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.

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.

Telemedicine is gaining ground, as more people get used to the idea of receiving health care via video or phone.

For employers, the main appeal of telemedicine is that it can reduce the time employees miss from work driving to and from appointments and sitting in doctors’ offices. But telemedicine consultations also can save money because they replace expensive emergency and urgent care visits. And, for employees in rural or remote areas, telemedicine enables employers to give them access to specialists and other care providers that might not be available to them in any other way.

However, legislative and legal hurdles exist that must be overcome before telemedicine can become commonplace.

For a recent article on the Society for Human Resource Management (SHRM) website, Dr. Allan Khoury, senior consultant at Towers Watson, explained these hurdles. Central among them is the problem of interstate licensure. Physicians currently must be licensed in each state where they practice and many states require that physicians be licensed in states where they provide telemedicine as well. This licensing issue would make telemedicine consultations impossible except when the physician and the patient are in the same state.

Another barrier is that some states require that an in-person visit precede telemedicine consultations. This defeats the purpose of telemedicine as a means to treat people who cannot get to a doctor’s office that would provide the care they need.

Telemedicine also raises questions about privacy and security law setting because of the sensitive nature of the personal health data generated, transmitted and stored.

Despite these issues, according Towers Watson research, 36% of employers already offer telemedicine as a part of health benefits; by 2017, that number could grow to two thirds.

As Dr. Khoury explains, “Telemedicine is a great triage service, has low costs and is an employee-pleaser.”

To read the complete article, click here.

Precision medicine made it onto the public’s radar on January 20th of this year when President Obama announced during his State of the Union address that he intended to make it a priority in the coming year. Ten days later, he formally unveiled the “Precision Medicine Initiative,” putting $215 million in federal funding towards a variety of strategies intended to get away from what the Administration calls a “one size fits all” style of medicine.

The National Academy of Sciences defines “precision medicine” as “the use of genomic, epigenomic, exposure, and other data to define individual patterns of disease, potentially leading to better individual treatment.” Also known as personalized medicine, precision medicine now is used primarily for the treatment of cancer.

While cancer treatments have long varied based on the type of cancer a person has – breast, lung, colon and so on – precision medicine enables physicians to take into consideration the molecular and genetic makeup of an individual patient’s tumor. This has spawned new medications such as Herceptin trastuzumab (Herceptin) for breast cancer. Having this information also can make a profound difference in treatment decisions physicians make.

Emily Whitehead, who is featured on the website, is a great example of an individual who has benefited from precision medicine. Emily was diagnosed with leukemia at age 6, yet was declared cancer-free just 28 days later. Her treatment included a procedure in which Emily’s own white blood cells, which play a key role in immunity, were collected from her blood and altered to recognize a protein found only on the surface of leukemia cells. The cells were then infused back into Emily’s blood, where they circulated throughout her body finding and destroying her leukemia. Science magazine declared this procedure a 2013 Breakthrough of the Year.

In the future, precision medicine also will be used to treat other types of illnesses, not just cancer. In fact, any condition that has a genetic or hereditary component – including mental illnesses – could benefit from this approach.

Some experts suggest that the buzz around precision medicine is getting ahead of the science, but that remains to be seen.

Precision medicine may be the medicine of the future, but not necessarily the distant future.

Every year Towers Watson customer support staff receives thousands of calls from people using OneExchange to find and enroll in health plans. The questions they ask us — and their employers –tell us a lot about what’s important to them and the information and guidance they need to make the best decisions they can.

With a growing number of full-time employees using OneExchange to find health coverage, we decided to compile the top 10 questions asked during the recent fall enrollment period for the plan year 2015. The questions underscore the obligation that employers and exchange providers have to help employees become more informed consumers and more active participants in their own health care.

Earlier this month, we issued a press release with a list of the top 10 questions and what they reveal about employees’ concerns.

Click here to read the full release.

Towers Watson released survey results showing that nearly one in four employers believe that private insurance exchanges could provide a viable alternative for their full-time, active employees as soon as 2016. So far, 28 percent have “extensively evaluated” the viability of private exchanges.

These results are from the 2014 Towers Watson Health Care Changes Ahead Survey, which was completed in July 2014 by 379 employee benefit professionals of midsize to large companies across a variety of industries.

Results from the survey also revealed the three primary reasons employers would adopt a private exchange: 1) if it was a better value than current self-managed model, 2) if other large companies in their industry adopted one, and 3) if the employer’s company was unable to get under the ACA’s excise tax ceiling coming in 2018.

Though employers are starting to consider the viability of private exchanges, they are not inclined to send active employees and their families to the public exchanges. Of the employers surveyed, 99.5 percent said they have no plan to exit health benefits for their active employees and send them to public exchanges.

This position is not likely to shift soon – 77 percent of employers were not confident the public exchanges would be a viable alternative for actives in either 2015 or 2016.

For additional details on these topics and others, click here.

>> 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

Towers Watson Acquires Liazon to Expand Private Benefit Exchange Offerings Through Multiple Channels

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

Towers Watson Selects WageWorks to Administer Health Accounts on Towers Watson’s New Private Health Insurance Exchange

Towers Watson Names Woody Sides Exchange Solutions Regional Vice President of Sales in the West

California State Association of Counties Partners With Towers Watson

Leading Health Insurers to Provide Health Plans on New Towers Watson Private Exchange for Active Employees

Towers Watson Kicks Off “Ready for 2014: Road to Exchange Solutions” Road Show

Fidelity® and Extend Health Partner to Help Retiring Employees Transition to Private Health Coverage

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

Towers Watson Announces Expansion of Exchange Solutions Segment

Extend Health Wins Inc. Magazine Hire Power Award for Leading U.S. Job Creators

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

Read the rest of this entry »

It’s a new year and employers are making some resolutions of their own to improve health and wellness — not for themselves, but for their employees.

New Year, New Goals

According to the 2013/2014 Staying@Work report from Towers Watson, nearly half (49%) of U.S. employers surveyed said health and productivity programs are essential to their overall organizational health strategy and 42% said they play at least a “moderate role.” In the survey, health and productivity was defined to include “physical, psychological and emotional aspects of health.”

Meanwhile, 94% of U.S. employers surveyed said that they plan to have “an articulated health and productivity strategy” in the next three years. According to Towers Watson, programs without a cohesive, articulated strategy run the risk of inadvertently offering program elements that are not coordinated with each other, have low return on investment or do not adequately engage employees. When implemented correctly, these programs have been tied to improved employee health AND company savings.

Read the rest of this entry »


With the amount of money being spent on health care in America — and our general enthusiasm for all things mobile — you’d think there would be a huge and successful market for mobile apps that empower consumers to take control of their health and wellness.

But according to a report by the IMS Institute for Healthcare Informatics, of the 40,000+ health care apps now available for download on the U.S. Apple App Store, over 50% of them get downloaded fewer than 500 times.

The report is based on an analysis of these apps and an assessment of the potential value they provide at various stages of a patient’s journey to better health. The study was conducted in June 2013.

So what’s the problem?

According to the IMS report, the following issues are holding us back.

1. There are just too many apps!

Forty thousand apps are available on the App Store alone — with reports of at least another 60,000 available from other sources. Seriously? How can we possibly sort through them and decide which ones might meet our needs… let alone which ones are any good.

The sheer number of apps available suggests that app developers are well aware that if they can strike the right chord with consumers, the potential rewards are great. But so far, few seem to have found that magic formula.

Maybe developers should try asking consumers what we want. And perhaps they should also do a better job working with health care providers to determine what we need.

The payday developers are seeking — and the results consumers and their health care providers are looking for — might very well lie at that intersection.

2. For all of the health apps out there, just 54% have a legitimate health-related function, and therefore have the potential to help us stay healthy or manage existing conditions.

Of the 43,689 apps identified as falling into either the “health and fitness” or “medical” categories in the IMS study, 20,007 were excluded early on from additional analysis because they were not really related to health care. According to the study, examples of those include apps related to beauty or fashion or “apps that use gimmicks with no real health benefits.”

Of the remaining 23,682 apps, 16,275 were for consumers and 7,407 were for health care professionals. Of those for consumers, the majority focus on diet and exercise.

The analysis further showed that two-thirds of the apps available for consumers simply provide information. Smaller subsets give instructions, capture data entered by consumers or have an alert/reminder feature.

In other words, the majority of apps for consumers simply move general information from websites and/or printed materials to our mobile phones — and do little else.

3. We have no way to tell the good apps from the bad apps.

The report notes that another issue is that consumers have few options for guidance on the quality of the various apps available. While physicians see the potential benefits of these, they are wary of recommending them to their patients. They too need information about which ones are helpful and which ones aren’t.

With so many apps available, it’s a sure bet that many, many of them are not very good. The report quotes Dr. Israel Green-Hopkins of Boston Children’s Hospital, saying “…40,000 apps within any store is the definition of poor design, because you know that 90% of them are terrible designs.”

Other reports show that some doctors have recommended apps as helpful tools for their patients – to track pollen counts in allergy season, brush teeth for the recommended amount of time or resist urges when quitting smoking. But physicians warn that these apps are supplements and not replacements for in-office care, with most of their benefit coming from encouraging good behavior, not actually improving health.

For the apps evaluated in this study, the App Stores’s popularity rankings do provide one small measure, but it is ultimately insufficient.

4. The vast majority of these apps are completely disconnected from the rest of our health care providers and systems.

The report notes that over time, health care apps will mature from being self-selected by consumers or physician-recommended on an ad hoc basis to being used systematically in health care delivery as an integrated component of our system. But they are not there yet.

What’s working now

Still, amidst this mass of underperforming apps, it is interesting to note that just five of the 40,000+ apps in the App Store make up a whopping 15% of all downloads.

One of these, Calorie Counter by MyFitnessPal, was the second most popular app in the App Store at the time this analysis was conducted and is the most popular free calorie counter and fitness tracker on Google Play. What does it do? And why is it breaking through?

Positive reviews of the app suggest that its primary strength is its community aspect, which allows users to share their progress, weight-loss goals and calorie counts with friends via social media channels like Facebook and Twitter.

While this might not be appealing to everyone, it has been a powerful differentiator in a sea of competitors. An attractive and intuitive interface also allows it to stand out from the crowd.

Despite these distinctions, the Calorie Counter app simply counts calories and nothing more! And counting calories alone has not been proven to improve overall health.

Bottom line, developers need to build better apps and consumers need better ways to find the good ones.

And the health care community needs to fully embrace mobile apps and integrate them into our health care system — empowering consumers to take charge of their own health.

In the meantime, if you’re using apps to get fit, it’s all about finding what works for you – whether it’s tweeting your latest weight loss milestone or tracking your speed on your morning jog.

[Photo Credit: Jason Howie on Flickr via Creative Commons 2.0]

Reports from the Wall Street Journal last month indicated that doctors are increasingly opting out of the Medicare program. But new numbers from CMS indicate that doctor’s biggest issue may not lie with Medicare, but instead with Medicaid.

The Wall Street Journal article reported that the number of doctors leaving the Medicare program has risen from 3,700 in 2009 to 9,539 in 2012. We wrote about this issue a few weeks ago.

While more doctors are leaving the program, there are also many more joining it. CMS reported that, “the number of physicians who agreed to accept Medicare patients continues to grow year-over-year, from 705,568 in 2012 to 735,041 in 2013.” In just the past year, 30,000 doctors entered Medicare, vastly outweighing the 6,000 that opted out over the past 3 years.

While Medicare payments may continue to be an issue for doctors, Medicare patients remain a vital part of many doctors’ practices. Reid Blackwelder, president-elect of the American Academy of Family Physicians, stated that Medicare patients make up 24% of the patient population for AAFP members.

So Medicare isn’t perfect, reimbursement rates and the annual doc-fix are still a point of contention for doctors, but the importance of Medicare patients keeps the majority of doctors in the program.

Medicaid participation tells a different story.

Reports show that less than 70% of the nation’s doctors accepted Medicaid in 2012. And the numbers aren’t getting any better. In a new Health Affairs Study, it was found that about 33% of primary care physicians didn’t accept new Medicaid patients last year.

Reimbursement rates for Medicaid patients are low; payments for procedures are much higher through private insurance than the same procedure for a Medicaid patient. The Affordable Care Act provides a 30% pay hike to primary care physicians who treat Medicaid patients, but the growing number of Medicaid recipients is also a concern. As many as 16 million Americans are expected to gain coverage through Medicaid in the coming years, and doctors may be faced with more patients than they can manage.

The good news is that the availability of doctors who accept Medicare patients appears to be adequate, and will continue to be so. Instead, perhaps the focus needs to be placed on helping doctors continue to accept, and prepare for the increasing numbers of Medicaid patients.

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