Top 3 Things You’ll Learn
- How the novel coronavirus pandemic is impacting small businesses and their employees
- Four main factors contributing to increased employer healthcare benefits costs
- Strategies to help your self-funded clients find prescription drug savings amidst the uncertainty
As businesses continue to navigate the impact of the COVID-19 pandemic, new data shows that “employed patients” will make up 1.5 million of the nation’s total cases. More than half of those cases will be employees of small companies, or those with fewer than 500 employees. Depending on the severity of illness, employer healthcare costs could increase between 4% to 7%, following projections that 30% of the population will become infected.
For most employers, the financial uncertainty brought on by COVID-19 has caused their well-intended budget forecasts to be unsteady at best. As businesses closed over the last couple of months, many employers faced tough decisions, including whether to furlough staff, reduce employee pay, or cut employee benefits. Now, as your self-funded clients look forward and begin to evaluate their employee benefits budgets in the coming months, they will look to you for strategies that can help lower their costs while considering the health and wellbeing of their employees.
Focusing on prescription drug benefits will provide you with the most significant opportunity to generate savings for your clients and can mean the difference in how they close out the year and plan for 2021.
Much is still unknown about COVID-19 and a potential second wave, yet pharmacy benefits remains a scale business. Size and strategy matters when trying to lower your costs.
Factors Contributing to Increased Costs
Some of the main factors contributing to the budgetary constraints facing self-funded employers include:
- Expanded coverage requirements: The Families First Coronavirus Response Act (FFCRA), enacted March 18, requires all health plans to cover COVID-19 testing and vaccines without cost-sharing for a minimum of 90 days. The provisions apply to employer-sponsored group plans, whether self-insured or fully insured. Self-insured employers also had the option to follow fully insured payers in waiving member deductibles, co-insurance, and co-payments cost-sharing requirements for coronavirus-related treatments.
- Demographics of the member population: Companies with employees in high-risk categories, such as older workers and people with underlying health conditions, are expected to see higher healthcare costs because of the virus, including hospitalizations.
- Early prescription refills: When stay-at-home orders were issued, PBMs allowed temporary overrides of early refill restrictions to enable members to obtain additional quantities of their needed medications. This influx of prescription drug claims in the first quarter of the year led to unexpected pharmacy benefits spending for many employers.
- Unknown future for high-risk populations: With no known cure and months before a vaccine could be available for mass distribution, your clients may face additional coronavirus-related expenses later this year. Employees who were infected and recovered from COVID-19 – and those who remain at high-risk – may face different health issues long-term and may need other medications, including high-cost specialty drugs that are in the market now or that become available in the future.
Analysts project that reductions in cost and utilization of typical medical services may offset some of the unplanned COVID-19 expenses. For example, elective surgeries and procedures, physician office and clinical lab visits, and other outpatient services that were postponed or canceled may help balance COVID-19 testing and treatment costs. While this may help your clients manage some of their medical benefits costs, the opportunity to optimize prescription drug spending remains.
Strategies to Help Employers Manage Financial Pressures
The reality is that much is still unknown about the COVID-19 virus and recovery period, and the possibility of a second wave is a distinct possibility. Meanwhile, pharmacy benefits remains a scale business. For smaller companies that had to downsize, aggregate purchasing power will be more critical than ever. A payer-friendly, one-year pharmacy benefits contract with the most competitive pricing and rebate terms is crucial to building a foundation for lowering pharmacy benefits costs.
Visibility into your client’s specific cost drivers goes hand-in-hand with an optimized contract. It enables you to implement sustainable clinical strategies that help direct their pharmacy dollars to pay for the most appropriate drugs for their members. There is a lot you can do with a laser focus on your client’s prescription drug claims – without a major impact on their members – to help them find those needles in the haystack.
Employers working hard to compete in this tough economy need a focused pharmacy benefits management strategy that best aligns with their interests and those of their members. We view it as our responsibility to prepare you and your clients for the challenges ahead.