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Final Rule Paves Way for Drug Imports to Reduce Patient Costs

by Inoventive Solutions
October 27, 2020

The Department of Health and Human Services and the Food and Drug Administration have issued a final rule and guidance that paves the way for states to allow pharmacists and wholesalers to import prescription drugs in order to reduce costs for patients. 

The final rule implements a provision of federal law that allows FDA-authorized programs to import prescription drugs from Canada under specific conditions, according to a report by Kaiser Health News. Prices are cheaper in Canada because the government there caps how much drug makers can charge for medicines, while the free market reigns supreme in the United States.

Even though insulin is not included among the drugs covered by the rule, the Trump administration also issued a request for proposals seeking plans from private companies on how insulin could be safely brought in from other countries and made available to consumers at a lower cost than products sold in the U.S.

Why now?

Congress has allowed drug importation since 2003, but only if the secretary of the Department of Health and Human Services certified it is safe. That had never happened until this year, when Secretary Alex Azar approved an application by Florida, according to a letter he wrote to congressional leaders. 

For decades, Americans have been buying drugs from Canada for personal use – either by driving over the border, ordering medication online or using storefronts that connect them to foreign pharmacies, according to Kaiser Health News. Though the practice is illegal, the FDA has generally permitted purchases for individual use.

About 4 million Americans import medicines for personal use each year, and about 20 million say they or someone in their household has done so because prices are much lower in other countries, according to surveys.

How it would work

The administration envisions a system in which a Canadian-licensed wholesaler buys from a manufacturer of drugs approved for sale in Canada and exports them to a U.S. pharmacy, wholesaler or importer that has contracted with the state in which they operate.

To be eligible for importation, a drug would need to be approved by Canada’s Health Canada’s Health Products and Food Branch and needs to meet the conditions in an FDA-approved new drug application.

Essentially, eligible prescription drugs are those that could be sold legally on either the Canadian market or the American market with appropriate labeling. 

Under the final HHS and FDA rule, state importation programs will have the flexibility to decide which drugs to import and in what quantities. 

The rule also requires drug manufacturers to provide importers with documentation guaranteeing the medications are the same drugs as those already sold in the U.S. 

Parts of this report were reprinted from Kaiser Health News.

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Pandemic Clouds Health Insurance Cost Predictions

by Inoventive Solutions
October 21, 2020

With large employers expecting health insurance rates to climb 5.3% in 2021, they are concerned about how the COVID-19 pandemic will affect overall health care costs in the coming years, a new survey has found. 

Those expectations gleaned from the survey by the National Business Group on Health would mean average premiums and out-of-pocket spending could reach $15,500 per worker. The expected increase is on par with the average 5% annual increase that large employers have projected in the last five years.

Employers have been using different strategies to tame those costs, most notably pushing more telemedicine for their workers, a trend that has increased during the pandemic.

Additionally, employers have increased their investments in employee health and well-being programs, a trend that was largely spurred by the pandemic and employers’ understanding that their business performance is linked to the health of their workers.

The numbers going into 2021 are squishy because there has been a significant drop-off in the use of medical services in 2020 due to the pandemic. Many people have delayed non-urgent care to avoid the risk of being infected with COVID-19 if they go to the hospital.

Other people with serious conditions have also unwisely decided to forgo care out of fear of getting sick from the coronavirus.

Health care experts are not sure if that means there will be an uptick in utilization in 2021 and think the 5.3% estimate increase in costs will pan out if people continue to put off care, Conversely, if care resumes in 2021, the projected trend may prove to be too low.

Here’s what large employers are expecting:

  • Average total health care spending on premiums and out-of-pocket costs will reach $15,500 per worker in 2021, up from $14,769 this year.
  • Large employers will cover nearly 70% of costs (premiums), while employees bear the rest. That would mean the average outlay per employee would be $10,850 for the employer and $4,650 for the employee.

Trends

Employers are continuing to address health care costs by focusing on new areas that can improve health outcomes for their workers. The trends that large employers predict would continue in 2021 are:

Continued move towards telehealth services – The use of telemedicine has exploded during the COVID-19 pandemic. Among the survey respondents:

  • 76% have made changes to provide better access to telehealth services.
  • 71% have boosted the types of telehealth services they offer, such as adding health coaching and emotional well-being support.
  • 80% expect virtual health will play a significant role in how care is delivered in the future. That’s compared with just 64% last year and 52% in 2018.
  • 52% will offer more virtual care options next year.
  • Nearly all will offer telehealth services for minor, acute services.
  • 91% will offer online counseling or therapy.
  • 29% may start offering virtual care for musculoskeletal issues, like physical therapy for back and joint pain.

Boosting wellness and mental health services – As many as 88% of respondents said they wouldprovide access to online mental health support resources, such as apps, videos, and articles. The survey also found that:

  • 54% are lowering or waiving costs for virtual mental health services in 2021.
  • 27% will reduce the cost of counseling services at the worksite.

Focusing on primary care – More employers are looking at advanced primary care strategies to reduce costs, with 51% saying they will have one at least one such strategy in place for 2021.

This would include contracting directly with primary care providers who can improve the delivery of preventive services, chronic-disease management, mental health, and whole-person care. 

Addressing high-cost drug therapies – Two-thirds of respondents said they were very concerned with the cost of new million-dollar treatments, just one of which can blow up their health cost budget.

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Getting a Head Start on Open Enrollment

by Inoventive Solutions
October 13, 2020

With open enrollment right around the corner, it’s time to review the health plan options available to you for the next year and prepare your workplace for signing up for the 2021 policy year.

The big decision for employers is finding a plan that fits not only their budget but also the budgets of their employees. And this is particularly important for “applicable large employers” under the Affordable Care Act, who must also ensure that the least expensive of their plans must not cost more than 9.83% of any of their health-plan-eligible employees’ household incomes.

This year, due to the COVID-19 pandemic, benefits advisors recommend that employers get an earlier than usual start on preparing for their upcoming open enrollments. The following are just a few issues you need to consider for this year’s open enrollment:

Determine how many employees will receive coverage – It’s to your advantage to try to get as many of your employees to enroll in your health plan as possible, particularly if you are a small employer. The more lives in your plan, the more the risk is spread for the insurer, which can translate into lower policy premiums for all of your workers.

Keep things simple – Try not to make open enrollment complicated. Your employees have enough on their minds during the pandemic. Your literature and meetings should provide easy-to-follow instructions that tell your workers:

  • What they need to do to enroll or re-enroll.
  • How they can choose the right health plan for themselves and their family, and
  • When the deadline is.

Get an early start and provide employees with health plan information prior to open enrollment, so as to give them enough time to review and compare their insurance options.

Informing your employees – If you are planning to meet with your staff in person, you’ll need to plan for social distancing as well as offering employees that cannot or do not feel safe the option to join the meeting via video conferencing.

If you plan to have your staff enroll and choose plans electronically, you need to make provisions for the ones who may not have access to a good internet connection or the technology to do so.

Periodically remind your employees to submit their applications or make changes before the end of the open enrollment period. Have a mechanism in place for identifying and approaching laggards as the deadline approaches.

The COVID factor – Your employees will want to know if testing and treatment of COVID-19 will be covered, as well as any vaccine that may eventually become available. Federal legislation enacted in March required all private insurance plans to cover costs associated with COVID-19 tests. A number of insurers announced that they would also waive all cost-sharing for in-network medical visits related to COVID-19, as well as for telehealth visits.

Since there are no laws that require private insurance plans to waive cost-sharing for COVID-19 treatment, you will have to explore your plan options to see which ones may offer treatment without cost-sharing. Also check to see if the plans you have access to will waive out-of-pocket fees for a coronavirus vaccine should one become available.

Coverage questions for your employees – Encourage your employees to ask questions during your meetings, and ask them to consider re-evaluating their coverage in light of:

  • Change in dependents – Will employees be adding or removing any dependents, such as children or a spouse, from their health plans? Will you the employer contribute to qualified dependent coverage and if so, how much?  
  • Health issues – Does any employee have evolving health issues that will require more medical services than they have used in the past. They should also check to make sure their plan network includes their personal physician, as well as covering the medicines they may be taking regularly.
  • Affordability – How much are they willing to pay for coverage and what kind of deducible would be in their price range? What is the premium cost-sharing (how much the employee pays for their share of the premium)?

The takeaway

During the pandemic, you’ll need to get a head start on open enrollment by getting information on your offerings to your staff as early as possible. Be prepared to answer questions about coverage, particularly as it pertains to COVID-19.

You can work with us to make sure you have everything in place for a successful open enrollment.

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How to Distribute Group Health Plan Rebates to your Staff

by Inoventive Solutions
October 7, 2020

Group health plan insurers are paying out $689 million in rebates to plan sponsors this year, as required by the Affordable Care Act’s “medical loss ratio” provision.

The provision requires insurance companies that cover individuals and small businesses to spend at least 80% of their premium income on health care claims and quality improvement, leaving the remaining 20% for administration, marketing and profit.

The MLR threshold is higher for large group insured plans, which must spend at least 85% of premium dollars on health care and quality improvement.

Employers who sponsor health small and large group health plans around the country in the last few months have received notices of rebates from their insurers. For those who have received one for the first time, there’s always a question of what they should do with the surprise funds. 

MLR rebates are based on a three-year average, meaning that 2020 rebates are calculated using insurers’ financial data in 2017, 2018 and 2019.

You received a rebate…now what?

Health insurers may pay MLR rebates either in the form of a premium credit (for employers that are still using the insurer) or as a lump-sum payment. More than 90% of group plan rebates come as a lump-sum payment.

Once an employer receives this money, it is their responsibility to distribute the rebate to plan beneficiaries appropriately within 90 days, or risk triggering ERISA trust issues. 

How the employer distributes the check will depend on how much their employees contribute to the plan, if at all. Here are the basic rules for employers handling their MLR rebate checks:

  • If you paid 100% of the premiums, the rebate is not a plan asset and you can retain the entire rebate amount and use it as you wish.
  • If the premiums were paid partly by you and partly by the participants, the percentage of the rebate equal to the percentage of the cost paid by participants must be distributed to the employees.

If you have to distribute funds to the plan participants, the Department of Labor provides a few options (if the plan document or policy does not already prescribe how they should be distributed):

  • The funds can be used to reduce your portion of the annual premium for the subsequent policy year for all staff who were covered by all of your group health plans.
  • The funds can be used to reduce your portion of the annual premium for the subsequent policy year for only those workers covered by the group health policy on which the rebate was based.
  • You can provide a cash refund to subscribers who were covered by the group health policy on which the rebate is based.

How it works (example)

  • Total premiums paid to an insurance company for a plan with 100 covered employees during 2019 = $2,000,000.
  • Total participant contributions during 2019 = $500,000 (25% of total plan premiums for the year).
  • The employer receives a $30,000 rebate from the carrier in 2020.
  • A total of $7,500 is considered plan assets and must be distributed to the employees (25% of the $30,000).

Tax treatment of cash refunds

If your employees paid for their share of the health premium with pre-tax earnings, the refund would also have to be taxed. But if they paid for their premiums post-tax, they would not be required to pay taxes on the refund (unless they deducted the premiums on their income tax returns). 

You must distribute rebates to your staff within 90 days of receiving them.

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