An important part of the Consolidated Appropriations Act of 2021 is the No Surprises Act, intended to address surprise bills and protect healthcare consumers who receive a “balance bill” for amounts charged by a provider but not paid by their health plan. The law, scheduled to take effect on January 1, 2022, will protect patients that go to an out-of-network facility for emergency treatment, patients needing to be airlifted to the nearest emergency room by an out-of-network provider and patients receiving treatment from an out-of-network provider at an in-network facility.
The new law establishes uniform, basic federal requirements for insured and self-funded group health plans, however states may adopt even stricter standards for insurers and providers in their jurisdiction. To date, 17 states have adopted comprehensive balance bill laws to protect their residents. Guidance for several situations will need to be provided prior to year-end, including how plans will distinguish between in-network and out-of-network providers in self-funded plans using reference based pricing without a traditional PPO network. Industry sources expect these regulations to be issued by mid-year.
Encouraging members and their dependents to take their prescriptions as directed by their doctor or pharmacist has long been a concern for health plans. As the Covid-19 pandemic continues to spike in most parts of the country, the problem has intensified, with experts estimating that the increased cost to our healthcare system may be nearly $300 billion annually.
Traditional challenges of rising costs and a failure to read and understand health information have been exacerbated by the fear of in-person doctor visits. Overcoming these issues requires increased communication and support because there is no doubt that when people fail to take their medications as prescribed, health plans often end up dealing with higher claim costs down the road.
A Higher Level of Support
Providing a high level of support can help many members avoid serious medical complications in the future. Collaborating with a PBM or member advocate to send a text message when a refill is due can be a big help. Some plans offer a lower copay as an incentive to fill prescriptions on time.
Taking the time to understand a member’s needs and concerns can go a long way in increasing medication adherence. While concerns about using generic alternatives, copay assistance programs and transportation are common, addressing language barriers, disabilities and other social factors are measures that can make a big difference. Providing a higher level of support will not only produce higher quality outcomes, but lower pharmacy benefit costs as well.
Two final rules related to the President’s promise to lower the cost of prescription drugs were recently announced by President Donald Trump. The first, known as the “most favored nation” rule, would lower the price of 50 Medicare Part B drugs to those paid by other wealthy countries. This pricing would apply only to Medicare beneficiaries. The second rule, intended to simplify drug pricing and pass available discounts to consumers, would eliminate the rebates drug manufacturers currently pay to Pharmacy Benefit Managers (PBMs) on higher priced brand name prescription drugs. Interestingly, in another recent action, drug manufacturers filed a lawsuit to stop the Trump administration from allowing states to import certain prescription drugs. Their suits argue that the last-minute steps by the President would expose the public to safety risks while not achieving any significant economic advantages for the public.
With enrollment in Medicare Part D and specialty drug costs exploding, it’s no surprise that forecasts predict 7 percent annual growth for PBMs over the next several years. Two trends noted in the report were the continued acquisition or startup of PBMs by insurance carriers and the need for employers to better understand their options when comparing proposals.
When the independent think tank finds that on average, prices paid to hospitals by younger, healthier policyholders were 100 percent higher than what Medicare would have paid for the same procedures, it’s easy to understand the impact that payment contracts based on what Medicare pays can have on health plan costs.
In contrast to traditional fully insured plans, self-funded health plans with reference based pricing (RBP) enable consumers to learn the cost of treatment before they receive it. This is the advantage of basing provider payments on publicly available cost and quality data rather than arbitrary network discounts. And because Medicare varies its pricing by geographic region, providers are compensated fairly, and medical price inflation can be controlled.
From Big to Small
While very large employers were early adopters, the model is becoming far more commonplace among smaller groups that partially self-fund. TPAs are helping some of these plans realize overall savings in the 20 percent range and for a plan with 300 members, this can mean annual savings of $1 million or more.
In a marketplace that has lacked transparency and accountability for far too long, Medicare reference is proving to be not only a market disruptor, but an approach that can help employer-sponsored health benefits thrive. Contact us if you want to learn more about how a RBP plan could work for you.
In 2017, according to the Centers for Medicare and Medicaid Services, healthcare spending for every man, woman and child in the U.S. totaled nearly $11,000 – more than any other wealthy country. The interesting thing is that very few of us really know what goes into this number or who pays the bills. Here are a few facts you may find interesting.
The average cost of employer-based health insurance for a family in 2019 was $19,616.
The Census Bureau reports that 91.5% of Americans have health insurance coverage.
In 2017, the average ER visit cost about $1,400 – an increase of 176% in 10 years.
Federal, state and local governments currently pay for about 45% of all healthcare services.
From 2000 to 2016, spending on prescription drugs rose by 69% – more than any other component.
The Kaiser Family Foundation reports that in the past year, 50% of Americans put off needed healthcare because of cost.
In a recent decision by the U.S. District Court for the District of Columbia, the AHA lost its bid to avoid having to disclose rates hospitals negotiate with insurers. While an appeal is expected, this is a win for the administration, which is committed to providing patients with understandable information about the cost of medical services.
The rule approved last year required hospitals to post a list of standard charges and rates they charge for diagnostic-related groups (DRGs). These charges were, however, posted as “chargemaster rates” – a format that meant little to the general public. By requiring that hospitals post median prices negotiated with commercial health insurers, CMS believes that providers will be forced to compete on price and that consumers will be better able to make informed choices.
In other developments, the Trump administration was stopped from requiring that drug companies disclose prices in their TV commercials. The President also brokered an agreement with drug companies and insurers to limit Medicare recipients’ copays on insulin to $35 a month. This will go into effect in 2021.
Inflation-adjusted limits for contributions to health savings accounts and high deductible health plans for the coming year were just announced. According to the announcement, eligible individuals with self-only HDHP coverage will be able to contribute $3,600 to their HSA in 2021, an increase of $50 from 2020. Those with family coverage will be able to contribute $7,200 in 2021 and those who are 55 years of age or older will be able to make an additional “catch-up” contribution of $1,000 to their HSA.
While minimum deductibles for HDHPs will remain the same for 2021 plan years at $1,400 for self-only coverage and $2,800 for family coverage, the maximum limits for out-of-pocket expenses will increase to $7,000 for individual coverage and $14,000 for family coverage.
With nearly 40 million workers laid off or furloughed as a result of the Coronavirus, many organizations have urged Congress to expand COBRA coverage. Most of their concerns are focused on encouraging Congress to subsidize COBRA premiums for these workers so that existing health conditions will not get worse because care is delayed.
To date, the Department of Labor and the IRS have extended the time period workers have to decide to enroll in COBRA. With the President’s order setting the end of the national emergency for COVID-19 at June 29th, individuals would have until August 28th to enroll in COBRA. DOL and IRS have also given workers 30 days beyond the end of the national emergency to pay their COBRA premiums for March, April, May and June. Should the Administration decide to extend the national emergency, these timelines would be adjusted accordingly.
America’s Health Insurance Plans, a national trade association whose member companies provide insurance coverage and health-related services to consumers and businesses, has released a study revealing the breakdown of today’s healthcare premium dollar, as follows:
23.3 cents of every premium dollar is used for prescription drugs
22.2 cents cover the cost of physician services
20.2 cents are used to pay for office and clinic visits
16.1 cents are used to cover hospital stays
13.5 cents are applied to care management, administrative expenses, business expenses, provider management and other fees
4.7 cents of every dollar go to taxes, and…
AHIP reports that on average, 2.3 cents of every premium dollar make it to the bottom line as net profit.