Health Benefit Costs Increases Driven by Specialty Drugs

Prescription drug costs are on the rise, with little indication that this trend will stop any time soon. While lawmakers have investigated the pricing of several costly drugs, Americans are still paying high out-of-pocket costs for their prescriptions.

In 2018, employers will be faced with a 5% spike in health benefit costs, which will increase spending to more than $14,000 per employee, according to a new survey conducted by the National Business Group on Health.

This uptick in spending may cause large US employers to focus on healthcare delivery and reimbursement, while incorporating traditional cost-controlling methods, such as cost-sharing and plan changes.

As a result of the potential changes, employers may increase access to telemedicine, centers of excellence, and onsite health centers without significantly increasing costs to employees, according to a press release.

Results from the Large Employers’ 2018 Health Care Strategy and Plan Design Survey showed that medical and pharmacy benefits costs have risen 5% for the fifth consecutive year.

The average healthcare cost per employee is expected to be $14,156 per employee in 2018, including premiums and out-of-pocket costs for employees. This is an increase from $13,482 per employee in 2017.

In 2018, employers are expected to cover nearly 70% of costs, while employees are expected to cover 30% ($4400), according to the study.

The study also found that employers have ranked specialty pharmacy as the top driver of costs for the second year in a row. Eight out of 10 employers ranked specialty among the top 3 benefits that drive spending. This trend will likely remain as newer, costly drugs emerge.

“Employers are recognizing that traditional cost control techniques alone aren’t able to reduce costs to the point where they are no longer a drain on the bottom line,” said Brian Marcotte, president and CEO of the National Business Group on Health. “While employers continue to address costs through health care management and plan design efforts, they are also ramping up efforts to positively affect the supply side of the health care system by pursuing health care payment and delivery reform initiatives.”

More than 95% of employers will make telehealth services available to employees, including for behavioral health services, according to the survey. Approximately 20% of employers have utilization rates more than 8%.

The investigators found that 21% of employers promote the use of accountable care organizations, with another 26% are considering offering the services on 2018.

Approximately 54% of employers plan to offer employees onsite or near site health centers in 2018, which have been found to decrease absenteeism, according to the study.

Nearly 90% of employers expect to use centers of excellence for procedures, with up to 48% also including bundled or alternative payment models.

The authors also found that 40% of employees have incorporated value into their benefit design by reducing cost-sharing or premiums when chronic conditions are managed more effectively or if employees seek more efficient care, according to the study.

More than half (66%) of employers also plan to offer medical decision support and second opinion services to their employees in 2018, an uptick of 47%.

The authors reported that approximately 90% of employers will offer 1 or more consumer directed health plans in 2018, including high-deductible plans and health savings accounts.

In an effort to control specialty drug costs, 44% of employers will have site of care management approaches, while 70% of employers will implement more stringent utilization management procedures, according to the study.

“As employers look ahead, we expect them to increasingly focus on value purchasing opportunities within the delivery system and improving the experience for health care consumers. Finding solutions to the growing challenge of skyrocketing specialty pharmacy costs will also remain a top priority,” Marcotte said.