Health Cost Trends in 2018

Insurance companies use a “health trend factor” when setting rates for Health benefits. An annual survey by Accompass Inc. suggests insurance companies expect health costs to rise by 11.8% this year.

This trend is usually impacted by prescription drug costs and the survey fund the top three drugs by dollars paid are Remicade, Humira and Enbrel – all are biologic treatments for autoimmune diseases.

A plan sponsor has a number of options available to manage this trend including:

• Placing a stronger emphasis on Health and Wellness Managing the costs under the Drug benefit through tiered formularies, use of pharmacogenetic testing
• Educating the plan member on how to be a smart shopper for services including dispensing fees for drugs and reasonable & customary charges for paramedical services

There are different competencies between insurance companies when it comes to supporting these options and any solution needs to be tailored to your group’s specific needs.

New Drugs Increasing Costs

A report by the Patented Medicine Prices Review Board indicates an increase in the number of new drugs to treat rare diseases entering the market. At 54% of new pharmaceuticals entering the market in 2015 and 42% in 2016, these drugs, also referred to as orphan drugs, include oncology drugs costing more than $5,000 for a treatment schedule of 28 days which represent 35% of the new pharmaceuticals in 2015 and, at 30%, non-oncology drugs costing more than $10,000 per year.

Similar actions to those outlined above under Health Cost Trends are considerations for the plan sponsor to better maintain the balance between providing adequate coverage while managing exposure to large cost spikes.

Age Discrimination in Benefit Plans Unconstitutional

In May 2018, the Ontario Human Rights Tribunal determined restricting or terminating benefits at age 65 was unconstitutional.

The decision was the result of a court case (Talos v. Grand Erie District School Board) as it was the Board’s policy not to provide benefits to teachers over age 65. There was a section in the Human Rights Code allowing for pension and benefit plans to treat workers older than 65 and younger than 18 differently than their colleagues.

The tribunal’s decision noted it’s unfair that 65 year-old employees who perform the same duties as their 64 year-old colleagues have their benefits cut - which amounts to having their compensation cut – just because of age.

There is a trend to workers staying longer and many benefit plans have now adopted wording making eligibility in the plan a function of “being actively at work” – there are typically a minimum number of hours worked per week as well.

Changes to OHIP+

On June 30th, the newly sworn-in Ontario Minister of Health and Long Term care, announced this program, that was launched 6 months prior, would become the second payor for claimants age 24 and younger who have coverage under a private plan. They will be required to submit claims to their private plan first and then OHIP+ covering any outstanding eligible amount not covered by the private plan.

Changes to Quebec Public Prescription Drug Plan

The Regie de L’assurance Maladie du Quebec (RAMQ) announced adjustments to this plan to be effective July 1, 2018. These adjustments will affect Quebec residents between the ages of 18 and 64, as well as seniors 65 and older.

The highlights are:

• The annual out-of-pocket maximum increases from $1,066 to $1,087
• The monthly deductible increases from $19.45 to $19.90
• The co-pay increases from 34.8% to 34.9%
• The monthly out-of-pocket maximum increases from $88.83 to $90.58
• The premium decreases from $667 to $616

Quebec’s drug plan legislation requires private plans be, at a minimum, equal to the RAMQ coverage. For plan sponsors who have contract wording that mirror RAMQ, they should be receiving an amendment from their insurance company to reflect these changes.

Key Considerations for Adding Medical Marijuana to a Benefit Plan

Most insurance carriers that offer a Health Care Spending Account (HCSA) included medical marijuana as an eligible expense for some time. A recent development with some carriers is to include it under an insured Drug benefit but with certain conditions. These control measures include:

• Coverage only for conditions where there is medical evidence that cannabis can have a therapeutic benefit
• A prior approval process to ensure the claim aligns with the medical needs
• Unit constraints that include coinsurance and annual maximums
• A claims process that requires the appropriate product aligns with the treatment prescribed by the health care practitioner and is dispensed by a licensed producer.

There have already been cases in the courts (Aitchison v. L&L Painting and Decorating Ltd is one example) relating to the treatment of employees who are using cannabis at work, ostensibly for medical purposes. It is important for plan sponsors to review their current Drug formulary and claims history to determine the best approach if, in fact, medical marijuana is a reasonable addition and also to ensure appropriate policies are in place to align with federal and provincial guidelines.