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Brad Wilson

Employers and consumers, driven by the sting of higher premiums and out-of-pocket payments, are more engaged than ever in the conversation about rising health care costs. While the math is simple —overall costs equal the cost per unit multiplied by the number of units — the broader issue is anything but.

Health care transactions are complex, and each involves a unique individual and a distinct set of conditions, treatments, and health care professionals. At every point throughout the process, data related to patients, treatments, outcomes, and efficiencies is gathered and processed. These data determine how claims are paid, but they also inform new programs and approaches aimed at improving outcomes and reducing costs.

Everyone in the health care system benefits when quality increases and costs decrease. Where we fall short now is aligning our actions across the system so employers, individuals, insurers, consultants, and health care professionals are working toward this common goal. Read more »

From Managed Care

The vast majority of Part D plans follow a tiered cost-sharing structure with incentives for members to use less expensive generic and preferred brand-name drugs. Cost-sharing has increased since 2006, but the Kaiser Family Foundation reports in “Analysis of Medicare Prescription Drug Plans in 2011 and Key Trends Since 2006” that there was barely a change between 2010 and 2011.” The foundation reports that since 2006, median cost sharing for a 30-day supply of nonpreferred brand name drugs in stand-alone prescription drug plans (PDPs) increased by 42 percent, from $55 to $78. Preferred brand costs increased 50 percent, from $28 to $42. But since 2010, cost sharing has been stable.

About half of PDP enrollees and over 75 percent of MA-PD plan enrollees are in plans that charge 33 percent coinsurance for specialty drugs. Compared to 2009, this share is down modestly for PDPs but up substantially for MA-PD plans. In contrast, only 4 of the 35 national or near-national PDPs charged a 33 percent coinsurance rate for specialty tier drugs in 2006.

Jack Hoadley, PhD, a health policy analyst and political scientist at Georgetown University’s Health Policy Institute and co-author of the report, says, “There’s been an attempt to have a greater cost spread between the generics and branded drugs. That’s what we’re going to see happen in 2012.”

“On the generic side,” he says, “we’re going to see a split from one generic price to two tiers for generic drugs. Medicare is going to do its best to persuade its enrollees to choose generic drugs by adjusting copayments.”

Copays

Coinsurance

Source: Georgetown/NORC analysis of data from CMS for MedPAC and the Kaiser Family Foundation; data for employer plans from Kaiser/HRET Employer Health Benefits Survey, 2010.