Success is relative. Health care costs may have actually decreased year to year during the Great Depression, when deflation was the scourge for a time, but since our records don’t go back that far, it is impossible to say for certain. This year, the rate of increase has slowed, according Segal, the consulting company. That’s better than having the rate accelerate, but nobody’s breaking out the champagne.

“Medical directors can clearly take away from this study that a lot of their employer clients are holding health plans accountable,” says Eileen Flick, vice president and director of Segal’s health technical systems.

Prescription drug prices seem to be holding steady; that is, they are expected to increase in 2010 at about the same rate that they increased in 2009.

“Drug spending by third party payers has flattened out the last few years and the trend rate is in the low single digits mostly due to generic drug pressure,” says Tim Sawyers, RPh, a member of MANAGED CARE’s editorial board. “However, pharma drug prices for the heavily promoted drugs continue to grow at three to four times the Consumer Price Index. With losses to generics, slowing drug pipelines, less innovative drugs, and the pressure on health plan formularies to limit new drug entries to nonformulary status, it’s easy to explain why pharma continues to increase prices on their existing drug portfolios at an alarming rate.”

Meanwhile, the increase in medical costs (includes pharmacy) will be more than four times as great as the annual increase in average hourly earnings and “will stand in sharp contrast to changes in the consumer price index for all urban consumers … which have been relatively flat or negative over the past 12 months,” according to the 2010 Segal Health Plan Cost Trend Survey.

Expect employers to want to see innovative methods to keep costs from going up at an even higher rate, says Flick.

Projected medical and prescription drug spending, 2007–2010

* Plans where the deductible is at least the minimum health savings account level required by the Internal Revenue Service ($1,200 single, $2,400 family in 2010).

** In 2010, prescription drug carve-out data were captured for retail and mail order combined.

Source: 2010 Segal Health Plan Trend Survey

PPOs/POS plans (with primary care gatekeepers)

Prescription drug trend (mail order)**

Fee for service/indemnity

High-deductible health plans*

Prescription drug trend (retail)

Open-access PPOs/POS plans


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There’s a lot more going on in health care than mergers (Aetna-Humana, Anthem-Cigna) creating huge players. Hundreds of insurers operate in 50 different states. Self-insured employers, ACA public exchanges, Medicare Advantage, and Medicaid managed care plans crowd an increasingly complex market.

Major health care players are determined to make health information exchanges (HIEs) work. The push toward value-based payment alone almost guarantees that HIEs will be tweaked, poked, prodded, and overhauled until they deliver on their promise. The goal: straight talk from and among tech systems.

They bring a different mindset. They’re willing to work in teams and focus on the sort of evidence-based medicine that can guide health care’s transformation into a system based on value. One question: How well will this new generation of data-driven MDs deal with patients?

The surge of new MS treatments have been for the relapsing-remitting form of the disease. There’s hope for sufferers of a different form of MS. By homing in on CD20-positive B cells, ocrelizumab is able to knock them out and other aberrant B cells circulating in the bloodstream.

A flood of tests have insurers ramping up prior authorization and utilization review. Information overload is a problem. As doctors struggle to keep up, health plans need to get ahead of the development of the technology in order to successfully manage genetic testing appropriately.

Having the data is one thing. Knowing how to use it is another. Applying its computational power to the data, a company called RowdMap puts providers into high-, medium-, and low-value buckets compared with peers in their markets, using specific benchmarks to show why outliers differ from the norm.
Competition among manufacturers, industry consolidation, and capitalization on me-too drugs are cranking up generic and branded drug prices. This increase has compelled PBMs, health plan sponsors, and retail pharmacies to find novel ways to turn a profit, often at the expense of the consumer.
The development of recombinant DNA and other technologies has added a new dimension to care. These medications have revolutionized the treatment of rheumatoid arthritis and many of the other 80 or so autoimmune diseases. But they can be budget busters and have a tricky side effect profile.

Shelley Slade
Vogel, Slade & Goldstein

Hub programs have emerged as a profitable new line of business in the sales and distribution side of the pharmaceutical industry that has got more than its fair share of wheeling and dealing. But they spell trouble if they spark collusion, threaten patients, or waste federal dollars.

More companies are self-insuring—and it’s not just large employers that are striking out on their own. The percentage of employers who fully self-insure increased by 44% in 1999 to 63% in 2015. Self-insurance may give employers more control over benefit packages, and stop-loss protects them against uncapped liability.