The Trillium Drug Program, part 2: Avoiding quick fixes
BY Patti Ryan | May 21, 2015
In the second part of a four-part series, Patti Ryan looks at how strategies that lead to short-term gain cause long-term pain — and how this reality needs to be communicated. In part one, she examined small businesses’ inability to make the Trillium Drug Program work for them.
Rising drug claims resulting from new drugs are driving renewal increases to new heights because many insurers use an experience-based model where businesses with higher claims pay higher costs.
“Too few advisors are aware of how claims for these sorts of treatments will affect renewals, because they are uniquely non-recurring,” says Patriarche.
Small businesses naturally want to avoid sharp renewal increases, but when it comes to hepatitis C, they need to be wary of responding with short-term fixes that don’t make sense for the long run, as these are one-time claims.
The crux of the issue is that the simplest way for many employers to cope with dramatic renewal increases is to impose a drug cap—but since drugs to treat hepatitis C represent a complete cure, the reality is that the spike is likely to be a one-time event for any given employee, and possibly for the entire business. Solving the problem by implementing a drug cap (or switching to a health spending account model) penalizes all other employees in company for years to come.
The takeaway is that advisors and employers both have to understand there is no quick fix, says Spark. “Every route has obstacles,” he says. “You can’t just cap everything and dump the rest to Trillium. It’s going to take a lot of work and cooperation from numerous people involved.”
However complicated it is, say advisors, having Trillium pick up the tab for catastrophic drug claims, instead of insurers, is key.
Who’s at fault?
Done properly, Trillium becomes the first payer of an employee’s eligible drug costs once the person has reached their out-of-pocket deductible (4% of net income from the previous taxation year). But instead, insurance companies have been paying first. As a result, Trillium tends never to get the bill, says Patriarche. When employees submit claims for expensive drugs, small businesses’ insurance rates can skyrocket.
To break this cycle, far more claims need to be paid by Trillium, say advisors. The challenge, in the coming weeks and months, will be in educating everyone involved—brokers, advisors, employers, employees, adjudicators, the government, and others—to make this shift happen.