Featured Health Business Daily Story, Jan. 11, 2018

Plan Sponsors Turn to Pharmacy Strategies to Slow Health Costs

Reprinted from DRUG BENEFIT NEWS, biweekly news and proven cost management strategies for health plans, PBMs, pharma companies and employers. Subscribe today!

By Diana Manos, Senior Reporter
December 8, 2017Volume 18Issue 23

Although prescription drug benefit plan cost trends are projected to be less severe for 2018, they’ll be offset by a slightly higher medical cost trend, warned the “2018 Segal Health Plan Cost Trend Survey” — Segal Consulting’s 21st annual study.

The survey shows that high-deductible health plans and emphasis on wellness programs are a couple of the ways health plans are tackling cost increases.

For the study, Segal researchers asked group health plans to rank the cost management strategies they used most frequently in 2017. They are:

  • Using specialty pharmacy management;

  • Intensifying pharmacy management programs already in place;

  • Contracting with value-based providers (including accountable care organizations and patient centered medical homes);

  • Increasing financial incentives on wellness design; and

  • Adopting high-deductible health plans.

Drug Benefit News

Eileen Pincay, vice president and pharmacy benefits consultant for Segal, tells AIS Health that the survey results could “help plan sponsors to understand if those surveyed have used similar cost management strategies, or at least see where there may be other health care cost management opportunities that they have not considered previously.”

Pincay says Segal recommends that plans invest in tools to help consumers find lower cost drugs with the same quality and to help consumers with medication adherence.

“An interesting find for me in this report is that the Segal drug cost trends are projected to drop, but yet they still remain in double digits and continue to be much higher than the medical trend,” Pincay says.

“Another relevant find is that [prescription] cost-management strategies and improved vendor contracting are plan sponsors’ top priorities.”

The best way for health plans to manage health care costs is to be open to different cost management strategies, including data analytics and predictive modeling, Pincay emphasizes. “This is very valuable for the plan sponsor to help see what strategy makes sense for them to implement or to consider for the future,” she says.

Segal Surveyed 100 Health Plans

Segal surveyed managed care organizations, more than 100 health insurers, pharmacy benefit managers and third-party administrators about health plan cost trend in summer 2017. The findings include a forecast of allowed per capita claims cost increases — the eligible billed charges (before participant cost sharing) less provider discounts, the study said. “Trend takes into account various factors, including price inflation, utilization, government-mandated benefits, and new treatments, therapies and technology,” according to Segal.

“Although there is usually a high correlation between a trend rate and the actual cost increase assessed by a carrier, trend and the net annual change in plan costs are not the same,” Segal said.

“A plan sponsor’s costs can be significantly different from projected claims cost trends due to such diverse factors as group demographics, changes in plan design, administrative fees, and changes in participant contributions,” according to Pincay.

Segal said that price inflation — particularly for hospital services and drug therapy — continues to drive higher health care costs. Value-based care approaches, including accountable care organizations (ACOs) and bundled payments for episodes of care, might be the best way to fight that. Pincay also said that inappropriate use of emergency rooms and urgent-care facilities and unnecessary, expensive diagnostic radiology procedures also contribute to health care cost increases.

“Plan sponsors should be making sure that their plan designs properly align with the costs of care in these instances, and make efforts to ensure their participants are making smart choices in order to get the right care at the right place with the right provider,” Segal researchers said.

For more information on the study, visit http://bit.ly/2AHN89o.

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