American Health Policy Institute

AHPI Top 5: Employer Health Plan Costs Likely...

Published on: August 19, 2022

Authors: D. Mark Wilson, Margaret Faso

Topics: Employee Wellbeing, ERISA Preemption and State Laws, Federal Health Care Reform, Transparency, Quality and Cost Containment, Wellness

Washington Update:

Recently signed Inflation Reduction Act (budget reconciliation) may impact employer health plans. While the new law may not require immediate benefit plan changes, it has the potential to significantly affect employer prescription drugs costs though pharmacy supply-chain cost-shifting and Employer Group Waiver Plans (EGWPs) that are used by employers to provide prescription drug coverage to retirees. Employers with EGWPs should consult with their third-party administrators to determine the financial impact on their program.

Pharmacy supply-chain transparency becomes even more important. The Institute will encourage the Biden administration to finalize the Transparency in Coverage rules, which presents an opportunity to mitigate future pharmacy supply-chain cost shifting. With greater transparency, larger employers will be able to leverage Medicare’s negotiated prices to reduce their drug costs.

Mental health parity guidance and next report to Congress. The Labor Department is required to publish new guidance on how employers are supposed to comply with their parity analysis obligations. The Institute plans to work with DOL to get as clear and detailed guidance as possible.  Early next year, the Department will also publish its second annual parity enforcement report to Congress, which is expected to name companies DOL has determined have violated their obligations under the law.

Bipartisan, bicameral ESRD bill introduced. The Restore Protections for Dialysis Patients Act would prohibit employer health plans from putting “limits, restrictions, or conditions” on renal dialysis benefits compared to limits the plans put on services needed to treat other chronic conditions. If enacted, this bill would likely increase employer costs and the reimbursement amounts for dialysis companies.

Final FDA rule allowing over-the-counter hearing aids goes into effect in 60 days.  Hearing aids which meet FDA requirements and specifications can be marketed to adults. Manufacturers are already marketing hearing aids they want to sell over-the-counter and will have 240 days to make changes to their products that would bring them in compliance with the new rule.

New guidance reminds employers of their contraceptive coverage requirements. The Frequently Asked Questions reinforce the current ACA requirements that health plans must follow regarding contraceptive benefits at no cost to participants.  The guidance follows the July 8, 2022, executive order issued by President Biden regarding the Supreme Court Dobbs decision.

No Surprises Act final rules have been approved by OMB and could be published any time.  We expect the final rule to change how the independent dispute resolution process determines the out-of-network payments employers are required to pay providers in a way that will increase costs.

Fall Outlook/Lame Duck Session: Congress could enact bipartisan mental health and telehealth legislation that includes several HR Policy supported provisions the Institute has been advocating for over the past year.  This includes funding to support expanding the collaborative care model for mental health services, which the House has already passed, and extending telehealth flexibilities for employer plans. Year-end spending bills also often contain various "extenders" that delay spending cuts or tax increases.

Health care inflation gaining greater attention from CHROs and CFOs. According to the BLS, medical inflation has jumped four-fold from an average 1.2% YoY in 2021 to 4.8% in July 2023.  Economists are predicting further increases health care inflation in 2023.

Potemkin Protections: Assessing Provider Directory Accuracy and Timely Access for Four Specialties in California, Abigail Burman & Simon Haeder, Journal of Health Politics, Policy and Law, June 1, 2022

Inaccuracies in provider directories have long been a source of concern for those focused on increasing access to health care services. “Ghost networks” are not only an inconvenience to patients but they also lead to patients delaying or outright forgoing needed care. The analyses evaluated four provider specialties in California and found that in all four, provider directory inaccuracies and network inadequacy contributed to the lack of timely access to needed care.

Takeaway: The analysis highlights a potential problem employers may have regarding their provider directories. The Consolidated Appropriations Act of 2021 generally requires employer plans to establish a process to update and verify the accuracy of their provider directory. DOL is expected to publish proposed rules implementing this requirement in 2023. Employers should work with their third-party administrators to ensure their provider directories are accurate and up to date.

How Health Insurance Providers are Increasing Mental Health Support for Commercial Plan Enrollees, AHIP, August 2022

Commercial health plans have increased the number of in-network behavioral health care providers by 48% over the past 3 years, including psychiatrists (21% increase), child psychiatrists (19% increase), licensed therapists (52% increase) and psychiatric nurse practitioners (87% increase). A large majority of health plans (89%) are also actively recruiting mental health care providers, including practitioners who reflect the diversity of the people they serve, and 83% of plans report they assist enrollees with finding available behavioral health appointments.  

Takeaway: Carriers are responding to employer demands to improve mental health networks which may reduce the future need for third-parties like Lyra and Ginger.

The Coming Public-Private Drug Pricing Divide, Caitlin Owens, Axios, August 15, 2022

The recently enacted Inflation Reduction Act may set up a two-tiered pricing system for certain drugs, which means – at best – employers and employees will pay a significantly higher rate than the government in the future. However, not everyone agrees. The argument hinges largely on whether drug companies are already charging the maximum price the commercial market will bear, or whether there's room for prices to grow.  Regardless, many experts do expect drug companies to launch new drugs at higher prices than they would otherwise to compensate for negotiated prices down the road and to also make up for limits on how fast they can raise prices post-launch.  

Takeaway: Increasing pharmacy supply-chain transparency is even more important now. With greater transparency, large employers will be able to leverage Medicare’s negotiated prices to reduce their drug costs. Separately, Reuters found the median yearly price of 13 FDA-approved medicines for chronic conditions in 2022 is $257,000, compared to $180,000 for 30 drugs in 2021.

4 Ways Employers Can Upgrade Their Health Benefits To Retain Workers, Robin Antonellis, New England Employee Benefits Council, HR Daily Advisor, July 21, 2022

With high inflation and the Great Resignation, employers are reconsidering their approaches to retaining talent. As employees struggle with burnout and the subsequent impact of the pandemic, health care benefits and affordability are playing a major role in recruiting and retaining talent. Here are four changes to your benefit offerings that will keep your company competitive:

  1. Health care benefits are a nonnegotiable expectation for most employees so look to your offerings to ensure your plans provide affordable access to high-quality providers and facilities. 
  2. Ensure your benefits match the needs of your employees. Gather the data you need to understand what benefits employees want and will use. For those looking to work remotely, an on-site fitness center will not be top of mind.
  3. Embrace telemedicine. The use of telehealth is 38 times higher now than it was in March 2020. While telemedicine is becoming more integrated into traditional health coverage, until it is truly integrated, look for benefit offerings that provide additional telemedicine coverage options.
  4. Expand beyond classic health care benefits. Employees are looking for benefits that address their overall wellbeing, rather than strictly medical plans. Consider what needs your employees have that would alleviate stress both in and outside of the workplace. 

Employers Are Sharing Health Price Data, but Real Change Is Slow, Sara Hansard, Bloomberg Law, July 13, 2022

While the Transparency in Coverage rules and the Consolidated Appropriations Act of 2021 put additional pressure on employer plans to provide price data, they also present an opportunity for employers to negotiate better prices. Starting July 1, 2022, the Transparency in Coverage rule requires employer plans to make their negotiated provider rates public and the Consolidated Appropriations Act requires employer plans as fiduciaries to pay fair prices for health care services. 

Takeaway: While it will take time for significant changes to occur, the increase in transparency around health care prices should lead to lower costs for employers and their employees. Prepare to utilize third-party data sources to analyze the price data to aid in negotiations with providers and hospitals. Employees will also have access to cost-estimators and price comparison tools but, in order for these tools to work, the data needs to be easy to understand and employers may want to use incentives to drive employees to high-value, lower-cost providers.


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