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.

Employees Appreciate Voluntary Insurance Benefits

Seventy-nine percent of employees see a growing need for voluntary insurance compared to last year. And of those, 60% say the need is driven by the rising cost of medical services, according to an Aflac survey. Employees who are offered voluntary benefits report higher satisfaction with their jobs and their benefits. Employees whose work site offers voluntary benefits are more likely to say the following:

  • They are prepared to pay for out-of-pocket expenses not covered by major medical/health insurance related to an unexpected serious illness or accident (73% versus 56%).
  • They are extremely or very satisfied with their jobs (73% versus 57%).

Consumerism Kicks into High Gear

gears2aby Leila Morris – Employers took action on several fronts to hold down growth in the average per-employee cost of health benefits to 3.9% in 2014. While this was a bigger increase than last year’s historically low increase, it is still well below the 7% average rate of growth over the past 15 years, according to a survey by Mercer. Total health benefit cost averaged $11,204 per employee in 2014; this includes employer and employee contributions for medical, dental and other health benefits. Employers predict that in 2015 their health benefit cost per employee will rise 4.6%. This increase reflects changes they will make to reduce costs. If they made no changes to their plans, they estimate that cost would rise by an average of 7.1%.

Julio A. Portalatin, president and CEO of Mercer said, “Employers have done a remarkable job of holding down health cost growth for the past few years. But with enrollment almost certain to rise in 2015 as major ACA provisions go into effect, they’ll need to intensify their efforts. The strong interest they’re showing in private exchanges suggests that this new benefit delivery system is the innovation they have been waiting for.”

Helping to hold down cost growth in 2014 was the largest one-year increase in enrollment in high-deductible consumer-driven health plans (CDHP), from 18% to 23% of all covered employees. In addition, 3% of large employers (those with 500 or more employees) moved to a private exchange in 2014 (or for 2015) to provide benefits to their active employees and another 28% say they are likely to do so within the next five years.

Many employers expect to spend more in 2015 when the ACA requires them to extend coverage to employees working 30 or more hours per week. Thirty-eight percent are affected by this rule. While some have already taken steps to comply, the majority will do so in 2015. Employees who have chosen not to elect coverage in the past now have a stronger incentive to do so — as the minimum tax penalty for not getting coverage rises to $325 for 2015 from just $95 this year.

Employers of all sizes, but especially large employers, added consumer-directed health plans in 2014. CDHP offerings jumped from 39% to 48% among employers with 500 or more employees, and from 63% to 72% among jumbo employers. CDHP enrollment spiked from 18% to 23% of all covered employees while enrollment in HMOs fell to just 16%, which is the lowest level of enrollment seen since the survey began in 1993. Enrollment in traditional PPOs fell from 64% to 61%.

Many employers that did not already cover all employees working 30 or more hours said they would add a lower-cost plan for newly eligible workers, which may have helped fuel CDHP growth in 2014. The average cost of coverage in a CDHP paired with a tax-advantaged health savings account is 18% less than coverage in a PPO and 20% less than in an HMO: $8,789 per employee, compared to $10,664 for PPOs and $11,052 for HMOs.

Offering these plans is a top strategy for employers looking to avoid the “Cadillac tax” in 2018. The 40% excise tax on health coverage costs more than $10,200 for an individual or $27,500 for a family. Mercer estimates that about a third of employers are at risk for triggering the tax in 2018 if they make no changes to their most costly plan.

Mercer’s past five annual surveys have shown that employers remain committed to offering health coverage. In 2014 the number of employers that expect to drop their plans and send employees to the public exchange fell even further. Just 4% of all large employers say they are likely to terminate their employee health plans in the next five years, down from 6% in last year’s survey. And while small employers are still more likely to be considering an exit strategy, the number of those with 50 to 199 employees that say they are likely to drop their plans fell from 23% in 2013 to just 16% in 2014. For more information, visit www.mercer.com/ushealthplansurvey.

Financial health can affect physical health

Clients who make financial well-being a priority and take prudent steps toward such goals are more likely to be physically healthy, according to one recent study. That adds to the evidence documenting a link between financial and physical health. PlanAdviser.com (10/7)

Covered California Announces SHOP Plans

Plans under Covered California’s Small Business Health Options Program (SHOP) now offer more benefit choices and options for adult dental coverage. Employers can offer coverage from two different metal tiers for small businesses starting coverage October 1 or later. The dual metal tiers must be adjoining: Bronze and Silver plans, Silver and Gold plans, or Gold and Platinum plans. Also, alternate benefit designs are being offered through three of SHOP’s carriers: Health Net, Kaiser Permanente, and Western Health Advantage. These alternate benefit designs meet the essential health benefits requirement of the Affordable Care Act, but vary from the standardized benefits established by Covered California. The plans provide expanded employee choice. Also, employers can now offer separate dental plans for adults beginning in 2015. Dental benefits are employee-paid, with no additional cost to employers. The six health plans and 10 dental plans offered through SHOP are a mix of HMOs, PPOs, and exclusive-provider organizations. The health plans are from the following health insurance companies:
• Blue Shield of California
• Chinese Community Health Plan
• Health Net
• Kaiser Permanente
• Sharp Health Plan
• Western Health Advantage

The following are successful bidders for Covered California’s SHOP dental coverage: (Dental Health Services is an additional dental carrier for 2015.)

• Access Dental Plan
• Blue Shield
• Delta Dental
• Dental Health Services
• Guardian
• Liberty Dental
• Managed Dental Care
• MetLife.
• Premier Access.
• Safeguard Health

Businesses are not mandated to enroll in SHOP, and there is no penalty for not participating. California businesses with 50 employees or fewer can choose from quality health insurance plans similar to those available to larger businesses. Businesses with fewer than 25 employees are eligible for tax credits exclusively available through Covered California’s SHOP. Covered California’s SHOP has enrolled 1,714 businesses, which accounts for 11,510 employees and their dependents. Open enrollment for SHOP is available year-round.

What Consumers Want in a Critical Illness Product

Patients are getting medical diagnoses at earlier stages than ever due to medical advances, better treatment, and the fact that more people understand the importance of preventive care and early detection. However, critical illness contracts don’t typically pay a benefit for earlier diagnoses, so those claims are not triggering a benefit and policyholders are not getting paid when they think they should, according to a study by Trustmark.
Carriers have added conditions to the list of what they cover, but it’s not as helpful as it sounds. Less than 12% of people are ever paid a benefit for these conditions while the added coverage increases the cost of their policy. Consumers say they want the following in a critical illness policy:
• A benefit for an early-stage diagnosis.
• Access to a medical expert or doctor for advice.
• A policy that lasts throughout their lifetime with multiple benefits, regardless of whether they get sick. They don’t want something that only centers on them being ill.
• Less confusion on what qualifies for a benefit and whether enough time has passed to pay a benefit
• A benefit even if they were previously diagnosed for a condition
• A commitment that their premiums will not change over the life of the policy.

For more information, visit www.trustmarksolutions.com.

Report projects 5.6% medical spending growth this year

The CMS reported Wednesday that growth in mean annual health care spending is expected to reach 5.6% this year and will average 6% from 2015 to 2023. The estimates fall below earlier projections as well as the 7.2% increase seen from 1990 through 2008, but the new figures represent an increase in growth over the 3.6% estimated for 2013. Spending on prescription drugs is expected to increase by 6.8% this year, driven in part by costly new drugs for treatment of hepatitis C. The Examiner (Washington, D.C.) (9/3), Politico (9/3), USA Today (9/3), Reuters (9/3), The Hill (9/3)

Domestic Violence Victims Face Grim Health Outcomes

domesticvA survey by the National Family Justice Center Alliance finds that domestic violence victims and their children are often uninsured or underinsured; they rarely receive needed medical, dental, and vision services; and they often fail to understand the profound short and long-term effects of the violence and abuse. Major findings include the following:
• Abused women are 70% more likely to have heart disease, 80% more likely to experience a stroke, and 60% more likely to develop asthma.
• Abused women are three times more likely to have reproductive health complications.
• The trauma of growing up in an abusive home has a dramatic effect on a child’s life expectancy. The life expectancy of a child with a score of six (multiple adverse childhood experiences) in the Adverse Childhood Experiences study is reduced by 19 years compared to a child with no adverse childhood experiences.
• Less than one in four victims attributes their health problems to abuse. Many survivors of domestic violence do not realize the possible health effects from near-fatal strangulation assaults.
• The primary barriers to care are lack of insurance and the cost of insurance. Forty-four percent have no insurance. Sixty-five percent of  those with insurance have public insurance, such as Medicaid or Medicare.
• 70% of survivors reported at least one physical health need, but only 49% had a primary care provider, and only 30% saw a doctor in 2013.
• Victims are more likely to use emergency rooms for regular health care. Half went to an emergency room to meet their medical needs while only 30% saw their primary care provider in 2013.
• Forty percent would like to have dental services, and 43% would like to have vision services available in Family Justice Centers or domestic violence agencies rather than going to hospitals or doctor’s offices.
• Twenty-four percent of women will experience intimate partner violence in the United States. It is the most common cause of injury for women ages 18 to 44.
• The economic impact of violence is estimated at $5.8 – $8.3 billion each year; the vast majority attributed to healthcare costs and lost productivity (CDC, 2013).

Alliance CEO Gael Strack said, “Most community-based domestic violence agencies do not have the capacity to meet these needs. Criminal justice interventions, social services, civil legal services, mental health counseling, and other assistance is available in many communities, and multi-agency and multi-disciplinary approaches, such as Family Justice Centers, are bringing together more accessible services under one roof. But health related services are not generally included even in the most dynamic multi-agency, multi-disciplinary service approaches.”

The National Family Justice Center Alliance is working with the Verizon Foundation, Blue Shield of California Foundation, and other allied national organizations to address health needs of survivors of domestic violence and their children, particularly in Family Justice Centers or other types of multi-agency, multi-disciplinary service approaches that serve victims of domestic violence. The Alliance is calling for all domestic violence agencies, Family Justice Centers, and other community-based service providers to do the following:
• Screen survivors for pressing health needs in their intake and case management services.
• Build partnerships with community-based health clinics, hospitals, and health service providers to make sure that victims get the medical services they need.
• Help get survivors signed up for health insurance immediately pursuant to the Affordable Care Act.
For more information, visit www.familyjusticecenter.org.

Healthcare To Take a larger Share of California’s Budget

On January 10, 2013, Governor Brown presented a balanced budget for the coming fiscal year, which will begin on July 1. No proposed budget had purported to be balanced since Governor Schwarzenegger’s 2007 to 2008 budget, which he presented in January 2007.

According to an analysis by California Common Sense, while some departments have seen their budgets shrink, the Department of Health Care Services (DHCS) costs have risen dramatically. As one of the largest departments in the state,  spending on DHCS increased 62.2% between 2007 to 2008 and 2013 to 2014, rising from $17 billion to $27.6 billion.

Driving up the departments costs are nationally rising health care costs and increasing enrollment in Medi-CAL, which accounts for most of the departments budget.

The 2007 to 2008 proposed budget estimated a MediCAL caseload of 6.7 million enrollees while the proposed budget for 2013 to 2014 estimates 8.7 million enrollees, a 30% increase. That growth does not include an additional growth in enrollees that’s expected as a result of the enactment of the Affordable Care Act (ACA).

Combined with rising health care costs, increased Medi-Cal enrollment accounts for most of the programs additional costs to the state. The federal government matches DMHC’s funding for enrollees. For a temporary period, the federal government will fund a larger portion of costs arising from new enrollment under ACA.

The department’s $10.6 billion in additional state funding exceeds the state’s net spending increase by $2.8 billion, requiring other service areas to take cuts in order to maintain a balanced state budget.

Employee compensation and retirement benefit costs will also consume a much larger share of state spending in 2013 to 2014 compared to 2007 to 2008. Proposed annual salary spending has increased 15.5% among the executive, judicial, and legislative branches, though spending on legislative salaries has declined slightly.

Annual state contributions to retirement benefits – pensions and retiree health care – have increased $1.5 billion, or 24.8%. In particular, annual retiree health care payments have increased $682 billion and thus account for nearly half of the retirement cost growth. Furthermore, among annual retirement costs to the state, health care for retired employees and their beneficiaries grew the most at 61.2%. In comparison, annual pension contributions increased $790 million, or 16.4%.

Taken together, proposed annual spending on salary and retirement benefit costs increased $3.6 billion, an 18.4% increase since 2007 to 2008. That increase amounts to nearly half of the states $7.8 billion annual increase in spending across the budget. For more information, visit www.cacs.org.

Use of Retail Medical Clinics Continues to Grow

Fast-growing retail medical clinics are attracting older patients and are delivering more preventive care, particularly flu shots and other vaccinations, according to a study by the RAND Corporation. Visits to retail medical clinics increased from 8% to 19% of all visits from 2007 to 2009.

More than 44% of visits to the clinics occurred on the weekend or other times when doctor’s offices are usually closed, according to the study published online by the journal Health Affairs. Retail clinics are promoting new services, such as caring for diabetes and other chronic illnesses. Dr. Ateev Mehrotra of RAND said, “If demand for primary medical care drives longer wait times to see a doctor, as it has following health care reform in Massachusetts, then this could drive greater demand for convenient alternatives such as retail clinics.”

The clinics, which are usually staffed by nurse practitioners, offer basic health care at clearly posted prices. Doctor groups have said that retail clinics could disrupt patients’ relationships with their primary care doctors and interrupt continuity of care. The criticism has increased since some clinic operators began offering care for chronic illnesses, such as asthma and high blood pressure.

But retail clinics account for only a small slice of outpatient medical care compared to the estimated 117 million emergency room visits and 577 million visits to doctors’ offices each year. Visits to retail medical clinics for vaccinations increased sharply from 2007 to 2009. Another recent study published by RAND researchers found that vaccination visits to the three major retail clinic chains quadrupled to more than 1.9 million in 2009. Most of the inoculations given were for influenza.

“The number of vaccinations provided at retail clinics could grow even larger if providers started counseling patients about the need for inoculations when they visit the clinics for other care,” said Lori Uscher-Pines, an associate policy researcher at RAND.

In the latest study, researchers found that the proportion of retail clinics visits that patients made for acute medical problems dropped from 78% to 51%. There was a corresponding increase in visits for preventive care, making up more than 47% of visits by 2009. Researchers say that patients who have no primary care doctor or have a weak relationship with their doctor are more likely to seek care at a retail clinic.

For more information, visit www.rand.org.

Last Updated 12/01/2021

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