The pharmacy landscape is a daunting place, rife with unpredictability. For self-funded employers, the challenges are even more profound, with specialty drug prices soaring and new, high-cost medications entering the market with six-figure price tags.
As a broker, your responsibility extends beyond securing coverage—it’s about guiding your self-funded clients through the uncharted territories of the pharmacy benefit landscape with certainty.
Here are the five stop-loss trends that every broker should be aware of to help their clients navigate the challenging terrain with confidence.
#1 Competition in the landscape
The stop-loss industry is witnessing fierce competition, driving many carriers to lower premiums to retain business. While the market is experiencing substantial growth, claims risk is also growing and continues to pressure on stop loss carrier loss ratios, making risk transfer to employers more deliberate.
As the market experiences such growth, the escalating volume and costs of claims become a pivotal factor in decision-making. Brokers must navigate this delicate balance adeptly to offer informed guidance to their clients in selecting the most coverage for their unique needs.
#2 Increasing number of multi-year claims to treat more serious, chronic conditions
High-cost therapies, particularly those in oncology and neonatal care, have long been significant contributors to healthcare spending. The COVID-19 pandemic exacerbated this issue by causing a substantial delay in routine screenings for conditions like cancer.
This delay has resulted in a surge of more advanced conditions, necessitating more extensive and prolonged care and therapy. As a result, there’s been an increase in multi-year claims to treat serious, chronic conditions. As new, high-cost drugs enter the market to address these conditions, traditional stop-loss plans may prove inadequate in providing sufficient coverage as they are not designed to cover multi-year treatments.
The industry now faces the challenge of addressing not only the higher numbers of advanced conditions but also the evolving nature of treatment plans. Self-funded employers, in particular, find themselves under heightened pressure to navigate these complexities and mitigate the risks associated with these claims.
#3 High-cost claims and the potential for lasering has the market nervous
The frequency and severity of high-cost claims continues to rise, with treatments for rare conditions like hemophilia or hypophosphatasia costing upwards of $1 million. The threat of these million-dollar claims haunts self-funded employers, as does the possibility of lasering, an approach where a stop loss-carrier discontinues covering a high-cost claim or claimant.
When lasering takes place, the stop-loss carrier caps payouts for high-risk individuals, placing liability back on the employer. Let’s say an employer brings on a new hire with thyroid cancer. They’ve been prescribed Lenvima, a drug that retails at an average annual cost of $276,000.
With the employer’s stop-loss insurance contract, they’re covered for the first year—after that, the carrier can laser out the claim, leaving the employer on the hook for a potentially budget breaking claim.
#4 Flexibility is key as the market changes
The pharmacy industry is incredibly dynamic. New drugs and biosimilars, legislative actions, updates to PBM regulations, and other factors cause frequent shifts in the market, warranting the need for adaptability and flexibility.
Additionally, as healthcare costs continue to rise, employers are actively seeking alternatives to control costs. Flexibility is crucial in the stop-loss industry to ensure that coverage can adapt to the changing needs of employers and the evolving landscape of healthcare costs and treatments.
#5 Employers are experiencing a great deal of uncertainty
The current economic uncertainties and the continuously changing landscape of healthcare costs and coverage limitations can be daunting for self-funded employers. The market remains unsettled, and the future can hold a great deal of volatility.
This fear is leading many self-funded employers to look toward more effective risk mitigation strategies, such as implementing supplemental stop-loss insurance. As the healthcare landscape undergoes dynamic shifts, your awareness of these stop-loss trends becomes a powerful tool.
By staying informed and proactive, brokers can empower their self-funded clients to navigate the complexities of the pharmacy landscape with confidence. In an industry characterized by constant change, your ability to anticipate, adapt, and advise is the cornerstone of success.
Contact us today for a consultation on your clients’ needs in 2024.