Episode 5 – Employers Health 2016 Update

Mike Stull (0:00)  

All right, we are ready to go. Welcome to the Employers Health Benecast, your monthly source for clarity on health benefit trends and strategies. This is your host, Mike Stull. 

Before we get started today, I just want to wish each of you on behalf of the Employers Health team members a happy 2017. We hope you and your family had a healthy and happy holiday season. Also, a thank you to everyone who took the time to listen to our last episode covering fiduciary duties. 

As always, we invite you to submit questions or topics of interest that you would like covered in future episodes.  

Keep an eye out for the announcement of the gift card giveaway winner from our last episode on our website. And in today’s episode, I’ll give you the code word for this month’s drawing of a $50 Visa gift card at some point during the show, so be sure to listen carefully. 

As we start out a new year, I want to recap our success over last year, what we’ve seen from pharmacy trends in 2016, and what we can anticipate in 2017. As we think about what we’ve accomplished together in 2016, I want to frame it in the context of what guides us at Employers Health, and what guides us as our GPS, which stands for growth, performance, and satisfaction.  

So let’s start off with growth. If anywhere you look in the health benefits arena or in the healthcare marketplace, you see a consolidating marketplace. So hospitals are buying physician offices, physician offices are consolidating, we see consolidation among supply chain members, we see consolidation with our vendors that we use for benefits. So everywhere we look, it’s a consolidating marketplace. 

And if you think about what that means for employers, it means that a single employer is actually losing leverage in the marketplace each and every day. So this is where the real value proposition of a coalition comes into play, is that it provides single employers with an opportunity to work together on areas where it makes sense to maintain their leverage or improve their leverage in the marketplace. Because let’s face it, in a lot of areas, we’re talking about a volume-based business here, and so scale matters, and that’s particularly true as it relates to pharmacy. 

(2:56) 

So how was our growth in 2016? Well, by all indicators, we had a really strong growth year. As a matter of context, we tried to grow our book of business as it relates to our pharmacy programs by about 10 percent every year. So at a billion dollars, that’s adding 100 million dollars in new pharmacy spend to our program through new business. 

This year, for 1-1-2017, we actually added about 120 million to our programs with CVS and Optum. So exceeded our growth target, and it now brings our state count in terms of where our members are located up to 33 states. And this is impressive in this marketplace, in that when you think about coalitions, we probably have the most scrutinized contract in the marketplace. 

The coalitions that are really growing are consultant-led coalitions run by the likes of Willis-Towers Watson, Aon Hewitt, and Mercer. And if you think about how they win business, they sell it to their own clients. So it’s not evaluated by an outside party. 

The way we’re winning business is by being evaluated by all the major consulting houses and all the niche PBM consultants in the marketplace. So to be able to withstand that type of scrutinization by such a broad array of consultants says something about the value of our contract. And I think the key to success with our contract is that we’re not focused on creating uniqueness just for the sake of uniqueness. 

A lot of companies out there and a lot of other groups out there try to figure out what the new flashy thing is that they’re going to market to their clients and prospective clients. And what we try to do each, and every year is look at our utilization, look at our data, look at where the marketplace is going, and then figure out what we can do from a contractual perspective to get the most bang for the buck. And this means that our deal is not always going to be the flashiest. 

(5:17) 

If you think back 10 years ago when the whole movement around transparent or pass-through pricing models hit the marketplace, we continually said it may make sense for some plain sponsors, but it certainly doesn’t make sense for all plain sponsors. And what are we seeing today? Well, we’re seeing a movement back towards a traditional pricing model. It’s actually a hybrid pricing model where there’s spread pricing at retail and mail and specialty and a 100% pass-through on the rebates. 

And guess what? That’s exactly the contract that we’ve had in place over the past several years. So I like to think that the coalition is ahead of the curve, and we stay ahead of the curve by not trying to get too flashy or trying to create differentiation purely for the sake of doing things a little differently. In those cases, doing things differently doesn’t always mean adding value to your clients, and that’s what we’re concerned about first and foremost. 

We’re approached by many third parties in terms of what could we do differently. And again, they become so hyper-focused on a particular element of the PBM contract that they do so at a detriment to the rest of their contract. So I can go out and negotiate any particular piece of the pharmacy contract that I want to, but you better believe that there’s going to be a trade-off involved in order for me to get done what I want to get done. 

And what I see way too often out in the marketplace is this hyper-focus with no regard to the rest of the deal of a certain issue or a certain component of the pharmacy piece that gets a lot of attention and people are willing to give up the farm in order to get a change in their contract. And that change in the contract typically isn’t worth the trade-off. So that’s a long way of saying that growth was really good in 2016. 

And thank you to our new members. Thank you to our existing members who make it possible for us to continue to grow by working collaboratively with us. And thank you to all the consulting houses out there that trust us in placing your clients in our program. 

(7:51) 

The last conversation kind of plays into performance. So on the performance perspective, the P in GPS, our aim is really to enable our members to be a success. You’ll hear from us this year a lot the tagline, professional benefits organization. 

And we’ve tried to think of what are we really as Employers Health and outside of collaboration and we’ve referred to ourselves as a coalition for a number of years and you’ll continue to hear that term. But deep down, what are we really? 

We’re really here to make sure that our clients succeed. And the people that we work with most often at our clients are benefits professionals. 

And so the professional benefits organization is a tagline that really, we’ve put together to try to represent that we are here solely for the purpose of helping our members be a success. Because when you all are a success, we are a success as an organization. So how are members getting value out of our organization? So if we look at how our members ranked our services and programs, group purchasing, obviously, no surprise ranks at the top of the list as the most valuable. 

And so let’s talk about what’s happening with group purchasing and in particular, again, let’s turn to pharmacy. So in 2016, our trend was 2.6%. That’s our gross trend and that’s before rebates. So that number will be adjusted as we reconcile at the end of the year, and we get additional data in. 

But at a start, 2.6% is below what I’ve seen most of the national benchmarks at from the PBMs. When we factor in rebates and it goes down even more, our book of business will be trending much better than the marketplace. What’s that driven by? Well, what’s contributing positively to that are the market check improvements. 

(9:54) 

Again, we do the market check each and every year. It gives us an opportunity to look at the performance or the value of our contract versus other coalitions, jumbo employers, mid-market employers and small employers throughout the marketplace and see where we might need to make some adjustments. This year, on average, across our book of business, the market check led to pricing improvements around 7%, actually in excess of 7%. So the market check helps drive down the trend.  

What else? Well, a reduction in hep C utilization so far in 2016. If we remember in 2015, the utilization of Harvoni and Sovaldi shot up. 

It was a big cost item for a lot of our members. Also keep in mind that it was a 12-week therapy. Once patients went through the 12 weeks, there was a high cure rate, and so there was discontinuation of therapy. 

That’s why we see in 2016 now the reduction in utilization, and that reduction is in the neighborhood of about 37%. A big driver of a downward trend for the reduction in hep C utilization.  

What’s increasing our trend? Drug price inflation. 

You see drug price inflation in the headlines almost on a daily basis, and so we do things within our contract, including the market check, to try to mitigate the effects of price inflation.  

We’re also seeing an uptick in the utilization and the drug price for rheumatoid arthritis medications. As you may know, Humira, which is the big drug on the pharmacy side for this category or from the inflammatory category in general, is set to get a biosimilar in the marketplace, and so we’ve seen the price of that drug increase quite dramatically. 

Oncology meds and then combo meds kind of round out the other two areas where we see upward drivers of trend.  

(12:04) 

The second most valued opportunity for our members are in the area of networking and learning opportunities, and this has been second most valued for pretty much all the years that we’ve done our member satisfaction survey. In 2016, we actually hosted 38 of these networking and learning events. We added the Employers Health Benecast.  

We gave a refresh to our e-notes that goes out on a monthly basis. Hopefully, you noticed that our magazine has changed up, so EH Connect. 

We used to do more of a newsletter on a quarterly basis. We’ve cut back the frequency of EH Connect and we’ve increased the quality and the content. The neat thing about EH Connect is that most if not all of the content in this magazine is created by our own team members, so when you talk about the expertise that we have on our team, it’s showcased every time we put out an edition of EH Connect. 

Definitely encourage you to make sure you’re reading that magazine, and you can check out the website where we’ve created white papers of a lot of those articles for you to go back and reference.  

(13:27) 

We’ve also, with the addition of Emily Geig and Emily Clevenger in our marketing department, we’ve increased our social media presence, so you’ll note that we have an Employers Health Twitter account. We also have an Employers Health LinkedIn account, and then finally our annual report, which we put out at the beginning of each year. 

We’ll be expecting that in the next month and a half or so. It continues to be a popular way for us to communicate our value out to our existing members and then also to prospective members, and kudos to the marketing team and our partners at Grabowski and Company. The annual report continues to win marketing awards for just the quality of how it’s put together on an annual basis. 

So, from a performance perspective, things were pretty good in 2016. So, how about satisfaction? Well, member satisfaction and engagement are obviously really important to us as a membership organization, and we measure satisfaction and engagement on an annual basis. Satisfaction through our member satisfaction survey and engagement through a host of tracking mechanisms where we look at how we engage with our member organizations and also how those member organizations engage with us. 

So, as it relates to the member satisfaction survey, we look at kind of two key metrics. One is participation, so how many of our members are actually responding to the survey, and I’m happy to report that we had the highest number of participants this past year as it relates to filling out the survey, and it’s not a short survey. A lot of appreciation goes out to those members that took the time to go through and fill out that survey. 

Also, from a results perspective, we ask for an overall satisfaction score with employer’s health. We rank that on a five-point scale, and we have, for the five years that we’ve done the member satisfaction survey, we’ve set out to get a score higher than 4.6, and I’m really pleased to say that we’ve exceeded that for five out of five years. This year, our score came in at 4.67, so again, our fifth year in a row over the five years that we’ve actually surveyed the membership specifically on satisfaction that we’ve scored over that benchmark, so that’s absolutely fantastic, and if we look at members that have been here, been a member for more than a year, 100% would recommend employer’s health, and 100% mentioned that they would renew. 

I’m really excited about the level of satisfaction that our members have for our team, and again, a special thank you really to everyone, both on the employer’s health team and at our member organizations, because without the collaboration that we all work on a daily basis, none of this is possible. Again, thank you to everyone.  

(16:47) 

So, growth performance satisfaction, if we measure 2016 as it relates to those three kinds of key metrics or key focus areas, we had a really good 2016, and looking forward to a good 2017 as well, and now it’s time for employer’s health news, so what’s happening at employer’s health? Well, we’re committed to providing learning and networking opportunities to our membership, as I mentioned earlier, and we’re pleased to announce the dates for our annual symposia in Canton and Cincinnati, so please be sure to save the date for the Canton Symposium, which will be on May 18th, 2017, and the Cincinnati Symposium, which will be on June 22nd, 2017. 

So again, May 18th in Canton and June 22nd in Cincinnati, and we’re working on an impressive list of speakers. Our marketing and events team has really been working at getting some great presentations lined up for you, and as you may have seen on our LinkedIn or Twitter page, we secured a keynote from Dr. Donna Shalala, who was the former Secretary of Health and Human Services under President Bill Clinton. She was the president at the University of Miami in Miami, Florida, and also has been running the Clinton Foundation for the past couple years, so really excited to have Dr. Shalala with us in Canton. 

Our events team is also working on several other exciting members-only learning opportunities for 2017, including our benefits roundtables. You can find more information about these opportunities as they are announced on our website at employershealthco.com and on our LinkedIn and Twitter page, and again, I’ll say it, if you’re on LinkedIn, I would encourage you to like the LinkedIn page. Things are moving rapidly within the organization. 

It is the quickest way to find out about what new things are going on with Employers Health.  

From a staffing perspective, three announcements. First, we’re still interviewing for an account management team member. 

As I mentioned earlier, we try to add at least 100 million in new pharmacy spend to our programs each year, and with that growth, we need additional team members to make sure that we’re delivering on the strong value proposition that we have with our members and that they’ve come to expect from us. So, account management team member. Second, we hired a new business development director. 

Michael L. joins our team, and Michael will be working out of his house in Denver, Colorado. Michael will have responsibility for the Northwest and the West Coast. You can check out Michael’s bio on our website. Impressive experience and education credentials, and I think he’ll be a great addition to our team.  

And then finally, I’d be remiss if I didn’t throw out that we have two team members celebrating 10 years with Employers Health, and that’s Colleen Gehring and Marcus Miles in our Canton office. And Colleen and Marcus have been instrumental in the growth of the organization and really just the improvement that we see on an annual basis. 

They’ve been a part of this for 10 years now and certainly are a big part of why we’ve been able to do the things that we’ve done together with our members. So, congratulations to Marcus and Colleen.  

(20:50) 

And finally, we’re in the process of closing nominations for the Employers Health Excellence and Benefits Award, which will recognize the contribution of an outstanding individual in the field of employee benefits. 

Individuals from Employers Health member companies are eligible to be nominated, and you can learn more about the nomination and evaluation process at excellenceandbenefits.com. I know we’ve received a couple great nominations already. If you are still out there, you can still submit a nomination, but I know that we’re closing that here pretty quickly so that we can get the nomination to the third-party judges and have an award winner ready to name at our May Symposium in Canton. So, that’s the Employers Health Excellence and Benefits Award. 

Again, there’s always something new at Employers Health, and the best way to keep up on what’s new is to follow us on LinkedIn or Twitter. And don’t forget to submit your questions so that we can answer them in upcoming editions of the Employers Health Benecast. Also, if you’d like to be considered for the $50 Visa gift card, the code word for this month is “experience”. 

So, please submit that code word, “experience,” along with your name and email address using the link on the landing page of the website.  

And that’s going to conclude this month’s episode. Thank you again for taking the time to listen. 

And more importantly, thank you for your continued membership and collaboration with the Employers Health team. Again, don’t forget to submit your questions, and we’ll make sure to answer them in an upcoming edition of the podcast. We hope everyone has a great 2017. 

I hope that it’s off to a good start.  

Be well, and we’ll see you real soon.