Cost rules benefit design

Cost concerns continue to dominate benefit design, according to findings from The Zitter Group’s Managed Care Benefit Design Index: Emerging Trends in Access.

The report cites three main findings directly pertinent to benefit design:

• Seventy-two percent of payers increased members’ premium contributions for plan year 2012. A majority of employers, and significantly more than did so for plan year 2011, made the same change, too. 

• For plan year 2012, 71% of payers increased the number of drugs subject to prior authorization, prior failure, or step edits, and 34% of payers decreased the range of covered branded drugs. 

“However, a large majority of employers made no utilization management changes for plan year 2012,” the report’s author Lee Goldberg, Zitter Group’s senior manager, syndicated research says. 

• Cancer now ranks as payers’ greatest management priority, ahead of type 2 diabetes. 

“Overall, high cost, high prevalence categories remain payers’ top focus,” Goldberg says. “Employers focus the most management attention on obesity, cancer, and type 2 diabetes, and place significantly greater priority on lifestyle categories impacting productivity than do payers.”

In addition, both payers and employers report that total medical and pharmacy costs, as well as disease prevalence, primarily dictate which categories they rate as their highest priorities.

As far as management interventions are concerned, payers believe cost-sharing most impacts therapy utilization for proton pump inhibitors, hyperlipidemia, and hypertension, and least so for children’s and adult vaccines and cancer, respectively.

Zitter Group research over the past couple of years shows that increased prior authorizations and higher cost-sharing is, indeed, a trend in the industry.  While this is nothing new, there is an interesting result about payer and employer perspectives on cost sharing, Goldberg says.

“A majority of payers and employers do believe there is a point at which shifting costs to members begins to erode patient health,” he says. “However of this group, a majority reports that they are unlikely to hit such a point within 12 to 18 months.  This is a statistically significant increase in the belief since the beginning of the year.

“In other words, respondents increased cost sharing for PY 2012 and feel they have more room to go before impacting outcomes,” Goldberg adds.

More employers are opting for self-insurance and contracting with health plans for administrative services only (ASO). Significantly more employers are managing therapeutic categories per ASO/PBM recommendation than were six months ago, while significantly fewer are managing less restrictively than ASO/PBM recommendation.

When an employer engages an insurance company to administer the health benefit through ASO arrangements, the insurer makes benefit recommendations but the ultimate decision rests with the employer who is paying the care costs.

“That is, employers placed fewer formulary restrictions-prior authorizations or step edits, for example-than their ASO recommended, thus allowing easier access for their employees,” Goldberg said. “For the 2012 plan year investigated with our fall data, employers seem to have increased these formulary restrictions to a level more in line with what the ASO recommends.”

Another key highlight from the report is that 63% of payers maintain a closed SPP network for self-administered specialty drugs, and 52% of payers do not allow standard retail distribution for these agents.

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