Mental healthcare utilization and specialty drug spending will increase healthcare spending in 2021, but this will be counterbalanced to some degree by widespread telehealth adoption and narrower networks, PwC’s 2021 medical cost trend report found.
For payers, the future is full of unknowns. Medical cost trend for 2021 is expected to be anywhere between four percent and 10 percent—unprecedented numbers in either direction, PwC noted. This is prompting a lot of questions.
What costs and factors can payers control? How can they best support their employer clients?
The report sheds light on a couple of answers to these questions.
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Specifically, PwC noted two areas that will drive costs upward and two “bright spots” in the outlook for 2021, along with actions that payers can take in response.
Mental healthcare utilization will be a major driver of healthcare spending in 2021.
Because of rising unemployment, the virus, and social isolation, mental health has been deteriorating for the past couple of months. As a result, around 12 percent of employer-sponsored health plan members said that they sought mental healthcare services due to the pandemic and another 18 percent plan to do so.
Blue Cross Blue Shield of Massachusetts, for example, reported that its mental health services accounted for almost 50 percent of its surge in telehealth claims.
Employers will actually encourage mental healthcare spending, knowing it will cost less to invest in mental healthcare now than to pay for the larger bills that result when members neglect mental health.
For members with chronic conditions, this is especially true. PwC found that employers end up spending twelve times more to cover costs for employees with complex chronic diseases and mental healthcare needs, as opposed to a healthy employee.
Virtual mental healthcare tools will play a big role in managing the surge in mental healthcare utilization. Plans may need to adjust their benefit design to incentivize telehealth use for conditions in need of mental healthcare services. PwC advised payers to waive or decrease mental healthcare cost-sharing, apart from the temporary legislative injunctions to do so.
Specialty drug usage will also see an influx in 2021, resulting in higher healthcare spending. While specialty drug prices have already been a major financial stressor, they could become even more prominent in payer budgets going forward.
For seven in ten employers that PwC surveyed, paying for specialty drugs was among their top pharmacy concerns.
Not only are the prices for these drugs considered extremely high, but availability and demand are also increasing. Specialty drugs make up nearly three-quarters (73 percent) of drugs expected to be released in 2021, up from 62 percent in 2020.
In 2021, payer specialty drug spending growth is likely to nearly double from 1.5 percent in 2020 to 2.6 percent in 2021, PwC projected.
Source: HealthPayer Intelligence