Financially, for self-funded employers, a high-cost specialty drug treatment that is chronic can be the most difficult to manage. One-time drug treatments are expensive on their own, but long-term treatments can produce more problems for self-funded employers due to the ongoing cost and potential need for lasers . In some cases, this can make it difficult to find a willing stop loss carrier to place a policy. 

These treatments are just as challenging for the stop-loss carriers. These are losses that materially impact their bottom line, especially for small to midsize carriers, which represents a large portion of the MGUs that participate in the market. The $2 million or $3 million losses in these categories can be significant and require stop-loss carriers to make strategic decisions on how they're underwriting more broadly across their book of business. 

With all of this in mind, these complex treatments pose a significant threat to all stakeholders involved, and it is incumbent upon all parties to work together to define a solution to manage future risk effectively. 

BP: What are the biggest benefits of self-funded coverage for employers looking to cover complex risks?

JM: Being self-funded, employers get to make more decisions – what's covered under the plan, what's not covered under the plan, or how something is covered under the plan. In a fully insured or a level funded environment, employers don't have the same level of control. Carriers make those decisions, and those carriers are highly regulated and are making decisions based on a pool of employers and factors like federal and state regulations, and reputation concerns, not necessarily the needs of a specific business. It's certainly impactful for the whole pool of employers to share the risk and cost associated with complex risks like gene therapies, but that risk can be spread out thereby minimizing the exposure for any individual employer.

Ultimately, the real threat is that those pools are selected against. One thing we're seeing is more and more midsize and small employers making decisions to transition out of fully insured pools into a self-funded arrangement so they can have more flexibility and manage the plan in a more sustainable fashion.  As better risk transitions out of fully insured pools the risk profile and the financial performance of the pool will deteriorate resulting in higher trends and undesirable renewals.

Self-funded employers often face challenges when it comes to placing stop loss; however they have the freedom to exclude certain drugs or classes of drugs from their plans. By excluding certain drugs or treatments it doesn't mean, in all cases, that the member won't be covered. Programs such as patient assistance, coupons, and other resources come into play for members who are uninsured or underinsured, reducing or eliminating the cost for the member and the employer.   

BP: What are the roadblocks and challenges? 

JM: One challenge that self-funded employers face is not only finding stop loss coverage, but making decisions and understanding options to effectively manage potential threats to their plans. Complex claims have the potential to cripple an employer sponsored health plan, resulting in an employer eliminating their health plan altogether or, in a worse-case scenario, if the stop loss policies were not placed appropriately bankrupt the company. 

As a result, decision makers struggle with understanding what their options are, how they can protect themselves and what other employers are doing as far as coverage terms for these types of treatments.  The decision goes beyond purely placing the risk, it's making a decision that's in the best interest of the plan, and  balancing this risk with what's the right thing for a group's employees and their family. 

BP: What steps can self-insured employers, stop-loss carriers, pharmacy benefit managers and reinsurers take to mitigate gene therapy risk?

JM: We've observed some carriers try to mitigate gene therapy risks through introducing new exclusionary language in their policies rather than just increasing premiums. The number of ways the industry is working to mitigate risk is growing. It's up to benefits advisors to read coverage documents carefully to understand when changes in coverage aren't in the best interest of the employer, and that coverage is only placed with carriers that are well capitalized and highly rated.

BP: How do lasers or drug assistance programs address complex risks?

JM: Drug assistance programs present an opportunity for uninsured or underinsured members to have treatments covered by the drug manufacturer or foundation. These programs are based on a myriad of qualifying factors for the patient, such as household annual income, citizenship status, and coverage terms under the health plan. There are also options to reduce the cost of treatment, like coupon programs. However, there are certain risks associated with drug assistance programs. In some cases, poor member experiences (treatment avoidance, non-adherence, etc.) can create additional unexpected costs within the plan. It's important for organizations to explore these options from a cultural perspective and if they do elect to pursue them, over communicate, and have enough flexibility to step in and support the employee and their family when needed. 

BP: What trends are you watching in this area?

JM: An emerging trend I've seen is reinsurers stepping into issue policies that cover certain drugs or classes of treatments. Effectively, these programs can cover many drugs and can provide flexibility and options to help self-funded employers more appropriately create a plan for conditions that, while still costly, aren't as severe in their financial ramifications when they occur. 

 Combining an effective stop-loss policy, reinsurance policy, clinical program, and coverage terms that fits the employer's culture is where the market is headed. These strategies will develop into what we observed with organ transplants policies, where centers of excellence manage the cost appropriately, deliver quality outcomes for patients and drive positive outcomes for all parties.   Incorporating elements of value based or outcomes-based contracting with manufacturers and treating facilities will be critical elements as we continue to innovate in this area.