees pay for individual health insurance premiums would count as an offer of coverage to satisfy the employer mandate under the ACA.
More options, lower costs
Administration officials said expanding HRAs would give employees more options in terms of health coverage, and it also would reduce costs and administrative burdens on employers.
If enacted, the new regulations would undo Obama administration guidance (as it was not actually written into the regulations) barring employers from paying into HRAs to help workers pay for health insurance premiums from policies they buy on the open market or on government-run exchanges.
Companies that were caught in such arrangements faced a hefty fine of up to $36,000 a year.
The employer mandate would stay intact but the proposed rule would allow an employer to satisfy the mandate by funding HRAs for its workers. Under the employer mandate, organizations with 50 or more full-time or full-time-equivalent employees are required to purchase “affordable” health coverage that covers at a minimum 10 essential benefits as outlined under the law.
HRAs must be affordable
The key is that the HRA must also be affordable under the proposed rules. That would depend in part on the amount the employer contributes to the HRA.
The agencies proposing the new regulations said in an announcement that they would provide further guidance on the HRA-specific affordability test.
Funds going into HRAs would be exempt from federal income and payroll taxes. Additionally, employers would be able to deduct the amount they put into HRAs from their taxes.
The proposed rule would also require employers that offer HRAs to allow a worker to opt out and instead claim a federal premium tax credit to purchase coverage on the individual exchanges.
This is the early part of the rule-making. The proposed regulations will have to go out for public comment before final rules are written and implemented.
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.
