Multiemployer Health Plans Have Cost-Containment Options

In the five years since the Patient Protection and Affordable Care Act (ACA) became law, many multiemployer health plan sponsors have implemented cost-containment strategies.

A study of multiemployer health plan clients by Segal Consulting revealed the most popular cost-management strategies that plans have implemented are soliciting competitive bids from carriers/vendors (40%), implementing more intensive pharmacy management programs (34%) and increasing copayments (32%). Twenty-seven percent have increased deductibles and 18% have implemented more intensive medical-management programs (e.g., prior authorization and/or disease management).

“The study suggests plan sponsors have additional options and opportunities for managing the high cost of health care beyond increasing participant cost sharing, because relatively few plans have implemented strategies such as including financial incentives tied to wellness, moving to a narrower network or establishing an on-site clinic,” says Andrew Sherman, senior vice president at Segal. “The Supreme Court affirmed with its King v. Burwell decision that the Affordable Care Act is here to stay, which means it is also time for trustees to take a look at how their plans are impacted by the 2018 excise tax.”

A large majority of plans in the study have not changed coverage for spouses, and most plans in the study have maintained coverage for retirees. According to the survey, 77% of multiemployer plan sponsors are not considering changes in an effort to avoid the excise tax on high-cost plans.

Individual health insurance coverage purchased through the federal marketplace or a state exchange must provide benefits at various actuarial levels: platinum (90%), gold (80%), silver (70%) and bronze (60%). To illustrate how the “metal” levels work, a platinum plan that has an actuarial value of 90% would be a plan that pays approximately 90% of eligible medical expenses. Segal determined the closest “metal” value of the surveyed plans’ primary coverage and found 60% are gold plans, 34% are platinum and 6% are silver.

In addition, Segal notes that group health plans in existence as of March 23, 2010, are grandfathered, meaning that they do not have to comply with some of the law’s requirements. A plan will remain grandfathered for as long as the plan’s benefit design does not change beyond certain limits set by the federal government. More than half of plans in the study are grandfathered under the ACA.

Segal points out that a loss of grandfathered status can add new costs to the plan. However, remaining grandfathered has its own set of consequences, most notably strict limits on the ability of the plan sponsor to make plan design changes.