September 5, 2017

Large Market Survey is in!    What are employers doing for 2018?

Recently the National Business Group on Health surveyed large employers (predominantly the Fortune 100 US Companies) to hear what changes they will be implementing for 2018 medical plan renewals.   It clearly shows for 2018 there will be shifts in strategies as large employers fight to keep costs in check.  Average cost to cover an employee (and their dependents) in 2018 is projected at be a 5% increase or $14,156 up from $13,482 in 2017.   Employer premium contribution is steady at 70% of cost with the employee cost share staying at 30% or $4,400 in 2018. In addition to the premium share, the average employee will have to pay $2,203 annually in out of pocket costs for their family at the point of receiving care.

Number one concern for employers cited in 2018 remains the sky rocking specialty pharmaceutical costs.  This is followed by high cost claimants and chronic conditions.

Here are some of the “game-changing” shifts in strategy for 2018…

While large employers are still focused on these strategies:

  • CDHP
    • 90% of employers will be offering a CDHP as an option up from 84% in 2017
    • 39% will offer ONLY a CDHP
    • CDHP plans have moved into the highest enrollment category – surpassing PPO plans with average 56% enrollment compared to PPO enrollment at 39%
    • Most will offer an HSA with an average contribution of $770 annually
    • CDHP Average deductible in-network for 2018:  Single=$1,500   Family= $3,250
  • By 2020 nearly all large employers (97%) will offer a CDHP
  • Telehealth / on-site clinics
    • 96% of large employers will offer telehealth up from 90% in 2017
    • 55% will provide On-site Health Centers
  • Centers of Excellence
    • 88% will make these networks available up from 85% in 2017
  • Transparency tools to navigate the healthcare system
    • 66% in 2018 up from 45% in 2017
  • Spousal Surcharge
    • For spouses that can obtain other coverage (typically through their employer), in 2018 35% of large employers will charge on average an extra $100. Per month.   6% of large employers will exclude coverage for spouses in 2018 who can obtain coverage elsewhere.

 Here is where we see a shift to a new way of thinking:    Change in focus to the supply side of the delivery system –

 Optimizing the health care delivery system

    • Accountable Care Organizations (ACO’s) are a growing strategy. Healthcare is local… and ACO’s may not be available in all areas, but health care providers are being pushed to be accountable for the quality and cost of care for a defined population.  Employers are looking for improved quality and more tightly managed providers for their members.   21% of large employers will be actively promoting this strategy for 2018 with their employees.
  • High performance Networks & Centers of Excellence
    • This is not a new concept but one that is a focus for high cost care. Carriers have developed networks of specialized hospital facilities to deliver care such as transplants and cancer treatment, selecting hospitals with higher positive outcomes.   Cancer treatment is a particular focus in this category.
  • Value Based Plan Designs
    • 40% of large employers will implement some type of incentives for their members to take steps to improve and manage chronic illnesses in exchange they will offer lower cost to the member for participation in these programs.
  • Additional services to members
    • Employers are offering second opinion services to assist members in navigating the complex healthcare system for high cost care.  Tools include coaching and high touch advocacy services for high utilizers.

Summary:   Clearly the focus of the future is the delivery system side of the puzzle.   Changing plan design and educating employees will remain the key strategy but employers are pushing for providers to deliver better outcomes and higher quality for the high cost of the plans we are supporting.

We will be providing a 30 minute webinar on October 4th at 12 noon EST to review the strategies and path forward.  You can register here on my website under the “EVENTS” tab beginning on Friday, September 8th.

 


 

September 5, 2017 

Pharmacy Survey data for 2018 is in!

Not surprising to all of us, Specialty pharmaceuticals are driving overall cost increases.   Historically, specialty drugs were used to treat only a small handful of diseases.   This is significantly changed.  Specialty drugs have expanded to more common conditions and are now being used to treat a wide range of illnesses.  In 1990, only 10 specialty drugs were on the market.   Fast forward to today, where there are more than 300 on the market today, which in turn is driving the costs for employers and patients.

Some key facts:

  • Over 60% of large employers carve out pharmacy to a dedicated pharmacy benefits manager (PBM)
  • 18% – 20% of employers have joined a pharmaceutical coalition for better purchasing / pricing
  • For the first time in history, more than 50% of the drugs in development are specialty drugs
  • By 2020 – 9 out of the top 10 best-selling drugs are projected to be specialty drugs
  • Price increases are unprecedented: Average cost of cancer drugs increased from approximately $10,000 annually in 2000 to estimated $100,000 by 2020 according to a study by the Mayo Clinic.
  • Within the top 10 specialty therapy classes, three specialty classes account for 56.3% of all expenses:
    • Inflammatory Conditions
    • Multiple Sclerosis
    • Oncology

What are employers doing?

Large employer survey done recently by the NBGH show changes in plan design are being implemented to try and preserve quality of care and access to the life changing pharmaceutical treatments while attempting to control the cost increase challenges.   Most large employers (60%) carve out the pharmacy programs to a Pharmacy Benefit Manager (PBM) for more focused approach and better pricing.  One of the newest problems we face is approximately 50% of specialty drugs are running through the medical program, not the pharmacy plan due to being delivered in the doctor’s office.  This is concerning due to those users falling outside of the clinical management programs, rebates and focused management programs we have put in place to control costs and address quality.  The percentage of employers focusing on site-of-care management for specialty drugs rose nearly 50% between 2017 and 2018!

Trion has developed 9 key strategies for employers to consider establishing effective pharmacy benefits utilization management strategies.  Through The Trion RX Coalition we’ve developed a collective arrangement for employers to use their combined purchasing power to secure a highly competitive prescription drug pricing model while retaining autonomy and control over their benefits plan structure, financing arrangement and contract terms. It combines the purchasing power of 500+ large companies. The value includes, on average, a 15% to 20% or more reduction in total Rx costs through lower administrative costs, higher discounts and guaranteed greater rebates. Our Trion RX Coalition trend in 2016 was 1.8%… not 10% or 20%…. 1.8%!

Additionally, we have expanded the PBM agreements we have in place to include:

  • Expanded reporting to understand what’s driving utilization
  • Developed program savings models to allow changes to programs to drive the financial modeling and decision making, coupled with the disruption analysis in the expanded reporting packages
  • New clinical programs to address quantity limits for specialty medication and opioid management. This includes the site-of-care focus to ensure all appropriate specialty drugs are being delivered through the pharmacy program, not the medical plan.
  • Compliance guidance. Keeping you abreast of all changes.   e.g. now approaching -December 1, 2017 under the standing ACA regulations, select statins to control cholesterol are to be covered 100% with no cost share to the members who are considered high risk of a cardiovascular disease.

Join me on October 4, 2017 at 12 noon EST for a 30 minute webinar to review all trends and talk through the changes in the marketplace.   Power lunch invites will be going out shortly to all contacts shortly.  You can also register on my website under the “Events” tab beginning Friday, Sept 8th.


Past Survey Results

April 6, 2017

The surveys are in for 2017 plan changes / increases and they show employers are committed to continuing to offer employee health coverage.  Most employers have shifted strategies to keep up with our fast changing landscape.  Dealing with: rising pharmacy costs with the increase in specialty drugs, ACA requirements – minimum value coverage while balancing the excise tax set for 2020 and many more elements.  Consumer- directed health plans (CDHP’s) have become mainstream in 2017 plan offerings with 84% of large employers offering one as an option and 35% offering only a CDHP to their employees in 2017.

Employers are very focused on tools to assist employees and their families to use healthcare more effectively and manage their HSA/HRA dollars.  These new transparency tools are the “big game changer” in my opinion.  Transparency in price and quality will force the healthcare provider market to focus on areas that have been sorely lacking in the past in accessing healthcare in the US.

So, without further adieu…  here are the numbers that matter to us for 2017:

Medical Trend: 6% increases and after plan changes 5%.  Same as 2015 but still an issue due to outpacing wages and inflation making the affordability long term an ongoing challenge for us.

Employee cost share:  On average, employers contribute to the total premium is still roughly 78%.   The acceleration of the CDHP’s may change this significantly.  Most employers (92%)  pair the CDHP with a Healthcare Savings Account (HSA) on average contributing $600-$700 per year for a single employee.  Some employers (34%) offer a Healthcare Reimbursement Account (HRA) with an average contribution amount of $725-$800 for a single employee.  Employers have used this these new plans as an incentive for employees and their families to utilize the wellness programs they offer.  Many provide additional credits to the savings accounts for members of the plan that participate.  Median in-network deductibles in 2016 were $1,425 for employee only coverage and $2,900 for family.  (Much lower than the plans offered on the public exchanges.)

Spousal Surcharge:  33% of employers now have a surcharge for spouses that have other coverage available to them that stay on the plan.

Pharmacy: Top driver of rising healthcare costs and a serious focus for all size employers. The CVS Caremark trend report states by 2018 specialty will be 50% of total drug spend.  By 2020, over 470 drugs will be available to treat orphan diseases for the 7,000 rare diseases with no or limited treatments available.   OptumRX survey states at least 40% by 2018 and definitely 50% by 2020. To add further color to the pipeline for specialty, OptumRX recently posted in an article, “Currently in the U.S., there are over 900 biologically engineered drugs in development, while worldwide sales of biologics are expected to grow to nearly half of the top-100 selling drugs in just the next two years.”  We still see problems with biosimilars (generic specialty drugs) as with Enbrel… always in the top 10 drugs and there is a new biosimilar (generic) but the launch has been stopped with patent litigation.  We saw in  2015, Pharmacy costs represents 26% of total health care spend and is on pace to replace inpatient hospitalization as the number one component of total medical spend.  In looking at employer utilization this year, it is clear that 40-50% of the specialty drugs are running through the medical plans because they are being administer in the physician’s offices at a very high cost to the employer…  a problem we will need to address quickly to control.

There are several effective utilization control techniques that have been deployed by our clients and the CDHP’s are adding value in these initiatives.

Excise Tax:  Employers (81%) have strategies in place to limit their exposure with 53% of employers expecting at least one of their plans offered to exceed the excise tax threshold by 2020 if changes are not made to the plans.   Further delay of this tax is unlikely given the precarious financial situation of the public exchange options this will financially support.

2017 Objectives:  Employers are focusing on employee well-being with financial and emotional initiatives.  Enabling employees to be retirement ready is a big focus this year.  Of course pharmacy is a key focus and many large and smaller employers (over 43%) have looked to carving out the prescription benefits to a Pharmacy Benefits Manager (PBM)  that can have a single management focus.   Trion has two purchasing coalition for employers to purchase pharmacy benefits at a more cost competitive price than on their own.  I am always excited when I can save my clients money and make benefits more affordable to their employees and their families.

Hope you enjoyed the survey summary!

-Marybeth