The Costliest Medical Conditions

Sun Life Financial studied the costliest medical conditions covered by its stop-loss insurance from 2012 to 2015. During the four years of the study, billed charges from medical care providers totaled $9 billion. Self-insured employers paid just over half ($5.3 billion) of those billed charges after discounts were applied and received $2.3 billion in reimbursements through stop-loss protection.

Million-dollar-plus claims increased 25% compared to the previous year. Less than 2% of million-dollar plus claimants (448) account for 18.5% of stop-loss claims reimbursements ($431.2 million). The average amount an employer paid 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).

Cancer dominates the top of the list (number one and number two) with $618 million in stop-loss reimbursements, accounting for 26.6% of stop-loss claims. Breast cancer accounted for 13.6% of cancer reimbursements. Cancer is also a leading million-dollar condition; it’s in the number-two spot after premature infant and live-born complications. The use of Intravenous medications was a key driver of rising cancer costs in 2015.

Chronic/end-stage renal disease (kidneys) held steady at number-three, accounting for over $369 million in combined first-dollar claims and stop-loss claims reimbursements. The average treatment cost for claims associated with kidney disease has gone down 21% over the last four years, the high incidence rate of the condition contributes to its ranking. One in three Americans is at risk for kidney disease, with diabetes and hypertension as leading causes.

Transplants were number-six with a 65% increase in incidence from 2012 to 2015. There has been an expanded use of transplants and an increase in organ donations and improved procedures, which can increase the pool of transplant candidates. Transplants represented over $62.2 million in stop-loss claims. There was a 79% increase in bone marrow/stem cell transplant costs and a 55% increase in associated pre- and post-transplant costs. The costs to treat a catastrophic condition were higher in certain regions of the United States: 27% higher in East South Central, 22% higher in the Mid-Atlantic, and 19% higher in the Pacific regions.

Obesity Is Driving Disability Claims

Disability claims have increased significantly over the past 10 years for joint disorders and musculoskeletal issues in the U.S., according to data from Unum. Greg Breter, senior vice president of benefits at Unum noted that aging Baby Boomers are staying in the workforce longer, and more than a third of U.S. adults are classified as overweight or obese. “Almost everyone over 55 begins to feel the twinges in joints and backs. But research is showing that obesity is contributing to a dramatic increase in knee replacement surgery and exacerbates other conditions like arthritis, back injuries and joint pain. We also see obesity contributing to other issues, like heart disease, stroke, type 2 diabetes, sleep apnea and respiratory problems, and certain types of cancer.” Aging and obesity tip scales in Unum’s 10-year review of disability claims. For musculoskeletal issues, there has been a 33% increase in long term disability claims and a 14% increase in short term disability claims. There has been a 22% increase in long term disability claims and 26% increase in short term disability claims for joint disorders. While Unum has seen an increase in joint and musculoskeletal issues, cancer has stayed the number one reason for long term disability claims over the past decade, and pregnancy continues to top the list of reasons for short-term disability.

Here are the top long-term disability causes for 2015:

  • Cancer 16.5%
  • Back disorders 13.9%
  • Injury 10.4%
  • Cardiovascular 9.6%
  • Joint disorders 9.2%

Here are the top short-term disability causes:

  • Pregnancy 27.4%
  • Injury (excluding the back) 11.3%
  • Joint disorders 2%
  • Back disorders 7%
  • Digestive system 6.6%

Long Term Care Claims Reveal Popularity of Home Care

Eight million Americans have purchased long-term care insurance and an increased number are now starting to claim benefits, according to a report by American Association for Long-Term Care Insurance (AALTCI). Most people mistakenly associate LTC with skilled nursing home care, but 51% of all newly opened claims begin with home care. Good coverage can cost about $100-a-month for a 55-year-old healthy male. That’s for roughly $160,000 of benefits, which covers quite a bit of care. Add a flexible inflation growth option and your benefits grow over time,” explains Jesse Slome, director of (AALTCI).

“In 2014 we paid $105 million in claim benefits, a 12% increase over the prior year…This protection is best purchased in your 50s and 60s when you are still able to meet the health qualifications and costs for coverage are lower,” says Bill Naylon, president of MedAmerica Insurance Company.

According to AALTCI, roughly two-thirds of all beneficiaries are women, and 54% of new LTC insurance applicants are 55 to 64. Most insurers charge higher rates for single women, but offer discounts for couples or partners who apply for coverage. While most new claims begin for policyholders who are 70 or older, nearly 9% of claims begin before age 70. The leading causes for home care claims are stroke, Alzheimer’s, arthritis, cancer and injury

Consumers Are Getting Stuck with Mystery Medical Bills

Forty-percent of consumers surveyed say they received unexpected medical bills, and half of them never received a good explanation for why it happened, according to a study by the Altarum Institute. Thirteen percent of consumers with unexpected medical bills said that insurance didn’t cover anything, which led some to cover the full cost of care. Consumers who have more confidence navigating the health system are more likely to get the bill covered or get a good explanation of the bill. Those who are less confident end up paying more of the bill without understanding what the charges are for. Wendy Lynch of Altarum said, “We don’t know if consumers have always been hit with unexpected costs or if this is new. Because the ACA puts new pressure on hospitals, it’s possible that providers are finding new ways to add revenue by tacking on services.” For more information, visit www.altarum.org/CCCHC.

CDI Imposes Record Penalties Against United

California Department of Insurance (DOI) Commissioner Dave Jones issued more than $173 million in penalties of against United Healthcare for violating the insurance code from 2005 to 2008. It’s the largest administrative penalty ever assessed against a California health insurer or plan. Jones says that the fine is warranted because no other insurer has violated the insurance laws hundreds of thousands of times. And no other insurer has repeatedly misrepresented its business practices, failed to correct the root causes of its violations, or ignored its statutory obligations to the extent found in the case. The administrative proceeding arises from problems that surfaced after United Healthcare’s acquisition of PacifiCare in 2005. Shortly after the transaction, the California Medical Association (CMA) saw a spike in complaints from its  members about the way PacifiCare was processing claims and contracts. After conducting its own investigation, the DOI filed an administrative proceeding against United Healthcare, charging PacifiCare with violations that included the following:

● Failing to give providers notice of their appeal rights and members notice of their right to an independent medical review. |
● Failing to pay claims and interest on late-paid claims in a correct and timely manner.
● Failing to acknowledge receipt of claims.
● Failing to respond to provider disputes in a timely manner.
● Closing claims files illegally
● Sending untimely collection notices for overpayment. Commissioner Jones sustained the findings of the administrative judge that PacifiCare committed over than 900,000 violations of the law. United Healthcare has appealed Jones’ decision to a California superior court.

2013 Long Term Disability Claim Payments Soar

Disability claims payments totaled $9.8 billion in 2013, a 1.6% increase over 2012, according to the Council for Disability Awareness (CDA).  In addition, more employers (214,000) offered long term disability benefit plans in 2013 than in 2012, yet the number of insured people fell 1% to 32.1 million — a decrease that may reflect the trend toward more voluntary/employee-paid disability benefit plans in which not all eligible employees enroll. CDA President Barry Lundquist said, “Despite increased consumer confidence, many employers and wage earners seem to have adopted a wait-and-see attitude toward benefit expenditures, a possible result of economic uncertainty and the fear of continually rising healthcare costs. It is a concern that, while more employers offered long-term disability benefit plans in 2013, fewer workers are actually protected. More and more employees are becoming responsible for making their own benefit decisions, so it’s critical to educate them about their risk of an income-interrupting illness or injury and the consequences of losing their paycheck. If our education efforts in this area are ineffective, we can expect declining numbers of employees with protected incomes in the years to come.”
The following are other key findings for 2013:

• Women accounted for 56% of new disability claimants approved by CDA member companies.
• The average claimant age exceeded 50 for the first time. Claims for those age 50 and older have been increasing consistently, mostly driven by claimants over age 60. Yet, more than four in 10 new claimants were in their 40s or younger.
• Musculoskeletal system/connective tissue disorders remain the leading cause of new disability claims, followed by cancer, injuries, cardiovascular/circulatory disorders and mental disorders.
• The total number of existing claimants who received disability payments fell 3% to 653,000.

For the second year in a row, new disability claims declined after increases in 2010 and 2011. The 5.7% decrease in new approved claims in 2013 is a result of fewer claim applications received, which is one indication of an improving economy. The number of disabled workers receiving Social Security Disability Insurance (SSDI) payments last year increased 1.3% to more than 8.9 million, which is the slowest growth rate in over a decade. To get a copy of the 2014 CDA Long Term Disability Claims Review, visit www.disabilitycanhappen.org.

2013 Long Term Disability Claim Payments Increase to $9.8 Billion

Disability claims payments totaled $9.8 billion in 2013, a 1.6% increase over 2012, according to the Council for Disability Awareness (CDA). In addition, more employers (214,000) offered long term disability benefit plans in 2013 than in 2012, yet the number of insured people fell 1% to 32.1 million – a decrease that may reflect the trend toward more voluntary/employee-paid disability benefit plans. Women made up 56% of the 150,000 new disability claimants approved by CDA member companies were women.

In 2013, the average claimant age exceeded 50 for the first time. Claims for those age 50 and older  have been consistently increasing as a percentage of the total, reflecting the aging of America’s working population. Yet, more than four in 10 new claimants were in their 40s or younger. Musculoskeletal system/connective tissue disorders remain the leading cause of new disability claims, followed by cancer, injuries, cardiovascular/circulatory disorders and mental disorders.

The number of existing claimants who received disability payments in 2013 fell 3% to 653,000. For the second year in a row, new disability claims declined after increases in 2010 and 2011. The 5.7% decrease in new approved claims in 2013 is a result of fewer claim applications received — one indication of an improving economy. The number of disabled workers who were receiving SSDI payments last year increased 1.3% to more than 8.9 million, representing the slowest growth rate in over a decade. This slowing growth rate is a result of declining SSDI claim applications and new awards during the past three years. For more information, visit www.disabilitycanhappen.org.

Wellness Programs Can Reduce Workers’ Comp Claims

Effective corporate wellness initiatives have shown to be successful in not only reducing the duration of lost-time workers’ compensation claims, but also in reducing a company’s workers’ compensation claims, according to a report by Lockton. The report, authored by Lockton’s Michal Gnatek, is titled “Wellness Programs: The Positive Affect on Workers’ Compensation Claims.” Gnatek says that promoting healthy behavior can inhibit unsafe or inattentive workplace behavior. “Risk managers and claims professionals should be adding employee wellness to the available arsenal of weapons to combat increasing claims,” he said. Lockton recommends that risk managers become well acquainted with their companies’ wellness program and find the data on comorbid factors captured by their insurer or third party administrator. Collaborating with internal safety, health, human resource, and environment professionals will help risk managers discover how to integrate employee wellness with workplace safety, he said. For more information, visit http://www.lockton.com.

Cigna Settles Over LTD Claims

California and three other states have settled with CIGNA over claims handling practices for long-term disability insurance. The settlement is the result of individual examinations by the insurance departments of Calif., Conn., Maine, Mass., and Penn.

Insurance department officials cite claim handling irregularities, such as not giving enough consideration to the medical findings of independent physicians, workers compensation records, or Social Security Disability decisions.

Cigna is re-evaluating certain claims and has set aside $77 million to pay policyholders whose claims were handled improperly. CIGNA is paying a $500,000 penalty to the California Dept. of Insurance. The company is also paying $150,000 to reimburse the department for the cost of ongoing monitoring required under the settlement agreement.

Cigna must do the following under the settlement agreement:
• Improve the claims handling.
• Apply enhanced claim procedures to certain previously denied or adversely terminated claims.
• Participate in a 24-month monitoring program, conducted by the insurance departments, involving random sampling and ongoing consultation.
• Undergo a re-examination upon completion of the monitoring period.
• Pay $1.7 million in fines and administrative fees to the five states involved in the settlement.

Last Updated 05/05/2021

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