Health care costs continue to put economic pressure on employers and employees, and the pace of meaningful and sustained change is slower than needed.
More employers are driving transformation in health care delivery by either directly contracting, partnering with their health plans, or working with other third parties to promote value-based care. Nearly half of the employers surveyed by the National Business Group on Health (49%) are pursuing one or more of these strategies that focus on improving access and convenience in addition to better quality and lower cost. The NBGH predicts it will spread to more localities in the future.
Chris Byrd, executive vice president, WEX Health Operations & Corporate Development Officer, also says there will be more use of value-based plan designs and narrow networks in 2019.
Tyler Harshey, Actuarial and Finance Group practice leader at Mercer, says while jumbo employers are typically the trailblazers, in 2019, midsized employers will take the lead with a couple of truly radical benefit strategies: Reference-based pricing solutions as a replacement for traditional open access broad network solutions, and swapping their own traditional employer-sponsored plan for health reimbursement accounts (HRAs) that employees use to shop coverage on the individual market.
Byrd adds that the new year will also see increased focus on high-dollar claims and specialty drug costs. According to the NBGH, the push for more straightforward, simple and streamlined supply-chain pricing and contracting models is reaching a tipping point; 2019 may well be the year the paradigm shifts. Over 90% of employers surveyed by the NBGH would welcome an alternative to the rebate-driven approach to managing drug costs.
“Aggressive change in pharmacy management is bringing greater transparency: a better line of sight into PBM [pharmacy benefit manager] acquisition costs and new pricing approaches: net cost model, point-of-sale rebates, removing rebates from the equation in lieu of other financial incentives, or focusing on outcomes, to name a few. Combined with the vertical vendor integration taking place, employers can expect administrative and operational challenges over the next few years,” says Lisa Oswald of the performance audit group at Mercer.
Rich Fuerstenberg from the Leave, Absence and Disability team at Mercer says a number of factors are driving an increase in both the prevalence and the size of extreme claims, and 2019 will be the year they start to appear with greater frequency. “What’s harder to predict is what the employer response will be. Will they pay these ongoing jumbo claims and move on? Or will they take action?” he queries.
With the severity and frequency of catastrophic claims, employers will increase their stop-loss insurance levels and those that don’t buy it now will reconsider, says Dan Davey with Mercer’s Stop Loss Center Of Excellence. “We’ll see growing interest in alternative funding options, such as single parent captives and group captives, and carrier consolidation to create the scale necessary to handle the volume of catastrophic claims. Carriers will more closely scrutinize charges and payment practices of major medical carriers and PBMs,” he says.
According to the NBGH, employers are rethinking consumerism. Today’s consumer places a premium on simplicity, convenience and personalization. Navigators, concierge services and virtual resources are expanding to help consumers take some of the complexity out of accessing care and to better anticipate and address their unique needs. For the first time, the NBGH annual survey shows a 9% decline in the number of employers offering only consumer-directed health plans (CDHPs) and it expects this percentage to grow in future years reflecting a movement towards increased choice.
However, while most employers continue to offer a choice of health plan offerings—both consumer-directed and traditional, Byrd expects employers to continue to nudge employees toward CDHPs. “As awareness of the various advantages CDHP’s offer spreads, eyes will open to the additional value of consumer health accounts as a budgeting and financial discipline tool to help those who struggle to make ends meet ensure that they have funds available when confronted with healthcare expenses,” he says.Wade A. Symons, JD, CEBS, with the regulatory resources group at Mercer, says the firm expects final rules on HRAs and action on health savings account (HSA) expansion will create a lot of buzz in 2019, but the complexity of the rules, administrative challenges and delayed effective dates will push real change off into future years.