Financial dynamics and an evolving regulatory environment in the group retiree pharmacy benefits market continue to influence the relative values of Employer Group Waiver Plans (EGWPs) and Retiree Drug Subsidy (RDS) plans. Plan sponsors should periodically monitor and evaluate emerging trends in these programs to optimize plan value in this still-changing market.
Last summer, for example, the Centers for Medicare and Medicaid Services (CMS) announced a large decrease in the monthly direct subsidy revenue to EGWPs. Additionally, the Medicare Payment Advisory Commission (MedPAC) recently proposed changes to the Medicare program with major implications for EGWP costs.
Figure 1 summarizes key recent and proposed market and regulatory dynamics that are already impacting the relative values of EGWPs and RDS plans—and which could potentially influence further shifts in these values.
Or more accurately, now may be the time for employers to look toward using an EGWP (Employer Group Waiver Plan) with a wraparound supplemental plan to provide more cost-effective prescription drug benefits.
For health plans that offer their retired employees prescription drug benefits, new rules from the Centers for Medicare and Medicaid Services (CMS) make the option of an EGWP/wrap attractive as a way to achieve significant plan savings.
Many employers have heard about this opportunity, but exactly how advantageous is the EGWP/wrap option, and how can they change to it from current plans, such as those involving the retiree drug subsidy (RDS)?
This paper delves into these questions.
While the ongoing healthcare reform debate creates a great deal of uncertainty for employers, there is one certainty: Healthcare costs continue to be a concern. With this in mind, many employers are seeking more economical ways to structure their benefits.
One tactic that is gaining momentum is the use of employee group waiver plans (EGWPs). A new briefing paper by Brian Anderson and Rebekah Bayram examines EGWPs and how employers can use them in their approach to Medicare Part D.