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How are insurers using block-level contract amendments to control drug costs?

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Mike Duggan:

Insurers have been processing these types of off-anniversary changes for quite some time. These changes violate the contractual provisions. What use is the contract if it can be changed arbitrarily by the carrier? Capable brokers will be advocating for their clients about these policy changes.

Monday, September 28 at 11:48 am | Reply

Jay Nadler:

There are positive and negative block changes. The addition of a service, not easily accessed in the current contract or through provincial medical, that benefits all clients evenly and is not getting charged until the next renewal, can be of value. The deletion of a service that will only affect a targeted group of people, with no ability for a plan sponsor to opt out and no reduction in premium is a big problem. Each year at renewal, the insurer makes a promise to treat a client a certain way. Changes that break that promise can affect employees, damage the integrity of insurance contracts and potentially harm the advisor. Sometimes, insurers have good ideas. Plan sponsors should have the ability to accept or decline the change based on their situation. Insurers need to know that if they force negative changes, experienced advisors may direct their clients to go elsewhere.

Tuesday, September 29 at 11:37 am | Reply

Anthony Feher:

Canada Life is adding their virtual health effective Oct. 1, 2020 (at a cost) and will only be at renewal, not a block, yet there is a cost that you may not opt out of (even if you deem it unnecessary). Block changes are there for one reason — to save insurers’ money (or limit liability) and very little else. There certainly is a need to reduce drug costs, however, this needs to be addressed with all parties (the insurer, the client, the consultant). Insurers seem to exclude the other two when implementing block changes.

Tuesday, September 29 at 12:33 pm | Reply

Gavin Mosley:

The health-care industry and prescription — drug landscape, specifically — are changing quickly. It is unreasonable to expect insurance companies to keep their products the same as they continue to take on new risks. That said, it is NOT REASONABLE to make block-level changes off-renewal, where these mass additions or (mostly) reductions of coverage seldom carry a corresponding price impact based on the increased or reduced risk to the insurer. Changing plans whenever an insurer sees fit is not good for clients or advisors, and puts us in a position where we cannot truly rubber stamp that the plan we’re renewing will truly be the same over the next 12-month period. Our business has historically been based on trust and the promise to pay … both are greatly being tested right now.

Tuesday, September 29 at 1:11 pm | Reply

Jason Watt:

It would have been nice to see a lawyer with an insurance-focused practice chime in here; they likely would have lamented insurers not respecting their contracts. With any other contract, you either wait until the contract ends to change it or you seek explicit consent from the other party/ies in the contract to change it mid-stream. This sets a dangerous precedent around insurance contracts, which are normally considered relatively sacrosanct. How much should I now trust Sun Life when they tell me that my whole life contract will pay in the intended form (hopefully) several decades from now when I kick the bucket? But going to each plan sponsor is expensive … for the insurer.

Thursday, October 01 at 10:49 pm | Reply

Dave Patriarche:

The comments by insurers are interesting. Ryan Weiss, vice-president at Canada Life, says they do this to “bring down the rate significantly and offer more value to sponsors.” But there are no corresponding rate decreases in most cases and many of these new medical devices have a cost that will drive rates up to employers.

Often this happens, without their knowledge. He says: “We don’t want to have plan sponsors beholden to a contract where they can’t be protected until renewal.” And yet, in many cases, they WERE protected until the insurer amended the contract.

A great example is continuous glucose monitoring devices. Fantastic new technology, but one with an annual cost in the thousands per employee. A plan may not have covered these items before (thereby protecting rates) until the advisor could discuss adding them at the renewal meeting. The off-renewal amendment by the insurer just took away that protection. The sticker shock will come later at renewal.

Saturday, October 03 at 5:24 pm | Reply

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