Financial health is increasingly recognized as a pillar of well-being. And as employees take on more financial responsibility for health care, the tie-in to health becomes even stronger. A new study from Health Affairs highlights how a patient’s interaction with their physician can impact their financial health as well. Researchers analyzed almost 2,000 transcripts of physician-patient conversations and identified instances where patients noted that care would be difficult to afford. Many physicians dismissed these financial concerns by ignoring the financial concern or suggesting a free trial. What the patients really needed was a long-term strategy to deal with the cost of care. Generally, physicians aren’t trained to handle these financial conversations and further, many times they don’t know what a course of treatment will cost. This study illustrates the need for employers to provide the tools and resources to help employees with the financial burden of health care. Things like voluntary benefit offerings, concierge services and transparency tools can go a long way in contributing to the financial health and overall well-being of employees.
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.
Consumers’ expectations are rising – they seek out novel apps, widgets and services that are intuitive, personalized and technology enabled. The market is responding rapidly to meet those needs. Engagement is still the “secret sauce” and employers who have not successfully cracked the code are also enlisting smart technology in hopes that a personalized end user experience will be the answer. It’s an exciting time as we witness the rise of digital navigators that serve as a personal concierge of sorts, guiding end users through the maze to more efficient and effective health and health care services – check out this Wall Street Journal article for a few examples. While consumers are used to the internet of things monitoring more and more of their personal lives and serving up custom advertisements in their social network feeds, having this type of targeted messaging coming from the employer is still fairly new. Employees must trust that their employer is in it for the right reasons and is looking out for their best interests. Wise employers will take care to be very transparent about confidentiality safeguards with clear communications.
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.
Outcomes based incentive programs are typically associated with employer health and well-being programs (where employees earn incentives by achieving or showing progress towards certain health status targets), but a recent arrangement could speak to a similar trend for prescription drugs. Cigna has entered into a performance based contract with Novartis, specific to their drug Entresto (used to treat chronic heart failure) in which Cigna would pay the pharmaceutical organization based on the reduction of Cigna customers who are hospitalized for heart failure. A similar arrangement for the same medication was made between Novartis and Aetna, though Aetna’s measures are on the drug replicating the results of clinical trials. As the value-based care trend is driving health care market focus away from traditional fee-for-service models and towards pay-for-performance and prescription drug prices continue to climb (as our research shows), we may see similar deals arise for between carriers and pharmaceuticals for other prescription medications.
The high cost of new specialty drugs rightly has our attention. But that’s not the only reason why employers are reporting significantly higher increases in the per-employee cost of prescription drugs. A recent article in Bloomberg provides some chilling examples of massive and seemingly unjustifiable price hikes for brand-name drugs. According to BloombergView columnist Megan McArdle, “Drugmakers set prices based on whatever the market will bear, especially since demand for some therapeutic drugs is relatively inelastic — in other words, demand does not change much in response to price changes.” And it’s not just the brand-name drugs we have to worry about. An article published last year in Forbes describes why we’re seeing unsettling increases in generic drug pricing as well; namely, consolidations in the pharma industry and supply shortages. Long story short, this is the year to focus attention on the drug benefit.
All health care is local, as a comparison of employer-sponsored plans across the country makes clear. When we released the results of Mercer’s 2015 National Survey of Employer-Sponsored Health Plans a couple of weeks ago, we provided data highlights for many states and metropolitan areas. Here are two articles that showcase how very different health care markets can be.
As reported in an article posted on The Arizona Republic’s site, among survey respondents in Arizona, an average of 45% of covered employees are enrolled in high-deductible consumer-directed health plans. Perhaps not coincidentally, average per-employee health benefit cost rose by less than 2% for these employers in 2015. As Mercer’s Denise Jewell commented in the article, employers may be changing health-plan offerings now to avoid the so-called "Cadillac tax" on benefits-rich plans beginning in 2018. But she also noted that Arizona employers understand health plans are an important tool to attract employees. None of the Arizona employers in the survey said they are likely to drop health-insurance coverage within five years and send employees to the marketplace.
Over on the East Coast, in Philadelphia and the surrounding area, survey data reveals a very different market. Average health benefit cost among the 67 responding employers from southeastern Pennsylvania, South Jersey and northern Delaware, rose by more than 5% in 2015 to reach $12,801, well above the national average. Philadelphia’s heavy concentration of medical schools and teaching hospitals is often cited as a reason for the region’s high medical delivery costs. Chris Amery, a consultant in Mercer’s Philadelphia practice, was quoted in an article in the Philadelphia Business Journal. He explained that another reason health benefits are more expensive in his area is that local employers tend to offer plans that are more generous than the average plan nationally. And enrollment in CDHPs? Just 23% of the Philly area respondents’ covered employees are enrolled in CDHPs, about half the percentage in Arizona.
A new study from the Employee Benefit Research Institute (EBRI) revealed only 6.4% of people with health savings accounts (HSAs) invested their contributions in the financial markets while the remainder left their money in savings accounts that typically earn a lower return. Given how rapidly these plans are spreading -- the number of large employers (500 or more employees) offering an HSA-eligible consumer directed health plan jumped from 32% to 41% in 2014 -- the EBRI study signals a need for further evaluation and education by employers to help participants maximize the benefits of an HSA. You’ll want to determine what roadblocks discourage your plan participants from investing their HSA contributions -- for example, fees and minimum balances -- and address those accordingly. Also, the upcoming open enrollment season is a great time to reeducate employees about their investment options and explain the process to liquidate the funds to pay for medical expenses, if needed.
For those of us who experienced the major consolidation of the health care industry during the 1990s, the recent announcements of Anthem’s bid for CIGNA and Aetna’s proposal to Humana was a “back to the future” kind of moment. Many are wondering whether the Justice Department will allow such a degree of consolidation to take place, and, if so, what the impact will be. A quick search of the internet turned up two studies looking at insurance market consolidation in the past. Health Affairs published a study in 2004 based on market consolidation data from 2000-03. The author, James Robinson, documented short-term price and profit pressure but suggested that long-term success was dependent on new products and new competition. In 2011, RAND published a study that found consolidation among plans benefited consumers by lowering hospital prices. With so few major health plans left, it will be interesting to see how this plays out.
In a prior post, I blogged about a new Kaiser Family Foundation analysis showing that Americans are struggling to pay their health plan deductibles. In addition, the Consumer Financial Protection Bureau has reported that an estimated 45 million consumers have credit reports affected by medical debt. That’s why it was good to hear that the three major credit reporting agencies recently agreed to be more flexible with consumer medical debt. As part of a settlement agreement with the NY Attorney General’s Office that covers consumers across the US, the credit agencies will institute a 180-day waiting period before the debts are placed on the credit report, and they will promptly remove the debt once it is paid by the insurer.
A recent analysis of four hospital rating systems – Consumer Reports, Healthgrades, Leapfrog Group and U.S. News & World Reports – found differing conclusions about which hospitals provide the best quality of care. There isn’t one hospital that was rated as a top performer by all four rating systems. In fact, some hospitals rated as top performers by one system were rated as poor performers by another. The rating systems use different methodologies that can result in consumer confusion. This analysis suggests that rather than simply provide employees with links to these rating systems, employers should also communicate the focus, limitations, and goals of each rating system.