1 / 33

2007 Annual Meeting ● Assemblée annuelle 2007 Vancouver

Canadian Institute of Actuaries. L’Institut canadien des actuaires. 2007 Annual Meeting ● Assemblée annuelle 2007 Vancouver. Large Drug claims IP32 Friday 10.30am. Tim Clarke Jim Lewis Gary Walters. Agenda. Introduction (Gary) Employer/Consultants’ views (Tim)

darlene
Download Presentation

2007 Annual Meeting ● Assemblée annuelle 2007 Vancouver

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Canadian Institute of Actuaries L’Institut canadien des actuaires 2007 Annual Meeting ●Assemblée annuelle 2007 Vancouver

  2. Large Drug claimsIP32 Friday 10.30am Tim Clarke Jim Lewis Gary Walters

  3. Agenda • Introduction (Gary) • Employer/Consultants’ views (Tim) • Insurance Company viewpoint (Jim) • Survey results (Gary) • Discussion (You)

  4. Large Drug Claims • Most benefit plans pay for items not covered by government • Except for PQ, MB, SK & BC expensive drugs are payable by employer plans • Increasing number of specialist expensive drugs available • Some maintenance, some one-off

  5. The dilemmas • Maintenance drug – known cost so not insurance • Government finding ways to not pay new drugs • Changes so rapid difficult to even price for next 15 months • Many such drugs don’t cure or significantly improve or extend life • Employer feels obligation to pay • Is cost/benefit analysis for a drug even possible?

  6. High Cost Prescription Drugs Employer and Consultant Perspectives

  7. Background • Many significant breakthrough drugs continue to be introduced • Unit cost of these drugs increasing due to: • Research and production costs (e.g. biologics) • Targeted treatments (ie. Fewer patients per drug) • Increased legal risks for producers

  8. Background • Examples of new drugs in recent years:

  9. Who Pays? • Key stakeholders – • Government • Employers • Individuals • Government • Increasingly cost conscious • In many cases question the added value of new products • Delayed decisions • Decisions to not cover many new / expensive products • Varies significantly by province • Employers • Often coverage by default when the government does not pay

  10. Employer Perspective • Balancing act • Employee health • Cost • Most employers want to cover breakthrough drugs • Plan Design / Risk management considerations • Plan maximums • Out-of-pocket maximums • Stop-loss

  11. Employer Perspectives • Large employers • ASO benefit plans • Generally high stop-loss points (e.g $50,000) • Financial impact of one or two very large claims not significant • Willing to accept greater risk • Small employers • Insured or refund accounting • Less ability to accept risk of large claims • Want to “insure” risks – both known and unknown • All employers understanding • Stop-loss has no caps, limits or pre-existing conditions • If we’re transferring risk, why would we buy anything else?

  12. High Cost Prescription Drugs Insurer Perspectives

  13. Problems • Moral / ethical / emotional issues abound • Who will / should pay? • Ultimately insurance companies do not pay (this fact seems to overlooked by Governments as they make decisions) • Historically Governments have paid for drugs administered in hospital, consumers / employers paid for drugs acquired outside of hospital setting (this is changing) • High cost, low frequency items make these drugs ideally suited for insurance concept (National PharmaCare or private insurance?)

  14. Problems • Do employers really want to pay? • Do employers really want to be in the position of having to make this decision?

  15. Insurer Responses to Date • Cancer drug specific issues • Insurers have reviewed contract wording to understand what is contractually promised • Lobbying through CLHIA • Need to prepare for reality that: • Governments are likely not to pick these costs up • No National consistency • Must understand needs of the customers • Employer perspectives • Employee perspectives • Ensure products available to meet these needs

  16. Insurer Responses to Date • Other High Cost Drugs • Generally paid under most standard contracts • Developed managed drug plans • Formulary plans • Prior authorization protocols • Why have these not taken off to a greater extent

  17. Insurer Concerns – Large Insurer Perspective • Balancing antiselection / spread of risk issues • Large claims will not “ruin” a large insurer based on current frequency / amounts • Concern is not getting more than “fair share” of claims

  18. Insurer Concerns – Large Insurer Perspective • Pooling of these claims not a problem but there are concerns about industry practices • do some insurers: • Refuse to quote on groups with large recurring claims • Set pooling charges on quote based on past claims/existence of recurring claims • Set pooling charges on renewal based on experience • Do clients understand differences in pooling practices (to the extent they exist) and their impact on price

  19. Small Insurer • Expect less than one claim – no spread of risk • Impact of a single ongoing claim in their pool is significant • May never be able to cover cost from pool charges • Need pre-ex, cannot takeover existing claims, etc

  20. Large drug claim pooling Survey Results

  21. Survey of current Insurer pool practices • 13 companies responded representing almost $9.5B of insured & ASO medical premium & equivalents • Small, Medium & Large insurers • Those only in Quebec – not relevant • All outside Quebec do offer some pooling • Sought info on: • What groups can get pooling at what level • Cost • What is actually pooled • Client/consultant/broker awareness

  22. Survey (1) • All companies offer compulsory pooling for small groups • Most companies make it compulsory for large insured groups as well • Available for Refund & ASO

  23. Survey (2) • Level usually based on # lives, sometimes at client’s choice • $5K to $100K pooling levels offered • Usually pool claims by individual, sometimes by certificate • 7 companies will grandfather prior pooling but at their own pooling level • Equally $ charge and % premium

  24. Survey (3) • Does pooling charge vary by: • Gp’s experience before joining pool • Gp’s experience after joining pool • Known future claims

  25. Survey (3) • Does pooling charge vary by: • Gp’s experience before joining pool • 2 companies yes • Gp’s experience after joining pool • 4 companies yes • Known future claims • 2 companies yes

  26. Survey (4) • All separate this from Out of Country • Total Drugs or total medical costs? • Pool treatment commenced before pooling? • Pre-ex on medical condition before pooling?

  27. Survey (4) • All separate this from Out of Country • Total Drugs or total medical costs? • Majority medical • Pool treatment commenced before pooling? • 4 No, 1 maybe • Pre-ex on medical condition before pooling? • 2 Yes

  28. Survey (5) • Any exclusions on an individual joining a pooled group? • Any direct or indirect out-of-pocket maximums created by the pooling?

  29. Survey (5) • Any exclusions on an individual joining a pooled group? • None • Any direct or indirect out-of-pocket maximums created by the pooling? • 2 companies yes

  30. Survey (6) • Decline to quote a group with past large medical claim? • Decline to renew a group with a history of making pool claims from multiple individuals? • Decline to renew a group with an ongoing pooled claim?

  31. Survey (6) • Decline to quote a group with past large medical claim? • 6 yes, 3 maybe • Decline to renew a group with a history of making pool claims from multiple individuals? • 2 yes • Decline to renew a group with an ongoing pooled claim? • 2 yes

  32. Survey (7) • Only 5 companies feel that plan sponsors are aware of and asking about the issue • Only 2 feel that brokers aren’t aware and asking • Half companies are not happy with the risks • All believe that this is becoming a bigger issue

  33. Your thoughts?

More Related