Causes of Large Health Claims

It is by now well-understood that a few patients account for a large proportion of health spending.  One way of understanding the causes of large-cost health claims is by looking at reinsurance claims, which are claims made by health plans and self-insured employers when costs for a case exceed a certain threshold.  Sun Life Financial is one of the large health plan reinsurers and issues an annual report detailing catastrophic claims.   (Sun Life Report)   This year’s report covers 53,000 cases and $4.5 billion in stop-loss reimbursement from the years 2009 through 2016.  A few interesting facts.  The top ten conditions underlying reinsurance claims account for 51.7% of claim dollars.  Cancers are the top two most costly conditions, representing 26.7% of reimbursements.  Number 3 is end-stage renal disease; number 4 is congenital anomalies; number 5 is transplants and other diseases in the top ten include septicemia, complications of surgical care, cerebrovascular disease and pulmonary collapse.  Transplants and septicemia have been moving up in volume over the last few years.

Cancer is the number one cause of stop-loss claims across industries, but different diseases are more prominent in certain industry segments.  For example, in educational services, hemophilia, cystic fibrosis and congestive heart failure move into the top ten.  In retail, a number of diseases not in the national top ten become leading causes of claims.  For manufacturing, burns move onto the list.  Breast cancer is the single leading cause of claims and 15% of all self-insured employers had at least one breast cancer-related stop-loss claim.  Million-dollar plus claims were up 26% in 2016 compared to the average of 2012-2015.  These claims were only 2.2% of claims volume but were 23% of claim dollars.  Cancers are again the leading cause of million-dollar claims, and you have to suspect that the cost of specialty drugs plays a large role in this.  The report also reveals wide variation between billed charges and paid reimbursements, which vary by disease.  End-stage renal disease has a particularly large difference between billed and paid amounts.  Transplant costs have held relatively steady at an average of around $270,000.