As the stop-loss landscape evolves, keeping an eye on emerging trends helps self-insured employers control healthcare spending. Knowing what’s been happening over the last few years can help employers anticipate what might be coming up around self-funding, stop-loss and high-cost claims over the next few years.
That’s part of what makes the data in Sun Life’s annual stop-loss report so useful for self-insured employers. The 2020 report was the company’s eighth, so we have years of data about high-cost claims and injectable drug trends to evaluate.
The 2020 Sun Life claims study includes data collected between 2016 and 2019 from 2,600 of the company’s policyholders, each of which represented anywhere from 50 to 100,000 employees. Specifically, the report analyzes data from the more than 40,000 covered members who incurred stop-loss claims during the report period. I want to highlight some of the report’s findings to give you an idea of how other employers are using their stop-loss coverage.
2020 Sun Life High-Cost Claims Study Highlights
- Employers had an 85.8% likelihood of having a stop-loss claim in any given policy year, with a 72.3% likelihood of a claim from one of the top 10 high-cost claim conditions.
- Claims in excess of $1 million continue to rise, with 24% of employers having at least one $1M+ claim between 2016 and 2019.
- Cancer continues to hold the two spots on the top 10 list of high-cost claim conditions.
- The top 10 high-cost claim conditions account for half of all stop-loss claims.
- The majority of employers (58%) have at least one injectable drug stop-loss claim each year.
- Patients younger than 2 are the most likely to have claims exceeding $1M, largely due to congenital anomalies.
- Since 2016, the number of members with claims that cost $3M+ has doubled.
- For four of the top 10 high-cost claim conditions, more than 25% of treatment costs are related to prescription drugs.
- Within the top 10 high-cost claim conditions, 44% of all costs were reimbursed by stop-loss.
Trends Around High-Cost Stop-Loss Claims
Because the Sun Life claims study is released annually, we’re able to see how the top high-cost claim conditions have changed over the last decade. The same four medical condition categories have generally held the top spots since 2010, and continue to hold the top four spots in the 2020 report. Those categories are: malignant neoplasm (cancer); leukemia, lymphoma, and/or multiple myeloma (cancers); chronic/end-stage renal disease (kidneys) and congenital anomalies (conditions present at birth).
A few conditions are relatively new to the top 10 high-cost claims list in this year’s Sun Life study, in part because of changes in medical coding. For example, “unspecified procedures and aftercare,” which is a broad category describing any care a patient receives after a serious diagnosis or treatment (such as chemotherapy or wound care), jumped to the ninth spot after being as low as number 84 just a few years earlier.
Unsurprisingly, the frequency and price tag of high-cost claims continue to climb year over year. Sun Life found that the number of patients who had a $1M+ claim rose 22% between 2016 and 2019. During the same period, the number of patients with claims between $2M and $3M rose 44% and patients with claims exceeding $3M rose by 100%. The highest claim an individual Sun Life member incurred was $8.1M. The youngest patients were responsible for a disproportionate number of the highest-cost claims. In 2019, only about 6% of Sun Life’s total stop-loss claims were for members under 2 years old—but these youngest patients had 26% of $1M+ claims and 43% of $3M+ claims.
The report also looked at the relationship between employer size and the average deductible level. For employers with under 200 employees, $50,000 was the most common deductible. Larger employers were more likely to have higher deductibles; $300,000 was the most common deductible for employers with more than 1000 employers.
Finally, the report highlights the fact that it continues to be difficult to talk about the “average costs” of high-cost claims with any specificity. Each patient’s case is unique, so there can be a huge range of costs within any one claim category. For example, the average cost of claims associated with surgical complications was about $118,000—but the highest of these individual high-cost claims in Sun Life’s report was $5.6M.
Injectable Drug Trends
Perhaps the biggest takeaway from the drug sections of this year’s Sun Life claims study is that cancer-treating medications continue to hold the top spots on the list of the top 20 high-cost injectable drugs. The top five drugs combined accounted for about 27% of total injectable costs, and all five are frequently used to treat cancer. In fact, the report attributes 64% of all injectable drug costs to cancer.
One new development in the world of high-cost drugs is the introduction of Zolgensma, which was approved in 2019 for treatment of Spinal Muscular Atrophy. In its first year on the list, it had the highest average cost of any injectable drug at $2.2M per member. The report also notes that even more expensive gene therapies could be made available to patients within the next few years.
COVID and Stop-Loss Claims
Because the 2020 Sun Life high-cost claims study was being compiled as the COVID pandemic was unfolding, there’s no conclusive data about stop-loss claims related to the crisis just yet. It’s very possible that some people who delayed preventative screenings during the pandemic will ultimately develop costly complications in the coming years, but the long term effects for self-insured employers remain to be seen.
At Stop Loss Insurance Brokers, Inc., we closely monitor stop-loss and self-funding trends so our clients don’t have to. If you have questions about what your business can do to manage healthcare costs over the next few years, get in touch so we can talk about your business’s specific insurance needs. Contact me today!