Part 4: Health and Pharmacy Plan Design

Examines the changes employers are making to health and prescription drug benefits, including CDHPs and specialty pharmacy management.

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August 23, 2022

This survey explores the employers’ views on health and well-being, health care delivery reform, prescription drugs and health care costs.

Key Takeaways

  • Employers made relatively few changes to plan design, but an increase or expansion of high-performance networks is an emerging trend.
  • Cost-sharing shifted in 2022, with employers taking on more of the burden of rising costs of premiums.
  • While the last several years have seen a move away from full replacement and a renewed focus on more plan choice, consumer-directed health plans continue to be the highest enrolled plan.
  • Prescription drug costs are 21% of overall health care spend, yet there are ample opportunities for employers to implement tactics to control it.

Although employers made few changes in plan design and eligibility in 2022, they did take on more of the cost of rising premiums. Prescription drug costs continue to rise. Concern about costs is growing, but opportunities exist to implement tactics to control them.

Few Changes in Plan Design

For 2023, most employers are not making any major plan design or eligibility changes (Figure 4.1). In a trend noted last year, employers are continuing to implement or expand high-performance networks (HPNs). Although consumer-directed health plans (CDHPs) continue to be the highest enrolled plans, the numbers have been slowly declining since 2019, moving from 55% to 52%. On the other hand, preferred provider organizations (PPOs) are making gains as the highest enrolled plan in the relative near future, going up from 38% in 2019 to 44% in 2022 (Figure 4.2).

The most common changes taking place in 2023 are implementing HPNs (16%), implementing advanced primary care solutions (10%) and extending select benefits to more employees (10%). 
Figure 4.1: Plan Design or Eligibility Changes, 2023
52% of employers say the plan with the highest enrollment is a CDHP, followed by PPOs (44%). 
Figure 4.2: Most Popular Plan Type, 2019-2022

CHDPS Maintain While Move Toward Plan Choice Grows

For the fifth year in a row, full replacement (i.e., CDHPs offered as the only option) has declined, while more employers are bringing choice back into their lineup. In 2023, 75% of employers will offer CDHPs as an option, up three percentage points from 2022 (72%) and eight points from 2021 (67%). The percent of employers offering full replacement declined slightly, moving from 14% in 2022 to 13% in 2023. Median enrollment in CDHPs remained the same, at 50% for the last 2 years (Figure 4.3).

The percentage of employers only offering CDHPs will be 13% in 2023 (a decrease from 14% in 2022). 75% will offer CDHPs as an option (up from 72% in 2022). 
Figure 4.3: CDHP Offerings, 2013-2023

Cost-sharing Arrangements

To help with the rising costs of health care, employers increased their cost sharing for premiums for employees only, from 80% to 82%. This increase covers PPOs and CDHPs, and the numbers may vary between these two types of plans. Employees’ share went down, from 20% to 18%. Cost-sharing for families, as well as in-network deductibles and in-network out-of-pocket costs, remained the same (Figure 4.4).

In 2022, employers will pay for 82% of premiums for employee-only coverage (80% for family coverage). In-network deductibles of $1,500 for employee-only coverage ($3,000 for family coverage). In-network OOP maximums of $3,500 for employee-only coverage ($7,000 for family coverage). 
Figure 4.4: Cost-sharing Arrangements for Highest Enrolled Plan, 2021-2022

Pharmacy Plan Design

Prescription drug costs continue to be a major concern for employers. Total health care cost attributed to pharmacy spend went up slightly between 2020 and 2021, increasing from 20% to 21%. As was found in 2020, specialty pharmacy alone made up 12% of overall health care spend. This amounts to over 50% of an employers’ drug spend dedicated to specialty pharmacy - illustrating the immense role specialty drugs play in employers’ overall health care cost strategy.

For the first time, employers were asked what percentage of overall pharmacy spend goes through the medical plan, an increasingly urgent area of focus due to the increased level of cost share paid through the medical plan. Employers reported that 20% of overall pharmacy spend goes through the medical plan (Figure 4.5).

21% of health care costs is spent on pharmacy overall, 12% is spent on specialty pharmacy and 20% of pharmacy spend goes through the medical plan. 
Figure 4.5: Employers’ Pharmacy Spend (Median), 2021

As prices continue to rise, most employers—87%—think that competition within the prescription drug market is needed in order to keep prices affordable. To accomplish this goal, 62% of employers believe that a combination of market-based and government solutions is needed, the same number as in the prior year (Figure 4.6).

62% of employers believe there needs to be market-based and government reform for a competitive prescription drug market, 20% believe their just needs to be market-based reform, and 6% believe their just needs to be government reform. 
Figure 4.6: Employers’ Opinions on Whether the Prescription Drug Market is Competitive, 2021-2022

Prescription Drug Costs a Major Concern, Yet Opportunities Remain

When employers were asked about their major pharmacy concerns, cost topped the list. Overall pharmacy trend, as well as patient affordability for maintenance medications and specialty drugs, are all part of the cost problem (Figure 4.7).

Employers are very concerned about pharmacy cost trend (56%), patient and plan affordability of gene therapies (45%), complexity of the supply chain (37%), and patient affordability of maintenance medications (22%). 
Figure 4.7: Top Pharmacy Benefit Concerns, 2022

Employers are aware of tactics that can help control costs in the areas of specialty pharmacy and high-cost therapy. For example, two approaches to manage specialty medications—prior authorization and site-of-care management—are gaining traction. Ninety-six percent of employers use prior authorization (whether the claim goes through the pharmacy or medical benefit), while 67% use site-of-care management strategies. However, there are other cost-saving tactics (Figure 4.8) that have not been widely deployed and may be good options for employers to consider in the future.

Employers use the following methods to manage specialty pharmacy: Prior authorization (96%), approval of a limited supply (69%), high-touch case management (67%) and site-of-care management (67%). 
Figure 4.8: Tactics to Manage Specialty Pharmacy, 2023


Biosimilars, which are lower-cost alternatives to some specialty drugs like those to treat cancer, are now covered more widely than they were in previous years. In 2023, nearly half (48%) will place biosimilars on the same tier as specialty drugs. A future opportunity for employers is to consider putting biosimilars on a lower tier as a more cost-effective option. For 2023, another cost-saving approach that employers are exploring is engaging with their PBM to help better promote biosimilars (Figure 4.9).

48% of employers cover biosimilars on the same tier as other specialty drugs, 19% have contract guarantees with PBMs, 16% have conducted education campaigns on biosimilars, 11% offer incentives to switch to biosimilars. 
Figure 4.9: Tactics to Manage Biosimilars, 2021-2023

Utilization of cost-saving tactics for high-cost therapies is projected to continue to grow through 2025. By then, the number of such therapies on the market will be significantly higher, making these strategies increasingly impactful. For example, the use of the tactic to delay inclusion at launch so that the PBM can determine safety and efficacy has increased steadily since 2020, rising from 26% to 46% for 2023 to 60% projected in 2024/2025. Other tactics follow a similar upward trajectory (Figure 4.10).

In 2023, 46% of employers will delay the inclusion of new, high-cost drugs on formulary, 21% will use indication- or outcomes-based pricing, and 19% have stop-loss insurance in place for specific drugs. 
Figure 4.10: Tactics to Address High-cost Therapies, 2020-2025

Shifting Away From the Rebate Model

Although employers have long expressed a desire to improve upon the rebate model, little progress has been made in this area. Alternative pricing models are based on the net price of medications (i.e., list price minus rebates, discounts and fees) and emphasize transparency. In 2022, 40% of employers noticed “slight” industry progress in creating alternatives to the rebate status quo, down from 49% in 2021. Another 32% reported “moderate” progress, an increase from the 26% noted last year. But 23% of employers said that no real progress has been made, about the same number reported in 2021 (Figure 4.11).

Numerous barriers stand in the way of reducing the impact of rebates on pharmacy contracting and gross-to-net price. Many stakeholders benefit from the rebates, decreasing the motivation to make significant changes. Nonetheless, as the numbers of those making progress have been rising each year, it is likely that employers will look to adopt alternative pricing models in the years to come.

37% of employers reported that moderate (or better) progress has been made in creating alternatives to a rebate-driven model. 40% reported slight progress. 23% reported no progress has been made. 
Figure 4.11 Progress in Creating Alternatives to Rebate-Driven Model, 2021-2022

Virtual Pharmacy Solutions and Digital Therapeutics

Although virtual health care has increased significantly since the pandemic, the pharmacy space has been slow to catch up, as fewer solutions are available. In 2022, only 10% of employers plan to leverage virtual pharmacy solutions and digital therapeutics, while 16% plan to do so in 2023. But the number of employers considering implementing these solutions declined from 2022’s level of 29% to 26% (Figure 4.12). Since these approaches are relatively new, employers may be unclear what benefits virtual pharmacy solutions can deliver and how they differ from what the traditional PBM may offer.

Digital therapeutics: Software programs or apps that physicians can prescribe as stand-alone or in combination with pharmacotherapy treatment.

Virtual pharmacy solutions: Remote provision of certain prescriptions (e.g., contraceptives) via a web-based platform and/or smartphone application.

16% will leverage virtual pharmacy solutions or digital therapeutics (up from 10% in 2022). Another 26% are considering doing so by 2025.  
Figure 4.12: Virtual Pharmacy Solutions and Digital Therapeutics, 2022-2023

Digital forms of treatment are convenient for individuals and can remove some of the obstacles to receiving care, such as provider availability and proximity. We were the first employer to implement Prescription Digital Therapeutics for Substance and Opioid Use Disorder. We also have in place digital tools for anxiety and sleep support.


Katie Archer, Benefit Manager | The Hartford

Evolving Role of the PBM

Although most employers will continue to rely on their PBMs to manage both traditional and specialty pharmacy, there are signs that employers are changing their views about the role of their PBM partner. For example, 83% of employers will have their PBMs handle non-specialty pharmacy management, and 84% will leverage PBMs for claims management (Figure 4.13). In addition, 27% of employers will rely on their PBMs for point solution aggregation, up from 5% in 2022. This increase may reflect a desire for more streamlined procurement and management of programmatic solutions.

89% of employers' PBMs manage their specialty pharmacy. 83% of PBMs manage non-specialty pharmacy. 84% of PBMs act as a claims administrator.  27% are aggregators of pharmacy point solutions. 
Figure 4.13: PBM Role in Administration and Strategy of Pharmacy Plans, 2023

Looking to the Future: Precision Medicine

Precision medicine approaches, including genomic testing and immunotherapy, are already being implemented, and their use is expected to continue to grow. Many employers are already covering some aspects of precision medicine, and more plan to do in the future.

In 2022, 41% of employers are covering genomic testing based on family history, and 12% are considering doing so for 2024-2025. Coverage for immunotherapy and genomic therapy during treatment are both at 32%. Nine percent are thinking about covering immunotherapy in 2024-2025, and 14% are considering covering genomic testing during cancer treatment (Figure 4.14). These types of therapies represent the future of health care, and no doubt employers will be keeping an eye on them as they consider future plan offerings.

In 2023, employers will cover: genomic testing based on family history (41%), immunotherapies (33%), genomic testing in cancer treatment (32%) and genomic testing for other conditions other than cancer (20%). 
Figure 4.14: Use of Precision Medicine, 2022-2025

Part 4: Health and Pharmacy Plan Design

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TABLE OF CONTENTS

  1. Key Takeaways
  2. Few Changes in Plan Design
  3. CHDPs Maintain While Move Toward Plan Choice Grows
  4. Cost-sharing Arrangements
  5. Pharmacy Plan Design
  6. Prescription Drug Costs a Major Concern, Yet Opportunities Remain
  7. Shifting Away From the Rebate Model
  8. Virtual Pharmacy Solutions and Digital Therapeutics
  9. Evolving Role of the PBM
  10. Looking to the Future: Precision Medicine