Speaking during a webinar presented by the National Alliance of Healthcare Purchaser Coalitions, experts weighed the pros and cons of employer high-deductible health plans (HDHPs) and outlined steps to address challenges raised.
In part 2 of a webinar series hosted by the National Alliance of Healthcare Purchaser Coalitions, experts discussed employer opportunities for improving value and crafting smarter deductibles in health savings account (HSA) high-deductible health plans (HDHPs).
According to the Internal Revenue Service (IRS), as of 2022, an HDHP has a deductible of at least $1400 for an individual and $2800 for a family, while the plan’s yearly out-of-pocket expenses cannot exceed $7050 for an individual or $14,000 for a family; the limits do not apply to out-of-network services.
Although HDHPs are becoming increasingly common, are often paired with HSAs, and are popular among employers as they shift costs to workers, previous research has shown individuals in HDHPs are more likely to delay necessary medical care, experience cost barriers, and have claims rejected by insurance. In addition, concerns have been raised regarding employees’ understanding of HDHPs and whether these plans actually deter individuals from seeking preventive care.
On the other hand, HDHPs could help incentivize employees to think through what the highest value care for their particular needs is and what may be low-value care and not necessarily worth their health care dollars, explained Kimberly Westrich, MA, vice president of health services research at the National Pharmaceutical Council, who served as the webinar’s moderator.
For all these reasons, employers’ careful crafting of HDHPs is crucial; incentivizing uptake of high-value care and yielding cost savings from rejecting low-value care was a key theme of the discussion.
When it comes to identifying good practices in HSA HDHPs, Laura Rudder Huff, vice president of Gallagher Research & Insights, laid out some consensus statements made by a variety of stakeholders surveyed. In her presentation, Huff defined a good practice as “a design that consistently helps enrollees maximize the value of their benefits and navigate treatment options.”
Of the 50 employers—each with at least 5000 employees—surveyed, 68% reported they see a strong or moderate outcome where out-of-pocket costs create a financial burden for certain segments of employees, particularly those who earn low or middle wages.
Huff’s research also revealed “52% [of employers] are seeing strong or moderate outcomes in that the out-of-pocket costs prompt employees to delay medical care, 46% have received some pushback from their employees with dissatisfaction about the HDHP design, and 36% have said that they've noticed some out-of-pocket costs can prompt employees to decrease medication adherence or abandon medications."
Researchers were also able to identify 11 good practices, of which 9 had consensus (66% or more agreed or somewhat agreed with the practice). Some of the top good practices included:
However, for all 9 agreed-upon practices, a gap existed between agreement and actual implementation. “So, just because employers agree or have consensus that something is a good practice, it can still be difficult for them to implement,” Huff said.
One method of addressing discordance between employee use of high- and low-value care is encouraging employer uptake of predeductible coverage for preventive services.
“In an HSA plan, the deductible is quite strict. It has to cover just about everything that the health plan covers, with the exception of some preventive services. And that's been a criticism of these plans since they were introduced back in 2004,” explained Paul Fronstin, PhD, director of the Health Research & Education Program at the Employee Benefit Research Institute.
In the summer of 2019, the IRS did relax some restrictions on what can be excluded from the deductible and covered on a predeductible basis, Fronstin said, noting the guidance was very specific and only included 14 particular services. This notice was a Trump administration initiative, highlighting the rare bipartisan support value-based insurance design holds.
An additional survey conducted by Fronstin and Mark Fendrick, MD, professor of internal medicine, health management, and health policy at the University of Michigan, and co-editor-in-chief of The American Journal of Managed Care®, revealed 76% of those asked in 2020 added predeductible coverage based on the update, but coverage was not evenly distributed across the 14 services.
“Employers were very discriminatory,” Fronstin said. “They picked and chose what they thought they should add coverage for,” and coverage was not free across the board as some employers introduced co-insurance or co-payments.
Importantly, the survey also showed the expansion of services covered did not lead to an increase in premiums. Encouraging more flexibility in predeductible services and drugs covered remains a central goal in advancing value-based insurance design.
“I strongly support Americans paying lots of money out-of-pocket for the care they should not be buying in the first place and the care that you all [employers] should not be covering in the first place,” Fendrick said.
Using insurer coverage of ivermectin for COVID-19 as an antithetical example, Fendrick noted insurers are not “really taking that aggressive position on trying to reduce the utilization of the services that there's clearly no clinical beneficial evidence that you should be covering it, at least generously.”
Research published in JAMA last month found that during one week in August 2021, insurers heavily subsidized costs of ivermectin prescriptions for COVID-19, despite no evidence showing the treatment has any benefit for the condition.
“Wasteful insurer spending on these prescriptions, estimated at $2.5 million in the week of August 13, 2021, would extrapolate to $129.7 million annually,” while “the true amount of waste is even higher because estimates did not include Medicaid spending,” the researchers wrote.
Dissuading uptake of low-value care via high out-of-pocket costs will result in cost savings that encourage generous benefits for high-value care.
An additional concern of HDHPs is that the onus of deductible payment falls on those who are sick and utilizing care, while premiums will be spread across the entire population.
“Many of my patients facing high deductibles and chronic disease needs view January as a very worrisome time, and we've seen a flattening, if not dropping off, of percent of enrollees in an HSA-eligible plan,” Fendrick said. As a result, in January, the number of individuals applying for charity care and the Medicare population both rise.
Individuals harmed by high deductibles are often financially insecure, Black and Brown populations, and have chronic diseases, while evidence supporting the expansion of the services covered show the move would lead to improvements in health equity, Fendrick explained.
Legislation addressing the need for expansion, the Chronic Disease Management Act, has been drafted. It aims to directly amend IRS code and allow HAS-qualified health plans the flexibility to expand the list of 14 services.
“It is my hope that we all can continue to work to put cost sharing in a way to make it easy, not hard, for patients to get the care we know will improve their individual health,” Fendrick concluded. “But at the same time, continue to put those barriers in front of those services…that will allow you to save a whole bunch of money on things that you're currently covering, that you shouldn't be covering as generously to allow that headroom, and prevent those patients in need from getting the care they really do deserve without having to have a bake sale or do an online Kickstarter campaign.”