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.

How the ACA Is Driving Telehealth

Virtual medical visits are growing due to the Affordable Care Act (ACA) and a rising prevalence of chronic conditions, according to an analysis from Frost & Sullivan. The market is expected to achieve a compound annual growth rate of 17.8% from 2015 to 2021. Telehealth virtual visits are gaining traction among health plan providers, payers, and employers for non-emergency conditions, such as allergies, colds, ear aches, upper respiratory infections or skin conditions. Telehealth is also attractive to parents who want to avoid dragging young children to a pediatrician. Some services focus on providing second opinions by specialists. Doctors’ and patients’ familiarity with desktop and mobile video services is driving telehealth. Since early adopters are satisfied with the services, providers are encouraged to establish telehealth services for behavioral health and other specialized therapeutic areas.

Teladoc, American Well, MDLive, and Doctor on Demand are the four major competitors attempting to build a virtual telehealth service on a national scale. Each company believes that telehealth virtual visits will become a preferred method of seeing a doctor or behavioral health professional over the next five years. As companies pursue diverse business models and strategies, they have vastly different ratios of video visits to phone calls or secure messaging. Numerous smaller participants are focusing on specific geographic areas or medical specialties.

Centene Completes Acquisition Of Health Net

Centene Corp. completed its acquisition of Health Net. Health Net is now a wholly owned subsidiary of Centene and is no longer a publicly traded company. Michael Neidorff, CEO of Centene said, “We are now the largest Medicaid managed care organization in the country. Centene expanded its government program offerings to include Medicare Advantage, as well as those offered through contracts with the Depts. of Defense and Veterans Affairs. Neidorff said, “The acquisition increases our scale across health insurance marketplaces while maintaining Health Net’s presence in the California commercial market.” He said that Centene also benefits from greater scale and a stronger financial profile.

California Insurance Commissioner Dave Jones said, “After thorough review…I concluded that this transaction provides an opportunity to bring new capital and resources from a major national health insurer largely outside of California to enable a California health insurer to continue to compete and offer consumers additional choices in California’s individual, small group, and large group commercial health insurance market.”

The following are conditions for the commissioner’s approval of the merger:

  1. Merger costs will not be imposed on California policyholders.
  2. Health Net will maintain and grow its commercial line of business in the small group and large group health insurance markets.
  3. Health Net Life will continue to offer products through Covered California.
  4. Centene and Health Net Life must provide sufficient networks of medical providers and timely access to medical providers and hospitals.
  5. Centene and Health Net Life must improve the quality of care delivered through their health insurance.
  6. An adequate distribution channel for Health Net health insurance must be maintained.
  7. Senior management for Health Net’s California operations must remain in California. Restrictions are placed on Centene’s ability to move Health Net Life out of state.
  8. Centene will make a $200 million infrastructure investment by establishing a California call center.
  9. Centene and Health Net will invest an additional $30 million in California’s low- and moderate-income neighborhoods, with investments prioritized for health facilities.

Jones said, “There are many reasons to be skeptical about health insurance mergers…Studies show that health insurance prices increased after mergers. This merger and the condition of the companies involved, however, present circumstances which led me to conclude that, with strong and comprehensive conditions, this merger was in the best interest of Californians.

Jones added, “Health Net Life Insurance, despite its name, is a health insurance company. Health Net Life has had declining market share and declines in covered lives in its commercial health insurance business. The merger with Centene provides Health Net Life with access to additional capital and resources to…compete successfully in a California market dominated by three much larger health insurers (Kaiser, Anthem Blue Cross of California, and Blue Shield of California) and several other national health insurers (United Health Care, Aetna, CIGNA).”

Wellness Programs Effective in Uncovering Chronic Diseases

Twenty-eight percent of 750 participants in sponsored wellness programs have been diagnosed with a chronic condition in the past two years. And 46% of them discovered their chronic illness through a wellness program, according to a HealthMine survey. Seventy-four percent of employees surveyed say wellness programs should include genetic testing as a way to identify risk for chronic conditions. Some large insurers have already begun to incorporate genetic testing into their wellness programs, even as program sponsors await pending regulation over privacy and other protections. Most consumers also want plan sponsors to offer health screenings, which can detect risk factors and uncover chronic illness. In fact, 74% of respondents said they would participate in vision screenings; 73% would complete a blood pressure screening; and 69% want a cholesterol screening.

Biosimilar Medications Could Save Billions

Over the next decade, the United States could save $44 billion by introducing competing biosimilar versions of complex biologic drugs, according to a report by the RAND Corporation. Biologics, which treat conditions, such as cancer and rheumatoid arthritis, are often effective, but expensive. Patient copays can be several thousand dollars a year. In 2011, eight of the 20 best selling drugs were biologics. Also, annual spending on the drugs has grown three times faster than spending for other prescription medications. Introducing biosimilar drugs into the U.S. marketplace is expected to increase competition and drive down prices, saving money for patients, health care payers, and taxpayers. However, savings are not expected to be as dramatic the as savings we have seen for an earlier generation of less-complex generic drugs.

The Affordable Care Act authorizes the FDA to develop a regulatory framework for approving biosimilar drugs. Draft materials released by the FDA suggest that not all biosimilars will be interchangeable with their original counterparts. In addition, nearly all biosimilars will require at least one head-to-head clinical trial to confirm similarity to the original biologic, which is a more-strenuous process than what is required for standard generics. A number of issues will determine the savings and who will benefit. One issue is how much the use of biologics grows as some patients switch to biosimilar drugs as they become more affordable. Patients will see some cost savings. But physicians and hospitals may also benefit because biologicals are often purchased by health providers and administered in clinics and other treatment settings. For more information, visit www.rand.org.

Uninsured with Pre-Existing Conditions Still Not Sure About Purchasing Coverage

Almost seven in 10 uninsured Americans with pre-existing conditions have not decided whether to purchase health insurance, according to a report by InsuranceQuotes.com. The Affordable Care Act will allow people with pre-existing conditions to purchase health insurance at no extra cost in 2014. The ACA mandates that all Americans have health insurance next year or pay a fine.

However, only 18% of uninsured Americans with pre-existing conditions are definitely planning to purchase health insurance (12% before Jan. 1 and 6% after that date). Fourteen percent are planning to remain uninsured while the others are undecided. Thirty-seven percent of the uninsured population has a pre-existing condition.

Laura Adams, senior insurance analyst of InsuranceQuotes.com said, “Many observers are worried that healthy Americans won’t sign up for health insurance next year. This research suggests that we should also be worried about unhealthy Americans failing to enroll.”

The report also found that 85% of Americans don’t think consumers have received enough education about Obamacare. Sixty-nine percent say they don’t feel that they have enough information to understand how the law will affect their finances. For more information, visithttp://www.insurancequotes.com.

Last Updated 12/01/2021

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