A trend toward coinsurance over copays results in Medicare beneficiaries paying higher out-of-pocket prices for their prescription drugs. It also makes it harder for seniors to predict costs because drug prices fluctuate.

Unlike copays, which are flat rates, coinsurance rates are based on a percentage of total costs. Coinsurance was previously limited to higher cost specialty drugs, but its adoption in other drug tiers now is increasing.

According to an analysis from Avalere Health, reported in a recent article in Kaiser Health News, more than half (56%) of drugs covered under the Part D Medicare benefit will use a coinsurance model in 2016. Medicare Advantage plans are also making the change, but at a much lower pace. Just 26% of drugs offered through Medicare Advantage plans will require coinsurance in 2016.

Rising pharmacy costs have been a concern not just for seniors on Medicare, but for health care consumers and providers generally. Pharmacy Benefit Managers (PBMs) have been working to manage the rising cost of drugs to avoid passing on higher costs to employees.

To learn more about the Avalere analysis, click here. To read the complete article in Kaiser Health News, click here.

Sherri Bockhorst

For highlights of my perspectives in articles and other forums, see links on LinkedIn and Twitter.

This post is part of our Exchange Innovator Series featuring leading private exchange, health care reform and Medicare experts from Willis Towers Watson. See Joe Murad and John Barkett.

I’m Sherri Bockhorst, managing director with Exchange Solutions, Willis Towers Watson’s private exchange business segment.

It’s my mission to support employers’ strategic business needs as well as help them meet their employees’ needs around their health care, finances and family situations.

At the end of the day, I’ve found that employers and employees are after the same thing: They want better health, productivity and protection from risk.

I help support the strategic direction of our group exchange for active employees through product design and development, forming strategic alliances with value-add third parties and raising the level of awareness and understanding across exchange-space participants including employers, employees, insurance carriers, and others.

My health insurance roots

Horsing around with Dusty

Most of my career has been focused on supporting large employers in the health care space. I have worked with employers under many different circumstances, including companies that needed to figure out how to provide benefits in a high-turnover environment, or how to work successfully with their unions.

My passion for my current job is based on seeing how a comprehensive exchange solution can be configured to solve each employers’ unique needs in a way that provides many options for the employer and a range of plan choices to meet the diverse needs of employees.

Exchanges like ours take the best practices that we’re figured out for large employers with the resources for a completely custom solution and package those leading-edge solutions so employers without the same resources can deploy a similarly configured approach.

We take the best thinking from our years of experience working with large employers – levers like high-performing networks, optimizing pharmacy costs, promoting and supporting consumerism, choice from the right mix of plans so employees and retirees can pick the best one for their personal needs, and integrated well-being and incentive design – and make it more accessible to smaller groups. Because why should these levers only be available to employers with a 100,000-employee workforce? The same solution could make sense for employers of any size.

At the same time, many employers aren’t necessarily ready to adopt the full depth of our solution. Account-based health plans are a good example; initially employers may want to make them available while continuing to offer more traditional options, like PPOs. Not all employers will be on a total replacement track, but having access to them is likely to be of interest.

All of those levers are embedded into OneExchange. So if and when employers are ready to change gears and adopt new strategies to achieve their goals, they can dial our exchange levers up or down at the pace that’s right for their organization.

Sailing with son, George

 

Where I see health insurance going

Right now we’re continuing to see exchanges evolve and change, and that makes a lot of sense, given how this space is developing as a new way for employers to deliver health benefits.

With employer adoption, we’re learning more about what employees will purchase, what kinds of choices and products they gravitate toward and how much they need to talk to individuals or want other types of on-demand decision support.

So that brings us back to where we started in terms of employers and employees ultimately wanting the same thing. Exchanges are fine-tuning the many ways their offerings can support the common ground between employers’ and employees’ goals – both where they are now and where they want to be over time.

As exchanges become more ubiquitous – and I believe this will happen within the span of my career – private exchanges will contribute greatly to the environment that will create transparency and choice for individuals and operate as a robust channel for delivering higher value employee benefits programs for employers.

To reach me for comment on an article or a presentation, contact Melanie Meharchand, Director of PR and Social Media for Exchange Solutions, Willis Towers Watson.

Joe Murad, Managing Director with Ex

For highlights of my perspectives in articles and other forums, see me on Twitter at #WTWJoeMurad

This post is part of our Exchange Innovator Series featuring leading private exchange, health care reform and Medicare experts from Towers Watson.

I’m Joe Murad, managing director with Exchange Solutions for Towers Watson. I oversee our individual exchange solutions that serve Medicare-eligible and pre-65 retirees, part-time employees and their families.

Every day, my goal is to figure out how we can leverage our position as a technology leader to connect employers and the consumers they represent with better value while selecting health insurance. Our mission is to create cost savings for our employer-clients and provide our individual consumers with improved choice and control over their health benefits.

My health insurance roots

I grew up in Silicon Valley, surrounded by technology, innovation and disruptive market forces. Of the four start-ups I’m fortunate to have been a part of – my last two have been in the health insurance space – but I got my start in the world of relational databases.

It’s very typical of Valley ventures that innovation comes from outside an industry – from those who are not entrenched in industry thinking. Given my tech and my health insurance experience, I’m now one of the few people in our industry who has brought technological advancements to health care twice.

Joe Murad, Managing Director with Exchange Solutions

Skiing with the kids in North Lake Tahoe

I helped found the nation’s first private Medicare exchange start-up a decade ago. Today I continue to apply that expertise to help employers leverage opportunities in the individual market made possible by health care reform.

It was true then and remains true today that health insurance – the largest sector of the nation’s largest industry (health care) – is burdened by inefficiencies, making it ripe for innovation and change.

The evolution of private exchanges

Private exchanges emerged as a result of three factors coming together at just the right time. The first was the idea of managed competition in health care, pioneered by Alain Enthoven in the 1970s. We were very fortunate to work closely with Alain early on as we were designing our private Medicare exchange.

The second factor was health care reform – which took the form of the Medicare Modernization Act in 2003 and now the Patient Protection and Affordable Care Act (PPACA, aka the ACA) of 2010 – both of which created a viable individual market for health insurance, first in the Medicare world and now in the pre-65 world.

Joe Murad, Managing Director with Exchange Solutions

On the beach

The third factor is powerful platforms for consumer technology, which emerged in other industries – think of Amazon and Travelocity – and which we applied to health insurance.

Today my focus is on helping employers provide quality health benefits at a lower cost and to empower consumers with more choice and control over their health benefits. I also believe that over time our exchange model will drive more consumerism in health care – which will lead to a more efficient and effective health care industry.

Where I see health insurance going

On the Medicare exchange side, the market has hit its stride in the private sector. Two years ago when IBM announced moving to OneExchange for its retirees, the whole nation sat up and took notice of the exchange concept. It was no longer seen as a nascent technology play – it’s now understood as a practicable strategy that crosses all industries and company sizes. We are also seeing strong uptake in the traditionally conservative public sector.

As we move forward, the next logical frontier is how to make health insurance more reflective of the voluntary insurance and employment markets, which have become more personalized and portable in recent years.

If you think about all the other insurance coverage people have access to – auto, home, life – and combine that with the leading retirement savings programs – 401ks and IRAs – these are portable, individual plans and accounts that aren’t tied to where someone works. Why should health insurance be any different?

In the past, because employers were the purchasers of health insurance, they made all the decisions. With exchange technology enabling employers to offer retirees and employees more choice and control of their own health coverage decisions, it raises the question: Why can’t employees take the coverage they’ve chose for themselves when they move to another job? The law isn’t there yet but the consumer mindset is. If health reform catches up to that thinking, we will be there to provide the business model and technical solutions to enable it.

This year’s annual report of the Trustees for Medicare and Social Security revealed that the Medicare trust fund will not run out until 2030 — four years later than last year’s estimate.

The extension was attributed, among other things, to reduced hospital admissions and to Part D payments declining 4% from 2013 estimates due to the use of generics.

In an article on the report in USA Today, Bryce Williams, managing director of Towers Watson’s Exchange Solutions, offered the opinion that future savings could be in store beyond what is being projected, considering that the ACA now covers many people who were previously uninsured. This could result in more people reaching the Medicare eligibility age of 65 without a lifetime of chronic health issues going untreated or unmanaged, putting less strain on Medicare coffers.

Said Williams, “[The ACA is] a stealth benefit that’s going to further extend the life of Medicare, perhaps substantially, without having to round up new funding.”

Keep an eye on the headlines for more Medicare cost-saving measures, such as changing the way doctors are paid and the creation and use of more quality metrics to improve care and weed out excessive fees.

Wellness data is very “in” these days. Wearable technology such as FitBit allows individuals to track their fitness activity and apps let people track calorie consumption or weight loss.

The recent data released on Medicare doctor pay has unleashed a firestorm of controversy because of the amount of money some doctors made from treating Medicare patients — as much as $21 million in the case of one opthamologist. The Centers for Medicare and Medicaid Services released the data this week, for the first time in 35 years. The data had been held subject to the resolution of  an injunction, sought by the American Medical Association, which had been in place since 1979.

But it’s not all bad news. Think of this as another kind of wellness data. Essentially it is wellness data, a level up — data on the “wellness” not of the individual, but of the Medicare system as a whole.

The specific dollar amounts will be repeated and repeated as evidence of excess and even criminal activity on the part of some doctors. But the longer term takeaway is that data facilitates transparency. [To see exactly what reimbursements were state by state, check out this interactive map from USA Today.]

“Taxpayers have the right to understand what is being paid for and how it is being paid for,” said Jonathan Blum, principal deputy administrator for the Centers for Medicare & Medicare Services.

In addition to it being a taxpayers’ “right,” having this full data transparency allows Medicare administrators to identify areas of excess and inefficiency and consumers to compare prices. It also allows all of us to consider broader questions about health care in the United States, for example, why some surgeries are performed more or cost more in one geographic area as opposed to another.

Shining the light on this data opens up the Medicare program to be improved, streamlined and  hopefully, made sustainable for generations to come.

>> Stay tuned later this week when the Extend Health blog gets a new name and look. <<

For a hint at what’s to come, check out our new look on Twitter – @OneExchange is the new face of the @ExtendHealth stream – tweeting all the healthcare, benefits & reform trends we’re known for.

The recent expansion of our Exchange Solutions business segment is a good opportunity to look back at the news from our private Medicare exchange over the past few years. Here are highlights from our early days to today.

Towers Watson Announces Expansion of Exchange Solutions Segment
1/23/2014

Towers Watson Acquires Liazon to Expand Private Benefit Exchange Offerings Through Multiple Channels
11/27/2013

Towers Watson Signs Agreement With Federal Government to Facilitate Public Exchange Enrollments
9/9/2013

Towers Watson Selects WageWorks to Administer Health Accounts on Towers Watson’s New Private Health Insurance Exchange
7/8/2013

Towers Watson Names Woody Sides Exchange Solutions Regional Vice President of Sales in the West
7/1/2013

California State Association of Counties Partners With Towers Watson
6/11/2013

Leading Health Insurers to Provide Health Plans on New Towers Watson Private Exchange for Active Employees
4/29/2013

Towers Watson Kicks Off “Ready for 2014: Road to Exchange Solutions” Road Show
2/26/2013

Fidelity® and Extend Health Partner to Help Retiring Employees Transition to Private Health Coverage
2/5/2013

Towers Watson Announces OneExchange, a Health Benefit Solution for Full- and Part-Time Employees, and Pre-65 and Medicare Retirees
1/31/2013

Towers Watson Announces Expansion of Exchange Solutions Segment
1/23/2013

Extend Health Wins Inc. Magazine Hire Power Award for Leading U.S. Job Creators
12/21/2012

Extend Health Survey: 74% of Seniors on Medicare Confident that Medicare Will Be There for Them for the Rest of Their Life
11/5/2012

Read the rest of this entry »

Medicare is constantly aiming to keep spending in line. A new study shows that making the change from expensive brand-name drugs to their generic counterpart could save Medicare billions. 

A new Annals of Internal Medicine report shows that Medicare enrollees are three times more likely than VA benefit recipients to choose brand-name drugs over generic, in part because the VA requires that patients try the generic option before switching to brand-name. All VA prescriptions are managed by the same pharmacy company and patients typically only get a branded version if there’s no close generic equivalent.

Outside of the VA, most doctors are inclined to prescribe brand-name drugs unless the patient asks otherwise. Meanwhile, many patients worry that generic versions of their medication won’t be as effective as their branded ones.

But the cost of generic drugs, while cheaper than brand-name, have their own pricing problems. Similar to the wild disparity between hospital procedures, generic drug costs fluctuate depending on location and pharmacy. For example, a 90-day supply of the generic equivalent of the cholesterol drug Zocor cost $51.99 at Safeway, $62.97 at Walgreens, $75.99 at Target, $122.99 at CVS, but just $9.99 at Costco. Not only are generic drug prices inflated depending on your pharmacy, getting information on what your insurance will cover at a new pharmacy proves difficult.

If Medicare Part D operated in the same way as the VA system, it would have saved $1.4 billion in prescription drug costs in 2008. CMS would do well to follow the VA’s example and encourage doctors and Medicare beneficiaries to try generic drugs first. And while choosing generic could save Medicare billions, more price transparency for generic drug options could also save big bucks for consumers.

Sources:

http://www.washingtonpost.com/national/health-science/study-brand-name-drugs-drive-up-medicare-spending/2013/06/11/a4a050a8-d288-11e2-b3a2-3bf5eb37b9d0_story.html

http://articles.latimes.com/2013/jun/11/business/la-fi-lazarus-20130611

 

The Centers for Medicare and Medicaid Services (CMS) has announced that 2013 will bring changes aimed at continuing to improve the quality of Medicare Advantage and Part D plans while helping seniors afford their prescription medications.

The Affordable Care Act Changes to Part D Prescription Drug Plans in 2013

The Affordable Care Act includes provisions that, over time, are reducing the cost of prescription drugs for people who fall into the coverage gap, or “donut hole.” In 2011 and 2012, the discount for brand name drugs was 50%; in 2013 and 2014, it will increase to 52.5%, and will grow after that until it reaches 75% in 2020.

The discount for generic drugs is increasing too; in 2013, it will be 21% so that you will pay 79% of the cost of your generic prescription medications. The generic drug discounts will also continue to increase, until they reach 75% in 2020, with the remaining 25% to be paid by you.

Other changes to Part D plans in 2013 include:

  • The standard Part D plan initial deductible will increase to $325 (up from $320 in 2012). Your deductible may differ.
  • Premium costs in 2013 are expected to remain at 2012 levels, around $30.00 per month on average. If you see a large increase in your Part D premium, you can make changes during the Open Enrollment Period.

Special Enrollment Period to switch to 5-star rated Medicare Part D or Medicare Advantage plans

CMS developed its quality rating system for Medicare Advantage and Medicare Part D plans a few years ago, basing it on well-established measures of health care delivery quality such as access to care, responsiveness, and beneficiary satisfaction. Plans can earn from 1 to 5 stars.

Although 5 star plans were few in 2012, forecasters are predicting they will be more widely available in 2013 as more insurance companies achieve the service levels necessary to earn the rating.

If you want to switch to a 5-star rated plan in your area, you can do so at almost any time during the year. The Medicare Advantage and Medicare Part D 5-star plan Special Enrollment Period this year runs from December 8, 2012 through November 30, 2013.

Special Enrollment Period to leave a consistently low rated Part D or Medicare Advantage plan

If either your Medicare Advantage or Part D plan has failed to achieve at least a 3 star rating from CMS over the last three years, you should expect to receive a letter from CMS offering you a Special Enrollment Period to leave your plan and choose a new one.

Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare insurance exchange.

Benefit ViewThe newly available Extend Health BenefitView™ dashboard lets employers ensure no retiree is left behind during the enrollment process. BenefitView gives employers access to something they’ve never had before on a Medicare exchange: real-time, interactive reporting on the experience of their retirees as they transition from the employer’s group coverage to their own individual Medicare plans on an exchange.

In “Retiree Medicare exchange previews improved transparency,” Employee Benefit News sheds light on how valuable this degree of insight is to HR professionals leading their companies and employees through a health care benefit transition this significant.

BenefitView is the culmination of eight years of our insight into delivering a premium health insurance exchange experience for consumers and employers on the Extend Health private Medicare exchange.

BenefitView answers burning HR questions

BenefitView offers employers immediate answers to questions around goals and milestones when transitioning from a group plan to the individual Medicare market:

  • Have retirees responded to our communications?
  • Are their calls to benefit advisors getting through in good time?
  • Are they making and completing their appointments with benefit advisors?
  • How long are those calls taking on average?
  • Are they choosing plans and which ones?
  • Are there groups that we may need to do additional outreach to?

BenefitView gives employers up-to-the-minute, unfiltered answers to these questions with the click of the mouse.

BenefitView users and creators tell us what they think

We talked to representatives from a few of the employers who have used BenefitView for mid-year transitions. Here’s what they had to say.

“Before our transition started, we wanted to make sure our retirees first understood that they were going to get more choice and control over their Medicare health benefits. Then we wanted to provide retirees with all the right information they needed to participate,” said Melissa (Missy) Hartfiel, benefits planner, Global Compensation and Benefits for International Paper. “With BenefitView, we can instantly see all the data on our progress – the number of retirees contacted, the number of calls and enrollments completed, how quickly our retirees were being answered, and the length of those calls. This inspired a lot of confidence in the Extend Health solution. As a non-techy, I also appreciated that BenefitView is visual and easy to use – there was no learning curve and I got all the data I wanted with one click.”

“The data HR professionals see in BenefitView is the same data that Extend Health sees in-house,” said David Lash, senior director of product management for Extend Health. “This actually makes our weekly progress meetings with employers much more strategic. We don’t have to spend time communicating numbers or determining where we are in the process. We’ve been looking at the same numbers all along and we are able to focus our energy on optimizing the course for each phase of the transition. It’s much more efficient for everyone. More than the technology involved, our goal for this tool was to create this premium experience for employers.”

“Employers sponsor and subsidize these transitions of their retirees to individual plans to assure that every retiree gets a chance to have the supplemental Medicare coverage they want while managing company costs and future liabilities,” said Brian Bohlig, chief marketing officer for Extend Health. “It’s very important to employers, to us and most importantly to retirees that these transitions go as smoothly as possible.  Extend Health has always provided employers frequent and comprehensive progress reporting to ensure smooth transitions – but now we’ve made it real time and on demand. BenefitView makes communication between Extend Health and employers seamless, and protects employers from finding out after the fact that their retirees missed out on getting the health care coverage they needed or wanted.”

Another Extend Health client, Oak Ridge National Laboratories, also experienced the difference BenefitView could make in the process of selecting individual Medicare plans. “With BenefitView, I was able to give our HR Director up-to-the minute progress reports whenever she asked for them,” said benefits manager Scott McIntyre. “As we neared the end of our enrollment period, we were checking BenefitView daily and adjusting our communications and outreach to make sure we were giving all of our retirees every chance to participate. BenefitView allowed us to keep our finger on the pulse of what was happening with our retiree transition whenever we wanted.”

BenefitView specifications

Real-time information available to employers through BenefitView includes:

  • Number of retirees enrolled versus the total number eligible in time remaining
  • Percent of eligible retirees contacted
  • Number of appointments scheduled
  • Number of appointments met
  • Plan types selected across different populations
  • Average premiums across different populations
  • Number of unique plans selected
  • Number of unique carriers selected
  • Total number of calls
  • Average wait times for before reaching a benefit advisor
  • Average time to handle calls

Get a BenefitView demo

Contact Extend Health online or by phone 1.888.232.1653 for a demonstration of BenefitView. Check out BenefitView online yourself.

Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare insurance exchange.

Extend Health held a tweet chat today on health care costs. There were some great questions and excellent answers from John Barkett, Dir. of Policy Affairs at ExtendHealth fielded questions. John worked in congress on health care and his wealth of knowledge was evident in the answers he provided.

If you missed our tweet chat you can read a complete recap of the event. Hope to see you at the next one!

Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare insurance exchange.