Skyrocketing healthcare costs continue to plague health plan sponsors. The vast majority of U.S. employers—94%—say that managing healthcare benefit costs will be their top priority over the next two years, according to WTW's “2022 Emerging Trends in Health Care Survey."

Thankfully, new technologies and services are delivering cost savings to both healthcare plan sponsors and their members. By offering advanced telehealth solutions, new specialty drug management programs and targeted utilization management services, agents can help address this major challenge for their clients.

There is no question that telehealth really came into its own during the pandemic as Americans who had previously avoided the option had no choice but to use it. Between February and April 2020, telehealth usage revenues increased 75-fold, according to analysis by KPMG, from $146 million in December 2019 to $11 billion in December 2020.

Even before the pandemic, there was growth in telehealth. An American Medical Association study conducted between 2016 and 2019 found that the telehealth provider adoption rate had increased from 14% in 2016 to 28% in 2019.

In March 2020, 60% of patients in the U.S. said the pandemic had increased their willingness to try telehealth, according to SYKES. That percentage increased to 77% one year later in March 2021. And 86% of patients who tried telehealth during the pandemic believe telehealth made it easier to get the medical care they need.

Additionally, another reason telehealth is gaining traction is because companies are leveraging digital platforms to make the telehealth experience more convenient, user friendly and loaded with value-added functions, such as prescription refill reminders. These next-generation telehealth solutions feature 24/7 virtual access from any personal computer or mobile device to experienced healthcare professionals who can triage a patient's call as needed with ease and efficiency.

The most innovative of these platforms feature integrated nurse helplines with a telemedicine program. Here's how they work:

Step 1: An individual with a medical problem or acting on the behalf of a loved one calls into a dedicated toll-free line staffed with experienced registered nurses (RNs).

Step 2: The RN conducts a virtual patient intake, asking key questions, such as the patient's contact information, their reason for calling, symptoms, relevant medical history and more, and records the answers into the patient's electronic health record.

Step 3: Based on the RN's assessment, the call either ends with the patient being given advice from the RN or it is triaged and transitioned to another level of medical intervention, such as a primary care physician, specialist, behavioral health professional or emergency department.

From a cost-containment standpoint, unnecessary physician or emergency department visits are avoided without compromising a patient's quality of care. As much as $250 billion in U.S. healthcare spending could be diverted with the use of telehealth, according to a McKinsey estimate.

Looking at the savings on a more individual basis, plan sponsors can save from $19 to $121 per telemedicine visit based on what venue—emergency department, urgent care facility, doctor's office—the patient would have otherwise used according to researchers at the Sidney Kimmel Medical College of Thomas Jefferson University in Philadelphia.

Telehealth solutions achieve lower medical claims, copays and coinsurance, as well as limiting medical stop loss liability and related costs. One telemedicine provider estimated that for employers with 1,000 employees, telemedicine can transition employees from 44% of urgent care visits and 35% of physician office visits. Further, 140 telemedicine calls for their 1,000-employee group resulted in $60,000 of savings.

“Companies large and small should lean into telehealth as a way to support employee wellness and productivity, reduce absenteeism and protect the bottom line," according to Forbes. Specifically, telehealth can reduce absenteeism through improved access to care via lower deductibles and copays, and minimizing inconvenience to both the employer and employee. Further, removing these barriers to care combats presenteeism, which is when an employee continues to work to a lower standard because they are unwell. 

Taking Aim at Specialty Drug Costs

It is no secret that prescription drug costs are increasing and specialty drugs are a major culprit. Specialty drugs now comprise 51% of total U.S. drug expenses based on AMS' “2020 Specialty Drug Trends Report"—even though they are used by only 2% of the U.S. population. Between 2014 and 2019, prices for the most commonly used branded specialty drugs rose by 57% while prices for generic drugs dropped by 35%, according to Petersen-KFF's Health System Tracker.

One reason for this escalation is that specialty drugs are more widely prescribed, and their costs continue to increase. Specialty drugs represent a class of drugs used to treat complex or chronic diseases, such as arthritis, cancer, multiple sclerosis and very rare or orphan diseases, and can be administered orally or as an injectable, inhalable or infusible product.

What they all have in common, regardless of what condition they are treating, are very high costs. For example, Revlimid, a drug used to treat cancer, has an estimated annual cost of $241,116, for which a healthcare plan's costs are $192,893. Embrel, which is used to treat rheumatoid arthritis, has an annual cost of $40,020, for which a plan's cost is $32,016.

The average annual cost for a specialty drug is $84,442, according to the AARP “Rx Price Watch Report." Drugs used to treat rare diseases can be up to $250,000 a year for one individual with some of the most expensive specialty drugs costing as much as $750,000 annually. Keep in mind that the lion's share of specialty drug costs, which have risen by over three times the general rate of inflation, according to the AARP report, are incurred by the plan.

Measures are underway to tackle specialty drug costs and using pharmacy benefit managers (PBMs) is one strategy. PBMs can help plan sponsors better understand their claim data and pave the way for them to secure the optimum volume discounts, rebates and fees while also watching for new specialty drug data and sharing that with plan sponsors.

Other strategies being deployed include the careful monitoring of patients placed on specialty drugs to determine their effectiveness and the use of gene therapies to treat certain medical conditions. Meanwhile, a newer approach, which has already proven to deliver measurable savings, is that of a specialty drug cost management program. It is among the top strategies employers are considering to reduce their specialty drug costs.

Specialty drug cost management programs are intended for use by all size plans—large, middle-market and small businesses, self-funded and multiemployer plans with 200 or more members. They work by aligning primary-, secondary- and tertiary-payer options to reduce out-of-pocket specialty drug costs for both plan sponsors and plan members. Through the restructuring of the specialty drug benefit and the ability to access multiple resources for specialty drugs, plan sponsors gain access to more efficient cost structures for their members' prescribed drugs.

Leveraging robust data related to alternate payer programs, associated regulatory requirements, and PBM operations plans have other ways to reduce their costs. Customized, responsive medication access models ensure that plan members receive their appropriate specialty drugs in a timely manner.

To begin a specialty drug cost management program, plan sponsors sign a service level agreement and are onboarded via a proven process. A point person must be assigned to each plan sponsor, followed by an implementation plan incorporating a review and audit of the plan's current specialty drug level and specialty drug users.

This step is followed by developing a communication plan encompassing an individualized approach, patient and provider contact model, pharmacy contact model, agent updates and regular plan sponsor reporting. Drug claims are flagged for reimbursement cost management, drug dispensing is continuously monitored and funding eligibility is managed on an ongoing basis.

Patient interactions are managed by professional staff with clinical backgrounds, like nurses and pharmacists. Plan sponsors should be guided on the importance of selecting specialty drug cost management programs that are compliant from a regulatory standpoint with key legislation such as the Affordable Care Act (ACA).

Keeping Health Care Utilization Under Control

Some specialty drug cost management programs are integrated with a utilization management program, although utilization management does not just target drug costs. The goal of utilization management is to achieve the most prudent, cost-effective use of medical resources while advancing quality healthcare and the best patient outcomes. Utilization management is another effective tool for reducing a plan sponsor's healthcare costs.

Utilization management programs are focused on several components:

• Hospital and medical pre-certification, concurrent review, patient discharge planning, appeals and retrospective reviews.
• Assessment of the medical necessity for inpatient stays in acute care facilities, behavioral or residential treatment centers and outpatient resources, such as diagnostic testing, therapies, infusions and durable medical goods.
• Reduction of risks relating to noncompliance with regulatory mandates.
• Support of population health management, which is defined by the Centers for Disease Control and Prevention (CDC) as “an interdisciplinary, customizable approach that allows health departments to connect practice to policy for change to happen locally."

In helping contain specialty drug costs, utilization management programs work to determine whether there can be a transition from a high-cost brand drug to a lower-cost generic drug, an option that Navitus data suggests can reduce drug spending by up to 30%. A utilization management program will determine whether to make this transition using a step therapy approach where clinically effective, lower-cost drugs are used before a higher-cost drug is used. Prior authorizations, which require a prescriber to seek the insurer's approval before dispensing a medication, are also used in utilization management.

When recommending that a client consider a utilization management program, it is important to advise them to seek a service provider that is accredited to the Utilization Review Accreditation Commission (URAC), and in full compliance with the Department of Labor's standards for ERISA self-funded groups.

Agents looking to provide best-in-class service to their clients should strive to introduce new strategies for reducing their healthcare costs. Your clients are looking for answers and are prioritizing this goal. By raising their awareness on advanced telehealth solutions, specialty drug cost management programs and utilization management; you are positioning yourself as a real resource.

The future of healthcare and its affordability is improving, and agents can drive greater progress on behalf of their plan sponsor clients.

John Thornton is executive vice president, sales and marketing, Amalgamated Life Insurance Company, a leading provider of comprehensive insurance solutions, which has 46 consecutive A ratings from AM Best.