With prescription drug prices continuing to rise, employers across the country are feeling the pinch. According to survey findings published by the Kaiser Family Foundation, the average employer cost for coverage in 2020 was more than $15,000 per employee per year. Prescription drug spending accounted for an estimated $1,200 per person annually. While the market is experiencing a surge in pricing, a customized health plan can help give control back to companies and their employees.
While employers have little control over prescription drug prices, they can make a difference in their plan’s performance and member experience by implementing a well-structured pharmacy benefit management program to help control costs.
Pharmacy benefit managers (PBMs) play a key role in prescription drug coverage plans that are built around program administration and claims processing activities.
PBMs have used various techniques and strategies to help control costs in drug programs but employers continue to struggle. Moving to a customized health plan that is pro-employee can often provide businesses with greater transparency and better rates.
The Three Largest PBMs Have Influence Over More Than 79% of the Prescription Drug Market
PBMs are responsible for managing prescription drug benefits on behalf of large employers, health insurers, and other payers. They play a major role in determining how patients access their medications and how much pharmacies are paid.
As third-party administrators of prescription drug programs, they are tasked with processing and paying prescription drug claims, as well as negotiating rebates and discounts with drug manufacturers. Today, just three of the largest PBMs have control of more than 79 percent of the PBM market, according to Becker’s Hospital Review.
These include OptumRx, Express Scripts, and CVS Caremark, which operate under the umbrellas of large insurers UnitedHealth Group, Cigna, and Aetna CVS Health. These massive corporations have significant influence over which medications are covered by insurance and how much patients are responsible for out-of-pocket costs for their medications.
Unfortunately, conflicts of interest can result in PBMs making decisions that drive up prescription drug costs drug costs for patients. The result is often higher out-of-pocket costs for patients and less access to the prescription medications they need.
Rampant Inflation in Recent Years Has Priced Out the Poorest Americans
Soaring inflation in the US has negatively impacted families across the country. However, not everyone has suffered the same way. The burden has been especially great for households that have limited resources. The average low-income household spends approximately 77 percent of its total income on necessities, compared to higher-income households that spend just 31 percent of their income on essentials.
The price of food, gas, and other goods continues to increase, resulting in a new 40-year high. In fact, nearly every sector has experienced higher-than-normal inflation, especially health care.
Health spending in the United States increased by 9.7 percent in 2020 to over $4.1 trillion, according to the American Medical Association (AMA), resulting in a growth rate substantially higher than the year before. With widespread cost increases, many low-income Americans do not have the financial cushion needed to account for increases in prescription drugs.
Customized Health Plans Advocate for Greater Transparency Into Prices
Health plan price transparency is a highly sought-after concept, allowing consumers to know the cost of a covered service or item before receiving care. Since July 2022, many group health plans and health-care issues of individual and group health insurance have begun posting pricing information online.
This pricing information has been commonly used by third parties, such as researchers, to help consumers gain a better understanding of the costs associated with their health care. The move towards customized health plans is meant to help provide greater insight into health-care costs.
A typical health plan involves many parties, including administrators, pharmacy benefit managers, claims managers, reinsurers, and others, which are prepackaged by the insurance carrier. Unfortunately, this often results in significant inefficiencies in vendor options.
By moving to a customized health plan, each vendor can be chosen in a competitive manner, resulting in significant cost reductions and improved benefits for employees.
Know Where Your Prescription Drugs Are Coming From
Prescription drugs sold in the US are commonly manufactured in other parts of the world, such as Canada, Japan, Australia, Singapore, India, China, Malta, Sweden, Germany, and the United Kingdom. However, it can be difficult for patients to pinpoint where their medications are coming from as companies are not required to reveal this information.
The only information that drug companies are required to provide patients is the corporate headquarters which is printed on the label. This issue becomes even more confusing when some drug companies choose to use contract manufacturers, meaning the company that distributes the medication is not the same one that manufactures it.
However, regardless of where a prescription drug is made, any drug sold in this country must comply with strict rules established by the Food and Drug Administration (FDA). This means that any drug sold in the US must be made in accordance with proper manufacturing practices to ensure that the products are of good quality and properly labeled for safe use by patients.
Plan Holders Can Negotiate for Better Rates
Formed in 1968 as a way to better process claims and help negotiate lower prices with drug manufacturers, PBMs played a key role in the health-care industry. Today, PBMs are responsible for administering prescription drug plans to over 266 million Americans with health insurance.
According to the Pharmaceutical Care Management Association, an organization that represents PBMs, pharmacy benefit managers save between 40 and 50 percent on prescription drugs. While there are many influencing factors involved, PBMs have remained a focal point in the ongoing debate over why prescription drug prices continue to soar in America.
Questions have been raised about how much of the discounts negotiated by PBMs are kept for themselves and how much is actually passed on to the health insurers or customers. What makes customized health plans unique is that plan holders have the opportunity to negotiate better rates.
Companies Can Expand Their Prescription Drug Choices With a Customized Health Plan
Employers are always looking for ways to cut costs while providing employees with the best health-care coverage options possible. Customized health plans offer employers new ways to achieve enhanced health-care options by expanding their prescription drug choices.
Many larger companies have already started adopting these solutions and with great success. New City Insurance is bringing these same innovative solutions to small- and mid-sized companies. There are countless advantages to choosing a customized health plan.
In addition to lowering costs for companies, a customized health plan can improve the overall employee experience. At New City Insurance, all custom plans are built on major networks, such as Cigna, United, Humana, Aetna, and the Blues. This means that employees can continue to maintain access to their favorite doctors and health facilities.
With New City’s customized health plans, employees can enjoy lower health-care costs by eliminating co-pays for a variety of services, such as labs, complex imaging, and multiple classes of prescription drugs.
Prepackaged Plans Are Inefficient and Can Contain Unnecessary Price Bloat
Many modern employers are moving away from prepackaged health plans in favor of customized alternatives. Prepackaged health plans can be inefficient and include coverage options that are not needed by the vast majority of patients, resulting in unnecessary price increases. These extra costs could be better spent elsewhere, such as for co-pays and other out-of-pocket expenses.
Today, many employers are starting to prioritize the personalization of employee benefits to meet the needs of a growing workforce. There is widespread understanding that individuals are more attracted and loyal to a personalized experience, making it an effective way to attract and retain top talent in the workplace.
However, since health-care needs can be unpredictable, it is important to create a customized health-care plan that is also flexible to adapt to the ever-evolving and unique needs of employees. Workers want the ability to search for medical services and find a variety of treatment options available to them. This can be achieved through a customized health plan.
Employees Have Access to the Health Care That They Want
Organizations across the country are shifting from traditional health plans to a new model that offers more personalization. With this new model, businesses of all sizes are better equipped to provide employees with benefits that offer real value.
Today’s workforce has unique wants and needs when it comes to health-care coverage. Instead of relying on prepackaged health plans that may not meet the needs of employees, many employers are choosing to offer customized plans that do not rely on the one-size-fits-all concept.
New City Insurance only builds customized health plans that will maintain or improve network access and benefits for all members of the plan. This means that any cost savings that a business acquires are actually savings and not money shifted to other expenses, such as increased co-pays or deductibles.
Partner with New City for a Customized Health Plan That Is Pro-Employee
Based in San Diego, California, New City Insurance is a premier employee benefits consulting firm that specializes in benefits consulting, compliance, insurance, and tech services. New City is dedicated to helping businesses take control over their health-care costs by reducing premiums and providing employees with a better experience.
New City Insurance helps small- and mid-sized businesses build customized health plans that provide a long-term solution to their health-care struggles. By managing the cost claims more efficiently, customized health plans can reduce the impact that these claims have on a business’s health plan performance and renewals.
Clients who work with New City spend half the national average on health care and acquire richer-than-average benefits. To learn more about custom health plans or to request a consultation with an experienced benefits consultant, contact New City at 888.210.2765.