While healthcare trends may be interesting to us consultants, we can sometimes forget a key point in employee benefits strategy:
Employers don’t want to become healthcare experts, they just want to provide quality benefits at the lowest cost
To this end, let’s translate data and findings around the healthcare and benefits industries into simple-to-understand insights for employers to act on. Springbuk recently released their “2022 Employee Health Trends” report, so let’s summarize some key findings!
Education and Treatment to address COVID-related Costs
A COVID patient who is hospitalized will incur claims multiple times higher than a non-hospitalized patient. Springbuk found that a hospitalized COVID patient costs $40,005 in the first six months following diagnosis, versus $3,350 for non-hospitalized patients.
These costs were 70 percent and 25 percent higher, respectively, compared to 2020, which reflects an increase in the cost of hospitalization and overall medical costs.
And these COVID patients also experienced greater diseases and infections, such as sepsis, heart disease, heart attacks, blood clots, pneumonia, fatigue, hypoxemia, and more.
Employers must understand that COVID-related costs have gone up compared to 2020 due to increased costs for services, hospitalized patients cost nearly 170 percent more than non-hospitalized patients, employers should encourage approaches to protect employees and their families, and employees need to be educated about the risks of severe diseases and proactive treatment.
PBM Review and Pharmacogenomics to address Increased Specialty Drug Spend
The industry is increasingly discussing specialty drugs – those that are high cost, biologic, used for rare or complex conditions, and require special handling or delivery.
Pharmacy costs per employee are rising faster than medical spending – Springbuk found 56 percent and 40 percent increases, respectively, as specialty drug spending is now $80 PMPM. This is in line with experts who expect specialty drug spending to exceed 50 percent of overall drug spending in 2021. This surge is massive.
The conditions these drugs (Humira, Ocrevus, Keytruda, Remicade, Entyvio for example) treat include multiple sclerosis, cancer, Crohn’s disease, ulcerative colitis, rheumatoid arthritis, and more.
While employers don’t need to be responsible for knowing the latest specialty drugs on the market, they need to confront the fact that these drugs will massively impact their benefits plan over the next few years and beyond, then take steps to mitigate this impact.
Employers need to adopt transparent health plans which allow them to choose their PBM – Pharmacy Benefit Manager – and utilize the services of a pharmacogenomic vendor to identify any ineffective, high-cost medications currently being prescribed. PBMs can help identify biosimilars that may be less expensive than current prescriptions, and keep employers abreast of the top cost-effective drug management strategies available.
For example, Humira accounts for the greatest overall spending among specialty drugs on the market today but in 2023, a biosimilar is expected to be on the market next year. More individuals on plans are taking specialty drugs today, as Springbuk’s research found the percentage of members taking at least one specialty drug increased from 1.6 percent in Q1 2018 to 2.1 percent in Q2 2021.
Employers can incentivize the use of generics and biosimilars with lower out-of-pocket costs, require step therapy to start with lower-cost drugs, and use pharmacogenomics to ensure members will have effective reactions to any drugs they take. Additionally, providers with value-based care arrangements can help improve care outcomes through treatment plans and aligned incentives. And all this is driven forward only if the employer has access to their own data in order to prioritize certain strategies.
Assess Telehealth More Easily – It’s Here to Stay
We’ve discussed how telehealth use exploded in COVID and is here to stay long-term – now we are seeing strategies to marry traditional brick-and-mortar care with virtual health. Rather than being mutually exclusive or even working against each other, they can be married and support overall health together.
For example, telemedicine utilization use has decreased over 50 percent from its peak in 2020, but telemental health – virtual mental and behavioral health – has remained fairly consistent since early 2020. In fact, Springbuk’s research found that June 2021 saw trend lines for telehealth and telemental usage crossover, as telemental utilization exceeded all over telemedicine rates for the first time.
We believe virtual mental and behavioral health is here to stay and as such, it should be integrated with the overall health plan and communicated in such a way as to keep it front and center for employees. For this latter point, we like care navigation tools like Rightway Health and others to improve the employee experience.
Finally, employers have to know their people and what access and comfort they have around digital solutions. If your employees are tech-savvy, these tools can be really helpful. But employees who are less tech-native may struggle to use these services or just pass on using them at all. So as always, know your employees before you implement any new strategy.
Have a Process for Identifying Needs and Vetting Point Solutions
Data plays a key role in how employers can invest in the best solutions for their health plan.
According to the Business Group on Health’s 2022 Large Employer Survey, employers share a handful of concerns, including:
- 91 percent anticipate long-term mental health issues resulting from the pandemic
- 76 percent anticipate higher chronic condition management needs
- 68 percent anticipate a higher prevalence of late-stage cancers due to delayed screenings
To address these trends, employers are taking proactive approaches to their health plans and not waiting on healthcare to change:
- 21 percent are deploying virtual and digital health solutions, navigation, and concierge services to increase convenience, experience, and efficacy
- 40 percent are deploying virtual and digital care solutions and implementing alternative payment and delivery models
For example, 75 percent of employers in the survey anticipate an increase in chronic condition management needs due to the pandemic and delayed care. Employers must have a digital health stack that presents their data in an easier to understand way, then a process for analyzing claims and risks and following up with point solutions around specific conditions or risks with their employees.
This could come in the form of a program around smoking cessation, weight loss, or diabetes management, for example.
Employers Need Flexible Benefits Frameworks to Improve Benefits and Reduce Costs
In summary, employers need health plans which offer transparency and flexibility if they truly want to improve their benefits offerings and reduce costs.
This hasn’t always been available to many groups – inflexible funding arrangements, difficulty in underwriting stop-loss insurance, and a lack of data analysis resources has prevented many groups from transitioning to transparent and modular health plans.