by US Rx Care | Jan 8, 2019 | Uncategorized
In recent years, many companies have been dealing with rising health care costs largely by transferring more of the expense and risk on to their employees.
But some employers have found smarter, more creative ways to limit health costs without further burdening valued employees. Here are some of the best solutions:
- Pharmacy benefit managers. Pharmacy benefit managers are independent third party administrators who work with pharmacists, employers and workers to reduce costs and inefficiencies. For example, they may help workers migrate from expensive brand name drugs to equally effective generics for a fraction of the cost.
Or they may be able to migrate workers from bricks-and-mortar pharmacies to mail order. They also assist employers with contract negotiations.
- Telemedicine. Some companies are contracting with doctors to provide health services online, via a video feed. It’s no substitute for an in-person examination, but workers can get consultations and routine assessments done and get a prescription for a fraction of the cost of an in-person visit. Furthermore, the worker doesn’t have to take time off work for an appointment. It can be done from the office. A typical insurance billing for a basic medical appointment can run as high as $150. But a telemedicine visit can cost about a third of that amount, according to reporting from U.S. News.
- Wellness programs. Healthy employees cost much less than sick ones over time. Smokers and the obese generate much more frequent and higher medical claims than normal-weight employees.
Employers are fighting back by offering access to smoking cessation and weight loss programs, as well as additional programs for the management of common conditions such as high blood pressure, diabetes and asthma. About 58% of health plans nationwide offer an incentive for participating in a wellness program, according to research from CEB, the best-practice insight and technology company.
- Consumer-directed health plans. Employers are also giving employees greater control over their spending decisions. They are doing this via high-deductible health plans, which come with access to health savings accounts. These allow either an employee or an employer to contribute pre-tax dollars to an HSA. Withdrawals from an HSA to pay for qualified health care expenses are tax-free.
These plans are less expensive for employers than comparable traditional insurance plans, and can work very well for employees in good health. Some employers choose to contribute to HSAs on their workers’ behalf.
- Transparency tools. Cost-transparency tools make the cost of every medical procedure or service visible to employers and patients alike.
A claims analysis from UnitedHealthCare found that those who used the company’s transparency tools spent an average of 36% less on health services. When consumers used price-transparency tools, CEB researchers found an average saving of $173 for employees and $409 for employers per procedure.
by US Rx Care | Jan 2, 2019 | Uncategorized
Under the Affordable Care Act, group health insurance costs have been rising at a much slower rate than they had during the decade preceding its passage.
In fact, the rate of annual premium growth in the group market has hovered around 5% – more than half of what it was between 2001 and 2010. Also, health care’s share of the national economy actually fell from 17.4% in 2010 to 17.2% by 2013. However, that trend hasn’t lasted and in 2016 the share was 17.9%.
There has been a lot of debate about why rates have been increasing and some pundits say that if it were not for spiraling pharmaceutical costs, the rate of health insurance inflation would be lower.
While the drug industry would deny pharmaceutical costs are what’s driving health care cost inflation, the numbers show otherwise, according to an analysis by Modern Healthcare, an industry trade publication.
Here are the figures that drive home the point. Between 2013 and 2016, personal health care consumption rose 16.7%, according to the Centers for Medicare & Medicaid Services (CMS). This is what was driving that inflation:
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- Hospital spending: Up 15.5%
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- Professional services (mostly physician office-based care): Up 16%
- Drug spending: Up 23.9%
Source: CMS
For 2018 group health plans, the inflation components of the three main areas could not be starker:
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- Hospital costs: 6.1% (from 2017)
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- Physician costs: 4.3%
- Pharmaceuticals: 10.9%
Source: Segal Company
The situation may actually be worse than the numbers hint at. Retail drug sales don’t include the most expensive medicines – those delivered in hospital outpatient and physician offices. The CMS doesn’t track that data separately, but one can get a glimpse of what’s happening by examining the latest financial reports from major hospital systems.
Controlling drug costs
Prescription drug costs now account for about 17% of total U.S. healthcare spending and were the fastest rising component of that spending over the past year.
Drug costs have been difficult for health care providers and the insurance industry to tackle.
The pharmaceutical industry has been able to fend off government efforts to counter price hikes. It successfully lobbied Congress in 2003 to bar Medicare from negotiating prices in the new Part D program.
The industry has been aided by opposition from physician and patient advocacy groups, who fear that cost-benefit calculations will be used to cut them off from high-priced but effective medicines.
Benefits consulting firm Segal Company asked managed care organizations, health insurers, pharmacy benefit managers and third-party administrators to rank the cost-management strategies implemented by group health plans in 2017. Here are the top five:
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- Increasing financial incentives in wellness plans.
- Contracting with value-based providers.
- Intensifying pharmacy management programs– This includes negotiating better pricing for commonly used drugs.
- Using specialty pharmacy management– This focuses on controlling costs of specialty drugs, many of which cost more than an annual health premium for a year’s worth of dosing.
- Adopting high-deductible health plans.
These strategies show plan sponsors are looking to drive utilization to high-quality, low-cost providers in lieu of simply passing the costs on to their employees.
by US Rx Care | Dec 18, 2018 | Uncategorized
An investigative report by the Washington Post has uncovered an alleged cartel among generic drug manufacturers to fix the price of some 300 medications, adding new fuel to the debate about raging price increases in the pharmaceutical industry.
While a number of name-brand drug makers have been named and shamed for their massive price increases – sometimes hundreds or thousands of percent higher – the article looks at how something similar has been going on in the generic drug market.
A case that started as an antitrust lawsuit brought by two states has spurred a massive investigation into alleged price-fixing by at least 16 companies that make 300 generic drugs. Now 47 states are party to the lawsuit, seeking to recoup perhaps billions of dollars.
In addition, pharmacies and other businesses have filed their own lawsuits against the generic drug makers. One such suit documents huge price hikes – like a 3,400% increase in the price of an anti-asthma medication – and investigators believe that generic drug producers colluded to raise prices in tandem or not make their products available in some markets or through specific pharmacy chains.
The scale of the alleged collusion was summed up by Joseph Nielsen, an assistant attorney general and antitrust investigator in Connecticut, whose office has taken the lead in the investigation: “This is most likely the largest cartel in the history of the United States,” he told the Washington Post.
If the allegations are true, the parties affected run the gamut from consumers, who have high copays or high deductibles for their pharmaceuticals, to hospitals and insurance companies. And many health industry observers were surprised to learn the news, considering that generics are supposed to be a safety net for patients to ensure access to quality medications at a reasonable price.
Two former executives of one generic drug maker, Heritage Pharmaceuticals, have pleaded guilty to federal criminal charges. They are now cooperating with the Justice Department.
The article describes the coziness among executives from competing generic drug makers and how they would allegedly collude to raise prices.
There has been no estimate of how much the generic drug companies allegedly overcharged over the years, but even if it’s a fraction of the annual sales of $104 billion a year, it would be substantial.
The drug makers that the Washington Post was able to reach denied the allegations.
Coordinated price hikes ‘almost routine’
The generics industry used to be highly competitive, according to the story, but over the years, things changed and suddenly allegedly “coordinated price hikes on identical generic drugs became almost routine,” the Post wrote.
The alleged price-fixing affects 300 generic drugs, according to the report. Generics account for 90% of the prescriptions written, however they only account for 23% of the total drug spend in the country, according to the Association for Accessible Medicines.
And still, the prices of on a benchmark set of older generic drugs in the Medicare prescription-drug program dropped 14% between 2010 and 2015.
But, for the 300 drugs in question, prices went up, according to the lawsuits. That’s why pharmacies have also come to the fore to sue. They were on the front lines when they started noticing marked increases of hundreds of percent in the prices of some generic medications.
If the collusion turns out to be true, it essentially reverses the possible gains when a generic drug enters the market. According to the Federal Drug Administration, prices fall up to 50% when a second generic enters the market. And once there are six or seven companies making the same generic drug, the price usually falls 75% from the original cost of the brand name pharmaceutical.
by US Rx Care | Dec 11, 2018 | Uncategorized
The IRS has been sending penalty notices to more than 30,000 businesses nationwide, advising them that they may be out of compliance with the Affordable Care Act employer mandate. The tax agency said those employers are on the hook for a total of roughly $4.3 billion in fines.
While the individual mandate has been repealed starting in 2019, the employer mandate is intact and the IRS is pursuing penalties aggressively.
Under the ACA, companies with more than 50 full-time employees are required to extend health insurance to their workers. Failure to do so can result in penalties as high as $2,000 per worker.
As the IRS steps up its efforts to pursue companies that fail to comply with the employer mandate, a report in the New York Times indicates that many of the letters that were sent out were for clerical errors that the employer can address in order to avoid the fine.
The Congressional Budget Office predicts the IRS could levy $12 billion in employer mandate violation fines in 2018.
And the IRS is just getting started, as it was delayed in enforcing the employer mandate for the first year it was in effect, 2014, because of delays in reporting and the Treasury Department clarifying the requirements.
That means the first round of penalty notices that are being sent out now are only for the 2015 tax year. Once it’s done sending those out, pundits say that the IRS will quickly start sending out penalty notifications for 2016 and 2017.
The New York Times reported that the IRS is working with some businesses that experienced technical or paperwork issues to help them avoid fines. E. Neil Trautwein, vice president at the National Retail Federation, told the newspaper that some employers are receiving notifications because they checked the wrong box on their 1094-C forms.
Employee benefits attorney John D. Arendshorst told the paper that the government has shown a willingness to reduce penalties when appropriate. He cited one case where a business with some 500 employees had been notified that it faced a $1.9 million fine, which was eventually reduced to $20,000 because the penalty had been caused by a computer error.
If you get a letter
When notifying an employer of a fine, the IRS uses Letter 226-J. The most likely cause of incorrect assessments is errors in Forms 1094-C and 1095-C.
If you receive a letter, consulting firm Towers Watson recommends that you:
- Respond within 30 days or request an extension. Unless the IRS receives a response within 30 days, the agency will assume that its facts and penalty amount are correct. Employers can request an extension by calling the phone number at the top of the Employer Shared Responsibility Payment (ESRP) Response form. The IRS typically grants these requests.
- Analyze the letter for accuracy. Review all documents you filed with the IRS and provided to employees to ensure that the information on them is correct and that they match the information in the IRS letter. The review should include the following:
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- Ensure that all employees listed in the letter as receiving a premium tax credit were common-law employees.
- Check whether any employees listed as having received a premium tax credit were enrolled in your health plan.
- Check whether you offered health coverage to employees who were not enrolled in the health plan and who received a premium tax credit.
- Verify that all employees listed as receiving a premium tax credit were full-time staff.
- Decide whether to challenge the assessment. If you feel there is a discrepancy between your numbers and those provided by the IRS, you should fill out the ESRP Response form. This filing should include a signed statement explaining the reason(s) for the disagreement and any supporting documentation.
by US Rx Care | Dec 4, 2018 | Uncategorized
The US is experiencing a prescription drug pricing epidemic, and some drug companies are driving a wedge into the health insurance model by severely jacking up pharmaceutical prices to astronomical levels.
Unfortunately, the cost of some drugs has become so extreme that by paying for one prescription it could take decades to recoup the cost in premium collections.
The scourge was recently highlighted in an investigative report by “60 Minutes” on CBS.
The investigation reflects the difficulties facing health insurers in paying for drugs and also the fact that many pharmacy benefit managers, which are in business to rein in runaway drug costs, are not actually doing much to stem the rampant and exorbitant price increases.
The “60 Minutes” piece focused on one city which was faced with financial ruin because of the costs of just one drug for one of its employees. The city’s experience is emblematic of just how bad things have gotten.
The city of Rockford, Ill., had for years been self-insuring and paying the health care costs for its 1,000 employees and their dependents. But then one pharmaceutical busted the city’s health care budget: Acthar.
In 2015, two small children of Rockford employees were treated with Acthar, a drug that’s been on the market since 1952. It is used to treat a rare and potentially fatal condition called infantile spasms, which afflicts about 2,000 babies a year.
The drug had been affordable in 2001 when it sold for about $40 a vial. By 2015, the price had spiraled to $40,000 a vial – a phenomenal 100,000% increase.
As a result, the city paid out close to $500,000 for the two children’s Acthar prescriptions.
The problem is that Acthar is not the only drug on the market that has seen that kind of price increase. Pharmaceutical companies have been on a major price-hike spree, pushing once-affordable drugs into the stratosphere – often after one company buys the rights to a drug from another firm.
The maker of Acthar also in 2010 decided that it wanted to boost sales of the drug because there are only about 2,000 cases of infantile spasms a year. So it started marketing it to doctors for other diseases that it was not designed to treat.
The company began to market the drug for several chronic conditions like rheumatoid arthritis that affect adults, even though there was no evidence it worked for these conditions.
Prescriptions surged, and by 2015 Medicare was spending $500 million a year on Acthar.
They were able to get those prescriptions because many of the doctors who prescribed a lot of Acthar also were getting money from the company. The drugmaker paid them for speaking, consulting and conducting research studies for the company.
“60 Minutes” found that those doctors appear to be the ones who are most likely to also prescribe Acthar. The drugmaker paid doctors millions over a nearly two-year period, with the top earner getting more than $350,000.
PBMs no help
To rein in drug costs, Medicare contracts with pharmacy benefit managers (PBMs), which are supposed to negotiate down the price of drugs. Unfortunately, the city manager of Rockford says the PBM the city was using didn’t do that.
He said that PBMs actually wield a lot of clout, but often don’t use it when they should.
Many observers say that PBMs have divided loyalties and make money when drugs are more expensive. Express Scripts, the largest PBM in the country, for example, not only is a PBM, but it also owns a pharmacy that sells expensive drugs and a company that ships and packs them.
Rockford has sued the manufacturer of the drug and also Express Scripts, which the city hired specifically to contain costs, but alleges it didn’t do.
Express Scripts has denied any wrongdoing and, in its motion to dismiss, argues it was not “contractually obligated” to contain costs.
Unfortunately, there are many players with their hand in the drug pie. Besides the drugmakers, PBMs and pharmacies, doctors can make more money by prescribing more expensive drugs over ones that are cheaper and just as effective.
by US Rx Care | Nov 28, 2018 | Uncategorized
As the number of employers offering high-deductible health plans continues growing, the spotlight recently has highlighted an inconvenient truth: some employees are going broke and filing bankruptcy because they cannot afford all of the out-of-pocket expenses and deductibles they must pay in these plans – just like the bad old days in the 1990s and 2000s.
Besides being in plans with high deductibles, many employees are also paying more for coverage as employers have shifted more and more of the premium burden to their staff.
Making matters worse, studies are showing that many people with HDHPs are forgoing necessary treatment and not taking the recommended dosages of medicines because they can’t afford the extra costs.
Consider:
- Enrollment in HDHP plans grew to 21.8 million in 2017, up from 20.2 million the year prior, and 5.4 million in 2007, according to a report by America’s Health Insurance Plans.
- Nearly 40% of large employers offered only high-deductible plans in 2018, up from 7% in 2009, according to a survey by the National Business Group on Health.
- 50% of all workers had health insurance with a deductible of at least $1,000 for an individual in 2018, up from 22% in 2009, according to the Kaiser Family Foundation.
Despite that, a 2017 report by the Centers for Disease Control and Prevention found that 15.4% of adults in HDHPs in 2016 had issues paying bills, compared to 9% of those with other types of insurance. And there have been a number of news reports about the deep financial toll on HDHP enrollees that have suddenly been hit by serious maladies.
Meanwhile, the average deductible for a family had risen to an average of $4,500 in 2017 from $3,500 in 2006, according to the Kaiser-HRET 2017 survey of employer-sponsored health plans.
As a result, some employers are rethinking their use of these HDHPs and trying to reduce the burden on their workers, according to news reports.
Skimping on care
Studies show that many put off routine care or skip medication to save money. That can mean illnesses that might have been caught early can go undiagnosed, becoming potentially life-threatening and enormously costly for the medical system.
A study by economists at University of California, Berkeley and Harvard Research, published in the Journal of Clinical Oncology
Findings: When one large employer switched all its employees to high-deductible plans, medical spending dropped by about 13%. That was not because the workers were shopping around for less expensive treatments, but rather because they had reduced the amount of medical care they used, including preventative care.
The study found that women in HDHPs were more likely to delay follow-up tests after mammograms, including imaging, biopsies and early-stage diagnoses that could detect tumors when they’re easiest to treat.
A report by the Robert Graham Center for Policy Studies in Family Medicine and Primary Care, published in Translational Behavioral Medicine
Findings: People with HDHPs but no health savings accounts are less likely to see primary care physicians, receive preventive care or seek subspecialty services. Compared to individuals with no deductibles, those enrolled in HDHPs without HSAs were 7% less likely to be screened for breast cancer and 4% less likely to be screened for hypertension, and had 8% lower rates of flu vaccination.
The study authors noted that although more individuals have health insurance under the Affordable Care Act, premiums and deductibles have increased, leaving many Americans unable to afford these costs.
Oddly, many people in HDHPs are also forgoing preventative care services, even though they are exempted from out-of-pocket charges, including the deductible under the ACA. This is likely because most people don’t know that the ACA covers preventive care office visits, screening tests, immunizations and counseling with no out-of-pocket charges. As a result, they do not benefit from preventive care services and recommendations.
Companies with second thoughts
A few large employers – including JPMorgan Chase & Co. and CVS Health Corp. – recently announced that they would reduce deductibles in the health plans they offer their employees or cover more care before workers are exposed to costs.
CVS Pharmacy, part of CVS Health Corp., in 2013 had moved all of its 200,000 employees and families into HDHPs. During routine questionnaires, CVS later found that that some of its employees had stopped taking their medications because of costs. The company, in response, expanded the list of generic drugs its employees could buy for free to include some brand name medications, as well as insulins.
