In a year filled with major distractions like near-constant legislative action on health reform (and now tax reform) and the recent CVS/Aetna announcement, to name just a few, it has not been easy to stay focused on the essentials. Time to wrap up 2017 and turn our sights to the coming year. I’ve pulled together a list of six things employers should be thinking about in 2018. Here are the first three, with the rest to follow next week.
1. Have a strategy to manage specialty costs.
As the fastest-growing cost component of medical trend, specialty drugs are not an issue you can afford to ignore. In our most recent National Survey, 83% of employers say managing specialty drug cost will be an important or very important focus over the next five years. The first step is to take a look at your current utilization and spend for these drugs. It is expected that 50 new specialty drugs will hit the market every year for the next five years, adding an estimated $250 million in pharmacy spend annually. It’s not as simple as carving out specialty pharmacy -- there’s as much opportunity for management on the medical side of the plan as on the pharmacy side.
2. Protect your company from high-cost claims.
Under the ACA, all lifetime benefit limits on covered essential health benefits were eliminated. At the same time, medical science continues to advance. No surprise we have seen a surge in high-cost claims the past few years. In fact, Sun Life reports a 68% increase in claims over $1 million in the past three years, and claims as high as $10 million have been seen. Historically, very large self-insured employers have not purchased stop loss insurance. Given the costs associated with medical advances and new specialty drugs, this may no longer be an appropriate risk strategy and if you do purchase stop-loss insurance your current coverage level may not be enough. In either case, it’s a good time to revisit your tolerance for risk. I’d suggest you put this on the agenda for your next discussion with your CFO.
3. Help plan members understand the cost of care at various access points.
The average deductible in a PPO plan is now about $1,000 among employers with 500 or more employees, and about $2,000 among those with 10-499 employees. For some employees, reaching the deductible in a given year would put a real strain on family finances. The good news is that most large employers (71%) offer telemedicine services. The bad news is that average utilization is still in the single digits. You can help by communicating to your employees about the relative cost of care at different access points. For example: A telemedicine visit costs approximately $40 and can be scheduled at your convenience; a visit to a retail clinic (like the Minute Clinics in CVS) costs $60-$90 depending on the service; the average cost for a doctor’s office visit is around $125; a visit to an urgent care facility will typically cost $200 to $300 (or more, if it includes lab tests or X-rays); and an emergency room visit costs the most of all. Once employees understand the basics -- that they have options and that their choice of provider can save real money -- you’ve paved the way for more sophisticated value-based care strategies (like Accountable Care Organizations and Centers of Excellence) that also involve choosing a cost-effective provider. Value-based care has been a hot topic in 2017 and will only grow in importance in our health benefit strategies over the coming years.
Coming up next week:
- Find the right number of medical plan choices
- Keep on top of paid-time off benefits
- Look beyond generational labels to understand what your workforce really wants