Multi-million dollar claims continue to rise, but employers — with the help of their brokers and stop-loss carriers — can find ways to contain the costs, according to Sun Life Financial's 2017 Sun Life Stop-Loss Research Report.

The stop-loss carrier reviewed 53,000 claims during 2009 through 2016, and found that the number of multi-million-dollar claimants increased 68 percent from 114 to 192. While that represents a small fraction of the total number of cases — just 2.2 percent in 2016 — multi-million dollar claims account for a greater proportion of reimbursement dollars — 23 percent of total stop-loss reimbursements in 2016.

Over the four-year period, total costs for catastrophic claims reached $6.1 billion, with $2.7 billion paid in stop-loss reimbursements.

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The increase of high-dollar claims during the 2013-2016 timeframe could be due in part to the Affordable Care Act's elimination of lifetime limits for essential benefits on employer-sponsored medical coverage, as well as the law's phased elimination of annual dollar maximums.

"Prior to this change, individuals experiencing catastrophic medical situations could exceed their benefits limit and lose their medical coverage," the authors write. "Now, due to the ACA provisions, covered members are able to continue to access the care they need."

The increase in catastrophic claims could also be due to a mix of highest-cost conditions, employer size, claimant age, and high-cost intravenous medications' paid charges, according to the report. Indeed, IV medications accounted for 48 percent of total paid charges on the top five highest-dollar claimants. Of the 562 claimants exceeding $1 million between 2013 and 2016, 45 generated more than $1 million in high-cost IV medications.

"With the increased frequency of million-dollar claims, stop-loss insurance remains an important part of the self-funded employer's risk management strategy," the authors say.

Among the top 10 catastrophic medical conditions, the various types of cancer took spots one and two, representing more than a quarter (26.7 percent) of total stop-loss reimbursements from 2013-2016. Breast cancer is the most common form of cancer in the U.S., with an estimated 247,000 new cases reported in 2016, and an average paid claim amount of $147,100.

Employers should evaluate their stop-loss coverage and decide if the right deductible levels are in place considering their experience with cancer claims and their risk tolerance. Stop-loss carriers can also help identify cost savings, in part by recommending cost-containment vendors. Employers should also consider using cancer care programs, Rx specialty/pharmacy benefits manager services, transplant contracting, and hands-on case management.

The report also discussed the high cost of transplants. Bone marrow/stem cell transplants are the most expensive, with an average paid claim cost of about $400,000. Transplants were the most common high dollar claim condition among 20 to 39 year-olds.

Employers should assess the impact of newly approved medical treatments that include transplantation and determine if they need to make changes to their plan language. They should also make sure their administrator and stop-loss carrier are providing them with access to a transplant "Center of Excellence" with a cost-containment contract.

For kidney disease claims, employers should review medical plan language to determine if it allows the plan to leverage other primary payers such as Medicare. They should also evaluate the use of alternative pricing to support a financial cap on benefits for kidney disease and consider adding appropriate plan language about it. Additionally, employers should ask their administrator and stop-loss carrier if vendors are available that can provide early detection of — and cost savings for –end-stage renal disease.

For all multi-million dollar claims, employers should ask their claims administrator if it reviews and identifies emerging high-cost claims prior to payment for potential intervention opportunities before the claim is processed.

Employers should find out how the claims administrator handles managing common chronic, ongoing, and high-cost conditions, and they should ask their administrator and stop-loss carrier what types of vendors and resources they use to support cost containment and high-quality care. Finally, employers should consider using vendors that provide negotiation services for high-dollar claims.

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Katie Kuehner-Hebert

Katie Kuehner-Hebert is a freelance writer based in Running Springs, Calif. She has more than three decades of journalism experience, with particular expertise in employee benefits and other human resource topics.