Skip to main content

Part 2: How Those Hot New Employer Cost Stats Could Upend Employers' Payer-PBM Relationships

Analysis  |  By Laura Beerman  
   October 14, 2024

For everything from GLP-1 and cancer costs to provider networks, one employer association has strategies — and they don't involve the major carriers.

In a press release for its 2024 Best Practices in Healthcare Survey, WTW notes: "To navigate the current healthcare environment, companies need to proactively address cost challenges and implement effective risk management strategies…By doing so, they can mitigate financial risks, support the wellbeing of their workforce and achieve long-term sustainability."

Enter the Association for Corporate Health Risk Management (ACHRM), "the only National Employer-Based Association, Think Tank offering alternatives to traditional health insurance carrier health risk management strategies." 

How do they do it and what could it mean for employers? Learn more from ACHRM's Nine-Pronged Strategy and HealthLeaders' exclusive interview with AHCRM CEO Bill Lacy.

Helping self-funded employers rethink their self-funding methodologies 

Self-funded employers pay for their employees' health insurance claims, contracting with a third-party administrator — usually one operated by a big national carrier — to handle things like billing and claims.

AHCRM promotes "the benefits of engaging an independent non-insurance carrier …[and] pharmacy benefit managers (PBM)." The goal for employers is "rethinking your firm's self-funding methodology [to] benefit your bottom line, employees, but also medical professionals."

As mentioned in Part 1 of this series, ACHRM has introduced its 2024-25 Strategic Plan to help employers achieve these goals and comply with the Consolidated Appropriations Act (CAA). This 2021 act requires employers to act in the best interests of their employees and offer quality, affordable group health coverage. 

ACHRM's strategies include but are not limited to:

  • Reigning in GLP-1 costs
  • Targeting cancer costs
  • Developing employer-provider partnerships

Here are the details . . .

Strategy: Target GLP-1 costs

A single class of drugs is responsible for a tipping point in prescription drug coverage and cost management: GLP-1s for weight-loss.

As WTW noted in its survey: "Employers are still contending with the continued demand for high-cost weight loss medications. While most employers are maintaining coverage for obesity medications with some restrictions, those not offering coverage today state cost and safety as the biggest barriers."

WTW adds that employers "are eager to consider safe and effective lower-cost alternatives."

This includes the employers that belong to ACHRM, says association CEO Bill Lacy.

"There's pandemonium in the marketplace as consumers are bombarded with weight-loss drug advertisements generating a tidal wave of inquiries to their employers regarding accessing these newer medications. If employers cover these medications, weight-loss drugs are quickly becoming one of their top drug spends."

In line with ACHRM's independent TPA/PBM approach, Lacy adds: "Unfortunately, employers are not receiving any guidance from the manufacturers or Big Four PBMs (CVS/Caremark, ExpressScripts, Optum). ACHRM's Pilot is to develop and test ‘guardrails,' such as lead-in and exit strategies, weight-loss and behavioral management programs, and strategies for side effects, compounding, PBM rebate manipulation, among other issues."

Strategy: Rethink PBMs — And just about everything related to prescription costs

ACHRM's approach is well-timed. The WTW study noted that employers have "strong interest in alternative drug channels and pricing":

  • 27% would consider a smaller PBM with alternate pricing models
  • 17% expect to have acquisition cost PBM contract structures
  • 73% plan to gradually carve out pharmacy benefits from medical
  • 21% may use drug discount cards or direct-to-consumer prescription delivery
  • 18% may also allow employees to buy prescriptions from retail or "cost plus" outlets

Prescription drugs are just one of the high-cost areas employers contend with. Cancer treatment is another.

Strategy: Partner with independent oncology providers

Lacy notes that cancer is the most expensive condition for employers to target.

"Employers can manage cost-savings in multiple ways, but then cancer costs hit them hard. The pandemic delayed screenings, so now cancer claims have become significant after flat periods. Employers are now seeing million-dollar claims for cancer and 10-20% cost increases, even with an independent TPA strategy."

ACHRM is developing pilots that stress prevention and direct contracting between employers and oncologists.

"We need to be more forward-thinking on prevention, like screenings, and focus on ineffective treatments with high costs," says Lacy, adding that AHCRM already has pilots in New Jersey and Arkansas. "It's still costly but much less. Payments are faster, more direct and represent a partnership."

Strategy: The importance of including the medical community

Employer-provider partnerships take us full circle to a key from Part 1 of this series and the WTW survey data.

More employers want to take control of provider networks from their contracted health plans and third-party administrators. In the WTW survey:

  • 30% of employers are exploring narrow networks
  • 25% are also exploring centers of excellence
  • 43% of employers plan to require re-bids from their health plans and vendors

The objective of all of these strategies is cost control. Again, ACHRM recommends employers consider more flexible and affordable alternatives: Contracting with non-insurance-carrier-based TPAs and PBMs and direct contracting with providers.

"For their TPAs, self-funded employers traditionally contract with BUCA [BlueCross plans, UnitedHealthcare, Cigna, Aetna]," says Lacy. "Most markets are dominated by a big payer and PBM. These middlemen are expensive and, in many ways, unnecessary."

The ACHRM CEO adds: "There are hundreds of challenged markets across the country that need this thinking to make this model successful." This includes what Lacy calls "rural, monopolistic markets [where] 30-50% of revenues go to these intermediaries [BUCA and their PBMs]."

ACHRM's proposal is to "replace both of them — to take the intermediaries out and bring employers and the medical community together. It's a win-win."

A win-win that more self-insured employers may be ready for.

Laura Beerman is a freelance writer for HealthLeaders.


KEY TAKEAWAYS

Part 1 of this series highlighted new WTW employer survey findings: The exponential increase in employers’ health costs and their plans to combat them.

Now, Part 2 spotlights the efforts of one employer collective, the Association for Corporate Health Risk Management (ACHRM).

ACHRM’s strategies ask self-funded employers to rethink their approaches — and their relationships with commercial-payer-owned TPAs and PBMs.


Get the latest on healthcare leadership in your inbox.