Unless you’ve spent the last few weeks vacationing on an internet-free tropical island or remote mountain-top (if so, lucky you!), you’ve read something about the controversy surrounding the EpiPen, the severe-allergy drug injector sold by the pharmaceutical company Mylan. Since 2007, when Mylan acquired the EpiPen, the list price has risen from about $100 for a two-pack to about $600. There are virtually no alternatives on the market, and the medication is potentially life-saving – in other words, not optional. A grassroots social-media campaign, driven largely by parents of children with food allergies, pushed Mylan to offer a $300 “savings card” to commercially insured patients to reduce their out-of-pocket costs and to broaden the eligibility for uninsured patients to receive free EpiPens. What they didn’t do was reduce the list price for the drug, and the barrage of negative press continued, affecting Mylan’s stock price. The company responded by announcing they would introduce their own generic version of the product in a few weeks, at half the price. It will be the exact same product as brand-name version – which the company will continue to sell for the full price. Although drug companies have introduced generic versions alongside their own brand-name drugs to compete with other generics, it doesn’t appear that another generic epinephrine auto injector will be available in the short-term.
Although this move may take heat off the company, the reason Mylan didn’t just reduce the price of the brand-name drug is because they hope and expect that sales of the brand-name version will continue – because (as this New York Times article suggests) some doctors will keep writing prescriptions for it by name, out of habit; because pharmacists will have a financial incentive to sell the more expensive, brand-name version; and because consumers with the $300 savings card might get the brand-name version for free but have a small co-payment for the generic version. On the other hand, some PBMs and carriers may have negotiated prices for the brand-name that are lower than the generic price! Employers will need to talk to their PBM or health plans to understand the current pricing structure and how, now that the target has moved and moved again, to get the best deal for their employees and their organization.
This story shines a spotlight on the urgent need for regulation to address pharmaceutical price-gouging and the extreme variation in prices paid by different purchasers for the same drug. On the defensive, Mylan’s CEO called out high-deductible plans as the real culprit; in fact, they exposed unfair price increases that might otherwise have gone unnoticed, as they do in so many cases. But the EpiPen story also highlights a problem with consumerism: you can’t be a smart shopper if there is no alternative to a product that your life, or your child’s life, may depend on.
Optum and Walgreens Boots Alliance (WBA) recently announced an alliance by which Optum Rx members can fill 90-day maintenance medication prescriptions at Walgreens stores at mail-order copays. Although cheaper, mail-order pharmacy benefits are not always popular with patients so this may be a welcome development for some health plans. Optum indicates that there will be two options. In one, there are higher copays if the member does not use Optum mail-order or Walgreens after two “grace fills.” In the other, the member would pay 100% of the drug’s cost if Optum mail-order or Walgreens is not used. Initial information indicates that mail-order pricing discounts would apply to these prescriptions. However, plan sponsors interested in this new arrangement should carefully review the arrangement to ensure pricing remains at, or below, current levels for both the patient and the health plan.
Medicare Advantage premiums are expected to increase around 3.5% in 2017. While this increase is in line with what we see for active medical plans, we need to keep in mind that the target membership for these plans is retirees, many of whom are on fixed incomes. The Medicare Advantage plans are popular with seniors because they typically include some services not included in traditional Medicare. About a fifth of all large employers (21%) provide medical coverage for Medicare-eligible retirees today on an ongoing basis, and an additional 11% still provide a plan to a closed group of Medicare-eligible retirees. Employers have gravitated to private exchanges as a way to offer retiree medical coverage. Among those that sponsor retiree coverage, 13% now offer Medicare-eligible retirees a private exchange, up from 9% last year, and 15% will use an exchange for their 2017 plan year. An additional 18% of retiree plan sponsors say they are considering moving their Medicare-eligible retirees to a private exchange within five years.
The Equal Employment Opportunity Commission (EEOC) grabbed headlines this week by filing for a temporary restraining order against Honeywell, claiming that the company’s wellness program violates both the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). While the EEOC had filed two previous suits in this area, both were against companies that had taken fairly extreme measures against employees who didn’t perform actions required to receive wellness incentives. In this case, the EEOC is alleging violations by a wellness program closer to the mainstream in which employees are required to undergo biometric testing to help identify health risks as well as a blood test to determine whether the employee or spouse uses tobacco.
According to the EEOC, the financial impact of not taking part in the screenings — two separate premium surcharges and the loss of an HSA contribution, amounting to a maximum of $4,000 for an employee and spouse — is enough so that employees are essentially being forced to undergo screening. Honeywell has called the suit “frivolous” and says the EEOC is “out of step” with the current health care marketplace — especially given that their program meets the requirements of both the ACA and HIPAA. Employer groups have been frustrated that the EEOC has not issued guidance about how the ADA and GINA apply to wellness programs, despite repeated appeals over the past few years.
While the EEOC action is obviously worrisome for employers that use financial incentives, here are a couple of points to keep in mind before panicking: First, we don’t know yet whether the restraining order will be granted — a hearing will take place on Monday. Second, even if the restraining order is granted, the case is being heard in a lower court in Minnesota, so it will have limited jurisdictional impact (although the ripple effect could be significant). So even if your program design is similar to Honeywell’s, it’s most likely that you’ll have time to consider a response. Long-term, it’s worth asking yourself two questions about your incentive strategy: how much of an incentive — and what type of an incentive — is enough to accomplish your goals, and what’s the best way to communicate the incentive to avoid employee backlash.
Update: November 3, 2014. The EEOC’s motion for a temporary restraining order was denied by the judge from the bench. This is good news for Honeywell and all employers hoping to get on with open enrollment without interruption. However, the judge specifically said she wasn't ruling on the merits. So if the EEOC pursues the case, the court may still rule on the underlying issues.
Taking the approach "measure it and it will improve," The Vitality Institute is calling on companies to begin reporting employee health metrics the same way they report earnings -- with the goal of reducing the incidence of non-communicable diseases (such as cancer, diabetes, and cardiovascular disease) in the US workforce. The Institute assembled a commission including representatives from major corporations, the health care industry, and academia to make recommendations. In a report issued last week, they estimate that if employers got serious about improving the health of their employees, improved productivity and reduced health spending could be worth $300 billion annually. While the commission is thinking big, employers can take a small but important step on the road to measurement by completing the HERO Employee Health Management Best Practices Scorecard, an online inventory of just about everything employers are doing today to improve workforce health. Mercer collaborates with the nonprofit Health Enhancement Research Organization to offer the online Scorecard free of charge to all employers -- you can access it here. It has just been updated with current best practices and a set of easy-to-use metrics for measuring program outcomes. Upon submitting the completed Scorecard, you'll receive a reply e-mail with your organization's best practice score compared to national averages. Over 1,200 employers have used the Scorecard since it was first launched in 2009.
After their failed attempt to pass ACA repeal and replace legislation, President Trump and House Speaker Ryan indicated that they were “moving on” to other legislative priorities. On Tuesday, we learned that Republicans have restarted their conversations about healthcare. On Wednesday, Bloomberg reported the GOP was discussing a new vote as early as next week.
At Mercer, we believe that the current healthcare system is unsustainable, but we urge that changes be made without undue haste and with careful consideration of the many complex factors at play in our system. We are actively advocating for new health savings account rules and the repeal of the Cadillac tax and, as I said in my blog post earlier this week, we stand ready to support lawmakers in shaping policies that will address the underlying causes of healthcare cost growth.
Our conversations with employers across the country echo these priorities. For instance, the morning of the day the bill was pulled, I gave a speech at the North Carolina Business Group on Health annual conference. I asked the group of benefits professionals if they could ask one wish of the President and Congress, what would it be? Responses included:
- Healthcare coverage for all
- Consideration of the consequences of cutting federal funding for Medicaid and public health programs
- Consideration of the consequences of cost-shifting to older pre-Medicare-eligible Americans
- Help addressing unnecessary/inappropriate care, ER visits, and opiate use
- Help with escalating prescription drug costs
- Relief on the ACA reporting requirements
What would your "one wish" be?
The path Congress will take to repeal and replace the ACA has been anything but clear. Since the election, many approaches have been discussed, some that could take up to two years to implement. Trump is asking Congress to move more quickly. Last week, a committee of House Republicans released four bills that suggest a new direction. In an article in Health Affairs, author Timothy Jost says “…they are not aimed at destroying the ACA, but rather at trying to calm insurers and a nervous public. Some may even pass on a bipartisan basis. This is a very interesting development.”
Each bill is focused on a different piece of a replace strategy, addressing areas that seem to be creating the highest levels of angst. The first three are aimed at insurance company concerns in hopes of stabilizing the individual insurance market:
verification of eligibility to enroll and receive a government subsidy
expand the age category ratios for insurance company pricing
tighten the grace period for non-payment of insurance premiums
The fourth bill affirms a commitment to continuing to ban pre-existing condition limits, an issue that has captured the attention of members of both individual and group health plans.
These bills are to be the topic of a House Energy and Commerce hearing on Feb 2, which is a first step in the vetting process. While these bills do not directly address employer concerns, movement to stabilize the individual market sooner rather than later is a welcome response that will benefit individual and group health plans alike.
Last week, The Henry J. Kaiser Family Foundation released new data showing only one in four Americans favor repeal of the ACA. About half of the respondents want Congress to leave the ACA alone or make it bigger and stronger. Contrast that with the results from our latest Mercer poll, where 63% of participating employers said they favored repeal-and-replace of the ACA; only 15% said they oppose; and 22% said they don't have an opinion yet. Why the difference? When pondering repeal, employers may be hoping for elimination of the cost and administrative burdens imposed by the ACA, where individuals may be concerned about losing some of the protections afforded by the ACA – for example, the ban on pre-existing coverage exclusions and coverage eligibility to age 26.
Now that ACA repeal seems imminent, the Kaiser data may indicate the ACA individual protections are more important to Americans than we realized. The data shows that among Republican voters those favoring repeal declined from 69% in October to 52% in November and those who would prefer Congress merely scale back the law increased from 11% in October to 25% in November.
Whatever Congress ultimately decides to do with the ACA, it’s important for employers to know what employees want from their health plan. If you don’t already know, find out what your employees value. Under a repeal scenario, you may choose to retain some of the ACA’s individual protections to promote your organization’s recruitment and retention efforts. Now’s the time to explore how repeal may impact your health strategy so you’re ready to respond to the changes Congress and the incoming Administration will make to the ACA.
As the latest Mercer National Survey of Employer-Sponsored Health Plans shows, more employers are offering employees tools to make more informed healthcare decisions. Among the largest employers (those with 20,000 or more employees), 28% provided transparency tools through a specialty vendor in 2016, up from just 15% two years ago. An additional 62% say their health plan provides some type of transparency tool.
But some employers are taking consumerism a step further and actually paying employees for using these tools to select lower-cost healthcare services. As this Wall Street Journal article describes, the states of Kentucky and New Hampshire and Jackson Health System are three employers taking this approach.
Vitals, Inc., a healthcare comparison shopping tool used by the state of New Hampshire, estimates employers saved $12 million by using their tool on “shoppable” procedures (e.g., mammograms, MRIs, CT scans and blood work). More complex procedures for which people are understandably less price-sensitive, such as cancer treatments or brain surgery, aren't included. Typical savings for employees can range widely from $25-$500, often paid in checks or gift cards, according to Vitals.
Transparency tools can be a key source of cost and quality information, but these tools need to be visible and user-friendly to gain traction with employees and thus generate savings. Effective communication about the tools are essential, but you might also consider more innovative approaches like those used by the employers above to incent smart shopping behavior in your population.
This New York Times article offers an interesting “compare and contrast” analysis of public exchange plans versus employer-sponsored plans. Whether you’re satisfied with benefits on the public exchange really comes down to your perspective. If you were among the millions who were previously uninsured, you’re likely to be happy with your exchange coverage. If you came to the exchange after having had employer-sponsored coverage, the story is very different. A more limited choice of providers in the health plan network and higher out-of-pocket requirements are among the chief differences noticed by those coming off employer plans. In the end, a typical plan on the public exchange “looks more like Medicaid, only with a high deductible.” So while the public exchange is helping to fill a gap in the U.S. health care system, it’s not proving to be a source of comparable coverage for early retirees or those who would like to quit a corporate job to freelance or start a business. And each year, as these plans get skinnier, we’re seeing fewer employers that would even consider dropping the company plan to send employees to the public exchange.
Employee well-being programs have become a mainstay in employers’ overall benefit offerings. Most large employers offer programs designed to support health and well-being, and each year our National Survey of Employer-Sponsored Health Plans finds that more are contracting optional and niche services from health plans or specialty vendors, as opposed to offering just their plan’s standard services or in-house initiatives (48% did so in 2015, up from 30% in 2012). That’s why we were surprised to see a recent Wall Street Journal article suggesting that employers may be taking a step back from wellness programs. The article pointed to SHRM’s 2016 Employee Benefits Survey, which found that certain wellness program elements have decreased in prevalence, notably onsite seasonal flu vaccinations and 24-hour nurse lines. But although certain services are being offered less, the study reports that more employers are increasing wellness offerings (45%) than decreasing them (19%). It also highlights that employers are becoming more strategic in their program offerings; if employers are taking a ‘step back’, they’re doing so to take stock of their current offerings and evaluate what works best for their workforce.
Other developments in the health care ecosystem may account for changes in wellness program offerings. As access to retail health clinics continues to expand, making flu shots easier and cheaper to obtain than with a primary care physician, some employers may pull back on this offering and dedicate those budget dollars to other well-being resources. And our survey found sharp growth in offerings of telemedicine in 2015 (from 18% to 30% of large employers) and advocacy services (from 52% to 56%), both of which may be taking the place of some previously offered 24-hour nurse lines.
Employee well-being programs will continue to evolve as employers assess their offerings, whether based on participation levels, employee surveys or ROI analysis. Health care market developments and innovations that arise will also impact well-being offerings, but it’s clear that these programs have become an essential part of the American workplace and are here to stay. There was lot of buzz earlier this year over a study published in JOEM (which we’ve written about here) linking robust health and well-being programs with better stock performance – perhaps because the findings resonated with many sponsors of high-performing programs who have been hoping for a better way to measure the value of their investments in employee health.
More employees leave their employers during the first 12 months after having a child than at any other time. That’s not surprising when you consider the added stress, late nights, and new responsibilities that a newborn brings. The need for flexibility and work-life balance almost always intensifies after the birth or adoption of a new child, and a growing number of organizations are trying to ease the burdens of new parents by offering generous leave benefits. Employers that compete the most for talent – like those in high-tech – may have started the trend, but now even more traditional employers are feeling the pressure to provide attractive leave benefits. “It’s almost an arms race to come up with the most innovative, generous and creative programs,” says Mercer’s Rich Fuerstenberg in this Houston Chronicle article. Between paid leave of 20+ weeks, the option to avoid business travel for one year, and so-called “baby money” for extra expenses, employers are going above and beyond what’s required by federal law (just 12 weeks of unpaid parental leave for eligible employees by employers with 50 or more employees). Expect to hear more about parental leave in the coming months as the presidential election heats up and it becomes a key policy issue. Employers should use this opportunity to look at the demographics of their organization and decide if expanding parental leave benefits would make their value proposition more competitive in this tight labor market.