GroupNews – March 2020
Eckler’s GroupNews monthly newsletter provides commentary on the issues affecting Canadian group benefit plans.
In this edition:
- Report on 2020 health and dental trend factors
- Alberta expands coverage treatment for cystic fibrosis
- Alberta announces changes to non-urgent out-of-country health coverage
- Ontario government proposes plan to improve mental health and addictions system
- Ontario releases economic outlook and action plan for COVID-19
- Ontario announces plans to modernize home and community care
Benefit plan management
Report on 2020 health and dental trend factors
Every year, GroupNews surveys several insurance carriers to assess the health and dental trend factors (the expected increases in claims costs) they expect to use in their 2020 group insurance renewal ratings.
Trend factors are broadly influenced by inflation in the cost of medical and dental goods and services; utilization by eligible plan members; and the impact of newer, more expensive drugs and procedures.
Health
The insurers surveyed cited annual trend factors ranging from 11.2% to 13.0%. However, various types of health claims are subject to differing trend assumptions and as such, the trend factors for these claim types could fall outside of the range cited.
These include:
- Vision care: This coverage is usually limited to a maximum benefit every 12 or 24 months, which is typically lower than the average cost of eyewear. As such, and in the absence of any changes to the maximum by the plan sponsor, vision care claims are typically limited to a utilization trend (i.e., more people claiming the benefit than before).
- Generic drugs: Cost savings resulting from the capping of generic drugs relative to their brand-name equivalent are being eroded by the ongoing introduction of specialty drugs (i.e., drugs with annual treatment costs typically pegged at $10,000 or more).
- Paramedical benefits: The paramedical benefits trend continues to be higher than in prior years, especially given the growth in claims for massage, chiropractor and physiotherapy services. However, like vision care, these benefits usually have a maximum, either per practitioner or on a combined basis.
Dental
Insurers expect a 5.5% to 8.20% utilization trend PLUS a fee guide trend of 1.14% to 4.90%, depending on the province. This is a significant trend, and plan sponsors should keep it in mind when preparing for their next renewal.
Dental fees are regulated by provincial dental fee guides set by the dental associations. While fee guides determine the cost of each procedure, usage is increasing. Consumers are more aware of dental health today and there is more education for young children to catch problems early. Dentists are also more aware of the coverage provided under private plans and are promoting their services accordingly.
Impact: While plan sponsors may make the case for a lower trend factor if their claims base supports it, these “industry” trend factors continue to be higher than general inflation and will have an impact on 2020 renewal proposals.
Benefit plan management
Alberta expands coverage treatment for cystic fibrosis
Effective March 1, 2020, the Alberta government is expanding coverage of Kalydeco. The high-cost drug was first approved in 2014 for patients six years and older with cystic fibrosis under specific situations. Coverage is now available for children over six with cystic fibrosis under expanded conditions, as well as for adults with specific indications. Several other provinces cover the drug including Ontario, Saskatchewan and Manitoba.
Impact: Kalydeco costs $300,000+ annually per patient. Plans sponsors may experience savings to the extent that coverage for Kalydeco was provided for under the drug plan and their plan experienced claims for this drug. Plan sponsors may wish to have discussions with their pharmacy benefits manager to ensure proper coordination with the government plan.
Benefit plan management
Alberta announces changes to non-urgent out-of-country health coverage
The Alberta government has announced changes to its elective, non-urgent out-of-country health coverage policy.
Effective April 1, Albertans travelling in another country will no longer be covered for elective, non-urgent health services and routine lab tests. Alberta’s independent Out-of-Country Health Services Committee will continue to accept applications for funding of insured, medically necessary services that are not available in Canada. The changes do not affect coverage for emergency health services required
out-of-country, and the province will continue to offer partial reimbursements for insured emergency health services when travelling outside of Canada.
Impact: The change brings Alberta in line with most other Canadian jurisdictions. Currently only Quebec and Newfoundland and Labrador offer out-of-country coverage for elective, non-urgent health services.
Benefit plan management
Ontario government proposes plan to improve mental health and addictions system
The Ontario government has released details of the province’s Roadmap to Wellness: A Plan to Build Ontario’s Mental Health and Addictions System (Roadmap). Developed in consultation in various stakeholders, the Roadmap addresses the challenges facing mental health and addiction services, including:
- Long wait times;
- Inconsistent service quality from region to region;
- Lack of evidence-based funding;
- An absence of data, limiting effective oversight and accountability; and
- Little understanding of available services and how to access them.
The Roadmap focuses on implementing changes based on four “pillars”:
- Improving quality and enhancing services through the development of a core services framework;
- Expanding existing services and investing in priority areas such as support for child and youth mental health, as well as mental health support for police, correctional staff and first responders;
- Implementing innovative solutions and filling gaps in care, including the launch of programs that provide access to cognitive behaviour therapy to help patients manage mental health issues; and
- Coordinating access to mental health and addiction core services and identifying mental health and addiction supports.
Impact: The changes should result in better and more timely access to services for addictions and mental health services, which could reduce wait times and allow more Ontarians to get the help they need to reduce time off from work. Additionally, expanded coverage for programs that help patients manage mental health issues might result in fewer days off from work.
Legal and legislative news
Ontario releases economic outlook and action plan for COVID-19
On March 25, 2020, the Ontario government released Ontario’s Action Plan: Responding to COVID‑19 (Action Plan), the government’s response to the ongoing COVID-19 crisis. The Action Plan replaced the previously planned 2020 provincial budget and is a direct response to the unprecedented economic circumstances brought on by the COVID-19 crisis. The Action Plan consists of an economic and fiscal update designed to provide a one-year outlook for the province based on economic projections, and a detailed action plan outlining the province’s immediate response to issues related to COVID-19 and measures to protect the health and welfare of Ontario residents, employers and institutions. Details of the measures related to health and benefits introduced in the Action Plan and their impact include:
Employer Assistance
The Action Plan provides the following assistance to employers:
- Doubling the EHT payroll exemption threshold from $490,000 to $1,000,000 for 2020, effectively reducing the EHT burden for many small businesses;
- Deferring required payments to the Workplace Safety and Insurance Board for six months; and
- Providing five months of interest and penalty relief for businesses to file and make payments for the majority of provincially administered taxes.
Health Care and Benefits
While most of the Action Plan funding is designated for the fight against COVID-19, there is some funding for longer term improvements, including:
- $62 million to improve the availability of physicians in rural and other remote locations, nurses in hospitals, and personal support workers in areas of need;
- $23.8 million for improvement to virtual care, including video, email and phone visits with physicians; and
- $35 million to fund Canadian Blood Services, including a new plasma site.
Impact: While much of the Action Plan serves the province in combatting the COVID-19 crisis and provides much-needed support to the economy and the health care system in general, the majority of the measures introduced are not seen as being a direct benefit to the employer-sponsored benefit plans except to the extent that the public plan improves services and reduces the trickle-down effect on the private payer.
Legal and legislative news
Ontario announces plans to modernize home and community care
On February 25, 2020, the Ontario government released Bill 175, Connecting People to Home and Community Care Act, 2020 (Bill 175). The bill is intended to improve funding and access to home and community care for patients.
Bill 175 will provide patients with easier access to home and community care by allowing hospitals and primary care settings to arrange home care directly for patients, rather than referring them to a third-party organization. The bill will also enable frontline care providers to make more decisions on care and provide for more remote monitoring and video conferencing to provide specialized care.
Impact: The details in the legislation and regulatory changes being proposed will reveal more about the government’s plans, but the stated goals of Bill 175 should help patients receive the services they need with fewer administrative barriers and allow more patients to receive care in their homes rather than in hospital settings. Allowing home care could also reduce doctors’ visits and wait times for patients.
This publication has been prepared by the GroupNews editorial board for general information and does not constitute professional advice. The information contained herein is based on currently available sources and analysis. The data used may be from third-party sources that Eckler has not independently verified, validated, or audited. They make no representations or warranties with respect to the accuracy of the information, nor whether it is suitable for the purposes to which it is put by users. The information is not intended to be taken as advice with respect to any individual situation and cannot be relied upon as such.
Current editorial board members are: Andrew Tsoi-A-Sue, Ellen Whelan, Charlene Milton, Alyssa Hodder, Philippe Laplante, and Nick Gubbay.