Editor’s Desk

Survey finds more prior authorization, cost shifting by large employers in 2016

Peter Wehrwein
Editor

The National Business Group on Health is out with its health benefits survey of large employers and what they are expecting in 2016.  The group received answers from 140 employers that collectively employ 7.6 million people.

Here are five of the key findings:

1) Rate of increase is holding steady. By adopting consumer-directed health plans (high deductibles combined with health savings accounts, FSAs, and other financial accounts) and wellness programs, they expect their 2016 health care costs to increase by 5%, which is the same rate of increase as in 2014 and 2015.  Of those surveyed, 43% identified high-cost claimants as the biggest driver of their health care costs.

2) Prior authorization requirements for specialty drug costs are becoming more common. Spending on specialty drugs (high priced drugs for relatively rare conditions) is increasing at a double-digit rate, so employers are tinkering with benefit design to rein that spending. For example, 55% in this survey said they are moving to some kind of prior authorization under the medical benefit next year. This year, only 29% required prior authorization under the medical benefit. Prior authorization under the pharmacy benefit is more common to begin with, but it’s also edging up, with 76% of employers having health coverage that will require it next year compared with 70% this year.

3) Private exchanges are rare. Private exchanges are much talked and thought about, but they remain relatively rare, according to this survey. Only 3% of the employers said they are moving active employees to private exchanges next year. Private exchanges for retirees are more popular—and growing. About a quarter (24%) of the surveyed employers said they will move retirees to private exchanges next year. In 2013, only 10% of employers offered retiree coverage through exchanges.

4) Telehealth trends up. Our July cover story was about telemedicine, and what was once a slightly offbeat,  slightly goofy idea is becoming a reality. Next year, three out four employers say their employees will have access to telehealth services either through a direct contract with a vendor (22%) or through one of the health plans that the company is offering (52%).

5) Shifting costs to employees. Shifting costs to employees is one of the ways that employers are keeping their costs down, and the trend will continue next year. About 4 in every 10 of the employers surveyed said they will be increasing their employees’ contribution to premiums next year, and 14% said that increase will be medium to large for their employees with family coverage. Increasing deductibles is another cost-shifting tactic, and roughly 3 in 10 employers said their employees will be seeing higher deductibles next year.