High-cost claims on the rise, especially among youth
More than half the participating employers have experienced high-cost claims of $2 to $4 million in the last few years.
Photo: Sam Edwards/Getty Images
Nearly eight in 10 employers consider drug prices, high-cost claims and hospital prices significant threats to the affordability of employer-provided health coverage for employees and their families, and high-cost claims are rising, especially among younger plan members, finds a new survey from the National Alliance of Healthcare Purchaser Coalitions (NAHPC).
Almost half describe $100,000 as the lower limit for a high-cost claim. Some use $50,000 as a threshold to identify potential high-cost claims early.
More than half the participating employers have experienced high-cost claims of $2 to $4 million in the last few years, and they're seeing a rise in high-cost claims for younger plan members, with more than $1 million claims disproportionately weighted toward that demographic. The top conditions for these claims include cancer, prenatal/neonatal care, and treatment for COVID-19.
WHAT'S THE IMPACT?
Employers have historically been more reliant on third-party administrators (TPAs) and pharmacy benefit managers (PBMs) to manage high-cost claims. As costs have escalated, employers want to learn how best to hold service providers accountable for better management, the survey found.
About 34% of employers set out-of-pocket maximums at $3,000 or below, while 42% have maximums of $3,000–$5,000. Almost 20% of employers have out-of-pocket maximums of $6,000 or more.
Most employer strategies include a focus on managing complex cases (65%) and addressing the cost of specialty drugs (64%). Other strategies employers are deploying include using a specialty carve-out, implementing a patient assistance program (PAP), case management (via TPAs), reassessing stop-loss insurance and accessing alternative, more affordable sources of medications, such as biosimilars.
Employers noted that stop-loss insurance is expensive – and while some are concerned about whether to cover certain classes of claims, others have been "rolling the dice" by not incorporating it, the survey found.
The highest priority areas for employers over the next couple years include offering precision medicine for cancer treatment (45%); implementing centers of excellence (39%); negotiating and auditing hospital prices (34%); auditing intermediaries (30%); and mitigating costs and coverage of rare diseases (30%).
THE LARGER TREND
Million-dollar claims per million covered employees rose 15% in the past year and 45% over the past four years, according to a May report from Sun Life. And one-fifth of employers had at least one member with more than $1 million in claims from 2018 through 2021.
Even conditions with a low average cost, such as behavioral health and orthopedic issues, can reach over $1 million. For instance, in 2022, orthopedics had an average cost of $90,000, but one severe case uncovered in the data reached more than $4.5 million.
Employers of all sizes are looking to bolster their health benefit options in 2023 with an eye toward improving recruitment and retention, and will focus on affordability and access, according to a July Mercer survey.
Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com
