For a sixth consecutive year, large companies responding to an annual survey projected that their health care costs will go up by exactly 6% next year unless they implement plan-design alterations and other remedies.
And, also for a sixth straight year, respondents forecast that such measures will hold the increase to exactly 5%.
Exemplifying a consistent pattern, in 2018 employers’ actual health care costs rose by only 3.6%, according to the survey, despite the prediction of 5%. And preliminary data for this year suggests that actual cost growth will come in at around 4%.
“Employers typically build in a percentage point to be a little more conservative on that trend line,” says Marcotte. “No one wants to go to their CFO or CEO and be over the budgeted cost for the year. And people are always afraid that this will be the year that actual costs go in the other direction.”
The trend of the last few years is a decided anomaly. Historically — throughout the 2000s, for example — trends in health care costs were volatile, with the growth rate spiking for two or three years and then receding, Marcotte says.
The recent pattern isn’t necessarily a good thing, he adds, since 4% to 5% inflation in medical costs has tended to be about twice the general inflation rate. But at least the rate of growth in health care costs is more predictable now.
Including premiums and out-of-pocket costs for employees and dependents, the total per-employee cost of health care is estimated to be $14,642 this year and projected to be $15,375 in 2020, with employers footing about 70% of that tab and employees the rest.
Topping the list of health care cost initiatives planned for 2020 is implementing more virtual care solutions, which 51% of the 147 survey respondents said they will be doing.
The solutions are meant to provide education and support in the areas of behavioral health, physical therapy, digital coaching, condition management, medical decision support, and sleep, among others.
The proportion of employers that believe virtual care will play a significant role in how health care is delivered in the future continues to grow, from 52% for 2019 to 64% for 2020.
Nearly all employers will offer telehealth services for minor, acute conditions in 2020, while 82% will offer virtual mental health services. Virtual care for musculoskeletal health, the category of physical conditions that has the greatest impact on health care cost, shows the greatest potential for growth, according to the NBGH. Only 23% of respondents expect to offer virtual care in that area next year, but an additional 38% are considering to do so by 2022.
How does virtual care for musculoskeletal issues work, considering that you can’t give yourself a massage or do any number of other things that a physical therapist might do?
If you’ve got back issues, for example, there are certain exercises you should be doing to relieve pain, rather than having surgery or taking medications, that can be as effective or more effective, based on the evidence, Marcotte says.
“Through monitoring and a virtual connection, [the services] can make sure you’re doing these things correctly and at the right frequency, as opposed to seeing a physical therapist once a week,” he adds.
Reinventing Primary Care
Another rising area of cost-management activity is advanced primary care. While primary care accounts for only 5% to 7% of total health care costs, it can influence up to 90% of the spend by steering consumers to the most efficient providers and keeping them out of emergency rooms and hospitals, for example.
There are various approaches to advanced primary care. But “what they all have in common is that they’re moving away from the fee-for-service model and encounter-based reimbursement to more comprehensive population health management, where they do whatever it takes to keep people healthy,” says Marcotte.
Some advanced primary care provider networks back their promise to deliver healthier populations at attractive costs by taking on some degree of risk: if they don’t deliver, they’re paid less.
Almost half (49%) of survey respondents said they plan to pursue an advanced primary care strategy in 2020, and an additional 26% expect to consider doing so by 2022.
A third (34%) of employers will deliver advanced primary care through on-site or near-site health centers, while a quarter of them (26%) are contracting or expecting to contract with advanced primary care providers in select geographic markets.
A company could, for example, contract with a primary care provider group like OneMedical or Iora Health wherever it’s available. Covered employees and dependents get access to same-day physician or nurse practitioner visits, virtual visits, and digital services as needed.
“Doing whatever it takes to keep people healthy” sometimes requires innovative approaches. Marcotte offers an illustrative anecdote.
One company, looking at its cost data, saw that an employee was making frequent visits to an emergency room for treatment of asthma attacks. The primary care provider sent a cleaning crew to thoroughly clean the employee’s house and change the air filters, at no cost to the employee. The next ER visit was months later. “Cleaning the house was way cheaper than one ER visit,” Marcotte notes.
Breaking the Bank
Zolgensma, a drug that cures spinal muscular atrophy in young pediatric patients with a single injection, was introduced in May. The cost for the injection: $2.1 million.
It was the latest and probably most expensive addition to the list of new, extremely high-cost specialty drug treatments. The conditions that such drugs treat are generally rare, but because large companies self-fund their health care, they’re extremely concerned about how to finance the costs, should they arise.
“Some of these therapies cost more than what an employee will earn in a lifetime,” Marcotte states.
The Affordable Care Act eliminated lifetime maximums for health benefits, so the only way for employers to remove the risk of exposure to the high costs of specialty drugs is to exclude them from coverage. However, Marcotte said he’s not aware of any company having done so.
Some companies, though, are delaying coverage for such new drug treatments for a period of time, often six months. The goal is to ensure that the company’s pharmacy benefits manager gets a handle on the drug’s applications and efficacy.
Employers have been burned in the past, Marcotte notes. For example, when Viox, an anti-inflammatory drug for chronic pain, came out years ago, there were significant issues that hadn’t been picked up in the clinical trials and some people actually died from it.
“These treatments are a new frontier,” he adds. “Employers are scratching their heads over what to do about them.”
Many would like to turn to the government for the answer. Among the 46% of survey respondents who said government action should be considered, 76% were attracted to the idea of the government negotiating prices on behalf of all payers for drugs costing above a certain threshold.
Also, 50% of them found government implementation of a stop-loss program, where costs above a certain threshold are covered by a national fund, to be potentially appealing. And 35% said that shifting patients with certain high-cost conditions to Medicare could be an option.
One potential solution is potentially more pragmatic, even if fairly troubling. “There’s no question that we want to encourage innovation in the pharma world,” Marcotte observes. “But at what point does the cost of these specialty drugs become prohibitive, in terms of not just what an employer can afford but what society can afford?”