Benefit Management

While use cases for artificial intelligence are still largely being tested in health care, AI may be helpful right now for health plans seeking to manage their provider directories — a troublesome task that even the largest payers struggle to handle.

“There’s a lot of hype here, and really, so far, not much has really materialized,” said Neel Butala, M.D., cofounder of HiLabs, during a June 25 AHIP webinar.

“However, there’s a big appetite [for AI]…everything ranging from automating administrative tasks, apps, data analytics, to risk prediction, and even you know, personalized medicine. AI has applications in each of these buckets with varying ranges of maturity. And we feel, right now at least, that the easiest thing for people to engage AI in right now is automating administrative tasks. And this is because it improves efficiency; has direct, easily measurable ROI; and it’s pretty low risk for health plans in particular, as it's not really directly involved in member care. And finally, an easy win here can help any AI across an organization that can then be used…for other types of applications that are more advanced, that have a big impact.”

A recent survey from the Pharmaceutical Strategies Group (PSG) found that 33% of health plans and employers provide coverage for GLP-1 medications for obesity and 91% cover them for Type 2 diabetes. While an additional 19% of respondents said they were considering covering the drugs for obesity, plans and companies that do not cover the medications indicated they were primarily concerned with their high costs or considered them as lifestyle drugs rather than as pharmaceuticals to treat obesity as a disease.

“In an ideal world, if these drugs were really cheap, everyone would cover them for obesity,” says Morgan Lee, Ph.D., PSG’s senior director of research and strategy and one of the report’s authors. However, she notes GLP-1 medications such as Novo Nordisk’s Wegovy (semaglutide) and Eli Lilly & Co.’s Zepbound (tirzepatide) have a wholesale acquisition cost of about $13,000 per year, and more than 40% of the U.S. population is obese. If 40% of a payer’s members take GLP-1s, Lee says the financial impact could be “terrifying.”

When designing their drug benefits packages, deciding how to approach GLP-1 medications was a top concern for plan sponsors, according to Pharmaceutical Strategies Group’s 2024 “Trends in Drug Benefit Design Report,” sponsored by Prescryptive Health. The report is based on surveys of 223 individuals representing employers, health plans and union/Taft-Hartley plans.

The report highlighted the complexities presented by the demand and high costs of GLP-1 drugs. In 2024, over 90% of all employers and health plans covered GLP-1s for Type 2 diabetes, while just over 30% covered these drugs for obesity. Of those who excluded the medications for obesity from coverage, 38% considered them too expensive to cover.

When designing their drug benefits packages, deciding how to approach GLP-1 medications was a top concern for plan sponsors, according to Pharmaceutical Strategies Group’s 2024 “Trends in Drug Benefit Design Report,” sponsored by Prescryptive Health. The report is based on surveys of 223 individuals representing employers, health plans and union/Taft-Hartley plans.

The report highlighted the complexities presented by the demand and high costs of GLP-1 drugs. In 2024, over 90% of all employers and health plans covered GLP-1s for Type 2 diabetes, while just over 30% covered these drugs for obesity. Of those who excluded the medications for obesity from coverage, 38% considered them too expensive to cover.

A recent survey from the Pharmaceutical Strategies Group (PSG) found that 33% of health plans and employers provide coverage for GLP-1 medications for obesity and 91% cover them for Type 2 diabetes. While an additional 19% of respondents said they were considering covering the drugs for obesity, plans and companies that do not cover the medications indicated they were primarily concerned with their high costs or considered them as lifestyle drugs rather than as pharmaceuticals to treat obesity as a disease.

“In an ideal world, if these drugs were really cheap, everyone would cover them for obesity,” says Morgan Lee, Ph.D., PSG’s senior director of research and strategy and one of the report’s authors. However, she notes GLP-1 medications such as Novo Nordisk’s Wegovy (semaglutide) and Eli Lilly & Co.’s Zepbound (tirzepatide) have a wholesale acquisition cost of about $13,000 per year, and more than 40% of the U.S. population is obese. If 40% of a payer’s members take GLP-1s, Lee says the financial impact could be “terrifying.”

Specialty drugs are still taken by only a small percentage of people but represent more than half of total drug costs. Anti-inflammatory specialty therapies continue to be a huge driver of those costs, according to the recently released 2023 Drug Trend Report from PBM analytics firm Xevant. The specialty pipeline remains strong, and payers should expect these agents to continue to affect their costs, says one industry expert.

Based on Xevant’s book of business for 2022 and 2023, the company observed an 11% increase in the number of prescriptions filled for specialty drugs. The plan-paid amounts for those agents rose 19%, slightly less than nonspecialty medications’ 22% plan-paid costs. In addition, the average plan cost per specialty prescription rose from $6,100 in 2022 to $6,700 in 2023.

The use of supplemental benefits in Medicare Advantage can markedly improve health care utilization, decreasing members’ inpatient admissions and increasing wellness visits and preventive screenings, suggests new research from Elevance Health, Inc.’s Public Policy Institute. And the effect is especially pronounced for Medicare-Medicaid dual eligibles, who are more likely to have greater care needs and face socioeconomic vulnerabilities.

Following legislation and regulatory changes in 2018 and 2019 that established new types of supplemental benefits and expanded the definition of what CMS considers “primarily health-related,” payers began to offer supplemental benefits that target these health-related social needs, such as food insecurity and lack of access to transportation.

Medicare Advantage plans that adopt supplemental benefits can improve their plan experience ratings, according to new research published June 5 in JAMA Network Open. Researchers found that plans that adopted both expanded primarily health-related benefits (PHRB) and Special Supplemental Benefits for the Chronically Ill (SSBCI) in 2021 increased their mean plan rating, measured via the Consumer Assessments of Healthcare Providers and Systems (CAHPS) survey, by 0.22 points. (Members rate plans between a low of 0 and a high of 10 points.) The study is among the first research available on any link between supplemental benefit adoption and plan quality ratings.

Three major health insurers have denied allegations brought against them in lawsuits pertaining to the use of artificial intelligence in coverage decisions. While The Cigna Group, Humana Inc. and UnitedHealth Group may succeed in getting the cases dismissed, those companies and other payers could continue to face scrutiny over their use of AI, according to Ileana M. Hernandez, a partner at Manatt, Phelps & Phillips, LLP.

“The staggering volume of claims and complexity of claims that insurance plans need to review on a daily basis make insurance reviews an attractive target for using AI,” said Hernandez, who spoke on June 12 during a Manatt webinar. “However, the use of algorithms for review of coverage issues has resulted in questions, concerns, investigations and now lawsuits.”

It's no secret that health plans are concerned that they may not be able to afford gene and cell therapies with new or anticipated approvals. With expensive launches on the horizon, plans are searching for payment models that can grant patients access to lifesaving or life-changing therapies without blowing budgets.

Those concerns are particularly acute for smaller, regional health insurers and employer plan sponsors. Those payers may have tight balance sheets and lack the pricing advantages that national insurers can leverage in negotiations with manufacturers. Midsize plan executives say their organizations are figuring out what to do as they go along.