Rising cost of healthcare is hurting HSAs

With HSA's providing a way for users to be able to reduce out-of-pocket costs for healthcare, deductibles still continue to rise. Read this blog post to learn more about why continuously raised healthcare costs are hurting current HSA's and HSA's that could be used for retirement.


Employees are increasingly putting money aside for their HSAs, but they’re using almost the entirety of it to cover basic health needs every year instead of saving the money for future expenses, according to Lively’s 2019 HSA Spend Report.

“People are putting money in and taking money out on a very regular basis, as opposed to trying to create some sort of nest egg for down the road,” says Alex Cyriac, CEO and Co-Founder of Lively.

The San Francisco-based HSA provider says 96% of annual contributions were spent on expected expenses and routine visits as opposed to unexpected health events and retirement care. In 2019, the average HSA account holder spent their savings on doctor visits and services (50%), prescription drug costs (10%), dental care (16%), and vision and eyewear (5%).

The rising cost of healthcare is a factor in these savings trends: Americans spent $11,172 per person on healthcare in 2018, including the rising cost of health insurance, which increased 13.2%, according to National Health Expenditure Accounts. For retirees, the figures are shocking: a healthy 65-year-old couple retiring in 2019 is projected to spend $369,000 in today’s dollars on healthcare over their lifetime, according to consulting firm Milliman.

“Because people can't even afford to save, there's going to be a very low likelihood that most Americans are going to be able to afford their healthcare costs in retirement,” says Shobin Uralil, COO and Co-Founder of Lively.

HSAs were intended to be a way for consumers to save and spend for medical expenses tax-free. Additionally, its biggest benefit comes from being able to use funds saved in an HSA in retirement — when earnings are lowest and healthcare is most expensive. However, just 4% of HSA users had invested assets, according to the Employee Benefit Research Institute.

While HSAs have surged in popularity as a way for more Americans to reduce overall out-of-pocket healthcare spending, more education is required to help account holders understand the benefits of saving and investing their annual contributions for the long-term, the Lively report states.

“As deductibles continue to rise, people just don't seem to have an alternative source for being able to fund those expenses, so they are continuing to dip into their HSA.” Cyriac says. “I think this is just reflective of the broader market trend of healthcare costs continuing to rise, and more and more of those costs being disproportionately passed down to the user.”

SOURCE: Nedlund, E. (29 January 2020) "Rising cost of healthcare is hurting HSAs" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/news/rising-cost-of-healthcare-is-hurting-hsas


Health insurance surpass $20,000 per year, hitting a record

According to an annual survey of employers, the cost of family health coverage has now surpassed $20,000, a record high. The survey also revealed that while most employers pay most of the costs of coverage, workers' average contribution for a family plan is now $6,000. Read this blog post from Employee Benefit News to learn more.


The cost of family health coverage in the U.S. now tops $20,000, an annual survey of employers found, a record high that has pushed an increasing number of American workers into plans that cover less or cost more, or force them out of the insurance market entirely.

“It’s as much as buying a basic economy car,” said Drew Altman, chief executive officer of the Kaiser Family Foundation, “but buying it every year.” The nonprofit health research group conducts the yearly survey of coverage that people get through work, the main source of insurance in the U.S. for people under age 65.

While employers pay most of the costs of coverage, according to the survey, workers’ average contribution is now $6,000 for a family plan. That’s just their share of upfront premiums, and doesn’t include co-payments, deductibles and other forms of cost-sharing once they need care.

The seemingly inexorable rise of costs has led to deep frustration with U.S. healthcare, prompting questions about whether a system where coverage is tied to a job can survive. As premiums and deductibles have increased in the last two decades, the percentage of workers covered has slipped as employers dropped coverage and some workers chose not to enroll. Fewer Americans under 65 had employer coverage in 2017 than in 1999, according to a separate Kaiser Family Foundation analysis of federal data. That’s despite the fact that the U.S. economy employed 17 million more people in 2017 than in 1999.

“What we’ve been seeing is a slow, slow kind of drip-drip erosion in employer coverage,” Altman said.

Employees’ costs for healthcare are rising more quickly than wages or overall economy-wide prices, and the working poor have been particularly hard-hit. In firms where more than 35% of employees earn less than $25,000 a year, workers would have to contribute more than $7,000 for a family health plan. It’s an expense that Altman calls “just flat-out not affordable.” Only one-third of employees at such firms are on their employer’s health plans, compared with 63% at higher-wage firms, according to the Kaiser Family Foundation’s data.

The survey is based on responses from more than 2,000 randomly selected employers with at least three workers, including private firms and non-federal public employers.

Deductibles are rising even faster than premiums, meaning that patients are on the hook for more of their medical costs upfront. For a single person, the average deductible in 2019 was $1,396, up from $533 in 2009. A typical household with employer health coverage spends about $800 a year in out-of-pocket costs, not counting premiums, according to research from the Commonwealth Fund. At the high end of the range, those costs can top $5,000 a year.

While raising deductibles can moderate premiums, it also increases costs for people with an illness or who gets hurt. “Cost-sharing is a tax on the sick,” said Mark Fendrick, director of the Center for Value-Based Insurance Design at the University of Michigan.

Under the Affordable Care Act, insurance plans must cover certain preventive services such as immunizations and annual wellness visits without patient cost-sharing. But patients still have to pay out-of-pocket for other essential care, such as medication for chronic conditions like diabetes or high blood pressure, until they meet their deductibles.

Many Americans aren’t prepared for the risks that deductibles transfer to patients. Almost 40% of adults can’t pay an unexpected $400 expense without borrowing or selling an asset, according to a Federal Reserve survey from May.

That’s a problem, Fendrick said. “My patient should not have to have a bake sale to afford her insulin,” he said.

After years of pushing healthcare costs onto workers, some employers are pressing pause. Delta Air Lines Inc. recently froze employees’ contributions to premiums for two years, Chief Executive Officer Ed Bastian said in an interview at Bloomberg’s headquarters in New York last week.

“We said we’re not going to raise them. We're going to absorb the cost because we need to make certain people know that their benefits structure is real important,” Bastian said. He said the company’s healthcare costs are growing by double-digits. The Atlanta-based company has more than 80,000 employees around the globe.

Some large employers have reversed course on asking workers to take on more costs, according to a separate survey from the National Business Group on Health. In 2020, fewer companies will limit employees to so-called “consumer-directed health plans,” which pair high-deductible coverage with savings accounts for medical spending funded by workers and employers, according to the survey. That will be the only plan available at 25% of large employers in the survey, down from 39% in 2018.

Employers have to balance their desire to control costs with their need to attract and keep workers, said Kaiser’s Altman. That leaves them less inclined to make aggressive moves to tackle underlying medical costs, such as by cutting high-cost hospitals out of their networks. In recent years employers’ healthcare costs have remained steady as a share of their total compensation expenses.

“There’s a lot of gnashing of teeth,” Altman said, “but if you look at what they do, not what they say, it’s reasonably vanilla.”

SOURCE: Tozzi, J. (25 September 2019) "Health insurance surpass $20,000 per year, hitting a record" (Web Blog Post). Retrieved from https://www.benefitnews.com/articles/health-insurance-costs-surpass-20-000-per-year


Employers shouldn’t fear expansion of Medicare

A new survey from the National Business Group on Health found that only 23 percent of large employers believe Medicare eligibility should drop to age 50. Read this article from Employee Benefits Advisor to learn more about the potential expansion of Medicare.


Like a significant chunk of American voters, a majority of large employers want to expand Medicare. Just not too much.

A new survey of 147 large employers from the National Business Group on Health found that 55% of them support a Medicare expansion that’s limited to older Americans. Only 23% think eligibility should drop to age 50, however, and 45% don’t think it should expand at all. A majority believe that a broader “Medicare for All” plan would increase health costs.

The same survey also highlights why employers should consider coming around on health reform that reduces their role in the system. The growth in health costs has outpaced inflation and wage growth for years, and the surveyed businesses expect it to rise 5% to $15,375 for each employee next year.

About 70% of those costs will fall on the companies, which plan to try everything from boosting virtual health services to investing in health concierges to rein them in, according to the survey.

History suggests that their best efforts might not amount to much.

Employer-sponsored insurance is America’s single largest source of health coverage. That’s mostly true because the IRS exempted employer health benefits from taxes in 1943, a move that created the federal government’s single biggest tax expenditure. Large companies derive some benefit from the current system because they can provide a significant tax-free benefit that helps them compete for talent and pay people less. But it comes with significant drawbacks. Employers have to devote substantial resources to providing healthcare and controlling costs. Many of them have no particular expertise or advantage in doing so.

The results are mixed. Yes, individuals with private insurance are generally satisfied with the quality of their coverage. They’re not nearly as happy about the cost as deductibles rise. The U.S. pays more than any other developed country for healthcare and medicines and receives worse results on a variety of metrics.

Employers pay particularly high prices and spend heavily on plans that have higher overhead than public alternatives. A recent RAND study found that employer-sponsored plans paid hospitals at 241% of Medicare rates in 2017. Employers are already effectively subsidizing public programs, not to mention the profitability of insurers, health care providers and drugmakers.

It’s not entirely their fault. The American system inherently fragments negotiating power, which gives providers a significant advantage and makes it difficult for even the largest employers to get a good deal. Turning a larger piece of healthcare over to the government would free companies to focus more time and resources on their actual business instead of on navigating the world’s most expensive and convoluted healthcare market.

Big businesses most likely fear big Medicare expansion in large part because it would lead to a significant tax increase. But looking at any tax increase as an enemy is a mistake. Those taxes represent a trade-off; they would replace some or all of the billions of dollars that employers are currently spending on care. Depending on what taxes are imposed and whether the public plan is able to control costs better than the current system — and it could hardly do worse — many employers could come out ahead.

There are a lot of unknowns when it comes to Medicare for All and plans that move the country in that direction. Employers are right to be skeptical until they know more, but the results could well shake out in their favor, and they shouldn’t be so quick to discount the approach.

SOURCE: Nisen, M. (15 August 2019)"Employers shouldn’t fear expansion of Medicare" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/articles/employers-shouldnt-fear-expansion-of-medicare


One overlooked way to promote well-being: Target oral health

Are you promoting oral health when promoting employee wellness? Research shows an association between gum disease and conditions like diabetes and coronary artery disease. Continue reading to learn more.


With the cost of employer-sponsored healthcare benefits approaching $15,000 a year per employee, according to the National Business Group on Health, innovative companies are looking for new and creative ways to get maximum value from their benefits dollars.

By embracing benefits strategies focused on overall health, companies can help their current employees be healthier and more productive and attract and retain the workers they need to succeed in today’s competitive labor markets.

And although wellness programs or health apps might first spring to mind, there’s an overlooked way to promote employees’ health: oral care.

Guided by research that shows associations between gum disease and conditions like diabetes and coronary artery disease, forward-thinking dental insurers are developing products that emphasize the importance of regular oral care, particularly for workers with those conditions — and smart companies are jumping on board.

Products that emphasize the importance of maintaining oral health are an important step in integrating care. Over the next several years, leading-edge insurers will create new ways to engage patients in conversations about their dental and overall health, as they seek to encourage behavior changes and improve health outcomes. To help improve oral and overall well-being, insurers will need to share oral care information with their members through targeted emails, text messages and phone calls.

Additionally, because individuals dealing with a complex treatment plan may put off receiving oral care while they address their medical issues, they could benefit from plans featuring a case manager, or a “dental champion.” Working in conjunction with medical case managers, a dental champion can help employees understand how receiving regular oral care can influence their overall health. They also can ensure a company’s workforce is getting the oral care they need, helping them find providers and arrange appointments.

Savvy employers recognize that any realistic effort to limit the increase in healthcare costs begins by addressing chronic ailments. According to the Centers for Disease Control and Prevention, six in 10 Americans live with at least one chronic disease, like heart disease, cancer, stroke or diabetes.

By promoting overall health — including regular oral care — employers can encourage positive lifestyle changes that help their employees reduce the likelihood of many chronic problems. Those who brush and floss their teeth regularly, receive frequent cleanings and checkups and deal with oral issues at early stages are taking steps to improve their overall health.

Because everyone’s individual situation is different, insurers and employers will need to include a more personalized approach, engaging members in conversations about their dental health and how it contributes to attaining their overall health goals.

SOURCE: Palmer, T. (13 June 2019) "One overlooked way to promote well-being: Target oral health" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/promoting-wellbeing-through-dental-health


To check or not to check: Managing blood sugar in diabetic employees

There's been a growing prevalence of Type 2 diabetes in the U.S. over the last 20 years. This chronic condition significantly impacts employees, their family members and even employers clinically and financially. Read this blog post to learn more.


Over the last 20 years, there’s been a growing prevalence in the U.S. of Type 2 diabetes, a chronic condition that significantly impacts employers, their employees and family members clinically, financially and through quality of life. With that comes an increase in the use of insulin for people with Type 2 diabetes to better control blood sugar to reduce long-term complications, which includes eye, kidney and cardiac disease, as well as neuropathic complications.

Most of these patients manage their condition with oral medicines versus insulin, and it’s estimated that 75% of patients with Type 2 diabetes regularly test their blood sugar, even though doing so may not be needed. Blood sugar testing is an important tool in managing diabetes as it can help a patient be more aware of their disease and potentially control it better. But it also can be painful, inconvenient and costly.

Blood sugar testing can be an important tool in managing diabetes, and there are two types of tests. The first is a test conducted at home by the patient that shows the blood sugar at a specific point in time. The second type is called HA1c (a measure of long-term blood sugar control) that shows the average blood sugar over the last two to three months. The value of at-home testing is now thought to be questionable.

In 2012, the Patient-Centered Outcomes Research Institute began a study to evaluate the value of daily blood sugar testing for people with Type 2 diabetes not taking insulin. The endpoint for the study was whether there was a difference in HA1c levels for those who did daily testing and those that did not. The conclusion of the study found that there were no significant differences between those two populations.

In response to these findings, the institute developed an initiative called Rethink the Strip that involves stakeholders including primary care practices, healthcare providers, patients, health plans, coalitions and employers. Given the cost for test strips and monitors for patients with Type 2 diabetes who test their blood sugar daily, it’s important to adopt an evidence-based patient-centered approach around the need for and frequency of self-monitoring of blood glucose.

As employees and employers cope with the costs associated with blood sugar testing, there are several strategies that should be considered to better manage this issue. They include:

1. Support shared decision-making. Like all interventions within healthcare, it’s important to weigh both the benefits and the risks of daily blood sugar testing in a thoughtful manner between the patient and their provider.

2. Managed benefit design. Employers should pay for daily blood sugar test strips in cases where it brings value (e.g., Type 1 and Type 2 patients who are taking insulin as well as patients that are either newly diagnosed or are going through a transition period, for example, post hospitalization or beginning a new medication regimen).

3. Involve vendors. To ensure alignment in all messaging to plan members, ask health systems and/or health plans and third-party vendors to align their communication, measurement and provider feedback strategies on when it’s appropriate for daily blood sugar testing.

These strategies can help employees with diabetes understand how their daily activities (nutrition, exercise and stress) and medications impact their condition. This benefits the employee in reaching treatment goals and feeling their best, while also helping employers and employees reduce the need for unnecessary and costly test strips.

SOURCE: Berger, J. (14 March 2019) "To check or not to check: Managing blood sugar in diabetic employees" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/opinion/managing-blood-sugar-in-diabetic-employees?brief=00000152-146e-d1cc-a5fa-7cff8fee0000


Hospital pricing transparency: More information, more confusion?

As of January 1, a new rule that requires hospitals to list the prices of all their services and medications they provide is in effect. Read this blog post to learn more about this ruling.


As of the first of this year, a new rule is in effect that requires hospitals to list the price for all the services they provide and medications they prescribe for patients while they’re in the hospital. In theory, this should give patients more information that can help them decide where it makes the most economic sense to receive hospital care. In actuality, while there’s a wealth of new data available, it can be difficult to find — and nearly impossible for people outside the healthcare industry to understand.

The document that aggregates the price information is called a chargemaster, and it can contain tens of thousands of entries. The new rule doesn’t require that the information be written in plain language, only that it be machine readable, so much of the data reads like it’s in a yet-to-be-discovered language. For example, if you download Memorial Sloan Kettering’s chargemaster, you’ll find an Excel spreadsheet that contains 13,088 entries such as “CAP MALE/FEMALE RAIL, $765” and “BX SUBCUT SKIN/INC, $1,771.” Even if a patient puzzles out the meaning of these abbreviations, the prices listed are different from the lower fees that insurers negotiate, so estimating how much you would pay for care is complicated at best and impossible at worst.

The goal of the hospital pricing transparency rule is to help patients understand the cost of their care and choose more wisely when deciding where to receive that care. Unfortunately, the information that is now available adds to the confusion and doesn’t help patients make one-to-one price comparisons when choosing where to receive care. In addition, the rule only covers care delivered by a hospital, so patients don’t have the information they need to make price comparisons for services performed in doctor’s offices, urgent care facilities, diagnostic test sites and outpatient surgical centers.

Though the new rule generally doesn’t help employees, employers can.

Even if price transparency doesn’t help workers better understand the cost of care and choose where to receive that care, there are strategies and resources that employers can provide to help their employees make more informed decisions about healthcare. Here are some of them.

Second opinions. Wrong diagnoses, inappropriate treatments (treatments that don’t meet the evidenced-based standard of care) and medical errors all drive up healthcare costs for both employers and employees and can lead to poorer health outcomes. One strategy to lower the risk of these types of problems is providing employees with streamlined access to second opinions from experienced physicians.

A second opinion can confirm or change an employee’s diagnosis, suggest other treatment options and pinpoint misdiagnoses, especially in the case of serious and complex conditions like cancer, autoimmune disease and back and joint problems. In fact, a Mayo Clinic study found that 88% of people who sought a second opinion from the hospital’s physicians for a complex medical condition received a new or refined diagnosis. Employers can make second opinions available to employees through several channels, including a health insurance plan or as a standalone benefit.

Care coordination. Duplicate testing and medical care is another source of wasted healthcare dollars. When communication between healthcare providers is inconsistent or medical records aren’t updated and shared among all treating physicians, employees may undergo repeat testing — for example, when a primary care physician and a cardiologist both order a cardiac stress test for a patient with shortness of breath. Employers can offer care coordination through a case manager for employees who are living with multiple health conditions.

This support can lower the risk of duplicative testing as well as duplicate prescriptions or medications that can result in interactions, which can put an employee’s health needlessly at risk. Another piece of this equation is the review and coordination of medical records, which is especially important when employees see multiple physicians. A medical records management service should include a review of the employee’s records by an RN or physician, consolidation of a comprehensive medical record, and the creation of a secure electronic medical record that can be shared with the employee’s permission with all treating physicians.

Guidance on where to receive care. While you can undergo a colonoscopy, medication infusion or a range of common surgical procedures at a hospital, that may not always be the most appropriate or cost-effective place to receive care. By offering employees the ability to talk with a care manager or adviser about the procedure they need and the options for where they can receive that care (a hospital, outpatient surgery center or doctor’s office), employers can help them receive the care they need and lower both claims costs and employee out-of-pocket costs.

Medical bill review. Another resource employers can offer to make sure healthcare costs are carefully managed is a medical bill review. Experts estimate that between 30% and 80% of medical bills contain errors that increase costs. There are many different causes of these errors, including the use of the incorrect billing codes and use of out-of-network healthcare providers. In addition to offering employees the services of a medical billing review and negotiation firm, they can provide education that lets employees know what types of errors are commonly made and how to spot them on their own bills.

SOURCE: Varn, M. (13 February 2019) "Hospital pricing transparency: More information, more confusion?" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/hospital-pricing-transparency-more-information-more-confusion?brief=00000152-14a5-d1cc-a5fa-7cff48fe0001


The benefits issue that costs employers big: Ineligible dependents on company plans

Frequently, roughly 10 percent of enrolled dependents are ineligible for the healthcare programs. Continue reading this blog post to learn more.


Are you paying insurance premiums for people who aren’t qualified to be on your company plan?

For some employers, too often the answer is “yes.”

In our experience, we find that nearly 10% of dependents enrolled in employee health and welfare plans are not eligible to be in the program. And for a company with a couple of hundred employees that spends around $2 million a year on benefits, ineligible dependents can become a significant financial issue.

When employers pay for ineligible dependents, costs increase for them and employees. Unfortunately, it’s an all-too-common issue that employers need a solid strategy to combat.

So how do ineligible dependents get enrolled in the first place? There are a couple of common ways that employers end up paying health insurance premiums for ineligible dependents. The most basic factor is a change in a person’s situation — children pass the age of 26, spouses get jobs, people get divorced, etc. — and the employee is unaware of the need to notify the plan sponsor. Most often, these situations arise because the employer doesn’t have a process in place.

But some situations are more nefarious: An employee mischaracterizes someone as a dependent. They may claim that a nephew is a son, or that they’re still married to an ex-spouse. In either of these situations, the employer loses.

Prevent ineligible dependents with best practices

Prevent paying for ineligible dependents by putting into place best practices that begin when a new employee joins the company.

During onboarding, investigate each potential plan member when the employee applies for insurance coverage. That means seeking documentation — such as marriage certificates and birth certificates — to verify that a person is, in fact, married, or that their kids are their kids and not someone else’s. Following these processes at the outset prevents the awkwardness of having to question employees about their various family relationships. Nobody wants to ask a colleague if the divorce is final yet.

To make it easy for employees to verify everyone’s eligibility, provide access to a portal where they can upload scans or images of relevant documents. This will also make it easier to track—and keep track of—onboarding documents and dependent audits when the time comes.

Once this best practice is established, it’s important to conduct periodic dependent eligibility audits, as required by ERISA. The employer can conduct an audit or hire an external auditor. This decision is usually driven by the size of the workforce.

The most logical time to conduct an audit is during benefit enrollment. Employees are already considering options for the next plan year, and they likely won’t be confused by the need to submit verifying documents. (During this exercise, it’s also a good idea to ask plan participants to verify beneficiaries on employer-provided life insurance.)

Some employers — again, depending on the size of the workforce — will conduct random sample audits of 20-25% of their employee population. Obviously, the larger the sample size, the better. Benefits administration platforms typically streamline this process.

What happens when employers identify an ineligible dependent?

Many employers offer workers an amnesty period during which an employee can come forward to say they have someone that should be taken off the plan. If the plan sponsor identifies an ineligible dependent, employees are typically offered a one-time pass. Then, they must sign an affidavit attesting that they can be terminated if it happens again.

If the employer has processed insurance claims for an ineligible dependent, they can declare fraud and seek back payment of claims payouts. Again, most in this situation prefer a more benevolent approach and will ask the employee to make monthly differential payments until the account is even. Conducting regular dependent eligibility audits as part of the benefits administration process needs to be handled with finesse for the good of organizational culture.

Some employers may shy away from conducting audits out of concern for creating awkward situations. But frankly, it’s the plan sponsor’s job to help them navigate the waters, educate them and keep them engaged in the process by becoming their best advocates. This will not only help enhance the efficiency and accuracy of employee benefit offerings, but it will result in a smoother ride for everyone involved.

Ensuring that a health and welfare benefits program follows eligibility best practices is the responsibility of the plan sponsor. But employees have a share in that responsibility, too.

SOURCE: O'Connor, P.(28 November 2018) "The benefits issue that costs employers big: Ineligible dependents on company plans" (Web Blog Post). Retrieved from:


Top 10 health conditions costing employers the most

As healthcare costs continue to rise, employers continue to look for ways to target those costs. Read this blog post to learn more.


As healthcare costs continue to rise, more employers are looking at ways to target those costs. One step they are taking is looking at what health conditions are hitting their pocketbooks the hardest.

“About half of employers use disease management programs to help manage the costs of these very expensive chronic conditions,” says Julie Stich, associate vice president of content at the International Foundation of Employee Benefits Plans. “In addition, about three in five employers use health screenings and health risk assessments to help employees identify and monitor these conditions so that they can be managed more effectively. Early identification helps the employer and the employee.”

What conditions are costly for employers to cover? In IFEPB’s Workplace Wellness Trends 2017 Survey, more than 500 employers were asked to select the top three conditions impacting plan costs. The following 10 topped the list.

10. High-risk pregnancy

Although high-risk pregnancies have seen a dip of 1% since 2015, they still bottom out the list in 2017; 5.6% of employers report these costs are a leading cost concern for health plans.

9. Smoking

Smoking has remained a consistent concern of employers over the last several years; 8.6% of employers report smoking has a significant impact on health plans.

8. High cholesterol

While high cholesterol still has a major impact on health costs — 11.6% say it’s a top cause of rising healthcare costs — that number is significantly lower from where it was in 2015 (19.3%).

7. Depression/mental illness

For 13.9% of employers, mental health has a big influence on healthcare costs. This is down from 22.8% in 2015.

New rule pushes for hospital price transparency

The Centers for Medicare & Medicaid Services is pushing for a new rule that will force hospitals to provide patients with a list of the cost of all their charges. Continue reading to learn more.


The Centers for Medicare & Medicaid Services announced a proposed rule aimed at providing patients with a clear price listing of the cost of their hospital charges. In an effort to fulfill the proposed rule’s objective, CMS suggested an amendment to the requirements previously established by Section 2718(e) of the Affordable Care Act.

CMS issued the final rule (CMS-1694-F), which included the suggested amendment discussed in the April 24, 2018 proposed rule. Currently, under Section 2718(e), hospitals are given the option to either (i) make public a list of the hospital’s standard charges or (ii) implement policies for allowing the public to view a list of the hospital’s standard charges in response to an individual request.

Beginning January 1, 2019, however, hospitals will be required to make available a list of their current standard charges via the Internet in a machine readable format and to update this information at least annually, or more often as appropriate.

This could be in the form of the chargemaster itself of another form of the hospital’s choice, as long as the information is in machine readable format. CMS believes that this update will further promote price transparency by improving public accessibility of hospital charge information.

In the final rule, CMS explains that it is aware of the challenges that continue to exist because the chargemaster data may not accurately reflect what any given individual is likely to pay for a particular service or visit.

Additionally, the comments received in response to the proposed rule argue that the chargemaster data would not be useful to patients because it is confusing as to the amount of the actual out-of-pocket costs imposed on a particular patient.

CMS further explains that it is currently reviewing the concerns addressed in the comments, and is considering ways to further improve the accessibility and usability of the information disclosed by the hospitals.

SOURCE: Goldman, M; Grushkin, J; Fierro, C (16 August 2018) "New rule pushes for hospital price transparency" (Web Blog Post). Retrieved by https://www.employeebenefitadviser.com/opinion/cms-rule-pushes-for-hospital-price-transparency


How employers can manage the skyrocketing cost of specialty drugs

The number of specialty drugs continues to grow. At the end of 2016, there were 700 specialty drugs in development, compared to the 10 that were in development in 1990. Continue reading to learn more.


In the past two decades, the number of specialty medications — which treat rare and complex diseases such as multiple sclerosis, pulmonary arterial hypertension, hepatitis C, HIV, cystic fibrosis, some types of cancer and hemophilia — has grown exponentially. In 1990, there were only 10 specialty drugs on the market. By 2015, that number had increased to 300 medications, and by the end of 2016 there were approximately 700 more specialty drugs in development.

These medications are usually very high cost, with some new biologic medications costing more than $750,000 a year. Why are the costs so high? There are a number of factors, including the facts that distribution networks are limited, these medications are complicated to develop and distribute, and there are few, if any, generic alternatives for these drugs.

See also: 6 ways to mitigate specialty drug costs

The Pew Charitable Trusts found that although only 1% to 2% of Americans use specialty medications, they account for approximately 38% of total drug spending in the U.S.

So, how can employers better gain control over the cost of specialty medications? Because there are hundreds of specialty medications, there’s no single strategy for cost management that can be applied universally. To build an effective cost management strategy, employers need to first analyze employee use of specialty medications. The best strategy will approach specialty medication management by disease class and drug by drug.

However, there are key building blocks of a strategy that will both manage costs and ensure that employees have access to the medications they need. Here are six things employers can do.

Assess benefit plan design structure. Employers should consider how they are incenting employees to spend their benefit dollars appropriately and wisely. A multi-tiered medication formulary where employees pay less out of pocket for generic drugs and lower cost medications and more for costly medications is one approach that’s proven effective. To help employees afford these higher out-of-pocket costs, employers can promote manufacturer copay savings programs, which many drug makers offer.

Think about utilization management. This can include requiring prior authorization for high-cost specialty medications and step therapies (employees must start with lower cost therapies and can move up to more costly ones if those are not effective).

Consider a custom pharmacy network design. By narrowing the network of pharmacies that fill specialty medication prescriptions, employers can negotiate a better unit price. A freestanding specialty pharmacy or a pharmacy benefits manager can provide savings by optimizing discounts for both employers and employees.

Offer second opinion and other support services for rare and complex diseases. A newly diagnosed rare or complex disease patient will see, on average, seven different specialists over the course of eight years before getting a true diagnosis and appropriate treatment path. These programs aim to reduce that burden and ensure success with that treatment once it’s identified. A second opinion from a top specialist in the field provides an expert assessment of the diagnosis and recommendations on the most effective treatment protocol. This not only helps manage costs, it lowers the risk of misdiagnosis and inappropriate treatment. Additional case management services can include one-to-one counseling and, when the drug regimen requires, in-home nursing services to help patients better manage their disease and improve outcomes.

See also: How employers can increase employee use of second opinions

Offer site of care choices. Where specialty drugs are administered can have a significant impact on what they cost. Medications administered in an outpatient clinic at a hospital can cost five times as much as those that are injected or infused in a physician’s office or at the patient’s home. Offering services such as home infusion or injection delivered by nurses or incenting patients with lower copays when they receive their medications at their physician’s office can lower overall specialty drug costs.

Educate employees. When an employee or covered family member is diagnosed with a rare or complex condition that will require a higher level of care and the use of specialty medications, employers can connect employees with case managers or similar services that provide education about the condition and the medication, such as how to manage side effects or what alternative medications are available, which can increase employee adherence with the medication regimen.

SOURCE: Varn, M (8 August 2018) "How employers can manage the skyrocketing cost of specialty drugs" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/specialty-pharmaceuticals-and-how-employers-can-manage-cost


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