Account-based health plans, or ABHPs, have taken on increasing importance with employers trying to manage cost trends and position their plans to have minimal exposure to the “Cadillac” tax beginning in 2018.
Roughly 75 percent of large employers currently offer an ABHP option, and one third of employers are planning to go to a total replacement approach next year, according to a by the National Business Group on Health. ABHPs are also a prevalent design on both public and private health insurance exchanges. So understanding their cost impact — for both the plan sponsor and the employee — is of great interest to organizations evaluating their exchange options.
In recent years, ABHPs have evolved to have more complex provisions. One area of particular interest is the design of pharmacy benefits, which has often been an afterthought. Pharmacy benefit design is an important component in encouraging efficient medication use and better compliance with therapies. Now, with advanced modeling, it becomes easier to see the specific outcomes of even highly complicated changes in pharmacy benefit design.
For example, some sponsors choose to maintain a carve-out pharmacy design, not subject to the plan medical deductibles and out-of-pocket cost-sharing. With this approach, the sponsor can employ a first-dollar, multi-tier cost-share approach including tiers for specialty drugs. Other sponsors choose to impose this type of tiered cost-sharing arrangements in a plan only after participants satisfy a combined medical and pharmacy deductible.
To understand the cost impact of this range of complex design approaches, modeling alternatives with actual employee population claims data, using an actuarially effective evaluation approach, becomes key.
Beyond pharmacy and medical benefit design, modeling can take a look at the implications of different health reimbursement and saving account funding levels and the impact on account balance accumulation. And viewing different scenarios of enrollee treatment compliance and their effects on population health can have tremendous value, too.
Going forward, employers have a lot to gain by honing their approach for ABHP design. In combination with a thoughtful measurement approach, using the data that’s already available on enrollees’ health risks, costs, and usage patterns, a sponsor can ensure the plans continue to contribute to lowered cost trends and improved employee health.
And frankly, without the insights that modeling can bring to those pre-design discussions, employers will likely leave money on the table and lose a chance to make a noticeable difference in population health over time.