Employer Group Health Plans

West Coast Public Sector Plan Sponsors Will Coordinate More Closely Through Purchaser Group

The Purchaser Business Group on Health (PBGH) for the first time has created a public purchaser advisory committee. The decision, part of the purchaser group’s newly announced five-year plan, is meant to align the needs of its public members and integrate them with private purchasers.

PBGH is a nonprofit coalition representing nearly 40 public and private purchasers that collectively spend $350 billion annually on health care services. While the group’s members include major corporations such as Apple, Inc., Microsoft Corp. and the Walt Disney Co., PBGH is different from other purchasing organizations in that it also represents public purchasers, according to Elizabeth Mitchell, PBGH’s chief president and chief executive officer.

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Armed With Transparency Data, Purchaser Groups Focus on Rising Prices

Amid growing medical cost trend and broad fears of inflation, two major purchaser groups have unveiled initiatives to coordinate plan sponsors in an effort to lower health care prices. Managed care experts tell AIS Health, a division of MMIT, that purchasers’ frustration with high prices are valid, but they don’t expect prices to come down any time soon with inflation and other macroeconomic trends set to wash over the health care sector.

The National Alliance of Healthcare Purchaser Coalitions (NAHPC) recently released a “playbook” white paper for regional purchaser groups and employers seeking to rein in price increases. The term purchaser coalition refers to a number of regional nonprofits across the country that are composed of the region’s largest employers; those groups comprise NAHPC’s membership. NAHPC’s largest member, the Purchaser Business Group on Health (PBGH), also rolled out a new plan to manage costs.

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AHIP Cheers Ruling in Dialysis Payment Case, but Congress Could Step In

Recently, health insurance trade group AHIP highlighted an under-the-radar Supreme Court ruling that centered on who should pay the bulk of the costs associated with treating some of the sickest patients: those with end-stage renal disease (ESRD). However, industry experts tell AIS Health, a division of MMIT, that what seems to be a victory for employer-based plans may be short-lived if Congress weighs in on the issue.

The case, Marietta Memorial Hospital Employee Health Benefit Plan v. DaVita Inc., concerned whether an employer-based health plan violated the Medicare Secondary Payer Statute (MSPS) by offering limited outpatient dialysis benefits to its enrollees. Specifically, the health plan in question had no in-network dialysis providers, capped reimbursement at 87.5% of the Medicare rate, and “imposed utilization management restrictions, such as claims audits and reviews,” health law attorney and Georgetown University research professor Katie Keith noted in a June article for Health Affairs.

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ICHRAs Begin to Gain Traction With Health Plan Purchasers

Employers are beginning to see the value of individual coverage health reimbursement arrangements (ICHRAs), managed care insiders tell AIS Health, a division of MMIT. Brokers and third-party experts say that while uptake has been slow so far, the ICHRA market could take substantive amounts of business away from both self-funded and fully insured commercial insurance books, particularly among medium-sized employers.

ICHRAs allow employers and employees to purchase Affordable Care Act marketplace plans. Employees select a plan on a health exchange or through a private broker, and their employer reimburses the member each month for a fixed amount of premium. Unlike exchange plans purchased by individuals, exchange plans purchased as part of ICHRA are not subsidized by advance premium tax credits. The market is still in its infancy: ICHRAs were created by the Trump administration in 2019, and the first policies in the segment were sold for the 2020 plan year.

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Employers Shift More Drug Cost Control Efforts From PBMs to Medical Plans

In 2021, prescription drugs accounted for a median of 21% of large employers’ health care costs, and a full 100% of firms said they were concerned about prescription drug spending trends, according to the Business Group on Health’s 2023 Large Employers’ Health Care Strategy and Plan Design Survey.

Yet the rising cost of specialty medications — which are often covered by medical rather than pharmacy benefits — has forced companies to think differently about how to curtail drug spending, the organization found. According to the survey, specialty medications account for 56% of all pharmacy spending by polled employers.

With Deal to Buy Trustmark, Health Care Service Corp. Continues Diversification Push

Health Care Service Corp. (HCSC) recently agreed to acquire Trustmark Health Benefits, a third-partner administrator (TPA) of health benefits. The pending deal continues HCSC’s expansion from its roots as primarily a traditional commercial insurer to other areas like TPAs and Medicare, and the diversification push is likely to continue, according to health insurance industry analysts who spoke with AIS Health, a division of MMIT.

For several years, HCSC has been a client of Trustmark Health Benefits, a firm that has more than 600 clients across the U.S. The companies Trustmark works with have self-insured health plans, meaning they are responsible for the cost of providing benefits to their employees. Trustmark generates revenue by helping companies in areas such as administering claims, managing risk, setting up virtual care and engaging with customers.

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Amid Inflation, Possible Recession, Insurers Are on Strong Financial Footing

Despite worrying macroeconomic trends, health insurers have done well this year so far, with all the largest publicly traded health insurance firms posting year-over-year earnings growth in the first half of 2022. Experts tell AIS Health, a division of MMIT, that they don’t expect health insurers to struggle despite ominous signs across the economy.

Those headwinds include inflation; a possible recession, which could decimate employer-based insurance enrollment; medical cost growth; and the resumption of Medicaid eligibility redeterminations, which will force unprecedented amounts of disenrollment. But experts say that insurers with a mix of business lines should be in a strong financial position. The largest risk is likely to insurers that carry a coverage mix disproportionately focused on the commercial market.

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Deferred Care Drives Up Employer Health Care Spending, Especially on Oncology

After a year in which health care cost trend flatlined, costs for self-funded plan sponsors increased “significantly” — by 8.2% — in 2021, according to the Business Group on Health’s 2023 Large Employers’ Health Care Strategy and Plan Design Survey. In addition, for the first time in the history of the annual survey, cancer eclipsed musculoskeletal conditions as the top driver of large firms’ health costs.

In 2020, 78% of polled employers said cancer was the top cost-driving condition, and the share rose to 80% in 2021 and 83% in 2022. The percentage of employers identifying musculoskeletal conditions as the most expensive condition dropped each of the three years, from a high of 90% in 2020, down to 84% in 2021 and 76% in 2022.

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Insurers Brace for When U.S. Stops Buying COVID-19 Vaccines, Therapeutics

The federal government will stop purchasing COVID-19 vaccines and therapeutics as soon as this fall, Biden administration officials said recently — meaning payers will have to procure vaccines and treatments like any other commercial pharmaceutical product. Health care experts tell AIS Health, a division of MMIT, that the move is likely to make vaccines and therapeutics less accessible and introduce dispensing costs that could drive up premiums.

The Biden administration is transitioning away from the “acute emergency phase where the U.S. government is buying the vaccines, buying the treatments, buying the diagnostic tests. We need to get out of that business over the long run,” White House Coronavirus Response Coordinator Ashish Jha, M.D., said during an Aug. 16 event organized by the U.S. Chamber of Commerce.

Employers Shift More Drug Cost Control Efforts From PBMs to Medical Plans

In 2021, prescription drugs accounted for a median of 21% of large employers’ health care costs, and a full 100% of firms said they were concerned about prescription drug spending trends, according to the Business Group on Health’s 2023 Large Employers’ Health Care Strategy and Plan Design Survey.

Yet the rising cost of specialty medications — which are often covered by medical rather than pharmacy benefits — has forced companies to think differently about how to curtail drug spending, the organization found. According to the survey, specialty medications account for 56% of all pharmacy spending by polled employers.