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Telemedicine Taking Off, Reducing Health Costs

One of the fastest growing parts of the health care system, and which touches significantly on group health plans, is telemedicine.

From 2016 to 2017, insurance claims for services rendered via telehealth as a percentage of all medical claim lines ― grew 53% nationally, faster than any other avenue of care, according to “FH Health Indicators,” a white paper published by the nonprofit FAIR Health.

Telehealth uses technology to provide remote care via video conferencing and other means and is proving to be more and more effective, especially for time-pressed individuals or people who live in rural areas where patients often have to travel great distances for care.

Elderly patients especially find it useful, since it eliminates the need for transportation.

But as telehealth gains traction, the focus is shifting away from the novelty of connected devices and new technology and more toward providing patients with top-notch care ― and giving providers, physicians and nurses alike the power to deliver it effectively. As it evolves, it is also a promising new trend in terms of reducing health care delivery costs.

Telehealth can reduce the cost of care by eliminating the physical barriers that prevent patients from managing their health. As more patients take advantage of digital services like remote patient monitoring, automatic appointment reminders, and remote physician consulting using live video and audio, patients can use these services to reduce the cost of care and improve their chances of early detection.

And that can reduce your overall group health plan costs, as well as out-of-pocket costs for your employees.

Tech firms are coming up with more efficient ways for patients to communicate with their doctors that save time and money, and reduce liability for doctors as well. For example, more and more health care practitioners are adopting an online patient portal as a direct link between the patient and the doctor.

Doctors, patients embrace online portals

The portal can easily be password-protected for each patient and streamline routine interactions from appointment-setting to refilling prescriptions ― and everything in between. 

For example, when it’s time to get a prescription refilled, the patient simply makes a request to his or her doctor, via the patient portal or even via a cell phone or tablet app that can be proprietary to the practice. The doctor checks the dosage and approves the request in a few clicks, and in seconds the information is sent directly to a pharmacy so the patient can pick up the prescription.

The patient doesn’t have to get the doctor on the phone or bug the staff for a moment with the doctor, and the doctor doesn’t have to do additional paperwork or get on the phone with the pharmacy to call in the prescription after already having spoken with the patient on a separate call. The result is tremendous time savings ― and ultimately, cost savings for both the doctor and patient.

Online portals also facilitate communication between doctors and patients between appointments. If a patient has a question or clarification that does not warrant an additional office visit, the doctor or staff can quickly respond in an instant, without playing phone tag, and without having to route calls to busy doctors who can’t always be on the phone.

Physicians can also leverage these portal technologies to send lab results and images directly to the patient using a secured and encrypted link, and to make clinical summaries easily available online. When the doctor adds new information to the file, such as a lab report, the portal system can be programmed to automatically send an e-mail alert to prompt the patient to log onto the portal.

For all the technology though, we still have a way to go in implementing it. According to a recent study in the Journal of General Internal Medicine57% of respondents said they want to use their doctor’s website to review their medical records, but only 7% of those polled reported having made use of that technology to access their own information online.

A study from the Annals of Internal Medicine found that 77% to 87% of individuals who used their physician’s portal to open at least one note, and who completed a post-intervention survey, said that the process helped them be more in control of their health care.


New Rules Allow Employers to Reimburse for Health Premiums

Starting Jan. 1, 2020, employers can establish accounts for their employees to help them pay for individual health insurance policies they purchase, as well as for other health care expenses.

A new regulation expands on how health reimbursement accounts can be used. Currently, employers and their workers can contribute to these accounts, which can be used to reimburse workers for out-of-pocket medical expenses.

With these new Individual Coverage HRAs, employers can fund the account workers would use to pay for health insurance premiums for coverage that they secure on their own.

Up until this new regulation, such arrangements were prohibited by the Affordable Care Act under the threat of sizeable fines in excess of $36,000 per employee per year.

This rule is the result of legislation signed into law by President Obama in December 2016, which created the “qualified small employer health reimbursement arrangement (QSEHRA),” which would allow small employers to reimburse for individual insurance under strict guidelines.

The Trump administration was tasked with writing the regulations, which created the Individual Coverage HRA (ICHRA).

How it works

Under the new rule, if an employer is funding an ICHRA, the plan an employee chooses must be ACA-compliant, meaning it must include coverage for the 10 essential benefits with no lifetime or annual benefit maximums — and must adhere to the consumer protections built into the law.

Once the ICHRA is created, the employer will a set amount every month into the account on a pre-tax basis, which the employee can then use to buy or supplement their purchase of health insurance benefits in the individual market.

The law allows employers to set up as many as 11 different classes of employees for the purposes of distributing funds to ICHRAs. The employer can vary how much they give to each different group. For example, one class may get $600 a month per single employee with no dependents, while members of another class may receive $400 a month.

The allowable classes are:

Full-time employees — For the purposes of satisfying the employer mandate, that means a worker who averages 30 or more hours per week.

Part-time employees — Like the above, the employer can choose how to define what part-time is.

Seasonal employees — Workers hired for short-term positions, usually during particularly busy periods.

Temps who work for a staffing firm — These employees provide temporary services for the business, but are formally employed through a staffing firm.

Salaried employees — Staff who have a have a fixed annual salary and are not typically paid overtime.

Hourly employees — Staff who are paid on an hourly basis and can earn overtime.

Employees covered under a collective bargaining agreement — Employees who are members of a labor union that has a contract with the employer.

Employees in a waiting period — This class would include workers who were recently hired and are in their waiting period before they can receive health benefits (in many companies, this is 90 days).

Foreign employees who work abroad — These employees work outside of the U.S.

Employees in different locations, based on rating areas — These employees live outside the individual health insurance rating area of the business’s physical address.

A combination of two or more of the above — Businesses can also create additional classes by combining two or more of the above classes.

The rules for ICHRAs are as follows:

  • Any employee covered by the ICHRA must be enrolled in health insurance coverage purchased in the individual market, and must verify that they have such coverage (as mentioned above, that coverage must be ACA-compliant);
  • The employer may not offer the same class of workers both an ICHRA and a traditional group health plan;
  • The employer must offer the ICHRA on the same terms to all employees in a class;
  • Employees must be allowed to opt out of receiving an ICHRA;
  • Employers must provide detailed information to employees on how the ICHRA works;
  • Employers may not create a class of employees younger than 25, whom they might want to keep in their group plan because they’re healthier;
  • A class cannot have less than 10 employees in companies with fewer than 100 workers. For employers with 100 to 200 employees, the minimum class size is 10% of the workforce, while for employers with 200 or more staff, the minimum size is 20 employees;
  • While benefits must be distributed fairly to employees that fall within each class, each class can be broken down further by age and family size. That means employees with families can be offered a higher amount per month and rates can be scaled by age.

New Booklet Helps Employers Set Up Safe Driving Programs

OSHA has published a set of guidelines to help employers reduce accidents among their driving employees.

The document is not a set of new regulations or a new standard. It is only advisory ― the federal agency describes it as “informational in content” ― and is intended to assist employers in providing a safe and healthful workplace.”

Nonetheless, the guidelines are an excellent way to establish a system that can reduce the likelihood of crashes involving your driving workers.

OSHA recommends implementing a safe driving program that includes the following:

Management commitment and employee involvement

Senior management can provide leadership, set policies and allocate resources (staff and budget) to create a safety culture. Actively encourage employee participation and involvement at all levels of the organization to help the effort to succeed. Involve workers in the planning phase of the policy.

Written policies

Create a clear, comprehensive and enforceable set of traffic safety policies and communicate them to all employees. They can cover such things as:

  • A zero-tolerance policy for using smartphones while driving and only using hands-free technology when talking on the phone.
  • A zero-tolerance policy of driving under the influence of alcohol or illegal drugs.
  • Requiring all driving staff to wear seat belts at all times.

These policies should be posted throughout the workplace, distributed to staff and discussed at company meetings. Offer incentives for sticking to the rules, and set consequences for disregarding them.

Driver agreements

Establish a contract with all employees who drive for work purposes, whether they drive assigned company vehicles or use their personal vehicles. By signing an agreement, the employee acknowledges awareness and understanding of the organization’s traffic safety policies, procedures and expectations regarding driver performance, vehicle maintenance and reporting of moving violations.

Check driving records

Check the driving records of all employees who drive for work purposes. Screen out drivers who have poor records. Review their moving violation records periodically to ensure that the driver maintains a good driving record. Clearly define the number of violations an employee/driver can have before losing the privilege of driving for work.

Crash reporting

Establish and enforce a crash reporting and investigation process. Require employees to report all accidents to their supervisor as soon as feasible after the incident. Set policies for what driving employees should do after an accident. Also, investigate all crashes and try to identify their root causes, so you can possibly help workers avoid making the same mistakes in the future.

Vehicle maintenance and inspection

Selecting, properly maintaining and routinely inspecting company vehicles is an important part of preventing crashes and related losses.

Review the safety features of all vehicles to be considered for use. Conduct routine preventative maintenance on vehicles as per manufacturer’s recommendations. Also check safety-related equipment and brakes regularly.

Disciplinary action system

Set rules for dealing with employees who are cited for a moving violation or are involved in a preventable crash while driving on the job. Options include:

  • Assigning points for moving violations.
  • Progressive discipline if a driver begins to develop a pattern of repeated traffic violations and/or preventable crashes.
  • The system should describe what specific actions will be taken if a driver accumulates a certain number of violations or preventable crashes in any predefined period.

Reward/incentive program

Develop and implement a driver reward/incentive program that includes recognition, monetary rewards, special privileges or the use of incentives to motivate the achievement of a predetermined goal or to increase participation in a program or event.

Driver training and communication

Provide continuous driver safety training and communication. Even experienced drivers benefit from periodic training and reminders of safe driving practices and skills. It is easy to become complacent and not think about the consequences of our driving habits.


Many Employees Choosing the Wrong Health Plans

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.


New Rules Aim for Hospital, Insurer Transparency

The Trump administration on Nov. 15 announced two rules that would require more transparency in hospital pricing and health insurance out-of-pocket costs for enrollees.

The final rule on hospital pricing will require hospitals to publish their standard fees both on-demand and online starting Jan. 1, 2021, as well as the rates they negotiate with insurers. The administration also proposed rules that would require health insurers to provide their enrollees instant, online access to an estimate of their out-of-pocket costs for various services. 

The latter are just proposed rules and will have to go through a comment period before final rules can be issued. 

The two sets of rules are part of the Trump administration’s efforts to bring more transparency into the health care and insurance industry. They are in response to more and more consumers’ stories of serious financial strife after receiving surprise bills from hospitals and other providers, particularly if they had to go to a non-network physician or hospital.

Both rules could benefit health plan enrollees by giving them more information on hospital services, particularly if they are in high-deductible plans and can shop around for a future procedure, such as a mammogram or knee replacement surgery.

Hospital pricing transparency

In the original proposed regulations, the administration had proposed the effective date of the hospital price transparency rule as Jan. 1, 2020, but health providers said they would need more time to ramp up.

The new rules, effective Jan. 1, 2021, will require hospitals to publish in a consumer-friendly manner their standard charges price list of at least 300 “shoppable services,” meaning services that can be scheduled in advance, such as a CAT scan or hip replacement surgery.

The list must include 70 services or procedures that are preselected by the Centers for Medicare and Medicaid Services. Hospitals will have to disclose what they’d be willing to accept if the patient pays cash. The information will be updated every year.

Hospitals will be required to publish their charges in a format that can be read online. This rule could pave the way for apps that patients can use to compare services between hospital systems.

Under the rule, hospitals will have to disclose the rates they negotiate with third party payers.

The new rules face some uncertainty, however. The health care trade press has reported that a number of trade groups such as the American Hospital Association and the Federation of American Hospitals, among others, announced in a joint statement that they would sue the government, alleging that the new rules exceed the bounds of the CMS’s authority.

Out-of-pocket transparency

The proposed rule would require insurers to provide their health plan enrollees with instant online access to estimates of their out-of-pocket costs.

The regulations would require health insurers to create online tools their policyholders can use to get a real-time personalized estimate of their out-of-pocket costs for all covered health care services and products, such as:

  • Hospitalization
  • Doctor visits
  • Lab tests
  • Surgeries
  • Pharmaceuticals.

They would also be required to disclose on a public website negotiated rates for their in-network providers, as well as the maximum amounts they would pay to an out-of-network doctor or hospital. 

The proposed regs would also let insurers share cost savings with their enrollees if the individuals shop around for services that cost less than at other providers. This would give enrollees an incentive to shop around.

This proposed rule is also certain to face push-back from the insurance industry.

These out-of-pocket transparency regs are just proposals, so they have to go through the standard rule-making procedure of soliciting public comments before eventually issuing the final rules.


Large PBMs Balk at Push to Reduce Drug Prices

In a move that exemplifies the potential conflict of interest that some large pharmacy benefit managers have, the nation’s largest PBM earlier this year said it would demand that rebates remain unchanged when drug makers roll out new price cuts. Drug makers earlier in the year said they would start reducing prices as well as the rebates they pay PBMs to appease lawmakers and the Trump administration, saying it would reduce the cost of medicine for patients. But not long after the announcement, the nation’s largest PBM, United Healthcare, fired off a letter to drug companies telling them that if they planned to reduce prices and rebates they would have to give seven quarters of notice (that’s 21 months if you’re counting) when they intend to lower prices. The letter, which was confirmed in news reports in the health care trade press, highlights what many critics say is an inherent conflict of interest among some of the large PBMs operating in the country.

Some background

When PBMs first came on the market, the services they offered were processing pharmacy claims and negotiating discounts on medications for the health insurance companies with which they contracted. Later though, they found a new way to make money: rebates. They would approach two manufacturers that made similar versions of a drug and play them off against each other to elicit the largest rebate they could. Whichever one offered the larger rebate would have their pharmaceutical placed on the drug plan’s formulary. The problem is that these large PBMs do not pass on the full rebate to their clients, like health insurance companies and health plan enrollees. Instead, they keep most of the rebate for themselves. As a result, PBMs with this business model are not motivated to include the lowest-priced drug on their formulary, but rather the one for which they can receive the largest rebate check.

The latest

United Healthcare sent out the letter to drug makers after pharmaceutical manufacturer Sanofi S.A. said it would cut the price of its cholesterol-lowering drug Praluent by 60%. It did so after its competitor Amgen Inc. reduced the price of its cholesterol drug Repatha by the same amount. United Healthcare’s demand that drug companies give 21 months’ notice when they plan to reduce prices has caught many drug makers off guard, since many of them have been looking to cut prices as pressure mounts on the industry from Washington. The dominance of United Healthcare’s PBM OptumRX and its competitor Express Scripts means that group health plan enrollees are often left at their mercy, as many large health insurers have contracts with them. If a drug company does not give the rebate that a large PBM demands, it could lose access to patients – and patients lose access to that drug. The only way to play the game is to offer a larger rebate and increase prices, which in turn increases the prices that patients have to pay. Fortunately, there are a number of smaller PBMs in the marketplace that have different business models that take payers’ needs into consideration and aim to reduce the out-of-pocket costs for patients. They contract with employers and insurers directly to make this happen.

Your Last-Minute Open Enrollment Checklist

By now you should be prepared and ready to go for your 2020 employee benefits open enrollment. You should have all your plan documents and have prepared or held presentations for your staff to explain the benefits package and any major changes to the plans that you offer. 

Employees should be familiar with how to use the enrollment portal and who they should talk to if they have questions. 

To be on the safe side, there are a few things you should do to make sure you maximize enrollment, that your employees have the correct materials and that you are in compliance with the law. 

Take an active role — Most of the policy selection is done online, but that doesn’t mean you can’t support your employees and let them know you are there in case they have any questions or are confused about any aspect of the benefits package. 

You should want all of your employees to choose the package that best fits their individual needs. To ensure they make the best possible choices and have a successful experience, motivate them to take an active role in their education by encouraging questions and showing them where they can find answers in the online enrollment platform. 

Last-minute blasts — You’ve probably sent a few e-mail reminders to your staff, but most certainly some of them still missed those communications. Make sure you send a few extra blasts at different times of the week, like Tuesday at 10 a.m. and another on Thursday at 2 p.m. 

You should also have all of your employees’ mobile phone numbers, and sending them reminder text messages is a sure-fire way to get in front of the ones who may not be as diligent about monitoring their e-mail. 

Double-check your plan materials — Do a final review of your plan documents for any necessary updates regarding member eligibility, plan benefits, new vendors and name changes to ensure that the current state of your benefits offerings is complete and accurate. 

Also, do a final review of your summary of benefits and coverage (SBC) and your summary plan description (SPD) to make sure they reflect any changes from the prior year. This is crucial as both documents are required under the law. 

The SPD may include the elements necessary to meet the requirements of the SBC, but it also needs to be a separate document that can be handed out with respect to each coverage option made available to the participants. 

To account for the annual open enrollment window, double-check your open enrollment schedule, deadlines, documents and forms, coverage options and changes, phone numbers, and website and mobile information for contacting resources, statement of current coverage, and plan-specific summaries and rates. 

Identify staff that didn’t enroll last year — To make sure you maximize participation and that nobody misses out, run a list of all your staff who didn’t sign up for benefits last year so you can approach them individually and convey the importance of securing health coverage. 

While you’re at it, make sure that all of your new hires in the past year have also signed up for coverage and that you didn’t miss them when sending out reminders about open enrollment. 

Check compliance with ACA — If you are an “applicable large employer” under the Affordable Care Act, meaning that you have more than 50 full-time or full-time equivalent employees, you are obligated under the law to provide health coverage to your staff that is “affordable” and covers 10 essential benefits. 

There is a figure for what is considered affordable, which changes every year. For your plan to be considered ACA-compliant, it must not cost an employee more than 9.78% of their household income.?? 

ACA refresher — The ACA remains as controversial and misunderstood as ever and most people only know what they have heard about it from their favorite news outlet, which can result in a skewed, and often incorrect understanding of the law. 

Also, there have been a number of changes to the law during the last few years, the biggest of which is the elimination of the penalties associated with individuals not securing health insurance as required by the individual mandate portion of the law. 

Give your staff a last-minute refresher to help them understand how the ACA affects their health insurance — and what the employer’s and their obligations are under the law. 


Many Workers Struggle with Medical Bills, Despite Having Insurance

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A new survey has found that many American workers are struggling with medical bills even though they have employer-sponsored health plans.

The good news from the survey was that 81% of respondents said they had health insurance, which meant they were 19% more financially fit than people without insurance. They were also happier.

The survey found that:

  • One in 10 employees who have insurance and pay part of the premiums, also have annual out-of-pocket medical bills of more than $10,000.
  • 33% of insured employees carry medical debts that they are trying pay down.
  • Insured employees that carry medical debt are 42% less financially fit than those who do not have such debt.

Carrying debts related to medical care also affects employees’ health. The survey found that workers with money problems are:

  • Three times more likely to suffer from anxiety and panic attacks.
  • Eight times more likely to have sleep problems.
  • Four times more likely to suffer from depression and have suicidal thoughts.

Stress from medical debts can also affect worker productivity. Of employees with medical debt problems:

  • 24% have troubled relationships with co-workers.
  • 22% cannot finish their daily tasks.

Lost productivity from these two issues costs businesses up to 14% of payroll expenses, the survey found.

What can you do

Given that health care costs show no signs of abating, what can you do for your low-wage employees and also ensure that your own health insurance premiums don’t spiral out of control? Here are some options:

Vary premium level – If you have a mix of highly paid staff and lower-wage workers, you can create a tiered system where the latter receive greater premium contributions from you than do the former. About a quarter of large employers vary employee health insurance premiums. This is something that’s not feasible for all businesses, particularly if money is tight.

Offer plans with generous benefits – You can offer a slate of plans, from ones with larger copays and deductibles to those with low or no out-of-pocket costs for those employees willing to pay more in premium. This way, your low-wage workers have a choice of health plans which include lower deductibles and lower variability in potential out-of-pocket liability.

Offer skinny plans – Skinny plans still cover the 10 benefits required by the Affordable Care Act, but they typically have a narrow network of providers in exchange for low out-of-pocket costs for the enrollee. While this option is good for your younger and healthier worker, it is often a non-starter for those who have existing health issues.

Carefully review incentives and subsidies – Employers should design wellness incentives that do not penalize low-wage workers, who are more likely to smoke, (many employers impose a tobacco surcharge averaging $600 a year). Employers should couple tobacco surcharges with tobacco-cessation programs, and waive surcharges for employees who are trying to quit.

Offer plans with modern attributes – Telemedicine services can reduce health care costs, as they reduce the worker’s need to take time off for an appointment and also lower the cost of delivery of care.

Push for lower prices and costs – You should coordinate with us, so we can work with your health plans and providers to reduce costs.


Trump Administration Decides Not to End PBM Rebates

The Trump administration has decided not to pursue a policy that would have put an end to rebates paid to pharmacy benefit managers, which could put the focus again on how drug companies set their prices.

The proposal would have barred drug companies from paying rebates to PBMs that participate in Medicare and other government programs. According to the administration, the proposed rules were shelved because Congress had taken up the issue to control drug costs.

The spotlight has been harsh on some of the country’s largest PBMs, which have been accused of pocketing a substantial portion of the rebates for themselves while passing on only a sliver of the rebates to the insurance companies that hire them and the health plan enrollees that pay out of pocket for the drugs.

Rebates had become a popular target of criticism in Washington after drug companies lobbied aggressively to cast them as the reason for high prices. PBMs negotiate drug discounts in the form of rebates, often keeping some of that money for themselves.

However, many pundits say that the rebate system put in place by large, national PBMs incentivizes drug companies to keep list prices high, which in turn defeats the purpose of the PBMs – that is, to reduce the out-of-pocket costs that health plan enrollees pay for their prescription drugs.

Like insurers and PBMs, some of which have sought to undermine the practice with accumulator adjustment programs, the Trump administration believes such coupons may be driving up health care spending by getting patients to opt for higher-priced name-brand drugs over generics.

The Centers for Medicare & Medicaid Services proposal unveiled in January would have essentially blocked drug manufacturer rebates from going to PBMs and health plans that serve Medicare and Medicaid patients, starting next year.

Now that the push to eliminate rebates has come to end, the focus looks like it’s shifting to how drug companies price their products. We will keep you posted if any legislation surfaces in this area.


The Costliest Claims for Catastrophic Conditions and the Drugs Used to Treat Them

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.


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