As the season transitions from summer to fall in the Northeast, we find ourselves reaching for jackets and boots to protect against the crisper autumn temperatures. This time of year, however, should not be limited to looking for ways to defend ourselves against the upcoming harsh conditions, but also the time we must use to protect (and prepare) our self-funded plans to avoid an unforgiving 2020 renewal. Often, the path to change starts by listening to employees about their concerns or suggestions for the upcoming year.

For 2020, it seems that one of the most commonly asked about topics is gene and stem cell therapy. Whether the question is what this is, what does our plan cover, or what does this cost, this is something that employers should be mindful of as they develop their renewal design to avoid a 2020 surprise.

Basic overview of gene therapy and stem cell therapy

While each approach is unique, both gene therapy and stem cell therapy could treat certain genetic or other diseases. The techniques are relatively new and exciting to explore. Understanding the differences, however, is important.

Generally, gene therapy is an experimental procedure which utilizes genes to treat diseases. Scientists are investigating various methods to apply gene therapy. For example, future gene therapy may be an option to replace a mutated gene with a healthy gene, inactivate a dysfunctional gene, or even introduce a new gene to fight against a disease.

Stem cell therapy techniques, however, repair dysfunctional tissue using stem cells. Using stem cells, scientists can create specialized cells which, when implanted, could repair the diseased cells. Generally, stem cell therapy involves moving cells with a specific function to an individual while gene therapy involves moving genetic information into cells.

Implications for self-funded plans

Therapies that could potentially repair or correct genetic or other rare diseases where no current treatment is available is very encouraging for those impacted personally. A self-funded plan, however, must contemplate the impact inclusion (or exclusion) may have for the plan.

These new technologies could have a large impact on employers who have self-funded plans. After understanding what these therapies may offer to individuals, employers should then ensure that the health plan design and any other plan materials fully communicate their intentions. For example, the plan must contemplate the plan language changes, costs, and other related agreements.

Plan language

Whether the employer wants the plan to cover (or exclude) these therapies, the documentation and communication to plan participants should not be confusing. As medical treatments evolve, it is expected that the plan design may not be in absolute sync with the latest science. For example, years ago a robotic arm assisted surgery was considered a medical breakthrough and only over time did they become more common. This newer surgery created a new method to overcome certain surgical limitations, however, this type of surgery had not been contemplated in many self-funded plan designs.

As a result, when participants were undergoing this type of surgery -and the underlying self-funded plan was silent on the issue- plan fiduciaries were unsure of how to address the surgery. Instead of being aware of potential trending medical advancements, these plan sponsors waited for the issue to arise and were caught by surprise. The same should not be the case for these newer therapies. While the plan design may not need to be modified, the employer should understand the potentially relevant plan provisions.

For example, since these therapies are newer, the impact or effectiveness measures may not be entirely clear. It is possible that a gene therapy suggested by a plan participant's physician is experimental, investigational or not medically necessary. This would mean that the therapy would not qualify as an eligible expense under the current terms of the plan and should be excluded.

The key to understanding with respect to plan language is that employers should be aware of the therapy and be aware of the current plan provisions. For example, some questions for employers to consider may be:

Does the plan contain an experimental and/or investigational provision? If so, would that operate to exclude the procedure?
Does the plan contain a medical necessity provision that would operate to exclude the procedure?
Does the plan contain a specific exclusion that would operate to exclude the procedure?

Employers can be prepared for 2020 by understanding what the plan design currently contemplates, then adjusting accordingly. After knowing the employer's position on the new therapies, the plan should adjust to ensure those intentions are captured.

Costs

It should not be a surprise that medical advancements, particularly those involving genes and cells, are expensive. Stories of gene therapy treatments costing more than a million dollars can easily be found in the news.

With a potential cost this high, it re-iterates the need for a clear action plan for employers. While the pool of individuals benefiting from such therapies may not be large, the cost for coverage could still be very high if the employer does not properly prepare. Further, these therapies could eliminate the need for future treatment of symptoms or care by addressing the root cause of a disease, which could be more cost effective.

Companies aware of the benefits (and costs) of such therapies are developing targeted programs. For example, entities such as CVS and Cigna are offering options for employers looking to cover some gene therapies by offering stop loss programs and per month fee options.

Employers can prepare for costs by planning in advance and being aware of options that might suit their demands for flexibility and budget.

Related agreements

Prior to implementing a program or benefit, however, employers should ensure coverage (or exclusion) would not create a gap with any current agreements or plan materials. For example, if an employer opted to modify the plan document to cover "gene therapy" could that create a gap with the stop loss policy if the stop loss carrier had a varying definition of experimental and/or investigational?

Next steps

Do what is right for the employer and communicate this action plan accordingly. Employers should understand what these therapies are, and what advantages or disadvantages may exist. Plans should then be adjusted to address the specific desires of the employer. It is highly recommended that employers work with their benefit advisors and consultants to make changes for their plans to ensure such modifications are done in a correct and compliant fashion.

Jennifer M. McCormick, Esq., is senior vice president of Phia Group Consulting, McCormick concentrates on a variety of health care and regulatory issues facing employee benefit plans and their administrators, including health benefit plan regulatory compliance services, including but not limited to self funded health plan consulting, health plan exclusions, health plan limitations, health plan revisions, defining key items such as usual and customary fees, and the entire health plan summary plan description and summary of benefits and coverage.

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Trending therapy options: Gene and stem cell therapy for self-funded plans

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