Employer Utilization Management Prioritizes Health Benefit Cost Over Patient Care, Survey Finds

Findings of a survey of large employers indicate that utilization management tools are ineffective in controlling health care costs for employees and may lead to barriers to treatment.

Employer efforts to control short-term organizational costs through utilization management tools may consequently lead to increasing health care costs and barriers to care for employees, according to survey findings published today by CancerCare.

Health care affordability has been a growing concern among employers, with recent Kaiser Family Foundation (KFF) findings indicating that single and family premiums for employer-sponsored health insurance are rising more quickly than wages and inflation.

Addressing health care spend has led employers to leverage utilization management tactics, including prior authorizations (PAs), step therapy, formulary design, co-pay accumulator programs, and specialty pharmacies. These strategies are intended to control cost, but they have been associated with delays to time-sensitive care for patients and costly administrative burdens for health care providers.

In seeking to gauge what factors are most important to employers in making health benefit decisions, the January 2022 CancerCare Employer Market Survey polled 50 executives from 50 large US employers who are responsible for the coverage of over 250,000 employees.

Findings showed that a majority of survey participants (94%) said employer organizational health care costs are more influential than any other factor when making health benefit decisions, including employee costs and issues.

Moreover, 98% of respondents said that direct costs are the most important information source in their benefits decision-making.

“Employers and their benefits consultants must keep in mind that the goal of employer-provided health coverage is delivering access to swift and effective treatment,” noted Patricia J. Goldsmith, chief executive officer, CancerCare. “When cost is the dominant factor in guiding employers’ benefits decision-making, employee health can pay the price…employers must take care in balancing cost savings with the real needs of their employees, especially those with serious or chronic illnesses.”

The survey’s accompanying press release provided added information on why certain utilization management tools compromise treatment and cause significant barriers to employees who need medical care:

  • PA: Most (93%) recently surveyed by the American Medical Association reported that PA was linked to delays in patient care, and 34% reported serious adverse events due to PA delays
  • Formulary design: Restrictive formularies—typically influenced more by pharmacy benefits manager (PBM) profit than efficacy or list price—can put needed drugs out of reach of patients
  • Step therapy: This can cause delays in effective treatment, increased costs to patients, and adverse effects or medical setbacks
  • Specialty pharmacies: When patients are required to use specific, usually PBM-owned, specialty pharmacies, it limits their choice as consumers and may result in difficulties receiving and refilling prescriptions
  • Co-pay accumulator programs: These exclude the dollar amount of financial co-pay assistance from deductibles and out-of-pocket ((OOP) totals, making it more difficult for patients to afford their medication while allowing health plans and pharmacy benefit managers to get paid twice

Overlooking increasing OOP prescription costs for employees can have a significant impact on employee health and subsequently employer health spend, noted the survey findings.

A 2019 KFF Health Tracking Poll showed that 29% of all adults report not taking their medicines as prescribed because of the cost—30% of whom report their condition got worse as a result (8% of the public overall)—19% didn’t fill a prescription, and 12% cut pills in half or skipped a dose.

For major diseases such as cancer, which accounts for 12% of employer health care spend, treatment costs continue to grow and are expected to reach $240 billion overall by 2023.

To advise benefits managers, human resources professionals, and executives on navigating and understanding the unintended consequences of utilization management, CancerCare recently published “The Employers’ Prescription for Employee Protection Toolkit: Best Practices for Prescription Drug Benefit Design.”

The toolkit includes 2 sections, which provide an introduction to utilization management and resources for employers.

“A strong benefit design can support productivity, help reduce long-term medical spending, attract and retain talented employees, and build satisfaction and loyalty, while meeting the needs of those with health problems,” said Goldsmith.

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