A Segal news release about its latest survey of managed care organizations (MCOs), health insurers, pharmacy benefit managers (PBMs), and third-party administrators (TPAs) found that forecasts for 2011 preferred provider organizations (PPOs)/point-of-service (POS) plans are slightly higher than last year: 0.6% for those that require referrals by primary care physicians for specialty services.
High-deductible health plans (HDHPs) and indemnity plans are expected to see slightly lower cost trends in 2011. The projected trends for 2011 reflect the additional expected costs plan sponsors face to comply with the health reform law.
According to Segal, other survey findings include:
- Similar to findings in recent years, all 2011 medical plan types are projected to experience cost trends that are more than eight times higher than the consumer price index for all urban consumers (CPI-U), 1.2% as of July 2010.
- In addition, trend projections are more than five times higher than the annual increase in average hourly earnings, which was 1.8% as of July 2010.
- In 2011, prescription drug trends (for retail and mail order combined) are forecasted at 9.2% for active participants and early retirees. Prescription drug trend projections have remained below 10% for the last three years.
- Projected trend rates for Medicare Advantage (MA) health maintenance organizations (HMOs) are expected to drop in 2011 to 7% from the 2010 forecasts of 7.7%. MA PPO trend rates are expected to be 6.4% in 2011.
- Price inflation for inpatient hospital stays is the largest component of overall plan cost trend.
- In 2011, trend rates for fixed scheduled dental plans and dental-maintenance organizations (DMOs) are both estimated to decrease, by 0.8% and 0.5%, respectively. This decline is a reversal of the 2010 projections in which both types of coverage were forecasted to increase by 1% and 0.5%, respectively.
- Projected trend rates for PPOs and POS plans combined show regional variations. Similar to 2010 findings, the lowest trend rates are expected in the Midwest region: 9.8%. The highest trend rates are forecasted for the Northeast and the West: 11.2%.
“Regardless of whether they are promoting better overall health for plan participants or implementing practical solutions to comply with the Affordable Care Act, plan sponsors must remain vigilant in their approach to containing health plan costs,” Segal commented in the survey report. “Plan sponsors should continue to play an active role in balancing the needs of plan participants and the demands of the federal health care reform law in order to combat escalating health costs while providing financially sustainable, high-quality health care.”
Complete survey results are at http://www.segalco.com/publications/surveysandstudies/2011trendsurvey.pdf . Additional information is here.
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