Archived Insight | October 12, 2020
That's one key finding from the 2021 Segal Health Plan Cost Trend Survey, and the current public health crisis has made understanding the factors influencing health plan costs and trends even more important for plan sponsors.
COVID-19 has caused unexpected disruptions and healthcare providers, carriers, and institutions will be looking for ways to offset anticipated financial losses.
Plan sponsors hoping to avoid potential cost shifting must vigilantly monitor carrier policies and provider performance and pursue targeted cost-management strategies.
The data in this report helps you put in context the effectiveness and impact of your plan designs. It also proves invaluable as you calculate your upcoming plan budgets and negotiate rate renewals.
Projected medical plan cost increases for 2021 are similar to projections for 2020. This contrasts with last year’s survey, which reported a slowdown in medical trend projections.
2020 reductions in health plan costs as a result of pandemic-related suspension of non-essential care more than offset the cost to test and treat patients for COVID-19.
But survey respondents estimate that COVID-19 will increase 2021 trend by 3.6 percentage points.
Survey respondents project per-person cost trends for open-access PPO/POS plans to be 7.7 percent for 2021 and the trend for outpatient prescription drugs is expected to be 7.3 percent for 2021.
Double-digit specialty Rx cost trend, mostly driven by price increases and new specialty drugs, continues to be a challenge for plan sponsors.
Provider price increases continue to be the primary driver for both medical and Rx trends, while trend projections for most dental coverages are lower for 2021.
For physician services, utilization is a greater trend driver than price: 3.1% compared to 2.6% for price inflation.
Forecasters may be predicting pent-up demand for physician services that are becoming more accessible through advances in telemedicine.
Plan sponsors are using various cost-management strategies to help mitigate significant increases in their health plan costs while maintaining high-quality standards and access to healthcare goods and services.
According to our survey, plan sponsors may consider these in 2021 and beyond:
Plan sponsors continue to use various cost-management strategies to help mitigate increasing health plan costs.
We asked survey participants to rank the top strategies being used by group health plans in 2020. Below, we compare the top five strategies being used today to last year’s ranking.
Whatever strategies plan sponsors use to manage health plan costs, the impact of the COVID-19 pandemic and its long-term effect on the U.S. population and the health of the economy is still unknown.
The current health environment is a moving target that requires continuous monitoring. This is a period of extraordinary cost-management uncertainty and change. Some healthcare vendors are promoting solutions or services that may be more focused on generating revenue than producing measurable results or improving participant experience.
Furthermore, the outcome of the presidential election could result in dramatic changes in the future. As a result, plan sponsors should proceed cautiously and draw on their data to make well-informed decisions about which strategies and services will produce the most value given their limited resources.
As the complexity of the healthcare marketplace evolves, plan sponsors should continue to explore all avenues that may produce cost savings, as well as develop strategies to improve outcomes for participants and mitigate price increases.
This begins with access to data, including detailed medical and pharmacy claims information.
By evaluating data and targeting strategies that address aggressive vendor contracting, measurable population health improvement and smart plan design, plan sponsors can continue to offer high-value benefits while bringing down their plan cost trends.
This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.
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