Prescription drug costs are rising more than 10% a year, which is twice the rate of medical costs increases according to an A.M. Best report. Retail prescription drug spending grew 12.2% in 2014 compared to 2.4% in 2013. Driving the rising costs are increased spending for new medications, such as specialty drugs for Hepatitis C; patents that expired, price increases for brand name drugs, and higher health plan enrollment due to the Affordable Care Act (ACA). Drug spending from private health insurance, Medicare, and Medicaid accelerated in 2014. These costs have affected insurers. Also consumers are paying more out-of-pocket costs.
The increase in drug costs has become divergent to other health care costs. In 2014, U.S. health care spending increased 5.3% to reach $9,523 per person. The cost growth was primarily due to major coverage expansion under the ACA, particularly for Medicaid and private health insurance. The share of the economy devoted to health care spending in 2014 was 18.1%, up from 17.5% in 2013.
The medical loss ratio (MLR) remained relatively flat from 2010 through 2013 in the low 80 percentages before a decline in the past two years to around 75%. But the MLR was more than 10 basis points higher in 2010 to 2015 when prescription drugs were included. For more information, visit ambest.com.
Hospitals Are Seeing Fewer Acute Patients
Rural hospitals that have higher volumes of less-acute patients, saw a 3.7% drop in year-over-year admissions (and 0.7% growth in admissions adjusted for outpatient activity), according to a report by Fitch. Payors are exerting pressure to reduce short-stay admissions and re-admissions; high-deductible health plans encourage patients to seek care in less expensive settings outside of the acute-care hospital; and technological advances allow more complex cases to be handled in outpatient settings. For more information, visit fitchratings.com.
The Costliest Medical Conditions
Sun Life Financial studied the costliest medical conditions covered by its stop-loss insurance from 2012 to 2015. During the four years of the study, billed charges from medical care providers totaled $9 billion. Self-insured employers paid just over half ($5.3 billion) of those billed charges after discounts were applied and received $2.3 billion in reimbursements through stop-loss protection.
Million-dollar-plus claims increased 25% compared to the previous year. Less than 2% of million-dollar plus claimants (448) account for 18.5% of stop-loss claims reimbursements ($431.2 million). The average amount an employer paid on a claim above $1 million was $1.45 million, which was reduced to $491,000 after applying the average stop-loss claim reimbursement ($962,000).
Cancer dominates the top of the list (number one and number two) with $618 million in stop-loss reimbursements, accounting for 26.6% of stop-loss claims. Breast cancer accounted for 13.6% of cancer reimbursements. Cancer is also a leading million-dollar condition; it’s in the number-two spot after premature infant and live-born complications. The use of Intravenous medications was a key driver of rising cancer costs in 2015.
Chronic/end-stage renal disease (kidneys) held steady at number-three, accounting for over $369 million in combined first-dollar claims and stop-loss claims reimbursements. The average treatment cost for claims associated with kidney disease has gone down 21% over the last four years, the high incidence rate of the condition contributes to its ranking. One in three Americans is at risk for kidney disease, with diabetes and hypertension as leading causes.
Transplants were number-six with a 65% increase in incidence from 2012 to 2015. There has been an expanded use of transplants and an increase in organ donations and improved procedures, which can increase the pool of transplant candidates. Transplants represented over $62.2 million in stop-loss claims. There was a 79% increase in bone marrow/stem cell transplant costs and a 55% increase in associated pre- and post-transplant costs. The costs to treat a catastrophic condition were higher in certain regions of the United States: 27% higher in East South Central, 22% higher in the Mid-Atlantic, and 19% higher in the Pacific regions.
Doctors May Do a “Brexit” from Medicare
American physicians have already been declaring independence from Medicare, states the Association of American Physicians and Surgeons (AAPS), but the imposition of new payment methods may lead to a rush to imitate the British in exiting the regime of a remote, unelected, unaccountable bureaucracy. Almost four in 10 physicians in solo and small group practices predict an exodus from Medicare within their ranks because of the program’s new payment plan, according to a Medscape Medical News survey.
The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) includes complex system of bonuses and penalties. The Centers for Medicare and Medicaid Services (CMS) predicted that 87% of solo practice physicians would be penalized. AAPS says that a physician’s compliance score is tied to resource use. Physicians will be increasingly pressured to make decisions that save resources for Medicare instead of decisions that are in the best interest of their patients. Compliance is also tied to mandatory use of government-certified electronic health records, which AAPS says are harmful to patient medical privacy and detract from face-to-face patient care. The government would gain even greater ability to access patient medical records. The rules allow all insurance-based care, not just Medicare, to be phased in to these “harmful payment models, according to AAPS.
AAPS executive director Jane M. Orient, M.D. said, “It is impossible to practice medicine under this rule, for ethical and practical reasons. The rule makes it impossible to protect confidentiality, and one is in a constant conflict of interest: What is best for the patient may be bad for the financial viability of the practice. It would take a dedicated team of legal specialists to even attempt compliance. Full compliance is probably impossible even with such a team, which is beyond the means of a small practice. Physicians need to withdraw from Medicare or any other program that subjects them to this rule.” AAPS offers detailed instructions on how to opt out of Medicare, and regular workshops on building a successful practice to serve patients without third-party shackles.
H.R.5659 Would Open Medicare Advantage to End-Stage Renal Patients
Dialysis Patient Citizens (DPC) hailed the introduction of H.R. 5659 as the latest milestone toward opening Medicare Advantage enrollment to end-stage renal disease (ESRD) patients. Stephen Anderson, a patient advocate from Indianapolis said, “As a dialysis patient of five years, I am fortunate to have secondary insurance to cover what Medicare does not. However, I know many patients in my facility don’t have that luxury. Providing dialysis patients access to Medicare Advantage will greatly help to reduce our out-of-pocket costs while improving our health with care coordination measures,” said. A study comparing outcomes of dialysis patients grandfathered into Medicare Advantage plans found that they have lower mortality rates than id their peers in fee-for-service plans. For more information, visit dialysispatients.org.
Bill Would Make Home Medicare Program Permanent
Compassion & Choices praised the introduction of Independence at Home Act of 2016 (S. 3130). The bill would convert the Affordable Care Act’s home care pilot program into a permanent, national Medicare program. Under the Independence at Home program, patients with debilitating diseases get primary care at home from coordinated teams of doctors, caregivers, and other healthcare professionals. The program reduces avoidable emergency room visits, hospitalizations, and re-admissions. Mark Dann, federal affairs director for Compassion & Choices said, “A great benefit of providing care in a person’s home is advance care planning conversations seem to happen naturally more often and can be updated as their illness progresses and their care wishes change. If an individual ends up in the hospital, but did not want to be there, the whole team is aware of these wishes and can attempt to quickly correct the situation.” For more information, visit CompassionAndChoices.org.
Wellness Plans & Smokers
Sixty-six percent of consumers in wellness programs say their program does not include a medical test for nicotine use, according to HealthMine study. Also, 66% of wellness programs don’t offer financial incentives to quit smoking. More than half of smokers lie on health forms, according to CDC data. The survey also reveals the following about employees in a wellness program:
- 57% say their program does not offer a smoking cessation program.
- 34% say their program does offer an incentive to quit smoking.
- 48% say that colleagues who smoke should pay a penalty or premium.
- 32% say they have smoked within the past two years, and 11% have participated in a smoking cessation program through their wellness plan.
- 80% say they probably wouldn’t complete a smoking cessation program without a financial incentive.
For more information, visit healthmine.com.
Blue Shield Reports Success with Narcotic Safety Initiative
Blue Shield of California’s Narcotic Safety Initiative is seeing significant results in the first year. The three-year program was launched to help plan participants avoid opioid abuse and addiction. In the program’s first year, there has already been an 11% reduction in Blue Shield of California members using the very highest doses of opioids and a 5% reduction in those using moderately high doses of opioids. Additionally, Blue Shield has seen a 25% reduction in the number of new opioid users progressing to chronic use as well as a reduction in all opioid consumption. These results are part of a white paper by the California Healthcare Foundation, which looks at how health plans in California are helping to reduce opioid over-prescribing and ensuring that people have access to recovery services. Blue Shield’s Narcotic Safety Initiative was launched in 2015 with the goal of reducing inappropriate prescribing and overuse of opioid narcotic medications for members by at least 50% by the end of 2018. To learn more, visit http://bcbsa.co/bFNt7.
Agent Caught Embezzling from Employer and Clients
Suren Hovhannisyan, 27, a licensed insurance agent of North Hollywood, was arrested on multiple felony counts after allegedly embezzling over $100,000 from his employer and clients. The California Department of Insurance launched an investigation after receiving a complaint from Hovhannisyan’s employer who suspected the embezzlement. Hovhannisyan offered fictitious discounts to policyholders if they paid him in cash for their automobile insurance. Rather than remitting the cash payments to his employer, Hovhannisyan allegedly deposited the money into his mother’s bank account for his personal use. A search warrant of Hovhannisyan’s residence uncovered a notebook with the names, Social Security numbers, and credit card numbers of dozens of other potential victims. Department investigators are working to identify and contact those victims. Investigators found evidence that Hovhannisyan used the credit cards of some clients to pay the automobile insurance premiums of those who paid him with cash. He charged one victim’s credit card 145 times to pay $45,545 in insurance premiums for 80 other policyholders. Anyone who purchased insurance from Hovannisyan and provided cash payment, credit card information, or Social Security numbers is asked to contact the department’s Investigation Division at 661-253-7500. Hovhannisyan faces up to six years in prison if convicted on all charges. The department has suspended Hovhannisyan’s insurance license.
Individual Life & Annuity Insurers Respond to Distribution Disruptions
Insurers are scrambling to keep up with the accelerating pace of change in the life-annuity industry. They have been transforming their distribution and marketing operations in response to consumer preferences, new technology, and new regulations, according to a study by Conning. Insurers are retooling their systems to respond to the digital imperative that’s driving consumer marketing and distribution. Steve Webersen, head of Insurance Research at Conning, said that insurers are actively planning for the Dept. of Labor’s Fiduciary Rule, which would phase-in through this year and into the next. He said that the greatest disruption will be among midsized and large insurers that have a greater focus on indexed and variable annuities. The potential impact of the fiduciary rule has caused Fitch to reduce its forecast of individual annuity sales for 2016 and 2017. For more information, visit conningresearch.com.
Life Sales Were Up in June
U.S. applications for individually underwritten life insurance were up 1.1% in June (year-over-year), according to the MIB Life Index. That’s the eighth consecutive quarter of expansion. For the second quarter of 2016, the composite index was up 1.5% year-over-year, which is somewhat off pace from the first quarter’s 5.4%. For the first six months of 2016, the MIB Life Index is up 3.4% year-to-date.
Applications for ages birth to 44 were up 1.6%, ages 45-59 were down 0.6%, and ages 60+ were up 2.3%, year-over-year. At the half year point, application activity for ages birth to 44 were up 4.6% year-to-date, ages 45-59 were up 1.7% year-to-date, and ages 60+ were up 2.7% year-to-date compared to the same six months in 2015. For the second quarter of 2016, ages birth to 44 were up 2.3%, ages 45 to 59 were down 0.2%, and ages 60+ were up 1.8% compared to the second quarter of 2015. For more information, visit mibgroup.com.
Program Helps Families Lower Out-Of-Pocket Expenses
HealthValues released a program to help families save on out-of-pocket medical expenses. The Saver plan combines telephone or video chat doctor visits that are free and unlimited to consumers and their families with reduced pricing on costly imaging services, medical bill negotiation, procedure pricing, doctor and hospital quality score ratings, plus educational information and other tools for a monthly fee of $9.99.
The Saver plan offers free, unlimited access to licensed physicians by telephone or video chat for routine medical situations, lets people shop for services and see real medical prices, and helps families negotiate the best price for many different types of procedures. Saver Plus offers an additional $2,500 for accidents or critical illnesses to supplement medical bills not covered by high deductible plans, and Saver Maximum covers $5,000 for unexpected accidents and critical illnesses.For more information, visit healthvalues.org.
MinuteClinic Announces New Travel Health Services
MinuteClinic, the walk-in medical clinics inside select CVS and Target stores, added several travel-related services and immunizations. Patients can now see a MinuteClinic nurse practitioner or physician assistant for a pre-travel risk assessment and get a plan for prevention and treatment targeted to the country they are visiting. The clinics will provide educational information on health risks, disease outbreaks, recommended vaccines, and preventive measures, including the latest updates from the Centers for Disease Control and Prevention (CDC). MinuteClinic nurse practitioners can provide guidance on prescribed travel-specific medications, over-the-counter medications, first aid supplies, food and water guidance and even mosquito bite prevention. Patients can also visit MinuteClinic for travel vaccinations and prescriptions for preventive medications. For information, visit minuteclinic.com.
Enhanced Defined Contribution Participant Website
Milliman enhanced its website for its defined contribution clients and their plan participants. New features on MillimanBenefits.com include an interactive “It’s Your Move” dashboard to support successful retirement behavior, such as saving enough to get the company match, diversifying investments, and utilizing automatic increase and automatic re-balance features – all with a refreshed look and feel. The site enhancements build on Milliman’s PlanAhead for Retirement projection tool, educational Financial Resources Center, and award-winning mobile application.
The Growing Global Travel Insurance Market
Regulatory authorities and governments of several countries have made travel insurance mandatory. This trend is likely to increase the uptake of these products, expand business, and increase profitability of travel insurance providers from 2016 to 2020, according to a report by Technavio. A growing market and evolving demand have pushed insurance companies to develop and customize products, making it a highly competitive market for local and international private travel insurance companies that offer competitive pricing for their products.
Travel insurance covers expenses, such as trip cancellation due to a medical emergency during domestic and international travel. Some policies also pay for damage to rented equipment, such as car, or for ransom in case of kidnapping. Many online companies that sell flight tickets or tour packages offer travel insurance at an additional cost. For more information, visit http://www.reportlinker.com/p03952839-summary/view-report.html.