No compliance deadlines are approaching in August, so this month we’re digging into healthcare spending strategies, emerging cancer care trends affecting employer plans and a refresher on new hire reporting requirements – for the July PCORI fee deadline, see last month’s newsletter.
Five Ways to Address Healthcare Spending through Plan Design
Healthcare costs continue to rise, placing sustained financial pressure on organizations of all sizes. In fact, PwC’s annual medical trend report projects that the commercial healthcare cost trend is expected to rise to 9% in 2027, the highest figure in 17 years. While cost-sharing adjustments remain common, they are insufficient as a long-term strategy. Employers that achieve durable savings do so through deliberate plan design, structuring benefits in ways that reduce total cost while preserving the quality of care available to their workforce.
This article explores five plan design tactics for employers to consider to effectively address healthcare spending. While many of these are only available to self-funded employers, others can be used regardless of funding type.
1. Centers of Excellence
Centers of Excellence (COEs) are high-volume, specialized facilities that have demonstrated superior clinical outcomes for specific procedures. Since these institutions perform a given procedure on a significant scale, they are often able to negotiate reduced facility rates while delivering fewer complications and shorter recovery times. Common services covered under COE arrangements include:
- Cardiac surgery and cardiovascular procedures
- Oncology and cancer treatment
- Orthopedic surgery, including joint replacement (e.g., hip and knee) and spine surgery
- Bariatric (weight-loss) surgery
- Organ transplants (e.g., kidney, liver, heart and lung)
- Fertility and reproductive health services
- Behavioral health and substance use treatment
For organizations with concentrated claims spending in surgical categories, COEs offer both improved clinical quality and lower total cost of care. When paired with a travel benefit that offsets transportation and lodging expenses, the model can be presented to plan members as a zero-cost or low-cost alternative to local facilities.
The primary implementation challenge is utilization. Members tend to default to familiar, geographically convenient providers. As such, effective COE programs invest in member education and ensure the associated travel benefit is substantial enough to shift behavior.
2. Direct Primary Care
Direct primary care (DPC) is a structural departure from the traditional fee-for-service model. Under a DPC arrangement, an employer pays a flat monthly fee, typically between $50 and $100 per enrolled member, in exchange for unlimited access to a primary care physician. The model eliminates claims processing for primary care visits entirely, reducing administrative friction and removing financial barriers to routine and preventive care.
Organizations whose workforce underutilizes preventive services, relies disproportionately on urgent care or accesses emergency departments for nonemergency situations are well-positioned to benefit from DPC. Improved access to primary care has meaningful downstream effects on chronic condition management and avoidable specialist referrals.
Industry benchmarks suggest that return on investment is generally realized over a 6- to 24-month horizon, making DPC a medium-term commitment. The model is most effective when layered with a high deductible health plan rather than deployed as a standalone benefit. COEs generally make more sense for larger organizations with local employees versus small businesses or employers with a remotely dispersed workforce.
3. Specialty Prescription Carve-out
Specialty drugs represented 54% of total U.S. drug spending in 2023, according to the IQVIA Institute for Human Data Science. However, specialty drugs (e.g., biologics, oncology therapies and gene therapies) account for a majority of total drug spending despite serving a relatively small patient population, underscoring their outsized impact on benefit budgets. This concentration of costs makes pharmacy benefit design one of the highest-leverage areas for employers.
A specialty carve-out separates high-cost specialty drugs from the rest of the pharmacy benefit and routes them to a dedicated vendor. The foundational decision is whether to maintain a bundled arrangement with the carrier’s pharmacy benefit manager (PBM) or transition to an independent, pass-through PBM model. Pass-through contracts provide full transparency into ingredient costs and rebate flows, allowing the employer to capture manufacturer rebates directly rather than having them retained by the PBM. Instead of all prescriptions running through one PBM, specialty medications above a certain cost threshold are routed to a separate entity, often a specialty pharmacy or carve-out vendor, that negotiates its own contracts with manufacturers, manages rebates independently and applies utilization management specific to high-cost biologics and infusion drugs.
This approach adds a vendor relationship and some administrative complexity and can create friction if the carve-out conflicts with the main PBM’s contract terms. However, for mid- to large self-funded employers, the savings potential usually outweighs the complexity. For smaller employers, a well-negotiated pass-through PBM contract may accomplish similar goals without the additional layer.
4. Reference-Based Pricing
Reference-based pricing (RBP) is a strategy that employers with self-insured health plans can use to lower costs by capping plan payments for specific healthcare services. Unlike traditional strategies, which base payments on providers’ billed charges, RBP uses a benchmark — or reference price — as a fixed payment amount. In general, a health plan with RBP will only pay the reference price for a specific healthcare service, regardless of who the provider is, where it is located or how much it charges. If a provider’s charge exceeds the reference price, the covered individual is generally responsible for paying the difference out of pocket, since the plan’s payment is capped at the established benchmark. As a reference price, plans with RBP often pay providers at a percentage above Medicare’s payment for the same service (e.g., 140% of Medicare), based on what is reasonable for the local healthcare market. Other benchmarks may also be used, such as the provider’s actual cost to deliver the service plus a fair profit margin. Most plans base their prices on Medicare-allowable costs, which are marked up to establish a profit margin. However, limits should apply only to “shoppable” services. These are services that allow an individual to take time to make a decision based on price and quality, such as imaging, lab tests or joint replacements. In all these examples, there are lower-cost options that are typically the same quality as the more expensive alternatives.
Employers typically work with a third-party vendor to establish the best limit for a procedure. The vendor will help conduct market research and negotiate the most appropriate deals with providers. Finding a reliable vendor that works well with the company is crucial for negotiating the best prices for employees. RBP is most effective when applied to procedures with fluctuating costs. For instance, colonoscopies may range from $400 to $6,000, depending on the physician. In this case, an employer using RBP might set the spending limit to the median price of the procedure, based on market findings. If an employee uses a health facility that charges above the spending limit for a specific procedure, they will need to cover the difference out of pocket.
RBP represents a meaningful operational commitment and is not appropriate as an initial plan design change. However, for organizations that have established the necessary infrastructure, the potential for cost reduction is substantial.
5. High-performance Networks
High-performance networks direct members to a curated set of providers identified as delivering superior value, defined as a combination of clinical quality and cost efficiency. Cost-sharing is used to incentivize in-network utilization. For example, members who access designated providers face lower or no out-of-pocket costs, while those who seek care outside the network bear greater financial responsibility.
This approach is fairly straightforward to administer and doesn’t require a self-funded plan structure or a new vendor relationship. However, its effectiveness is contingent on two factors: the quality of network construction and the magnitude of the incentive differential. A narrow network built solely around cost, without attention to quality, risks member dissatisfaction. Similarly, differentials that are too modest fail to meaningfully influence provider selection.
Employer Takeaway
No single plan design tactic is sufficient on its own to make meaningful cuts. Organizations that achieve lasting reductions in healthcare spending typically do so by combining multiple strategies, prioritized based on their administrative readiness, claims profile and workforce demographics. However, there is a unifying principle across these highlighted approaches — a plan design deliberately aligned with how a workforce actually accesses care is more effective and equitable than cost-shifting alone.
Contact us for more resources, including information on our self-funded center of excellence that can address many of these plan design choices.
Cancer Care Trends Impacting Employer-sponsored Coverage in 2026
Cancer is no longer a concern that employers can address reactively. It’s a persistent, growing and increasingly complex challenge that impacts workforce health and healthcare spending. More employees are being diagnosed, more are being diagnosed younger and the advanced treatments available today come at a high cost. According to the Business Group on Health’s (BGH’s) 2026 survey, 58% of employers cite cancer as their primary driver of healthcare costs, with 88% ranking it among their top three cost factors. In addition, 74% of employers report seeing higher cancer prevalence within their own workforce.
This article explores current trends in cancer care and their implications for employer-sponsored coverage.
The Financial Impact of Cancer on Employer-sponsored Coverage
The financial burden of cancer care on employer health plans is substantial and accelerating. Understanding its full scope requires looking beyond medical claims and examining how cancer costs impact benefits broadly.
According to the BGH, cancer surpassed musculoskeletal conditions as the No. 1 cost driver for employer health plans for the first time in its 2023 survey. With no change through 2026, this can reflect a structural shift in the health profile of the American workforce driven by rising incidence, delayed diagnoses and dramatically higher treatment costs.
Cancer treatment is among the most pharmacy-intensive areas of medicine. Between 2021 and 2023, the share of employer health care dollars spent on pharmacy rose from 21% to 27%, and oncology medications are a significant contributor to that increase. Employers are projecting an 11%-12% increase in pharmacy costs from 2025 into 2026, even as they search for plan design levers to manage the overall trend. For self-funded employers, a single high-cost cancer claim can affect annual stop-loss thresholds and renewal terms.
Furthermore, timing matters in cancer care, both from an outcome and a financial perspective. According to virtual cancer care clinic Color Health, diagnosing cancer just one stage earlier can save $60,000 per patient in treatment costs. Late-stage diagnoses require more intensive treatment regimens, longer treatment durations, more hospitalizations and more specialty medications. When employers invest in prevention and early detection, they see positive impacts on finances and employee wellness.
Lastly, the financial impact of cancer extends beyond medical claims. Employers also absorb high indirect costs that affect the bottom line in meaningful ways:
- Short- and long-term disability claims from employees undergoing treatment
- Lost productivity and presenteeism from employees managing their own diagnosis or caregiving for an ill family member
- Workforce disruption from extended leaves of absence or attrition among high-performing employees
- Increased utilization of mental health and employee assistance program (EAP) services by both the diagnosed employee and colleagues
The full economic cost of cancer is often underestimated when only direct medical spending is considered.
3 Key Trends Shaping Cancer Care
The following forces are changing cancer care with direct implications for employee benefits:
1. Rising Diagnoses in Younger Populations
Over the past decade, the rate of cancer diagnoses has been steadily rising among adults under the age of 50. Colorectal cancer, breast cancer and thyroid cancer, among others, are being diagnosed in younger patients at rates that researchers are still working to fully explain. For employers, this means cancer is no longer primarily a concern for employees approaching retirement, and it’s increasingly a mid-career reality.
According to the American Cancer Society, in 2026, approximately 40% of all new invasive cancer cases in the country are expected to occur in people younger than 65. Complicating matters further, a study published in JAMA Oncology estimates that 10 million preventive cancer screenings were delayed or skipped during the COVID-19 pandemic. The ripple effects of that screening gap are still being felt. Many of those missed screenings would have caught cancers at earlier, more treatable stages; instead, some are now presenting at advanced stages, driving both worse outcomes and higher costs.
2. Innovation in Diagnostics and Treatment
The pace of innovation in oncology is notable. Precision medicine, including genomic testing, biomarker-driven therapies and immunotherapies, has transformed cancer from a near-certain death sentence in many cases to a manageable, sometimes curable condition. However, advances in survival rates come with significant cost implications. Genomic testing, while essential for precision treatment decisions, adds upfront diagnostic expense. Targeted therapies and immunotherapies can run from $100,000 to more than $500,000 per treatment course. CAR-T cell therapy, one of the most promising cell and gene therapies (CGTs) for certain blood cancers, can cost more than $400,000, and that’s without factoring in hospitalization and post-infusion monitoring.
For employer plan sponsors, the challenge is not whether to cover these therapies, but how to ensure utilization is appropriate, providers are high-quality and that costs are managed without compromising care. According to the BGH, 41% of employers today cover immunotherapies, 24% cover genomic testing for treatment decisions and 44% cover genetic testing based on family history. The question for plan sponsors is no longer whether these therapies will be part of benefit plans, but how to manage them effectively.
3. The Productivity and Presenteeism Factor
Improved treatments have fundamentally changed the journey following a cancer diagnosis. Many patients who would have had limited survival prospects a decade ago now live for years with cancer as a managed chronic condition. This is a profound medical success, but it also creates new and ongoing coverage obligations for employer health plans.
Cancer survivors may require years of follow-up care, ongoing surveillance imaging, maintenance medications and rehabilitation services. Recurrence is also common across many cancer types, requiring additional treatment cycles. Meanwhile, the psychological toll of a cancer diagnosis, such as anxiety or depression, creates sustained demand for mental health services that most standard benefit plans are not designed to fully address.
For employers, this shift means cancer can no longer be thought of as a separate episode of care. It must be planned for as an ongoing cost driver with both medical and behavioral health implications. Cancer survivors who return to work often do so while managing ongoing symptoms, cognitive effects of treatment (e.g., “chemo brain”) and a demanding schedule of follow-up appointments. Ultimately, these collective elements can impact productivity, scheduling and engagement.
How Employers Can Support Cancer Care
Today, many employers are not waiting for cancer claims to arrive and are redesigning their benefit strategies to stay ahead of rising healthcare costs. To support employees throughout their cancer journey, employers can consider the following strategies:
- Expand and incentivize cancer screening coverage. Early detection is the most impactful and cost-effective tool available. Going beyond minimum preventive care requirements by covering screenings at earlier ages, expanding eligibility and eliminating cost-sharing barriers can drive higher participation. Employers may also pair those coverage enhancements with financial incentives (e.g., gift cards, premium reductions or health savings account contributions) to overcome common barriers.
- Consider a cancer center of excellence (COE) program. COE programs steer employees to specialized, high-volume oncology centers with proven outcomes, reducing misdiagnosis and unnecessary treatment variation. Covering travel and lodging also removes access barriers. Half of the employers surveyed by the BGH plan to offer a cancer COE in 2026, and another 23% are considering doing so by 2028.
- Ensure appropriate coverage for precision medicine. As genomic testing and targeted therapies become the standard of care for many cancer types, employers need to ensure their benefit designs keep pace. Denying or delaying access to biomarker testing or clinically appropriate targeted therapies could increase long-term costs by leading to less effective treatment paths, more hospitalizations and poorer outcomes. Employers can work with their third-party administrator (TPA), health plan or benefits consultant to establish clear, evidence-based coverage policies for genomic testing, immunotherapy and emerging CGTs.
- Close the gaps in cancer-specific support. Most employer-sponsored plans offer cancer-adjacent support (e.g., mental health through EAPs, disability coverage and basic care navigation), but these programs often fall short of meeting the specific and complex needs of cancer patients and survivors. Mental health resources are rarely specialized for oncology needs. Return-to-work programs may not account for the cognitive and physical effects of treatment. Navigation services may not be equipped to help employees understand their treatment options or secure second opinions. Some examples of specific support include cancer-specific navigation programs, second-opinion services, survivor return-to-work support and caregiver assistance.
- Use data to drive strategy. Claims data is a powerful tool for understanding the cancer burden within a workforce and for targeting interventions to have the greatest impact. Employers can work with their health plan or TPA to analyze cancer-related claims trends, screening utilization rates, stage-of-diagnosis patterns and the share of cancer spend allocated to pharmacy versus medical. This data can reveal what stage employees are being diagnosed, whether high-risk populations are engaging with available screening programs and whether COE referrals are being utilized effectively. Proactive data analysis enables employers to measure impact and make evidence-based adjustments.
The most effective plan approaches combine prevention, access to high-quality treatment and holistic support for employees throughout their cancer journey.
Employer Takeaway
Cancer is a sustained healthcare challenge for many employers right now, and the trends driving it won’t slow down. The shift required for plan sponsors is a change in mindset from reactive payer to proactive health partner. Cancer care is not simply a claims problem to be managed after the fact. It is a workforce health challenge that requires strategic, forward-looking benefit design, strong vendor partnerships and a commitment to supporting employees through one of the most difficult experiences of their lives.
Contact us today for more benefits-related information.
New Hire Reporting
New hire reporting is a critical component of workplace compliance. Under federal law, employers must report basic information on new or rehired employees to the state where the employee works within 20 calendar days of hire. Failure to properly report may result in costly monetary penalties and increased scrutiny from regulatory agencies.
This Compliance Overview provides a general overview of federal new hire reporting requirements and best practices to help employers effectively satisfy their new hire reporting obligations.
While states may impose additional reporting requirements on employers, this Compliance Overview focuses on the nationwide new hire reporting requirements and serves as a starting point to help employers better understand their compliance obligations.
Overview
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 requires all employers to report certain information on their newly hired employees to a designated state agency. New hire data is used to locate noncustodial parents who owe child support and to issue income withholding notices to employers. This data is matched with child support case information at the national level to assist states in locating parents who live in other states. This information is maintained in the National Directory of New Hires (NDNH). After receiving new hire data from other states, state child support agencies can take steps to locate parents, establish child support orders or enforce existing orders. New hire reporting also helps detect fraudulent unemployment insurance and workers’ compensation claims. The federal Office of Child Support Services, which is part of the Administration for Children and Families at the U.S. Department of Health and Human Services (HHS), administers the new hire reporting program.
Reporting Requirements
All employers in the United States, regardless of size, must comply with new hire reporting requirements. Independent contractors are not subject to federal new hire reporting requirements. However, a growing number of states, including California, Colorado, Connecticut, Florida, Illinois, Iowa, Maine, Massachusetts, Nebraska, New Hampshire, New Jersey, New York, Ohio, Oregon, Texas, Virginia and West Virginia, require employers to report certain independent contractors.
Employers must report basic information about newly hired or rehired employees to the state new hire directory in the state where the employee works within 20 calendar days of the employee’s date of hire. Date of hire is the day an individual first performs services for wages. Rehired employees trigger reporting obligations when a previously separated employee returns to work after a break of at least 60 consecutive days. States may apply a lower threshold or require reporting for rehires regardless of the gap length.
Under federal law, employers may submit new hire reports by first-class mail, magnetic tapes or electronically. However, states generally offer additional methods for submitting new hire information, such as fax, email, phone and website transmissions. If employers send new hire data electronically or by magnetic tape, they must submit two submissions per month, not less than 12 days or more than 16 days apart. Some states set stricter time frames for reporting new or rehired employees. Employers must comply with the reporting time frame of the state to which they report.
Employers operating in multiple states may choose to report new hires to the state where the newly hired employee works or select one state where employees work and report all new hires to that state. Employers that decide to report all new employees to one state must:
- Register with the HHS as a multistate employer
- Designate the state the employer selected to receive the organization’s new hire reports
- Submit new hire information electronically or by magnetic tape to the selected state no more than twice per month (12 to 16 days apart), if necessary.
Multistate employers that choose to report to a single state should ensure they comply with the requirements for submitting data elements and electronic data specifications for that state.
After employers submit new hire data, the state directory forwards the information to the NDNH. New hire reports are compared against child support records at both the state and national levels to locate individuals who owe child support. If it is discovered that an individual owes child support, the system provides the information to the appropriate state agency.
Required Information
Under federal law, employers must report the following information:
- The employee’s full name associated with their Social Security number (SSN)
- The employee’s current residential address
- The employee’s SSN
- The employee’s date of hire (i.e., the first date the employee received pay for services)
- The employer’s name associated with their Federal Employer Identification Number (FEIN)
- The employer’s address associated with the FEIN entity that employs the individual
- The employer’s FEIN.
States may require employees to report additional information, such as the employee’s job title or wage rate. Employers must comply with data reporting requirements for the state to which they report.
Employers should use the same FEIN to report new hires and quarterly wages. Reporting different FEINs for new hires and quarterly wages may lead to potential noncompliance issues. If an employer’s worksite address is different from its payroll address, the employer is encouraged to report both their worksite and payroll office address. If employers provide only one address, they should report the address where they want potential income withholding orders sent.
Employers may provide copies of their Forms W-4 to report new hire data. Employers may also create an equivalent form or use a state reporting form. According to the HHS, electronic submission through the state’s new hire website is the preferred reporting method.
Penalties
Failing to properly report newly hired or rehired employees may result in civil monetary penalties. States can impose penalties for failing to comply with new hire reporting requirements. However, federal law mandates that if a state elects to impose penalties on employers for failure to report, the fine may not exceed $25 per newly hired employee. The penalty may not exceed $500 per newly hired employee for instances in which an employer and an employee conspire not to report. States may also impose nonmonetary penalties for noncompliance.
New Hire Reporting Best Practices
Establishing best practices for new hire reporting can help employers meet their compliance obligations in a timely and accurate manner, limit their legal exposure and minimize operational disruptions. While best practices may vary from one organization to another, employers can implement the following to better comply with new hire reporting requirements.
Establish a Standardized New Hire Reporting Process
Employers can better ensure organizational compliance by establishing a standardized internal process for reporting newly hired and rehired employees and, in some cases, independent contractors. This process can clearly outline the information that must be provided and the deadlines for providing it. It can also define “new hire” to include employees returning from a qualifying break in service.
Ensure Data Accuracy
Federal law mandates that employers report specific information, including the employee’s name, address, SSN and date of hire, along with the employer’s name, address and FEIN. States may require employers to report additional data elements. Employers are responsible for ensuring that the data they submit to state agencies is accurate. Implementing data validation protocols, such as presubmission audits or system-based error checks, to verify that all required data elements are collected during onboarding and transmitted correctly can help employers comply with new hire reporting requirements.
Verify State New Hire Reporting Requirements
While federal law mandates that employers report specific information within 20 calendar days of the date of hire, new hire reporting requirements may vary by state. Reporting deadlines, required data fields and rules for independent contractors and rehires are not uniform and can frequently change as states update requirements. Therefore, employers should regularly review state new hire reporting requirements.
Integrate New Hire Reporting into Onboarding
Treating new hire reporting as a separate task rather than embedding it into an organization’s onboarding workflow can lead to errors and missed deadlines. Employers should align onboarding workflows so that reporting is automatically triggered when employees are hired or rehired. Automation may help reduce the risk of missing new reporting deadlines and enable multistate employers to comply with varying state reporting deadlines.
Conduct Internal Audits
New hire reporting requirements, while based on federal law, continue to evolve at the state level. Regular audits can identify potential issues, such as late filings, inconsistent reporting practices or incomplete data capture, allowing employers to remedy issues before they result in penalties.
Train Responsible Personnel
Employers can consider training relevant personnel, including HR personnel, payroll employees, managers and supervisors, on their responsibilities regarding new hire reporting requirements. Because new hire reporting may be incorporated into broader onboarding processes, organizations should train personnel to recognize reporting triggers and deadlines and assign clear ownership for completing new hire reporting tasks. Employers should also maintain documentation demonstrating timely filings, including confirmation receipts or electronic submission logs, to support audit readiness and defend against potential enforcement actions or penalties.
Employer Takeaway
New hire reporting impacts all employers. Therefore, employers should ensure they understand and comply with new hire reporting requirements. Strategies for implementing an effective new hire reporting process will likely vary by employer and employee location, but an effective process can help reduce potential legal exposure.
