What do the DOL’s new AHP rules actually mean?

Do you understand the Department of Labor's (DOL) new rules on Association Health Plans (AHP)? Continue reading to learn what they mean and when they go into effect.


President Trump signed an Executive Order on October 12, 2017 directing the U.S. Department of Labor to consider ways to make it easier to form an Association Health Plan by expanding existing membership rules. After issuing proposed regulations in early 2018 and considering public comments, the DOL issued a set of final regulations intended to make it easier to form AHPs on June 18, 2018.

The final regulations do not replace the existing AHP rules. Instead, they create a three-tier AHP system referred to in this article as the:

Narrow Standard AHP: These AHPs are available under the existing rules, but they can be difficult to form.

Relaxed Standard AHP: These AHPs are created by the new regulations. They are easier to form than a Narrow Standard AHP and can allow self-employed individuals to participate, but they do not allow as much flexibility in terms of plan design and underwriting (discussed in the chart below under “Plan Design and Underwriting”).

Non-Conforming AHPs: These are AHPs that do not meet either the Narrow or Relaxed Standards. We’ll touch on these briefly at the end of this article.

What are the Pros and Cons for Narrow and Relaxed Standard AHPs?

Pros:

  • The combined membership of the member employers may enable the AHP to self-insure
  • Qualify as single employer group health plans for ERISA and other purposes, enabling many fully-insured AHPs to qualify as a large group insured plan based upon the number of covered lives
  • Self-insured and large group insured AHPs are able to avoid certain requirements applicable to small group and individual plans under federal and state law, including:

o The requirement to offer all essential health benefits (EHB) mandated by a state’s EHB package (the AHP will still have establish a reasonable definition for EHBs such as selecting a benchmark plan); and

o Community rating requirements. This may enable AHPs to offer less expensive coverage alternatives to member employers as well as greater flexibility when setting premiums (but see “Plan Design and Underwriting” in the chart below)

  • Greater buying power than individual member employers may have on their own
  • The AHP’s risk pool may be more favorable for smaller employers than the community rating in their applicable small group market(s)

Cons

  • Not appropriate for many potential member employers and should be carefully evaluated on a case-by-case basis
  • Do not avoid state regulation, even if self-insured
  • Require a strong ongoing commitment to participate from member employers as turnover can cause AHPs to quickly fail
  • Insurance carriers may be reluctant to insure AHPs that do not meet certain criteria established by the carrier (e.g. The insurance carrier may require a closer relationship between the member employers than the AHP rules require)

AHP odds and ends

AHPs are generally subject to the reporting and disclosure requirements applicable to the underlying benefits, which may include providing summary plan descriptions, summaries of benefits and coverage, and Form 5500 filings. The DOL is still working out how certain other requirements may apply to AHPs. For example, the DOL indicated that existing HIPAA wellness rules apply to AHPs and the Mental Health Parity and Addiction Equity Act will apply if the member employers of the association have at least 50 employees in the aggregate, but the DOL is still considering how COBRA may apply and intends to issue additional guidance addressing this.

Many AHPs will not qualify as Narrow Standard or Relaxed Standard AHPs, typically because the association fails to meet the formation requirements described above. These Non-Conforming AHPs can still provide the advantages of greater purchasing power and the ability to separately experience-rate member employers like Narrow Standard AHPs, but Non-Conforming AHPs do not qualify for single employer plan treatment and are instead viewed as a separate plan maintained by each member employer. As a result, many member employers will still be subject to the small group and individual plan requirements that Narrow Standard and Relaxed Standard AHPs can avoid.

Effective dates

There are three phase-in effective dates under the final regulations:

  • Sept. 1, 2018: New or existing associations may establish a fully-insured Relaxed Standard AHP
  • Jan. 1, 2019: AHPs in existence on or before June 18, 2018 may establish a self-insured Relaxed Standard AHP.
  • April 1, 2019: All other new or existing associations may establish a self-insured Relaxed Standard AHP.

There are no effective dates specific to Narrow Standard or Non-Conforming AHPs as these existed before the final regulations and are not directly affected by them.

Source:

Beinecke, C. (19 July 2018). "What do the DOL’s new AHP rules actually mean?" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/opinion/what-dol-ahp-rules-actually-mean


Reference-based pricing is gaining momentum — here’s why

Reference-based pricing has made its comeback. Continue reading to learn what reference-based pricing is and why it is slowly gaining momentum.


In my 25 years in the insurance business I’ve seen many changes. But there’s always been one constant: Healthcare and pharmacy costs continue to accelerate and no regulatory action has been able to slow this runaway train. The problem is that we have focused on the wrong end of the spectrum. We don’t have a healthcare issue; we have a billing issue.

At the root of this national crisis is a lack of cost transparency, which is driven by people who are motivated to keep benefit plan sponsors and healthcare consumers in the dark. Part of the problem is that most cost-reduction strategies are developed by independent players in the healthcare food chain. This siloed approach fails to address the entire ecosystem, and that’s why we continue to lament that nothing seems to be working.

But that could change with reference-based pricing, a method that’s slowly gaining momentum.

Here’s how it works.

Reference-based pricing attacks the problem from all angles and targets billing — which is at the heart of the crisis.

Typically, a preferred provider organization network achieves a 50-60% discount on billable charges. However, after this 50-60% discount, the cost of care is still double or triple what Medicare pays for the same service. For example, the same cholesterol blood test can range from $10 to $400 at the same lab. The same hospitalization for chest pain can range anywhere from $3,000 to $25,000.

Reference-based pricing allows employers to pay for medical services based on a percentage of CMS reimbursements (i.e. Medicare + 30%), rather than a percentage discount of billable charges. This model ensures that the above-mentioned hospitalization cost an employer $3,000 rather than $25,000.

“Negotiating” like Medicare

Reference-based pricing is becoming increasingly popular as more organizations consider the move to correct cost transparency issues as they transition from fully-insured to self-funded insurance plans.

One well-known and considerable example is Montana’s state employee health plan. The state employee health plan administrator received a notice from legislators in 2014 urging the state to gain control of healthcare costs. Instead of beginning with hospitals’ prices and negotiating down, they turned to reference-based pricing based on Medicare. Instead of negotiating with hospitals, Medicare sets prices for every procedure, which has allowed it to control costs. Typically, Medicare increases its payments to hospitals by just 1-3% each year.

The state of Montana set a reference price that was a generous 243% of Medicare — which allowed hospitals to provide high-quality healthcare and profit, while providing price transparency and consistency across hospitals. So far, hospitals have agreed to pay the reference price.

Of course, there is still the risk that a healthcare provider working with the state of Montana health plan, or any other health plan using reference-based pricing, could “balance bill” the member. But a fair payment and plenty of employee education about what to do if that happens could help you curb costs.

If balance billing does occur, many solutions include a law and auditing firm to resolve the dispute. In one recent example, a patient was balance billed almost $230,000 for a back procedure after her health plan had paid just under $75,000. An auditing firm found that the total charges should have been around $70,000, and a jury agreed. The hospital was awarded an additional $766.

Reference-based pricing is a forward-thinking way to manage costs while providing high-quality benefits to your employees. It’s one way to improve cost transparency, which may eventually transform the way that we buy healthcare.

Kern, J. (18 July 2018) "Reference-based pricing is gaining momentum — here’s why" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/opinion/reference-based-pricing-health-insurance-gaining-momentum?utm_campaign=intraday-c-Jul%2018%202018&utm_medium=email&utm_source=newsletter&eid=1e52d1873f9d2e8d6bd477da3e7f49a3


How tech solutions can take aim at employee stress

Are your employees stressed? Stress can lead to multiple health conditions and many people cope with stress in unhealthy ways. Continue reading to find out how employers can help reduce stress in the workplace.


In case you haven’t noticed, today’s workforce is completely stressed out. Overwhelming workloads, looming deadlines and the 24/7 always-on mentality is becoming the corporate America norm. Unfortunately, long-term stress can contribute to everything from heart disease to strokes, cancer and other grave conditions. Stressed employees also are more likely to be unmotivated, quit their jobs, perform poorly and have low morale and higher incidence of illness and accidents.

Because everyone copes with stress differently, some deal with it in unhealthy ways, such as overeating, eating unhealthy foods, smoking cigarettes or abusing drugs and alcohol, according to the American Psychological Association. This vicious cycle makes stress one of the top health concerns, with 49% of individuals at risk for stress-related illnesses, second only to weight, which impacts 69% of individuals, according to internal research.

All in all, employee stress is causing employers … well, stress. In fact, the cost of work-related stress in the US is $300 billion annually, according to the American Institute of Stress. Further, behavioral-related disability costs have increased more than 300% in the past decade and account for 30% of all disability claims.

While more than two-thirds of US corporations have adopted some kind of health and wellness program, the majority doesn’t adequately address or even include solutions that support mental health. That’s why it’s critical to educate employers on the real cost of stress and the benefits of an effective stress-related wellness initiative to help keep health costs down, while keeping employee productivity and retention up.

However the realities of promoting a healthy balance for employees, while simultaneously ensuring the delivery of quality work that’s completed on time, is much easier said than done. Anecdotally, we often hear that employees don’t feel they are benefiting from their corporate wellness plans because they don’t have time or they can’t break away from their desks.

Walk the walk
What can employers do to break the cycle? First and foremost, stress reduction starts from the top-down as management and bosses play a key role in employee adoption and lasting engagement. Not only are they responsible for communicating about available resources, they need to literally and figuratively walk the walk. When leadership incorporates stress management into their own lives, employees understand the company's commitment to these practices and feel more comfortable taking a break.

The role of technology
Some of the most effective wellness programs leverage a variety of technologies that offer something for everyone and makes it easier for employees to engage and benefit, regardless of where they are or the time of day. Popular technology-based solutions include:

· Digital health platforms — Connecting employees to health coaches, board-certified physicians, and colleagues who can provide support for those dealing with stress and offer guidance with chronic disease resulting from, or adding to, individuals’ stress levels.
· Digital health games — Employees receive encouragement and rewards through fun, engaging games in which they compete against others in stress-busting exercise to reach health goals.
· Wearables — Employees can sync popular wearable devices, such as their Apple Watch, to visualize the impact of guided meditations on their heart rate. Through smart feedback, employees can better understand which meditation exercises, locations, and times of day have the greatest impact on their heart rate, and therefore, stress level.
· Virtual Reality guided meditation — Combining an immersive VR with mindfulness meditation can help transport employees to relaxing environments, bringing a whole new dimension to the meditation experience. Using apps on their cell phones and portable VR headsets, employees are able to practice meditation from any place, at any time. In addition to stress reduction, a growing body of scientific evidence suggests that meditation can heighten attention spansimprove sleepreduce chronic pain and fight addictions like drug and alcohol abuse, and binge eating.

The bottom line: Stressed-out employees can have significant health and financial consequences for your clients. With the start of open enrollment season just a few short months away, it’s time to start educating your customers about the benefits of incorporating mental health programs, like digital health platforms and meditation, into their corporate wellness plans to mitigate employee stress and improve productivity.

Miller, M. (11 July 2018) "How tech solutions can take aim at employee stress" (Web Blog Post) Retrieved from https://www.employeebenefitadviser.com/opinion/mental-fitness-why-your-corporate-wellness-portfolio-needs-mental-health-solutions


Specialty Drugs and Health Care Costs

Prescription drug spending is rising every year and a significant portion of that spending it on specialty drugs. Read on to learn more.


This November 2015 fact sheet was updated in December 2016 to reflect new data.

Overview

Spending on prescription medications continues to rise each year in the United States.1Specialty drugs— including those used to treat conditions such as cancer and hepatitis C—represent a significant portion of this spending. The high cost of these novel therapies, which often offer advancements in patient care, raises affordability concerns for health plans, patients, and consumers.

What is a specialty drug?

The Pew Charitable Trusts defines specialty drugs as medications with high costs for a course of treatment or a year of therapy. Some health plans also categorize drugs as specialty if they are novel therapies; require special handling, monitoring, or administration; or are used to treat rare conditions. In general, elevated costs are a distinguishing characteristic of specialty drugs. A recent survey found that 85 percent of health plans consider high cost a determining factor in identifying specialty drugs.2 Medicare’s definition of specialty drugs is also based on price: Pharmaceuticals costing $600 or more per month are considered specialty.3

See also: How employers can manage the skyrocketing cost of specialty drugs

Cost implications

The estimated price tag for treating a patient with a specialty drug is high: For some chronic conditions, a year of treatment with a specialty drug can exceed $100,000.4 In 2015, only 1 to 2 percent of the American public used specialty drugs, yet they accounted for approximately 38 percent of total drug expenditures.5 And the price of many specialty drugs continues to rise: In 2015, specialty drug unit costs increased by 11 percent.6 More patients are treating their health conditions with these drugs; utilization rose by 6.8 percent in 2015 because of increased use of existing drugs and the introduction of new pharmaceuticals.7 In 1990, only 10 specialty drugs were on the market,8 but there are now more than 300,9 33 of which became available in 2015 alone.10 And nearly 700 specialty drugs are under development.11 Because of higher prices and increased use, spending on specialty drugs represents an increasing share of total health care costs.12 In 2015, specialty drug spending reached $121 billion on a net price basis.13 The estimated number of Americans with annual drug costs greater than $50,000 increased 63 percent in 2014, from 352,000 people to 576,000.14 Many of these patients take multiple drugs, and 92 percent use high-priced specialty drugs.15 Importantly, patients who need specialty drugs face higher out-of-pocket (OOP) costs, because health plans often require a co-insurance payment, which is a set percentage of a drug’s price. Some plans charge a co-insurance payment as high as 33 percent.16

Managing specialty drug costs

To deal with the high cost of specialty medications, payers in public and private programs use a number of strategies to control patient OOP costs and member premiums, such as negotiating with manufacturers to obtain rebates and other discounts that help reduce the prices that plan members pay for medications. Payers also use different benefit design strategies to ensure the appropriate use of medications and manage total drug spending, including:

Formularies and cost sharing: Specialty drugs are typically placed in a health plan’s highest drug formulary tier, where OOP costs are most expensive. Patients are often required to pay co-insurance in order to access these medications. Research shows that requiring patients to pay more out of pocket reduces their use of prescription drugs.17 In their negotiations with drug manufacturers, payers can sometimes achieve lower prices by allowing patients to pay lower OOP costs for drugs.

See also: A Look at Drug Spending in the U.S.

Step therapy: When multiple treatment options are available for a patient’s condition, plans sometimes require patients to try, and fail, treatment with a cheaper, traditional drug before letting them access a specialty drug. Patients with rheumatoid arthritis, for example, are sometimes required to attempt therapy with traditional oral medications before they can use specialty biologics.18

Prior authorization: These policies require a health care professional to provide documentation that validates a patient’s need for a particular medication. Under most prior authorization criteria, clinical information is necessary to verify that a specialty drug is medically appropriate for a patient before coverage is granted.

Looking forward

Many specialty drugs offer meaningful therapeutic advances over existing treatments. However, if current trends continue, the high cost of specialty drugs will have a significant impact on overall health care spending and patients’ OOP costs. Pew is focused on identifying and evaluating policy options that balance the need to control overall health care spending with ensuring patient access to appropriate medications.

Endnotes

  1. Express Scripts, 2015 Drug Trend Report (2016), https://lab.express-scripts.com/lab/drug-trend-report.
  2. EMD Serono, EMD Serono Specialty Digest, 10th Edition: Managed Care Strategies for Specialty Pharmaceuticals (2014), http://specialtydigest.emdserono.com/pdf/Digest10.pdf.
  3. Centers for Medicare & Medicaid Services, Announcement of Calendar Year (CY) 2016 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter (2015), http://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf.
  4. Bradford R. Hirsch, Suresh Balu, and Kevin A. Schulman, “The Impact of Specialty Pharmaceuticals as Drivers of Health Care Costs,” Health Affairs 33, no. 10 (2014): 1714–1720, http://content.healthaffairs.org/content/33/10/1714.short.
  5. Express Scripts, 2015 Drug Trend Report.
  6. Ibid.
  7. Ibid.
  8. American Journal of Managed Care, “The Growing Cost of Specialty Pharmacy—Is it Sustainable?” (2013), http://www.ajmc.com/payer-perspectives/0213/the-growing-cost-of-specialty-pharmacyis-it-sustainable.
  9. Ibid.
  10. Express Scripts, “FDA Approvals Set All-Time High” (2016), https://lab.express-scripts.com/lab/insights/drug-options/fda-approvals-set-all-time-high.
  11. IMS Health, “Overview of the Specialty Drug Trend: Succeeding in the Rapidly Changing U.S. Specialty Market” (2014), http://docplayer.net/4230764-Overview-of-the-specialty-drug-trend.html.
  12. The estimates in this section are based on published reports, some of which use different definitions for a specialty drug. However, the various authors do note that drug price or cost is used as part of their definitions of specialty.
  13. Quintiles IMS Institute, “Medicines Use and Spending in the U.S.: A Review of 2015 and Outlook to 2020,” (2016), http://www.imshealth.com/en/thought-leadership/quintilesims-institute/reports/medicines-use-and-spending-in-the-us-a-review-of-2015-and-outlook-to-2020.
  14. On an invoice price basis, specialty spending was $150.8 billion in 2015.
  15. Express Scripts, “Super Spending: U.S. Trends in High-Cost Medication Use” (2015), http://lab.express-scripts.com/lab/insights/drug-options/super-spending-us-trends-in-high-cost-medication-use.
  16. Kaiser Family Foundation, Medicare Part D at Ten Years: The 2015 Marketplace and Key Trends, 2006-2015 (2015), http://kff.org/medicare/report/medicare-part-d-at-ten-years-the-2015-marketplace-and-key-trends-2006-2015/.
  17. Dana P. Goldman, Geoffrey F. Joyce, and Yuhui Zheng, “Prescription Drug Cost Sharing: Associations With Medication and Medical Utilization and Spending and Health,” Journal of the American Medical Association 298, no. 1 (2007): 61–69, http://jama.jamanetwork.com/article.aspx?articleid=207805.
  18. Express Scripts, Drugs That Require Prior Authorization (PA) Before Being Approved for Coverage (2015), https://www.express-scripts.com/art/medicare15/pdf/prior_authorization_choice.pdf.

SOURCE: PEW (16 November 2015) "Specialty drugs and health care costs" (Web Blog Post). Retrieved from http://www.pewtrusts.org/en/research-and-analysis/fact-sheets/2015/11/specialty-drugs-and-health-care-costs


15 employee benefits on the decline

Employee benefits are on the rise due to many employers ramping up benefits in an effort to attract and keep talent. Although employee benefits are on the rise, a recent SHRM survey showed that these 15 benefits weren't as prevalent as they used to be.


Thanks to a tightened job market, a number of employers are ramping up benefits in an effort to recruit and retain talent. A number of big companies, including Discover, WalmartTaco Bell and Kroger, have announced new and enhanced benefits for employees just this year. In fact, according to research from the Society of Human Resource Management, between 2017 and 2018, the prevalence of more than 60 benefits assessed increased compared with just 20 between 2016 and 2017.

However, not every employee benefit out there has been there on the rise. A number of offerings have declined in prevalence over the last few years — especially for employers looking to better manage benefit costs. Here are 15 benefits that are not as hot as they once were, according to SHRM’s annual survey.

Preventative programs

Though wellness programs are still very popular among employers, preventative programs specifically targeting employees with chronic health conditions has seen a significant drop in the last five years. The coverage fell by eight percentage points since 2017 (from 33% in 2017 to 25% in 2018) and a whopping 17 percentage points since 2014 (42%).

Flexible spending accounts

FSAs are not as prevalent as they once were: 63% of employers currently offer the spending accounts, down from 69% in 2015. While they are still more popular than health savings accounts, that may change in the years to come: HSAs are on an upward trend. The number of employers offering HSAs — which offer triple tax benefits for employees — rose just one percentage point from 2017 to 2018 (from 55% to 56%), but has increased by 11% in the last five years.

Domestic partner benefits

Domestic partner benefits fell by 10 percentage points for opposite sex partners and by nine percentage points for same-sex partners (both to 15%) since 2017.

Childcare and eldercare referral services

Both childcare (17% in 2017 to 9% in 2018) and eldercare (13% in 2017 to 10% in 2018) referral services fell between 2017 and 2018.

Onsite cafeterias

Onsite cafeterias that are fully or partially subsidized by the company are on the decline. Twelve percent of employers currently offer the perk, down from 16% in 2017.

Defined contribution catch-up contributions

The prevalence of defined contribution catch-up contributions — which permit participants who are age 50 or older to make additional elective deferral contributions at the end of the calendar year — has continued to fall over the past five years with 64% of organizations offering this benefit in 2018, down from 76% five years ago.

Short-term disability insurance

Short-term disability insurance has fallen 10% in the last three years: In 2015, 74% of employers offered the coverage; 64% of employers currently offer it, according to SHRM.

Incentive bonus plans

Incentive bonus plans fell by nine percentage points for executives (to 42%) and seven percentage points for nonexecutives (to 37%), SHRM reports.

Sign on bonuses for executives

Sign-on bonuses for executives fell by six percentage points in the last year, from 35% to 29%. SHRM notes of the change: “As competition for talent rises as unemployment falls, organizations may be identifying which types of compensation benefits are the most helpful in recruitment and retention, and subsequently making changes to spend their budgets as wisely as possible.”

Bariatric coverage for weight loss

Bariatric coverage for weight loss — including stomach stapling and gastric bypass surgery — has fallen in the past five years. While 38% of employers offered such coverage in 2014, 33% now offer it, according to SHRM.

Onsite health screening programs

Employers who offer onsite health screening programs — for example, screening for employees’ glucose and cholesterol numbers — have declined 17% since 2015. Thirty percent of employers offer these programs currently, according to the latest statistics.

Employee discounts

Benefits in employee discounts and charity fell in several areas since 2017, including discount ticket services (from 31% to 27%), donations for employee participation in charitable events (from 28% to 24%), company-purchased tickets (from 23% to 20%) and employer-sponsored personal shopping discounts (18% to 12%). SHRM noted the drop “may be due to less value added in terms of effects on recruitment and retention compared with other benefits.”

Elective procedures coverage

The percentage of employers who cover elective procedures for their employees — defined as any nonemergency surgical procedure other than laser-based vision correction — has dropped over the last five years. In 2014, 15% of employers offered such coverage; 11% now do.

Housing and relocation benefits

Overall, housing and relocation benefits are among the least common compared with other benefits categories. Since 2014, prevalence rates for several housing and relocation benefits fell, “perhaps indicating that organizations see little if any value added,” SHRM notes. Although the decreases are between just three and five percentage points, given the low prevalence rates of these benefits to begin with, the decreases are quite substantial (between 25% and 60%). For example, 16% of employers say they offer temporary relocation benefits, down from 24% who offered it in 2016.

Health fairs

The prevalence of corporate health fairs have dropped 10 percentage points in the last three years. Now, 30% of employers surveyed by SHRM say they offer health fairs, down from 40% who did in 2015.

SOURCE:
Mayer, K. (24 July 2018) "15 employee benefits on the decline" [Web Blog Post]. Retrieved from https://www.benefitnews.com/slideshow/employee-benefits-on-the-decline?brief=00000152-14a5-d1cc-a5fa-7cff48fe0001


A Look at Drug Spending in the U.S.

Spending on prescription drugs in the U.S. is projected to overtake other sectors of healthcare in 2018. Continue reading this blog post to learn more.


This fact sheet was updated on April 26, 2018, to reflect newly published data.

Overview

Spending on prescription drugs in the United States is on the rise and is projected to outpace growth in other parts of the healthcare sector in 2018.1 Limited public data on how much various payers and supply chain intermediaries pay for prescription drugs, as well as a lack of consensus on a single metric for drug expenditures, presents methodological challenges in measuring drug spending.

See also: Specialty Drugs and Health Care Costs

Nevertheless, a number of public and private organizations have published drug spending estimates over the past several years, including the share of health spending attributed to drugs. Historical estimates and spending projections from the Department of Health and Human Services’ Assistant Secretary for Planning and Evaluation (ASPE), the Centers for Medicare & Medicaid Services’ (CMS’) National Health Expenditure Accounts (NHEA), the Altarum Institute, and IQVIA are explored in Figures 1 and 2.

Figure 1 illustrates estimates and projections of U.S. drug spending by source from 2010 to 2018. Each incorporates rebates and spending on drugs, excluding over-the-counter (OTC) products.

  • ASPE estimates total prescription drug spending, including retail and nonretail, using CMS NHEA, IQVIA, and Altarum Institute data.2
  • CMS’ NHEA data provide estimates of retail prescription drug spending, excluding nonretail.3
  • IQVIA estimates total manufacturer revenue (“net price spending”), accounting for rebates and other price concessions.IQVIA also breaks down manufacturer revenue for drugs sold in both retail and nonretail settings.

Figure 2 illustrates drug spending as a percentage of health expenditure. Each of these estimates incorporates rebates and spending in retail and nonretail settings excluding OTC products, unless noted below.

  • ASPE estimates total drug spending (retail and nonretail) as a percentage of personal health expenditures, a subset of national health expenditures.5
  • The Altarum Institute estimates total prescription drug spending (retail and nonretail) as a percentage of total national health expenditures.6
  • CMS NHEA estimates drug spending (excluding nonretail) as a percentage of total national health expenditures.7
  • IQVIA estimates net drug spending (retail and nonretail) as a percentage of health care spending, including OTC products that do not require a prescription.8

See also: How employers can manage the skyrocketing cost of specialty drugs

Organizations use different denominators to describe health care expenditures

  • National health expenditures: Total health expenditures, including medical spending and public health activities, administrative costs, and research investments (Altarum Institute and CMS).
  • Personal health expenditures: Spending exclusively on direct patient care (ASPE).
  • Healthcare spending: An estimate of health care spending from the World Health Organization (IQVIA).

What drug spending estimates include

  • Rebates: Drug price reductions intended to increase sales through formulary placement. While the method used to calculate the rebate is specified at the time of purchase, the actual rebate is received in the future, as it is based on product sales. Most rebates are paid to pharmacy benefit managers and health plans. Rebates are accounted for in all five estimates, but none of the organizations has access to the specifics of manufacturer agreements.9 IQVIA approximates rebates and other price concessions using publicly available wholesaler and pharmaceutical sales data, public financial filings, the Medicare trustees’ report, and proprietary audits. CMS NHEA adjusts estimated drug expenditures to account for rebates in retail and mail-order settings.10 Altarum Institute and ASPE apply CMS’ rebate adjustments to their drug expenditure estimates.
  • Payers: Entities other than patients responsible for paying health care costs. In the United States, payers generally include insurance companies, health plan sponsors—such as employers or unions—and pharmacy benefit managers. Medicare is the nation’s largest payer. CMS NHEA data include estimates of pharmaceutical expenditures by private health insurers and public health insurers such as Medicare and Medicaid. CMS NHEA data also incorporate the amount that premiums contribute to the cost of pharmaceuticals, though the data do not include the share of premiums that go toward pharmaceuticals. IQVIA does not directly incorporate patient premiums in its drug spending estimates. CMS NHEA data include nonretail prescription drug spending in overall health expenditures but do not separately report spending on nonretail drugs. Spending on drugs in these sites of care is included in overall health cost estimates for each respective setting (for example, drugs purchased by hospitals are reported as hospital spending). The Altarum Institute uses IQVIA data to estimate spending on nonretail prescription drugs. ASPE also publishes an estimate of pharmaceutical spending for both retail and nonretail outlets.
  • Over the counter: Drugs that do not require a prescription. Only the IQVIA estimate for net drug spending as a percentage of health care spending incorporates spending on OTC products.
  • Retail prescription drugs: Drugs sold in a retail setting, such as a pharmacy, drugstore, mail-order, or other mass-merchandising establishment.
  • Nonretail prescription drugs: Drugs dispensed in clinics and institutional settings such as hospitals, long-term care facilities, and nursing homes.

Endnotes

  1. Gigi A. Cuckler et al., “National Health Expenditure Projections, 2017–26: Despite Uncertainty, Fundamentals Primarily Drive Spending Growth,” Health Affairs 37, no. 3 (2018): 553–63, https://doi.org/10.1377/hlthaff.2016.1627; Centers for Medicare & Medicaid Services, “National Healthcare Expenditure Data,” accessed February 14, 2018, https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData.
  2. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, “Observations on Trends in Prescription Drug Spending” (2016), https://aspe.hhs.gov/pdf-report/observations-trends-prescription-drug-spending. ASPE figures rely on data from the NHEA and the Altarum Institute. ASPE expenditures are available from 2009 to 2013 and projections from 2014 to 2018. This was a one-time publication.
  3. Centers for Medicare & Medicaid Services, “National Healthcare Expenditure Data.” CMS data are sourced from Census Bureau retail data, Medicare and Medicaid claims, and IQVIA data. CMS expenditures are available from 1970 to 2016 and projections from 2017 to 2026. CMS publishes these data annually.
  4. IQVIA, “Medicines Use and Spending in the U.S.: A Review of 2017 and Outlook to 2022” (2018), https://www.iqvia.com/institute/reports/medicine-use-and-spending-in-the-us-review-of-2017-outlook-to-2022. IQVIA data are sourced from wholesaler and pharmaceutical company sales information. IQVIA publishes expenditures from 2013 to 2017 and projections from 2018 to 2022. It updates this publication annually.
  5. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, “Observations on Trends in Prescription Drug Spending” (2016).
  6. Charles Roehrig, “A Ten Year Projection of the Prescription Drug Share of National Health Expenditures Including Non-Retail,” Altarum Institute (2017), https://altarum.org/sites/default/files/uploaded-publication-files/Non-Retail%20Rx%20Forecast%20Data%20Brief%20with%20Addendum%20May%202017.pdf.
  7. Centers for Medicare & Medicaid Services, “National Healthcare Expenditure Data,” accessed February 14, 2018, https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData.
  8. IQVIA, “Understanding the Dynamics of Drug Expenditure: Shares, Levels, Compositions and Drivers” (2017) https://www.iqvia.com/institute/reports/understanding-the-dynamics-of-drug-expenditure-shares-levels-compositions-and-drivers. IQVIA data are sourced from wholesaler and pharmaceutical company sales information and the World Health Organization’s Global Health Expenditure Database from December 2016. This one-time publication includes expenditures from 1995 to 2015.
  9. IQVIA accounts for but does not report drug supply and payment chain entity profit retentions (e.g., discounts, rebates, chargebacks and other financial transactions among manufacturers, pharmacy benefit managers, pharmacies, and wholesalers).
  10. Centers for Medicare & Medicaid Services, “National Health Expenditure Accounts: Methodology Paper, 2015,” https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/DSM-15.pdf.

SOURCE: PEW (27 February 2018) "A look at drug spending in the U.S." (Web Blog Post). Retrieved from http://www.pewtrusts.org/en/research-and-analysis/fact-sheets/2018/02/a-look-at-drug-spending-in-the-us


6 ways HR can help prevent a data breach

Employees are often an organization's first line of defense against cyberattacks. Continue reading to learn the 6 ways HR can play a critical role in preventing data breaches.


Employees are an organization's first line of defense against and response to cyberattacks—which have become widespread in recent years. HR, in particular, can play a critical role in protecting sensitive information and minimizing employer liability.

Data breaches can lead to enormous liability, said Danielle Vanderzanden, an attorney with Ogletree Deakins in Boston. Some losses are easy to calculate, such as time spent on help desk activities, investigations and legal defense. Other losses are harder to quantify, such as reputational damage to the business. But it's clear that the costs can be staggering: The average total organizational cost of a data breach in the United States is $7.35 million, according to a 2017 study.

Whether a worker intentionally sold customer data, unintentionally left a laptop on a train or carelessly left boxes of medical records unattended in a high-traffic area of a hospital, employers can wind up paying millions of dollars in damages.

So what can HR do to mitigate these costs? In large part, data security is an issue for the technology department, but HR professionals can help ensure that effective programs are in place, Vanderzanden said at the 2018 Society for Human Resource Management Employment Law & Legislative Conference. Specifically, HR can lead the way by:

  1. Knowing who is hired. Protecting personally identifiable information (PII) starts with properly vetting job candidates who will have access to sensitive information: those being considered for HR, payroll and finance positions, to name a few.
  2. Accounting for equipment. During the onboarding process, employers should complete a checklist so that they have a record of all the equipment each employee receives. Then, at the time of separation, the checklist should be consulted to ensure that all equipment is returned and workers don't walk out of the building with sensitive information.
  3. Training employees to spot issues. Workers may not always know how to identify an issue—such as a phishing scam through which a cybercriminal sends an e-mail that looks like it came from someone in the company. An employee may quickly respond to the message and divulge personal information that can be used to access payroll and other information. Employees should be trained on how to identify scams and also should know what to look for in a legitimate company e-mail, such as a standard signature line, a photo of the sender and a company e-mail address.
  4. Encouraging workers to speak up. When a breach or attempted breach occurs, employees who handle PII must feel comfortable stepping up and notifying the appropriate staff. This is essential for resolving the situation, but also because employers must provide certain notices when information is compromised.
  5. Carefully crafting BYOD policies. Bring-your-own-device (BYOD) policies may turn into bring-your-own-breach policies in practice, Vanderzanden said. The more mobile the device, the easier it is for an unauthorized person to walk away with the device and any sensitive information that is stored on it. If employers are going to have a BYOD policy, they should have written policies about what will happen if the device is lost or stolen and what will happen upon termination of employment. Among other things, they should also have a procedure for remotely wiping data from the device.
  6. Building a culture of compliance. Representatives from different business functions—such as IT, HR, security and finance—should work together to ensure that data security measures are ingrained in the organization's practices. Moreover, compliance and cooperation must start in the C-suite. HR can play a role in influencing senior management about the importance of having everyone in the organization follow security procedures.

Check State Laws

HR professionals should note that state laws are the primary source of potential identity-theft liability for employers. "State laws in this area are a patchwork collection and are neither uniform nor completely consistent," said Patrick Fowler, an attorney with Snell & Wilmer in Phoenix, in an interview with SHRM Online. California and Massachusetts have been more active than other states in passing data privacy legislation, but virtually all of the states have data breach notification laws at this point, he noted. Employers should make sure they know what is required under relevant state laws.

SOURCE: Nagele-Piazza, L. (14 March 2018) "6 ways HR can help prevent a data breach" (Web Blog Post). Retrieved from https://www.shrm.org/resourcesandtools/legal-and-compliance/employment-law/pages/6-ways-hr-can-help-prevent-a-data-breach.aspx


5 great, underutilized places to promote your recruitment content

Are you promoting your recruitment content on these sites? Read on to learn about these 5 underutilized places to promote your recruitment content.


All your time and effort invested in brainstorming great recruitment content ideas and creating interesting and useful recruitment content for every step of a candidate's journey will be wasted if you don’t promote it.

Many HR professionals publish their recruitment content on their company’s career sites and job posting sites.

They also share it on social media. They know that if they want to be successful at promoting their employer's brand on social media, they have to learn all the tricks of recruiting on Facebook and create an outstanding LinkedIn Company Page.

However, there are many other places where you can promote your recruitment content to maximize its reach and achieve better ROI.

5 great, underutilized places to promote your recruitment content

Here is the list of the 5 best underutilized places where you can promote your recruitment content for free:

1. Your employees’ social media profiles

Asking your employees to share your recruitment content on their personal social media profiles is one of the most effective tactics for promoting your recruitment content. Recruitment content shared by employees receives 8 times more engagement than content shared by companies.

2. Online forums

Online forums are very effective, but often overlooked place to promote your recruitment content on. You can choose between numerous different forums, from general ones to those dedicated to special industry areas or any other topics.

3. Blogs

Blogs are another relatively underutilized place where companies can promote their recruitment content. Do a little research to find out which blogs your candidate persona regularly follow and offer to write a guest blog post.

4. University websites

If you’re looking to attract top young talent, then university websites are your go-to places for promoting your recruitment content. Many universities and colleges offer an opportunity for employers to advertise their recruitment content completely free of charge.

5. Company review sites

Online company review sites (such as Glassdoor and Great place to work) are a perfect place to promote your recruitment content and enhance your employer brand. According to Glassdoor, 54% of online job seekers read company reviews from employees.

Martic, K. ( 30 July 2018) "5 great, underutilized places to promote your recruitment content" (Web Blog Post). Retrieved from https://hrtechweekly.com/2018/07/30/5-great-underutilized-places-to-promote-your-recruitment-content/


3 ways to support employee caregivers

Employers are now offering their employees benefits if they act as caregivers to loved ones. Do you have employee caregivers?


Think about the people you work with every day—their similarities and differences, their hobbies and family backgrounds, their areas of expertise. Despite their myriad differences, employees of all backgrounds face common challenges that preoccupy their thoughts and pull them away from their work.

A newly released white paper, “Taking Care of Caregivers: Why corporate America should support employees who give their hearts and souls to those in need,” highlights caregiving as an emerging factor that greatly impacts the well-being of today’s workforce.

The scope of what it means to be a caregiver is broad, and many employers remain unaware of how caregiving affects the well-being of their employees. “For many, caregiving is comparable to holding down a second job, and the lines between their work and personal lives become blurry, at best, when the care of a loved one is top-of-mind,” the white paper states. “Tethered by an emotional struggle to leave unpaid caregiving at home, these people must go to work and are expected to perform at the highest level.”

Transamerican Institute’s pivotal study, The Many Faces of Caregiving, reported that 14 percent of employee caregivers go so far as to reduce their work hours or receive a demotion. Another 5 percent  give up working entirely.

While caregiving proves costly for employee well-being, studies also reveal how costly it is for business. According to AARP and the Family Caregiver Alliance, employee caregiving costs employers:

  • Up to $33 billion annually from lost productivity
  • $6.6 billion to replace employees who retire early or quit
  • $5.1 billion in absenteeism

It doesn’t take a “Big Four” accounting firm to see that ignoring this challenge is bad for business. The National Business Group on Health reports 88 percent of employers have “expectations that caregiving will become an increasingly important issue in the next five years.”

But what can be done to make life easier for employee caregivers and keep them happy, healthy and focused at work? Companies of all sizes are taking notice of this challenge and embarking on the first steps to support employee caregivers.

Taking Care of Caregivers highlights a few policies industry leaders have implemented thus far to support employee caregivers.

1. Offer paid leave for caregivers

Giving employee caregivers time and space to be with their loved one and figure out what’s next is a great starting point.

Companies like Microsoft, Starbucks, Bristol-Myers Squibb and Facebook all offer paid time off for employees to care for sick family members. Facebook even offers 10 to 20 days of bereavement leave, which provides much-needed time for caregivers to focus on self-care after experiencing the loss of a loved one.

Renee Albert, Facebook’s Director of benefits, goes so far as to say, “Caregiver support is part of our DNA,” as Facebook aspires to be “the best company for families, no matter how you define ‘family.’”

2. Get creative with online resources

While paid leave certainly frees up time for employee caregivers to focus on their loved one’s care, simply providing PTO doesn’t guarantee that the employee will figure out how to best care for their loved one while they’re away from work. Most first-time caregivers spend hours searching the internet for what to do next with little luck or clarity.

Taking Care of Caregivers cites online support groups, decision-support systems and digital support platforms as primary ways to support employee caregivers in today’s digital world. These tools can be particularly helpful for emotional support and guidance.

“Use opportunities to create communities,” Albert suggests. “Often just knowing you aren’t alone and have someone to share your experience with goes a long way.”

3. Consider how your workplace culture can benefit caregivers

Caregiving programs come in all shapes and sizes, and companies of all sizes can leverage their resources to develop solutions that are responsive to the needs of employee caregivers. This includes options like telecommuting and flexible schedules, which are becoming increasingly common as traditional workplace culture continues to change.

A study conducted by AARP and the ReACT coalition confirms the importance of these programs, stating that “flextime and telecommuting programs saw an ROI of between $1.70 and $4.45 for every dollar invested. What’s more, a work-family human resources policy is associated with a share price increase of .32 percent on the day that policy is announced.”

Even incorporating stress-reduction activities into the workplace can go a long way for caregivers. On-site yoga and exercise classes, relaxation techniques, and massage therapy are just a few options that can help caregivers focus on self-care.

As America’s workforce continues to face the challenges of caregiving, it is time for employers to creatively consider ways to offer support to this preoccupied and stressed-out employee group. Caregiving will eventually touch us all. Take part in these initiatives now, and your employees will thank you later.

SOURCE:
Payne, E. (19 July 2018) "3 ways to support employee caregivers" [Web Blog Post]. Retrieved from https://www.benefitspro.com/2018/07/19/3-ways-to-support-employee-caregivers/


Point-of-sale wellness: How health plans are cashing in

With skyrocketing healthcare costs, payers constantly look for ways to reduce costs and improve health. Continue reading to learn more.


Health care costs continue to skyrocket, and payers are constantly looking for ways to keep their populations healthier and to reduce these costs. Payers looking for more effective strategies to improve health and wellness for members should be aware of the new preventative approaches that more health plans are offering.

One such method that health plans are deploying to engage members is point-of-sale wellness, a type of incentive program that encourages members to actively make healthier purchases and lifestyle choices. As point-of-sale wellness becomes more prevalent among health plans, human resource managers and benefits brokers should understand how these programs work to best determine if they would be a valuable option for their employees and clients.

What is point-of-sale wellness?

Point-of-sale wellness is all about helping health plan members make smart, healthy purchasing decisions when they’re in a retail store or pharmacy. According to the Henry J. Kaiser Family Foundation, the average consumer visits their doctor 3.1 times per year. This same consumer will visit his or her favorite retailers multiple times per week. This presents the perfect opportunity for actionable engagement. It is often too easy for individuals to make impulsive decisions that favor cheaper care items or junk food that provides instant gratification but lead to an unhealthy lifestyle in the long run. Empowering consumers in these moments before checking out at the register with the understanding — and more importantly, the financial incentive — to make informed, smarter choices can lead to a healthier lifestyle and reduced health care costs. In short, the goal is to help individuals prioritize health and wellness at retail point of sale.

There are numerous ways that health plans can achieve this goal. One of the most common is by providing members with prepaid cards that are loaded with funds and discounts for the purchase of over-the-counter (OTC) items such as vitamins, diabetes care items and medications for allergies or cold and flu symptoms. The key component of these specialized prepaid cards is that they can be restricted-spend cards. In other words, they cannot be used to purchase any items that the health plan members want; they can only be used to purchase items off a curated list of products.

Under this arrangement, all parties, from the individual to the health plans and retailers, benefit. With a restricted-spend prepaid card in hand, an individual is rewarded for making purchases that contribute to a healthier lifestyle, while reducing health care costs both for themselves and the health plans administering the cards. In the meantime, the retailers partnering with the health plans to make point-of-sale wellness possible enjoy the opportunity to build long-term customer relationships with the health plan members using the cards.

Point-of-sale wellness in action

Point-of-sale wellness can be customized to be as general or specific as a health plan needs. For example, a health plan that supports a high number of new parents on a regular basis may offer a prepaid card designed specifically to assist members with newborn children. The first years of an infant’s life are among the most expensive from a health care perspective. More health plans are starting to offer new parents prepaid cards that are loaded with funds and discounts for items such as OTC medications, baby food and formula, diapers, strollers, car seats or thermometers. This opens an easier path for new parents to do basic at-home diagnostics and keep their babies’ health monitored so costly trips to an emergency room or urgent care center are not needed as often.

Payers that offer health and wellness programs to assist new parents in their populations can consider engaging health plans that offer these types of prepaid cards. Having a healthier child has the added benefit of reducing stress on the parents, which means they are in a better position to continue performing in the workplace.

Financial incentives for healthier choices

Most wellness programs are focused on informing participants of the best ways to support a healthier lifestyle, but that is only half of the equation. Point-of-sale wellness goes one step further to ensure participants are empowered from a financial perspective to make smarter purchasing decisions while shopping for daily care items. Businesses and benefits brokers who want to provide their employees and clients the best opportunities to live a healthier lifestyle should consider engaging health plans that prioritize these prepaid card incentives into their offerings.

Vielehr, D. (19 July 2018). "Point-of-sale wellness: How health plans are cashing in" (Web Blog Post). Retrieved from https://www.benefitspro.com/2018/07/19/point-of-sale-wellness-how-health-plans-are-cashin/