With the drug plan landscape continuing to shift and the idea of sustainability hanging in the balance, managing costs and value for the plan members is what is ultimately at risk.
The 2019 Canadian Leadership Council on Drug Plan Partnerships recently hosted a roundtable discussion on the drug benefit and how it is an ongoing challenge due to a variety of factors that drive the increasing costs of plans. A number of plan advisors sat down to examine the pressing challenges of Canadian private drug plans and why it is important for plan sponsors to re-evaluate the underlying objectives of their drug plan — and if current plan designs are sustainable moving forward.
While it might seem like there has been an uptick in costs over the past few years, we’re embarking on what is likely a monumental shift happening in proactive drug plan management discussions.
Is the rise in cost new to private drug plans?
While it might seem like an alarm has gone off recently, this really isn’t a new issue that’s being brought to the forefront.
With medical, prescription drugs and dental care coverage making up the important triage of employees’ total compensation package, it proves to be a growing challenge to effectively strike a balance between plan sponsor costs and sustainability, while making sure that there is true value and impact to a member’s health.
To help contain costs, companies are wise to think of ways to encourage a healthy lifestyle amongst employees while embracing new medical advances resulting in better health outcomes. The industry has had a knee-jerk reaction, but one that has a renewed interest in sustainability, while keeping employees’ health care top of mind.
Dental plan costs are a major concern that deserves more attention
We’re always talking about health and drugs as drivers towards increasing claims, yet we very rarely talk about dental; and many advisors questioned why Insurers don’t manage dental benefits the same way they manage drug plans.
New drug coverage requires analysis of the clinical evidence to assess value versus price to see if it’s worth the investment – but we don’t see anything close to that level of due diligence when it comes to evaluating dental procedures.
Dental claims are poised to keep growing, with reports suggesting that fees will increase an average of 4.19% in 2019; up from the 1.86% in 2018.
Every January, each province’s dental association issues a fee guide for the year that outlines the suggested costs for services and procedures, and dentists use these guides to set their prices – but are essentially free to charge more based on the economics of their practice.
Eight solutions to ensure sustainability
Tackling these issues requires collaboration amongst all industry stakeholders. The roundtable openly discussed solutions surrounding sustainability, of which are listed below;
- Offering a wide range of solutions for plan members’ health concerns.
- Increased transparency on how Insurer administration fees, trend factors, and pooling charges in their clients’ renewals are developed.
- New government-managed pooling of high-cost claims.
- Manage dental benefits in a similar fashion that drug plans are currently managed.
- Use real-world data and measure the impact on private plans after a drug launch.
- Look at health benefits plans holistically to determine the impact the drug plan has on the disability plan.
- Align drug plan designs with patient experience.
- Increased collaboration between industry stakeholders to improve dialogue, education, and transparency.
The advisor roundtable agreed that there’s a need for increased discussion to meet the business needs of Insurers, support the health of plan members, and ensure the sustainability of plan sponsors’ health benefits budget and risk.