The FDA’s approval of the first biosimilar, Zarxio, as an alternative to Nupogen in March of 2015 marked a turning point. Many name-brand drugs already had lower cost generics, but biologics such as Nupogen did not. The possibility of biosimilars being available at lower cost bodes well for employers seeking to control rising pharmacy costs.

In the immediate term however, hurdles exist to widespread adoption. A recent article in Managed Healthcare Executive highlighted issues related to reimbursement as one source of concern. In particular, there are questions about how biosimilars would be categorized under Medicare.

As it stands, all biosimilars (with Zarxio alone in that category for now) are assigned the same J-code for billing. J-codes refer to injectible drugs that usually cannot be self-administered, such as chemotherapy drugs. The concern is that lumping all future biosimilars under the same code could lead to confusion down the line and even lead to safety issues.

Managed Healthcare Executive interviewed Nadina Rosier, North America health and group benefits practice leader of pharmacy at Willis Towers Watson, on this topic. Rosier noted that such coding and other naming conventions for biosimilars are in the early stages. “The ability of biosimilars to reduce plan sponsors’ costs for specialty drugs,” she cautioned, “remains unpredictable.”

That said, the potential benefit is huge, with a 2014 RAND study projecting that biosimilars could result in over $44 billion in savings on biologics between 2014 and 2024. So there is a strong incentive to figure out how reimbursement would work to smooth the path to widespread adoption.

For the complete article in Managed Healthcare Executive, click here.

Health care costs continue to rise, spurred to new heights by the exponential increase in the cost of specialty pharmacy, among other things. According to the Willis Towers Watson/NBGH Best Practices in Health Care Employer Survey, employers expected a 4.1% rate of increase in the cost of employer-sponsored health care benefits in 2015 — the lowest in 15 years but still well above inflation.

Employers, insurers, and health care providers are all looking for new strategies to manage the rising cost of health care in 2016. Shelby Livingston covered this in a recent article for Business insurance, and spoke to Sandy Ageloff, west coast leader of Willis Towers Watson’s Health & Benefits Practice.

Employers focus on several common themes to control cost, including managing the rising cost of pharmacy, adopting high deductible health plans, and increasing adoption of health reimbursement accounts (HRAs).

One area of focus within the overall pharmacy spend is the rising cost of specialty pharmacy. “Pharmacy is the component of employee benefit plans that has the highest rate of increase right now,” said Ageloff.

For more information on the rising cost of specialty pharma specifically, see this recent Willis Towers Watson press release.

For read the complete Business Insurance article, click here.

The winter holiday season that just passed is a stressful time for many, whether because of travel anxiety, the desire to find just the right gifts, or tension between family members at holiday gatherings. But it turns out one of the greatest sources of year-round stress for many people are the environments of the organizations in which they work. In fact, according to the 2015/2016 Towers Watson* Staying@Work survey of 1,669 employers globally, fielded in June and July of 2015, workplace stress is the #1 lifestyle issue in every region except Asia Pacific, where it ranks second.

It’s no wonder reducing stress in the workplace is a primary aim of employer-sponsored wellness programs. The view is that less stress at work translates into healthier and more productive employees — and lower health care costs.

Despite their good intentions, employer wellness programs have been plagued by the unmet promise of return on investment (ROI). Programs may be reducing stress and improving employee health and productivity in the workplace, but the reality is, that gain is not reflected in the numbers. Employers recognize this disconnect, with less than half of them describing any specific aspect of their health and productivity programs as successful, where success is defined as achieving goals such as lower cost, fewer employee sick days, and reduced chronic disease and lifestyle-related risks in employee and dependent populations.

The ROI challenge does not mean, however, that employers are poised to abandon wellness programs. In fact, according to the Staying@Work survey data, 84 percent of employers identify health and productivity improvement as essential or moderately important to their health strategies. Additionally, 77 percent of these companies said they plan to increase or significantly increase their commitment to employee wellness and well-being in the next three years.

As we progress through the new year, we may see improved methods of capturing the ROI of these programs or other means of measuring their success. That remains to be seen. But it is clear that employers remain committed to programs that promise to reduce stress in the workplace well into 2016 and beyond.


For other OneExchange posts on wellness, see:

Wellness Programs and the Challenge of Pinning Down ROI

Survey Reveals Employers’ New Year’s Resolution: Employee Wellness


*Towers Watson is now Willis Towers Watson, following the merger of equals between Wills and Towers Watson on December 11, 2015.

Tension between traditional health insurance brokers and startups offering web-based and other tech-based solutions continues to rise. However, while some traditional brokers fear advanced technology solutions, others highlight their unique value add borne from years of experience as valuable differentiators.

A recent article in Business Insurance explored this classic showdown between “high tech” and “high touch.” In reality, there is room for both. For example, a seasoned broker might bring valuable wisdom to a strategy while a tech-based solution might enable a strategy to scale.

Randall K. Abbott, a North American leader and senior strategist in Willis Towers Watson’s Health and Benefits practice, noted in the article that the primary threat to traditional brokers is not competition from tech startups, but rather consumer preferences. “People want to do things just like they do on Amazon,” said Abbott.

Still, Abbott said it is “way too early to sound the death knell for brokers. Traditional brokers (will) adopt some of the new technologies to meet the needs of their consumers, and I think we’ll increasingly find that some that relied extensively on the technology will find the need to provide more personalized decision support.”

For the complete article in Business Insurance, click here. (Note: a paid subscription is required.)

Employers remain committed to the health and productivity of their workforce, driven by ongoing concerns over stress, obesity, and sedentary lifestyles among employees. A large majority (84 percent) of U.S. employers identify improving the health and productivity of their employees as essential or moderately important to their health strategies. In addition, 77 percent expect their organization’s commitment to increase or significantly increase in the next three years.

This data comes from the findings of two surveys, the 2015/2016 Willis Towers Watson Staying@Work Survey and the annual Global Benefit Attitudes Survey, which were completed by 1,669 employers and 30,000 employees respectively. Willis Towers Watson reported results from both surveys in a recent press release.

While this continued commitment by employers is good news, current offerings may not be engaging employees or resulting in healthier choices. According to the survey findings, only a third of employees reported that well-being initiatives offered by their employers encouraged them to live healthier lifestyles.

Employees also reported that they prefer to manage their own health (71 percent), and in some cases that employer offerings don’t meet their needs (32 percent). While 50 percent of employees participated in a well-being activity or health management-related program in the last year, they weren’t taking full advantage of the incentives offered. Despite an average of $880 being offered through a range of annual incentives, employees collected just $365 on average and as many as two fifths didn’t earn any incentives at all.

Shelly Wolff, senior health care consultant at Willis Towers Watson, explained the challenge for employers: “U.S. employers have long recognized that the health and productivity of their workforce can influence business success and create competitive advantage. Yet while the hot-button issues of stress and obesity remain ever-present, the numerous programs and incentives designed to combat them have failed to effectively engage employees.”

The answer, Wolff suggests, may be looking at the program offerings from a different perspective. She said, “Employers may find the key to making better progress hinges on looking at these programs through an employee’s eyes.”

Determining how exactly this needs to be done is no easy task and depends on the individual employer’s industry and the occupations their employees fill.

To read the complete press release, click here.

You may have noticed that the OneExchange Blog has a new look.

Its striking purple hue reflects the corporate identity of Willis Towers Watson, formed when shareholders approved a merger of equals between Wills and Towers Watson on December 11, 2015. The newly minted company began operations on January 5, 2016 as a leading global advisory, broking and solutions company serving 90% of the world’s 500 largest companies in more than 120 countries.

The OneExchange Blog will continue uninterrupted, providing commentary on the latest health care news, sharing updates from Willis Towers Watson, and providing data-driven advice for employers managing benefits for their employees.

For more information, see our press release here, or visit the Willis Towers Watson website here.

The cost of pharmacy benefits has continued to rise and has increasingly become the focus of employers looking to manage medical benefit costs. Although pharmacy represented approximately 20 percent of employer-sponsored medical benefits costs this year, its cost is increasing and will account for 50 percent of medical cost inflation going forward.

This data comes from the 20th Annual Towers Watson/NBGH Best Practices in Health Care Employer Survey of 487 large U.S. employers.

Eric Michael, the Towers Watson U.S. central division pharmacy leader, specifically highlights specialty pharmacy as a reason for greater spending. “The price, utilization and delivery of specialty prescription drugs, many of which require special handling or delivery, are a top pain point for employers,” said Michael. “Frustrated by their lack of success in controlling these growing costs, employers are beginning to consider new aggressive approaches.”

Currently, more than a quarter (26 percent) of employers address specialty drug cost and utilization in their medical plan and that number is expected to triple in the next three years. Also, 53 percent of employers have added new coverage and utilization restrictions for specialty pharma and that will rise to 85 percent by 2018.

As we head into 2016, we will continue to see employers working to rein in pharmacy benefits cost, and putting policies in place to manage especially costly areas such as specialty pharma.

For the full press release, click here.

2015 is almost over, and it was another eventful year in health care. The most read blog posts on the OneExchange blog show the range of interests among readers of this blog.

Taken together, our series on Towers Watson exchange solutions leaders topped your list, with a post on the rise of account based health plans ranking a strong second. How employees are under-utilizing Employer Assistance Programs (EAPs) also landed near the top of the list.

A bit further down, the U.S. Supreme Court’s historic 6-3 decision in the case of King v. Burwell captured your attention. The decision reaffirmed allowing subsidies on both state and federal exchanges, ensuring that a key provision of the Affordable Care Act (ACA) — one that is largely responsible for the gains in insuring the uninsured — would remain in place. Director of Policy Affairs for Towers Watson’s Exchange Solutions, John Barkett, explained the case’s implications in our blog post on the topic.

You also were interested in public sector adoption of private retiree exchanges, as evidenced by the popularity of posts on the Ohio Public Employees Retirement System OPERS and Alameda County in California announcements that they were transitioning their retirees to OneExchange. Towers Watson’s acquisition of Acclaris, a provider of software-as-a-service (SaaS)-based technology and services for consumer-driven health plan and reimbursement accounts, also garnered interest as did the news that Towers Watson was a founding member of the Association of Web-Based Health Insurance Brokers (AWHIB), formed to advocate for policies that would enhance the efficiency of web-based brokers when they enroll people in public exchange insurance plans.

2016 will be another busy year for health care, especially as the U.S. elects a new president. Aside from this major event, next year’s hot topics remain to be seen.

Happy Holidays and Happy New Year!

Recent research from The Commonwealth Fund, a private foundation that aims to promote a high-performing health care system, explored how the ACA’s reforms of the individual health insurance market are working. Researchers compared the cost of subsidized plans offered on public exchanges with non-subsidized plans available off exchanges to determine the validity of early concerns that lower risk customers would prefer off-exchange plans. If that were to happen, the number of individuals needing government subsidies and subsidy amounts for plans on exchanges would increase — thwarting the ACA’s goal of offering good coverage at relatively low prices on public exchanges.

In fact, just the opposite has proven to be true. Richer plans that typically appeal to people with health problems make up a greater proportion of plans sold off exchanges than on them. According to the researchers, this means that the ACA’s provisions that discourage this type of risk segmentation are working.

Premium increases tell the story

To make this determination, researchers looked at 2015 premium increases, based on insurers’ federal filings for ACA-compliant plans both on and off exchanges. They found that the average premium for plans in the individual market increased $30 per person per month overall, with the average premium for plans purchased off exchanges ($34) higher than for on-exchange plans ($29). The reason for this premium increase differential has to do with the different preferences of purchasers, such as access to specific doctors or hospitals, which are met by plans bought directly from carriers compared with plans purchased on the public exchanges.

With the ACA, all plans are “guaranteed issue,” which means no one can be denied coverage because of preexisting conditions. This is great news for individuals who might have been denied coverage in the past due to an existing illness or chronic condition. However, the cost to the carriers of accepting everyone is higher.

On public exchanges, the higher cost is mitigated by restricting the doctors and other medical service providers that are considered “in-network,” a practice known as narrow networks. Off-exchange plans, which are offered directly by carriers, are not similarly constrained, giving purchasers access to a wider range of service providers — an appealing feature to people with existing health problems and established relationships with doctors and other providers.

The complete report is available from The Commonwealth Fund’s website.

Two Towers Watson surveys reveal a notable disconnect between what retirees believe they were told by their employers about their retirement medical benefits when they retired and what employers say they offered retirees in education and information.

In March 2015, Towers Watson surveyed 3,384 retirees aged 65 and older who formerly worked at large and midsize employers. Previously, in September 2014, Towers Watson surveyed 144 HR executives at large and midsize employers that sponsor retiree medical benefits. The retiree survey showed that 43 percent said their employers took no steps at all to help them understand and manage the cost of retiree medical benefits before they retired; the employer survey showed that just 9 percent of employers acknowledged they offered no help.

Other issues that retirees claimed employers did not discuss with them included the reality of out-of-pocket costs, and financial planning resources and decision support tools that would be available to them.

According to John Barkett, a director for Towers Watson’s Individual Exchange line of business, the disconnect points to the need for employers to redouble their efforts to make sure retirees have crucial information that could affect their financial health in retirement.

“It’s evident that employers can do a better job of educating employees about retiree medical costs and benefit options as well as explaining more clearly the support retirees can expect with benefits after they’ve stopped working,” said Barkett.

For the full press release, click here.


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