High-Cost Claims: You Ain’t Seen Nothin’ Yet 

In our 2017 National Survey of Employer-Sponsored Health Plans, we asked employers to rate the importance of strategies they will be using over the next five years to advance the triple aim of lower cost, higher quality, and a better member experience. This post on addressing the growing impact of high-cost claims is part of a series that looks at  these six key strategies.

One of the great things about living in America is that we invest a lot in the development of new healthcare services and procedures. Sometimes that investment translates into high-cost claims – and right now it’s happening faster than ever. Remember when the drug to cure hepatitis C – Sovaldi – hit the market at a cost of $1,000 a day per pill, 8-12 weeks of treatment, with total claims upwards of $80,000-$100,000? In anticipation of the impact on their medical plans, employers made adjustments to their claim cost projections. While a less-expensive drug introduced in 2017, Mavyret, ranges in cost from $26,400 to $52,000 depending on the length of treatment, it’s still not exactly a bargain, especially when you consider the much lower cost for hepatitis C treatment outside the US.

Employers need to watch and plan for new sources of high-cost claims as, each year, new therapies hit the market. Consider these two procedures:

• Artificial pancreas closed-loop system that monitors blood sugar levels and automatically dispenses insulin so a patient no longer has to manage their diabetes on a daily basis. The cost is $25,000 and the benefits last 10 years -- no more monitoring blood-sugar levels or insulin injections. While $25,000 does not seem that costly, consider the potential volume. According to the CDC 30.3 million Americans have diabetes and another 84 million are pre-diabetic, so there is a large potential target market for this procedure. While it has not yet been approved, it’s expected to be available within two years.
• Gene therapy that can cure inherited blindness: a 45-minute procedure with an injection in each eye at a cost of $400,000-$500,000 per eye. This is just one type of disease that could benefit from gene therapy. There are 500 other diseases that will follow – and 60 million people in the world today who have diseases that could be treated with gene therapy.

These are examples of emerging therapies and technologies that have long-lasting or lifetime value for a patient. While it’s life-changing for the patient and makes sense for society that these treatments be covered, how will employer plans handle these upfront costs? It would be shortsighted not to promote therapies in our benefit coverages that have lifetime value associated with them because an individual will likely not stay with the same employers for his or her working life.

For now, employers can undertake a deeper review of high-cost claims expense and consider new levels of stop-loss coverage, especially as we expect the market to offer new stop-loss products in response to these trends. But in addition to managing today’s high-cost claims, we must all start thinking about the larger issues involved with super-high-cost lifetime cures. The solution will likely require cooperation among multiple stakeholders.

More posts on Key Strategies:

• The Surprisingly Strong Connection Between Well-being and Turnover
• High Cost Claims By the Numbers
• Why Consider Point Solutions? (And What are They, Anyhow?)
• Point of Sale Drug Rebates
• Three Tips to Help Employees Choose a Health Plan
• Three Steps to Building a Better Health Plan Network
• Where's the Real ACO?
• Disruption is Not a Four-Letter Word

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