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Understanding the conditions that lead to catastrophic claims helps employers mitigate their risks
The number of million-dollar-plus health claims by covered employees continues to escalate, with an increase of 25 percent in 2015 compared to the prior year.
By understanding the conditions that lead to catastrophic claims, employers can better anticipate health benefit costs and take steps to mitigate their risks. Two new reports focus on the challenges posed by high-cost conditions and claimants and highlight effective cost-containment strategies.
Sun Life Financial's fourth annual
Top Ten Catastrophic Claims Conditions report, published in July, compiles the costliest medical conditions covered by the firm's stop-loss insurance from 2012 to 2015. Stop-loss insurance protects self-funded employers by limiting the risk associated with catastrophic claims.
Individuals with $1-million-plus claims, who make up less than 2 percent of claimants, account for a disproportionate 18.5 percent of overall stop-loss claims reimbursements. Over the four-year period studied, the average amount paid by an employer on a claim above $1 million was $1.45 million, which was reduced to $491,000 after applying the average stop-loss claim reimbursement ($962,000).
The costliest claims include cancer treatments, heart disease, perinatal and birth-related medical conditions, and blood infections.
Cancer continues to dominate the list of the costliest conditions (No. 1 and No. 2 over the last four years), accounting for more than one-quarter of total stop-loss claims. Of the various types of cancer identified in the report, breast cancer was the costliest, accounting for 13.6 percent of total cancer reimbursements.
Chronic/end-stage renal disease (kidney failure) held steady in the No. 3 spot on the list. Although the average treatment cost for claims associated with kidney disease has gone down 21 percent over the last four years, the high incidence rate of the condition contributes to its ranking.
One in three Americans are at risk for kidney disease, with diabetes and hypertension as
Outreach, Education and Interventions
"High-cost claimants" are employees or covered dependents who cost their health plans $50,000 or more a year. Employers are seeking to better understand and mitigate the burden that these claimants put on their health plans, and some help is provided in a new study by the American Health Policy Institute (AHPI), a nonprofit think tank that examines the impact of health policies on large employers.
AHPI's July report,
High Cost Claimants: Private vs. Public Sector Approaches, is based on a recent survey of claims data from 26 large U.S. employers. Key findings include:
In comparison, the researchers analyzed Medicare fee-for-service claims data and found that the average high-cost claimant costs the program $105,004 annually (a lower amount than for employer plans), but that 3.4 percent of Medicare beneficiaries are high-cost claimants (a higher percentage than in employer plans).
"Both the federal government and the private sector need to take a careful look at high-cost claimants," said Tevi Troy, CEO of AHPI. "Employers, for their part, are developing innovative approaches to high-cost claimants and are in a unique position to establish programs that address this group."
Some possible initiatives that employers can take to reduce the cost of high-cost claimants, the report suggests, include:
(For further suggestions on engaging those with chronic conditions using a variety of communications, see the
SHRM Online article
Engaging Employees with Chronic Conditions Improves Health Outcomes.)
"To be successful, employers must plan interventions that do not run afoul of regulatory guidelines but that also need no regulatory fix or legislation to be passed," the report advised.
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