Rx trend moderates while PPO costs increase

Trends for prescription drug coverage will slow down in 2006 to levels that are closer to those of medical coverage, according to the Segal Co., a human resources consultant.

"Trend" refers to the increase in health plans' per capita claims cost as determined by insurance carriers, managed care organizations, and third-party administrators. Trend is affected by factors such as price inflation and cost-shifting.

But lest we celebrate too quickly, the report also predicts that plan sponsors that provide PPOs, POS plans, and HMOs will experience cost increases of about 12 percent in 2006. Nearly 80 percent of respondents project costs for PPOs to increase between 10 and 14 percent.

More than half of respondents reported retail prescription drug trends for 2006 in the range of 10 to 14.9 percent — a major increase from 2005 when just 37 percent of respondents were in that range.

Trend ranges for PPOs and retail prescription drug carve-out coverage: 2003–2006

Source: 2006 Segal Health Plan Cost Trend Survey, The Segal Company
Note: PPO trends do not include prescription drug trend as a component of overall trend.

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