HHS Announces 2017 Out-of-Pocket Maximums

Money and gavelThe Department of Health and Human Services (HHS) has announced the 2017 out-of-pocket maximums applicable to self-funded and fully insured employer health plans. The maximums for 2017 have been set as follows:

  • Individual coverage: $7,150
  • Family coverage: $14,300

All non-grandfathered health benefit plans in effect on or after January 1, 2014 are required to comply with the Affordable Care Act’s (ACA) mandate that employer health plans’ annual in-network out-of-pocket maximums not exceed HHS’ established limits. The 2017 limits represent an increase from the current 2016 maximums of $6,850 for individual coverage (an increase of $300), and $13,700 for family coverage (an increase of $600).

The out-of-pocket limits represent the maximum amount that an enrollee must pay for covered essential health benefits through cost-sharing. It typically includes the annual deductible as well as any cost-sharing obligations the enrollee must meet after the deductible has been satisfied. The out-of-pocket maximum does not include premiums, cost sharing associated with of out-of-network services, or the cost of nonessential health benefits.

According to a recent study by United Benefits Advisors (UBA), out-of-pocket costs have increased significantly over the past decade, although median plan limits have remained below HHS’ out-of-pocket maximums. According to UBA, both individual and family coverage plans saw significant increases in median in-network plan out-of-pocket maximums in 2015. It is expected that out-of-network expenses will continue to increase significantly as well, as employers continue to widen the cost-share gap between employer and employee responsibilities.

For solutions to help mitigate employee health benefit plan costs that don’t simply shift costs to valued employees, contact the benefits experts at POMCO today.

 

More Large Employers Self-funding Pharmacy Benefit Plans

self-funding prescription drug benefit plansAccording to a recent survey conducted by United Benefit Advisors (UBA), more large employers are selecting to self-fund their prescription drug benefit plans. According to the survey, an increasing number of employers are turning to the cost-containment benefits of self-funding to avoid the Affordable Care Act (ACA)’s impact on the cost of fully insured health coverage.

Based on data obtain from over 10,000 survey respondents, self-funded prescription drug benefit plans have increased by approximately one third from 2009 to 2014, while fully insured prescription drug benefit plans have decreased by approximately 3 percent. The data also showed that 66 percent of employers with at least 1,000 employees currently maintain a self-funded pharmacy benefit plan.

Employers across the nation are also more likely to implement a layer of stop loss protection for their prescription drug benefit plan. The increasing trend is the result of both the shift to self-funding, as well such ACA requirements as the removal of annual and lifetime limits on health benefits, which open plans up to greater high dollar claim risk and cost exposure. Another factor leading employers to elect stop loss coverage for their prescription drug benefit plans is the increased cost of expensive specialty medications used to treat complex disease states.

According to UBA’s survey, approximately 95 percent of self-funded pharmacy benefit plans now include specific stop loss coverage, an increase of almost 7 percent compared to the five preceding years. Approximately 77 percent of self-funded pharmacy plans incorporate a layer of aggregate stop loss protection. This trend has grown more rapidly over the same five year period, at a rate of just over 9 percent. In 2014, the average specific stop loss level was $140,235, representing an increase of approximately 14 percent from the four prior years.

For information on how to mitigate overall benefit costs with an integrated health and pharmacy benefit management solution, contact the experts at POMCO today.

 

How Partnering with a TPA that Offers an Integrated Pharmacy Benefit Management Solution Can Reduce Your Workers’ Compensation Plan Costs

worker' comp PBM partnerAs a risk manager, you are focused on every aspect of your workers’ compensation plan that holds the potential to reduce your bottom line. As part of your responsibility to financially manage your organization’s cost exposure, one of your goals is to identify key strategic partnerships that can result in cost mitigation. By integrating a strategic pharmacy benefit manager (PBM) into your workers’ compensation plan, you have the potential to realize significant savings, as part of an effective pharmacy management strategy that can reduce overpayments of medical expenses. Consider the following benefits of choosing an integrated PBM model for your workers’ compensation plan:

The Benefits of a Strategic PBM

The cost of prescription drugs can easily be one of the most neglected areas of workers’ compensation cost control. It is estimated that on average, organizations spend $5 billion on drugs costs as part of their workers’ compensation plan each year. If your carrier or third party administrator (TPA) is not offering you a leveraged, strategic PBM partnership, you could be leaving money on the table.

Utilization Control

PBMs offer more than discounted drug costs. A truly strategic PBM will work with your TPA or carrier to identify trends in utilization, such as recurring prescriptions for opioids beyond the immediate recovery phase. Unfortunately, many work-related injuries involve managing chronic pain through the use of powerful, and potentially addictive, narcotics. An integrated PBM will also work with your TPA’s nurse case manager throughout the utilization review process to prevent the overuse of medications, such as narcotics. A singular, integrated PBM can also prevent injured employees from obtaining and filling multiple prescriptions for the same drug from multiple physicians or pharmacies.

Formulary Options

A valuable PBM partner will provide a comprehensive standard formulary that can be customized based on injury or patient in order to steer utilization to the most effective, and cost efficient medications.

Generic Substitutions

In many cases where a brand name drug is prescribed, a clinically-equivalent generic alternative can offer comparable outcomes for the patient, at a fraction of the cost. A strategic PBM partner will help to identify opportunities to speak with the patient and physician about a generic substitute.

Adverse Drug Interaction Avoidance

An integrated PBM with comprehensive visibility into all of the medications prescribed to a single worker can identify potential negative side effects of certain drug interactions, preventing potentially serious negative health risks.

Compliance Adherence

Each state has its own regulations regarding workers’ compensation plans. By partnering with an expert PBM that is well-versed in the regulations of your state, you can rely on the knowledge of its experts to help ensure your plan is compliant.

Network Access

The most valuable PBM partners offer vast national networks. With convenient access to pharmacies across the country, no matter where your employees are obtaining care, they can rest assured that they can obtain the prescriptions they need with the appropriate pricing.

 

        Mail Order Solutions

Without proper adherence to a prescribed treatment plan, an injured worker’s recovery and return to work could be delayed. Mail order solutions mitigate the risk for gaps in care, helping to ensure the injured worker is compliant with his prescribed treatment so that he can recover as quickly as possible.

Comprehensive Reporting

Under an integrated model, your TPA will aggregate prescription drug claim costs with medical claim costs to give you a holistic picture of the factors driving your workers’ compensation plan costs.

For more information on the benefits of integrating a PBM with your workers’ compensation plan, contact the risk management experts at POMCO today.

 

The Cost of Polypharmacy

The cost of polypharmcyPolypharmacy is a term used to describe the use of four or more medications by a single patient. It typically occurs in patients managing a chronic condition, or in a patient who is over 65 years of age. Affecting approximately 40 percent of seniors, polypharmacy poses significant health risks, including drug-interactions, and dosing errors. For health plans, not only are higher numbers of prescribed medications costly, but the risk of adverse reactions could result in additional incurred costs in the form of hospitalizations. By understanding the risks of polypharmacy, and by partnering with an administrator with nurse case management capabilities, the risks and costs of polypharmacy can be mitigated.

According to pharmacy benefits manager Express Scripts, the average senior utilizes six different medications, and more than 15 percent of seniors use at least 10 different medications simultaneously. One common scenario in which polypharmacy occurs is when a patient is being treated by multiple physicians who are unaware of one another’s prescription treatment plans. A study by Express Scripts found that seniors being treated by two different physicians had an average of 27 prescription fills and were at-risk for 10 medication errors each year. For patients being treated by as many as seven physicians, their average number of prescriptions increased to a staggering 52, with the potential for 22 annual medication errors. Other causes for polypharmacy may include:

  • Interaction with other drugs that require treatment from a third drug, a scenario called “cascading drug therapy”
  • Inadequate screening for drug allergies
  • Inappropriate dosing strength based on the patient’s age, size or health status
  • Use of expired medications
  • Use of over-the-counter or alternative treatments

When a patient is utilizing so many different medications, there is the potential for increased side effects and even reactions that contradict one another, or that a drug being used for one condition will have a negative impact on another health problem. For example, a medication used to manage diabetes may negatively impact heart function and may not be appropriate for a patient at-risk for heart failure. In addition, patients prescribed four or more medications often report that they find it difficult to remember when to take each drug, leading to complications associated with inappropriate medication use and non-adherence.

In addition to the severe risks for the patient, employer health plans are at-risk for significant costs associated with not only higher drug utilization patterns, but the potential for health complications caused by mixing so many medications. Polypharmacy can harm a patient’s health, resulting in increased doctor visits, emergency room visits, and inpatient stays. According to OptumRX, medication misuse and polypharmacy cost the United States more than $177 billion in unnecessary visits to the doctor, the emergency room, and the hospital every year.

Patients managing one or more chronic conditions do not need to struggle to follow their treatment plans alone. For employers partnering with a benefits administrator that offers nurse case management services, an on-staff registered nurse can assist at-risk patients to manage their condition. A nurse case manager may:

  • Conduct a medication review that includes over-the-counter medications
  • Assist in coordinating care and treatment plans among multiple physicians
  • Educate the patient and his/her family members on risks of overdosing, underdoing, and non-adherence
  • Assist the patient in finding generic substitutions, if applicable

By engaging a nurse case manager, at-risk patients are more likely to use medications appropriately, and use less of them for shorter periods of time. By helping to make each patient’s medication treatment plan as efficient as possible, employers can mitigate the impact of avoidable drug and health care costs and reduce their overall bottom line.

 

Does Your Consumer-Driven Health Plan Put You At Risk for the Cadillac Tax?

Affordable Care Act (ACA), Out-of-Pocket-MaximumsThere are significant questions regarding 2018’s potential Cadillac Tax in the minds of employers across the nation. The Affordable Care Act’s (ACA) proposed 40 percent excise tax on high cost plans has the potential to either significantly add costs to employers’ health plans, or require a shift of costs to members in an effort to avoid the tax – something many employers are hesitant to concede. Aside from the potential impact to health benefit plans, new insight indicates that the Cadillac tax may impact employers’ abilities to offer consumer-driven health plans (CDHP) such as flexible spending accounts (FSA) and health savings accounts (HSA). Read on to prepare your benefit strategy prior to 2018.

Potential Impact to FSAs

The Cadillac tax intends to levy a 40 percent penalty on health plans with annual premiums in excess of $10,200 for individual coverage, and $27,500 for family coverage. The tax applies only to the portion of the plan cost that falls above those thresholds. Since the maximum FSA contribution limits, which are estimated to be $2,700 by 2018, are typically additive to other benefit costs for employees that elect contributions, the cumulative cost of coverage between health and FSA plans could easily trigger the penalty fee for generous health plans. For this reason, some employers are considering terminating their FSA benefit, but maintaining their health benefit plan structure.

According to BenefitsPro.com, a recent survey of hospital management personnel identified that many hospitals intend to remove their FSA plans from their benefit plan offering if the ACA’s Cadillac Tax goes into effect in 2018. This potential trend is because FSA benefits may have an impact on triggering the Cadillac Tax penalty. According to the Kaiser Family Foundation, an estimated 26 percent of employers anticipate that their FSA offering may, in part, trigger the excise tax.

As an alternative solution to canceling an FSA plan entirely, other employers are considering re-structuring their FSA to only allow employer contributions, or to limit the employee’s contribution below the maximum IRS thresholds, thus diminishing the risk that an employee’s additional contribution may push the employee’s total cost of overage over the Cadillac Tax’s acceptable limit

Aside from FSA plan reductions, employers may also want to consider reducing such pre-tax ancillary health benefit options as critical disease or hospital indemnity plans.

Potential Impact to HSAs

As the proposed ACA mandate currently stands, employer and employee contributions to HSAs are also subject to the Cadillac Tax’s threshold limit. While the popularity of HSAs coupled with high deductible health plans (HDHP) have been on the rise as employers look for solutions to mitigate their overall benefit plan costs, HSAs, when coupled with employer pre-tax contributions, may now increase an employer’s risk of being subject to the 40 percent excise tax.

Similar to the decisions facing employers offering FSAs, employers are considering reducing or eliminating their pre-tax contributions to their employees’ HSA accounts in order to avoid reaching the Cadillac Tax’s threshold. Such a trend could reduce the effectiveness of HSAs as a successful strategy for employees to reduce their out-of-pocket health care costs. It may also limit opportunities for employers to incentivize population health management program initiatives in the form of HSA contributions – an employee engagement strategy that has been extremely successful in increasing wellness program participation.

Potential Changes in the Future

As a result of concerns expressed by organizations that the Cadillac Tax may impact their ability to help employees pay for quality health care expenses, many benefits professionals are advocating for benefit accounts to be excluded from the threshold limits before the Cadillac Tax goes into effect in 2018.  In addition, there is still hope that the United States Treasury Department and the Internal Revenue Service (IRS) will delay enforcement of the tax through extended transition relief.

 

The Benefits of a Total Solutions Provider.

Total Solution ProviderAs organizations search for the most effective ways to manage their benefit plans, they may find short-term benefits, such as incremental cost-savings, in working with a variety of vendors to achieve their goals. However, obtaining optimal plan performance requires advanced knowledge of the multiple aspects of a full benefit solution. The implementation of a benefit plan that assimilates disparate services results in increased costs associated with reduced service and missed opportunities to contain costs. The following document outlines the many benefits associated with partnering with a total benefit solutions expert in order to fully mitigate risks and drive down costs.

Risk Management Across the Spectrum for Enhanced Transparency

To mitigate risk across all employee benefit services, risk management services such as workers’ compensation, medical bill audit, and nurse case management should be integrated into the benefit solution to fully contain costs.  Integrating all related risk management services with the health benefit plan results in a solution that is able to allocate member claims appropriately. For example, an integrated solution will identify when an employee’s doctor visit is associated with an injury that was the result of a workers’ compensation claim, and make sure the claim is not erroneously paid as a health claim.

Fully Integrated Benefits Administration

The full spectrum of services that encompass an effective benefits solution are vast:  medical, dental, and vision; pharmacy integration; case management; utilization management and review; population health management; on- and near-site clinics to name a few. The more services that are a part of an overall benefit solution increases the complexity involved in its administration. In addition, services that are decentralized and do not feed into a shared technological platform must be analyzed singularly, therefore, hindering the effectiveness of comprehensive predictive modeling. Enhanced program optimization relies upon advanced technology that not only serves as the single location for plan data, but stratifies that data accordingly to identify every opportunity to reduce costs.

Account Management – The Expert in the Benefit Solution 

Arguably, the most important aspect of an effective benefit solution is the expertise of the account manager. When services are fully integrated, the advanced knowledge of the account manager is even more important to the full optimization of the program. Account managers with extensive industry knowledge that spans the full breadth of the services within the solution produce the most effective recommendations for risk mitigation. In addition, they are equipped with the analytical expertise to review plan performance metrics of all implemented services, such as medial plans, prescription drug plans, disease management, case management, and population health management, to identify trends and gaps in care that are driving plan costs. When an administrator only manages one piece of the puzzle, their analytics are limited to only those cost factors in their scope of service, which means there could be compounding factors left unaddressed.

 

 

2016 Open Enrollment Reminders for Employers

2016 open enrollment checklistOpen enrollment season is already upon us. This year, make sure your health benefit plan is fully-compliant with 2016 regulations, and form a plan to effectively communicate plan changes and open enrollment requirements to your employees.

2016 Benefit Plan Compliance Requirements

As we approach 2016, employers should work with their brokers and benefit plan administrators to ensure their benefit plans are in compliance with the following 2016 regulations:

  • Prepare for 2016 Affordable Care Act (ACA) reporting requirements. The ACA’s Employer Mandate states that applicable large employers (ALEs) that do not offer affordable, minimum value health coverage to the majority of their full-time employees (FT) and their dependent children will be subject to a penalty if any FTs purchase health coverage through the Health Insurance Exchange Marketplace and receive a premium subsidy credit to help pay for coverage. This mandate became effective January 1, 2015. Employers must be prepared to report to the Internal Revenue Service (IRS) whether or not they offered affordable, minimum value health coverage to employees and their dependent children in compliance with ACA regulations. Review the calculation methods available and determine if your plan meets affordability and minimum value requirements. Click here for more information of employer reporting requirements under the ACA.
  • Verify your grandfathered plan status. A grandfathered plan is defined as a plan that was in existence when the ACA was established in 2010. Certain plan changes will result in a loss of grandfathered status which requires compliance with other ACA mandates, such as $0 member cost share for preventive and routine services. Work with your broker or benefits administrator to verify your grandfather status for 2016. Click here for more information on grandfathered and non-grandfathered plan requirements.
  • Verify your out-of-pocket maximum. Effective January 1, 2016 all non-grandfathered health plans’ out-of-pocket maximums for essential health benefits may not exceed $6,850 for individual coverage and $13,700 for family coverage. Check the maximums on your benefits to ensure your plan is compliant.
  • Embed individual out-of-pocket maximums. Effective January 1, 2016 the ACA also requires that for non-grandfathered health plans the out-of-pocket maximum apply to all individuals regardless of whether they are enrolled under a family or individual health plan option. This means that individual out-of-pocket maximums must be embedded in the plan’s family coverage when the family out-of-pocket maximum exceeds the ACA’s out-of-pocket maximum for individual coverage. Speak with your benefits administrator to ensure its claims processing system will accommodate the embedded out-of-pocket requirements. Click here for more information on embedding out-of-pocket maximums.
  • Review your high deductible health plan (HDHP) and health savings account (HSA) limits. For HDHP-compatible HSAs, a plan’s out-of-pocket maximum must be lower than the ACA’s limits of $6,550 for individual coverage and $13,100 for family coverage. Verify that your plans’ limits are in compliance. In addition, verify that your HDHP’s deductible and out-of-pocket maximums comply with the 2016 limits. Click here for more information on 2016 HSA limits.

Employee Communications

Once you have verified that your health plans are compliant for 2016, follow these tips to effectively communicate required information to your employees and eligible plan members:

  • Distribute summary of benefits and coverage documents (SBC). Per ACA regulations, health plans must provide an SBC to applicants and enrollees to help them understand the benefit options available to them and decide in which plan to enroll. Be sure your SBCs are updated to reflect any changes for 2016 and distributed to all eligible employees and their beneficiaries during open enrollment. Click here for more information on SBC regulations.
  • Distribute annual notices. Work with your benefits plan administrator and broker to ensure you distribute all required annual notice to employees, which may include the following:
    • Notice of Patient Protections
    • Notice of Health Insurance Portability and Accountability Act (HIPAA) Special Enrollment Rights
    • Consolidated Omnibus Budget Reconciliation Act (COBRA) Notice
    • Grandfathered Plan Notice
    • Annual Children’s Health Insurance Program Reauthorization Act (CHIPRA) Notice
    • Women’s Health and Cancer Rights Act (WHCRA) Notice
    • Medicare Part D Notices
    • Michelle’s Law Notice
 

The ICD-10 Compliance Deadline is Here. Is your Benefits Administrator Ready?

business process outsourcing (BPO)Effective October 1, 2015 all organizations required to comply with the Health Insurance Portability and Accountability Act of 1996 (HIPAA) were required to comply with new regulations associated with medical bill coding. This requirement impacts third party administrators (TPA), insurance carriers, government agencies such as Medicare and Medicaid, and health care providers. The primary goal of the new regulations is to enable more efficient processing of claims by utilizing more descriptive coding definitions.

The October 1, 2015 deadline required all HIPAA-compliant entities to begin using an updated medical bill diagnosis and procedure coding set for all medical claims incurred on or after October 1, 2015. The new mandated system is the International Classification of Diseases 10th Edition (ICD-10). ICD codes are medical codes that provide a detailed representation of a patient’s condition or diagnosis. The previous system, ICD-9 has been in use since 1979.

The transition to ICD-10 will improve clinical communications as the new coding system allows for the capture of more detailed data regarding signs, symptoms, risk factors, and comorbidities to better describe the patient’s clinical condition. In addition to providing more detailed clinical data, the ICD-10 coding system will allow health care providers in the United States to exchange information with international providers, who have been utilizing the ICD-10 system for many years.

From a technical perspective, the new ICD-10 codes allow for more detailed procedure and diagnostic coding through their use of elongated alphanumeric sequences. The previous ICD-9 codes are three to five, primarily numeric, digits in length, while the new ICD-10 codes are three to seven alphanumeric digits. Where the ICD-9 code set offered approximately 14,000 unique diagnosis codes and approximately 4,000 unique procedure codes, the ICD-10 system offers health care providers more than 69,000 unique diagnosis codes and approximately 72,000 unique inpatient procedure codes.

For HIPAA-compliant entities, the full code-set replacement from ICD-9 to ICD-10 represents a significant system and technological undertaking, especially since TPAs, insurance carriers, and other payers must maintain the capability to process ICD-9 codes for claims with dates of service prior to October 1, 2015. Compliance, however, is mandatory, and there is no grace period for providers or payers who fail to comply by the compliance date. Claims that do not contain ICD-10 codes for services provided on or after the implementation deadline will be considered non-HIPAA compliant. The original ICD-10 compliance deadline was set for October 1, 2014; however, the Centers for Medicare and Medicaid Services (CMS) delayed the requirement until October 1, 2015. It was the belief that the extra year would allow providers and payers the extra time needed to meet the mandated requirements.

For more information on POMCO’s ICD-10 compliance, click here.

 

Six Advantages of Self-funding Your Employee Benefit Plan

Professional Man Celebrating Fists in the airAccording to the Kaiser Family Foundation’s 2014 Employer Health Benefits Survey, more employers are self-funding their employee benefits, and that number has been on the rise. According to Kaiser, 15 percent of covered employees at small companies with 3-199 employees, and 81 percent of covered employees at larger firms, are enrolled in plans which are either partially or completely self-funded.  The percent of covered employees enrolled in self-funded plans has increased for large firms since 2004. Both mid- and large-sized employers are learning the advantages inherent in self-funding employee benefits.

As you plan for the coming benefit year, consider the following advantages of self-funding, and whether or not it may be a financial strategy that can help your organization meet its corporate goals:

  1. Cost-Containment. Third party administrators (TPA) that manage self-funded plans have the capability to go beyond strict network discount arrangements on every claim payment to find additional cost savings. With internal claim reviews, fraud and abuse protections, custom claim negotiations, and case management solutions, each claim can be reduced before it is paid to ensure the employer is paying the least amount required.
  1. Greater flexibility. While insurance carriers sell pre-designed, fully insured health and dental plans with restricted benefits and strict plan limitations, under a self-funded arrangement, a TPA can customize a plan design to the exact specifications of the employer at the benefit/cost-share level. This opportunity poses a significant advantage to collectively bargained plans and allows employers to strategically manage the cost of their plan.
  1. Actionable data. Fully insured plans receive minimal experience data from their carriers, which limits an employer’s ability to understand what factors are impacting costs. Strategic TPAs can offer their self-funded plans fully-customized data, data analytic tools, and predictive modeling solutions, that can be used to help guide plan design strategy in an effort to mitigate cost-drivers.
  1. Lower Administrative costs. With a self-funded plan, employers avoid the costs of claim reserves, steep insurance carrier profit margins, risk charges, premium taxes, and contingency margins. They also avoid the Affordable Care Act’s Health Insurance Tax, which is expected to incur $145 billion in revenue.
  1. Enhanced cash flow. Unlike fully-insured plans that require advanced premium payment, under a self-funded plan, claims can be funded as they are due, which allows employers to keep more money in a bank account where it can earn interest.
  1. Strategic Service. TPA client service staff members are highly trained in the intricacies of self-funding. They are benefits experts who work to collaborate with employers and their brokers or consultants to properly manage the plan to optimal efficiency. This engagement and service involvement provides self-funded employers with a trusted partner to assist with escalated member inquiries, plan experience review discussions, compliance resources, and strategic expertise.

For more information on why so many employers are transitioning to self-funding, review the infographic below.

 

shift to self-funding
 

Catastrophic Conditions and the Benefits of Stop Loss Protection

Catastrophic Claims and Stop-LossA self-funded employee benefit plan offers customization and flexibility that inherently allow an employer to directly manage the overall costs of its plan. Such elements as case management, proper eligibility and coordination of benefits administration, and custom out-of-network claim negotiations are all elements of a successfully managed self-funded plan that can reduce costs without reducing benefits. Despite the very best plan management, however, no plan can avoid catastrophic claims. There are ways for self-funded plans to mitigate the impact of even these costly impacters, however.

A layer of stop-loss insurance can be added to a self-funded plan to provide this additional financial protection. Stop-loss is a product that provides protection for self-funded plans by serving as a reimbursement mechanism for catastrophic claims exceeding pre-determined levels. Stop-loss insurance can benefit groups that are not large to spread their financial risk across their full populations.

Stop-loss coverage may be purchased in either specific and/or aggregate policies.

  • Specific stop-loss provides protection for the employer against a high claim on any one individual.
  • Aggregate stop-loss provides a maximum limit on the total dollar amount payable for all eligible expenses that an employer would pay during a contract period.

An expert third party administrator (TPA) can work with an employer and/or its broker to review claims history, current diagnoses, and prospective plan costs using sophisticated predictive modeling techniques to determine the most appropriate stop loss protection needed for the plan year. A determination of necessary stop-loss coverage takes into consideration the estimated costs of catastrophic conditions and disease states, among other factors.

A recent report from Sun Life Financial reveals that cancer remains the costliest disease currently impacting self-funded plans in the United States. According to Sun Life Financial, cancer accounted for more than 25 percent of the reimbursements it paid out during a four-year research period. In addition to the high cost of cancer claims, according to Sun Life Financial, end-stage renal disease accounted for 33.5 percent of its total reimbursement costs during the same time period.

The report also identified the financial impact of intravenous medications. According to the report, in 2014 alone, intravenous medications accounted for 13 percent of total paid stop-loss claims, with the top 20 intravenous medications representing 65 percent of the total cost of intravenous medications administered for catastrophic claims conditions, many of which were used to treat cancers.

Patients whose claims exceed $1 million can be hugely impactful to employers of any size. According to the report, cancer, congenital anomalies, and premature births are the conditions that most frequently result in patients exceeding the $1 million claim level.

Self-funded organizations not currently protecting their health plan with stop-loss insurance should speak with their TPA to determine if specific and/or aggregate coverage may be a beneficial element of an overall cost-mitigation strategy. An analysis of current diagnoses and predictive modeling techniques can help to prognosticate the potential impact of such catastrophic conditions as cancers or end stage renal disease and can result in strategic recommendations for maximum protection.