Quebec employers can expect to face significant increases to their drug pooling premiums in 2020.
The Quebec Drug Insurance Pooling Corp., which sets the annual pooling parameters for private drug plans in the province, has increased the cost that plan sponsors with Quebec employees must pay per plan member. Plan sponsors pay different rates for members with and without dependants.
According to Philippe Laplante, principal for group benefits at Eckler Ltd., plan sponsors could expect to see their premium costs go up 10 to 25 per cent as a result of the change, but won’t feel the effect until their renewal period. He noted plan sponsors registered with the QDIPC don’t deal directly with the corporation and instead pay pooling charges through insurers, which then pass on the funds to the corporation.
As of this year, employers with between 4,000 and 5,999 employees — which previously negotiated directly with their insurers on pooling — are no longer exempt from the pooling corporation.
For employers coming under the cover of the corporation, the change to their premiums will depend on their previous experience, says Laplante.
“If you have a group that had a really good experience over the past years and they were able to negotiate a great pooling rate with the insurer, these groups are going to see a big impact by moving to the corporation,” he says. “Certain groups that maybe have had a bad experience and are paying a higher than average market rate . . . are probably going to be happy about the change. And they should make sure they negotiate with the insurer so their pooling charges are more in line with the corporation.”
The threshold — the amount per certificate above which drug claims are pooled among insurers and plan administrators — remains the same for all employer groups. The thresholds are set progressively higher for companies with more employees to protect smaller employers. For employers with fewer than 25 employees, for example, the threshold is set at $8,000, whereas for companies with between 500 and 999, pooling protection kicks in at $95,000.
“We would think that with inflation they could increase those thresholds over time, but they want to keep [strong] protections for the groups,” says Laplante.
For plan sponsors with 4,000 to 5,999 employees, the threshold will be set at $300,000. However, notes Laplante, all plan sponsors have the option of negotiating directly with their insurer if they feel their group threshold is too high for their comfort level.
While employers with more than 6,000 employees are still exempt from the corporation and have the ability to negotiate their pooling costs directly with insurers, Laplante speculates that could change in the future as biologic and high-cost drugs continue to drive private plan spending.
“I wouldn’t expect this over the short term,” he says. “This is based on cost increases that we’ve observed in the past, but I’m thinking they could [bring larger employers into the fold] down the road.”