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Healthcare roundup: A focus on rising costs, telehealth privacy and psychedelics

Some direct-to-consumer telehealth companies shared personal data

By Jeff Levin-Scherz, MD, MBA | January 17, 2023

Our population health leader weighs in on healthcare costs, privacy in telehealth and the use of psychedelics for depression in this monthly update.
Health and Benefits|Benessere integrato

Healthcare costs are the highest they’ve been in over a decade. Driving the trend is the combination of:

  • Overall inflation
  • Provider consolidation
  • Medical progress

We expect costs to increase further over the next two years, as many health plan multiyear contracts are renegotiated. Lowering health insurance plan costs will be challenging for employers, which are already buffeted by other rising costs and the threat of an economic downturn.

There are three ways employers can lower healthcare costs:

  1. Have fewer covered members by decreasing headcount, shifting employees/dependents to other plans, or moving employees to the individual marketplace if they are eligible for federal subsidies.
  2. Decrease company-provided subsidization by shifting more premium or out-of-pocket costs to employees. This could hurt recruitment and retention given the current labor shortage and high medical costs many employees already face, even if they have employer-sponsored health insurance.
  3. Increase healthcare efficiency with higher value providers, better contracts or medical management programs, which can improve the health of your employees. It’s not always easy or quick to increase healthcare efficiency, but efforts here can pay large dividends. Healthcare costs in the U.S. are higher than elsewhere mostly due to high prices rather than overutilization. Therefore, employers should have some focus on unit prices.

Employer characteristics determine which employers can benefit from certain programs or initiatives. For instance, smaller employers that face high costs of contracting for programs with multiple vendors may benefit from programs offered through their health plan carrier or pharmacy benefit manager.

The demographics of a population matter too:

  • An employer with a large portion of younger employees might benefit more from a program to improve fertility and maternity care.
  • An employer with a high average age might give more consideration to a program for congestive heart failure or chronic obstructive pulmonary disease.
  • Employees with high rates of diabetes or kidney disease could benefit most from programs to address members with these conditions.

There is a huge difference in provider unit price, which is usually unrelated to quality or outcomes. Therefore, centers of excellence (COE) or high-performance network programs that direct members to the highest value providers can provide large cost savings. Some COEs also offer bundled prices. These programs are most effective with large financial incentives, which should be carefully developed to balance member and company cost impacts.

Site of care matters too. Programs to steer patients to ambulatory care centers for infusions and surgery can also decrease costs compared to care at hospitals.

Costs for newly approved, brand-name pharmaceutical products continue to increase rapidly, even as costs for generic drugs decline. Utilization management programs help ensure these drugs are used prudently and can lower costs. Manufacturer coupons that lower employer costs have been controversial but can lead to short-term cost savings.

New biosimilars for some expensive biologic brand-name anti-inflammatory drugs are expected in 2023 and beyond. Biosimilars should lead to some cost savings, but not as large as discounts for generic “small molecule” drugs, since the cost of production for most biologics is substantially higher.

Many look to preventive care to lower total healthcare costs, but only childhood vaccinations and birth control save substantial medical claim costs. Most other preventive care provides longer or better-quality life at a reasonable cost (but no net cost savings). Tobacco cessation programs can decrease costs modestly, and encouraging lower cost colorectal cancer screening (fecal immunochemical tests rather than colonoscopy) could lower costs and increase the acceptability of screening.

Most medical costs are incurred by a small number of plan members:

  • 1% of the population is responsible for over 20% of costs.
  • 5% of the population represents 50% of total costs.

Diligent nurse care management of this group can decrease complications and lower healthcare costs.

For some employers, reviewing and putting health plan or pharmacy benefit managers out for rebid can be a source of savings, although this is a process that usually takes over a year.

Implications for employers:

  • Managing healthcare costs will likely be difficult for the next few years. Targeted efforts can help control employer costs while maintaining affordability for employees and their families.
  • Employers should focus on the demographics and claims experience of their covered population.

Some telehealth companies send sensitive health information to Facebook and others

StatNews reported last month that all but one of 50 direct-to-consumer telehealth companies they evaluated were passing along highly sensitive personal data to big technology companies. The telehealth companies generally consider themselves “platforms” and not healthcare providers and contend that they are not technically obligated to abide by the Health Information Privacy and Accountability Act (HIPAA), even though many of them claim to be HIPAA-compliant.

Telehealth companies sent health information including such sensitive items as suicidality, illegal drug use and drugs prescribed. This data was often associated with individual identifiers such as name, address, email address, phone number and IP address. While most telehealth companies in this report provide services directly to members of the public, some of them also sell services to employers, and more of them intend to do so.

This comes just weeks after The Wall Street Journal reported that some healthcare delivery systems were transmitting sensitive personal data to big tech companies including Microsoft, IBM and Amazon. This included data associated with virtual visits with clinicians. Many of these providers reported that they were changing their systems to prevent such data transmission.

The Health and Human Services Office of Civil Rights issued a bulletin last week stating that HIPAA regulated entities are “not permitted to use tracking technologies in a manner that would result in impermissible disclosures of protected health information to tracking technology vendors.” Vendors providing health services to employer-sponsored healthcare members are clearly HIPAA regulated entities and should abide by this bulletin.

Implications for employers:

  • Current federal regulations protecting patient privacy have substantial loopholes that can allow highly sensitive data to be acquired by third parties.
  • Public scrutiny arising from this reporting can improve vendor behavior even without regulatory intervention.
  • Employers should carefully evaluate the privacy and security capabilities of their vendors, and check with counsel to determine if they need to put a business associate agreement in place with vendors that are dealing with member-protected health information.

FDA-approved psychedelics can help with treatment of resistant depression, but have cost and availability issues

There is a growing body of evidence that psychedelics are effective for some people who have depression who have not been successfully treated by other means.

Ketamine, an intravenous antidepressant, has been used off-label for this for many years. A component of ketamine, esketamine (Spravato) nasal spray was approved for treatment-resistant depression in 2019. It has not been used widely because it requires observed administration one to two times a week for eight weeks. A course of therapy costs over $7,000. This therapy is approved for those who have major depression and are acutely suicidal and is generally reserved for those who would otherwise be treated with electroconvulsive therapy, which is effective but sometimes has serious side effects.

National carriers generally provide coverage for Spravato with prior authorization, but some private clinics don’t accept insurance and charge patients $8,000 to $10,000 out-of-pocket for a course of therapy. A new third-party administrator, Enthea, recently received $2 million in seed funding and has announced intentions to provide a set of credentialed providers for this service, positioning this as a perk for progressive employers.

Clinical trials are underway to determine effectiveness of other psychedelics:

  • Psilocybin (psychedelic mushrooms) for depression
  • MDMA (otherwise known as ecstasy) for post-traumatic stress disorder

Implications for employers:

  • Employees may already be accessing psychedelics out of pocket through in-person treatment centers or through vendors who sell directly to patients.
  • Some employees will be able to gain access to esketamine through conventional health plans. Others might be treated with intravenous ketamine, which is far less expensive but not FDA approved for this indication.
  • I view this therapy as an important clinical tool, but I don’t think it should be considered a “workplace perk.”

Population Health Leader, Health and Benefits, North America

Jeff is an internal medicine physician and has led WTW’s clinical response to COVID-19 and other health-related topics. He has served in leadership roles in provider organizations and a health plan and is an Assistant Professor at Harvard Chan School of Public Health.

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