Diagnosed opioid use disorder by payer

Over 25 million American adults report suffering from chronic pain on a daily basis, and a range of adverse health outcomes accompanies their pain. Beginning in the early 2000s, opioid analgesics were increasingly seen as a solution to the problem of under-treatment that had been a concern in the 1990s. From 1991 to 2011, the number of opioid prescriptions filled at U.S. retail pharmacies nearly tripled, increasing from 76 million to 219 million per year, though those numbers have started to decrease since the peak in 2011.

Despite the recent decrease in prescriptions of opioids, the human toll of the opioid crisis has continued to intensify. Illegally acquired heroin and synthetic opioids such as fentanyl have become the leading cause of overdose deaths. Opioid overdose deaths are now the single largest factor slowing the growth in U.S. life expectancy, and if current trends continue, opioid overdose deaths could outnumber suicides by 2019.

In this article, Milliman’s Stoddard Davenport and Katie Matthews help explain the scale of the opioid epidemic within the insurance industry.

Based on a sample of over 42 million people with commercial insurance, nearly 1.3 million Medicare beneficiaries, and a Kaiser Family Foundation analysis of Medicaid beneficiaries in 49 states, we estimate that over 1.5 million insured Americans were diagnosed with an opioid use disorder in 2015 (the most recent year available). Figures 3 and 4 summarize these findings by payer. These results (and others presented throughout this report) have been age- and area-adjusted to be representative of the U.S. insured population as of 2015 using U.S. Census Bureau data.12

Figure 3: Diagnosed opioid use disorder by payer, 2015 (or most recent year)


We found that about 41.4% of those with diagnosed opioid use disorder were commercially insured, 15.9% were Medicare beneficiaries, and 42.7% were Medicaid beneficiaries. Overall, the diagnosed prevalence rate of opioid use disorder was 3.28 per 1,000 for the commercially insured, 5.39 per 1,000 for those with Medicare, and 8.90 per 1,000 for those with Medicaid. Across all insurance payers, we found that the prevalence of opioid use disorder was 4.91 per 1,000.

Figure 4: National estimates of opioid use disorder diagnosis by payer, 2015 (or most recent year)

Payer Diagnosed prevalence per 1,000 Total diagnosed nationally No. (%)
Commercial (2015) 3.28 622,000 (41.4)
Medicare (2015) 5.39 239,000 (15.9)
Medicaid (2013) 8.90 642,000 (42.7)
Total 4.91 1,503,000 (100.0)

The authors also highlight the rate of opioid use disorder by age and sex.

Rates of opioid use disorder varied widely by age and sex, with men generally experiencing higher rates of opioid use disorder through age 65, and women experiencing higher rates from 66 and older. Rates were quite low through childhood, followed by a marked increase in the late teen years, peaking in the mid-20s at a rate of 5.47 per 1,000 for women (at age 24) and 10.00 per 1,000 for men (at age 25). Rates showed a sharp drop-off in the late 20s, followed by a rise to another peak in the mid-30s of about 3.76 per 1,000 for women (at age 35) and 6.37 per 1,000 for men (at age 36). From the late 30s through age 64, the gap between men and women closed and both experienced prevalence rates hovering between 3.50 to 4.00 per 1,000 through retirement age. Opioid use disorder rates for Medicare beneficiaries were generally higher for women than for men, and tapered off with advancing age. Comparable data for Medicaid were not available.

Medicare Advantage’s transition from RAPS to EDS risk scores

In 2017, there were many changes to Medicare Advantage (MA) risk adjustment as the transition continued from Risk Adjustment Processing System (RAPS) data to Encounter Data System (EDS) data. MA organizations will also experience complexity and challenges in payment year (PY) 2019.

This article by Milliman’s Deana Bell, David Koenig, and Charlie Mills compares EDS and RAPS risk scores and details some of the program highlights from the past 12 months:

• A 25% EDS weight for PY 2017
• EDS file layout updates
• PY 2016 EDS deadline extension and change to payment timing
• PY 2017 RAPS and EDS deadline extensions
• Including inpatient RAPS diagnoses in EDS risk scores for PY 2019

Plan sponsors must consider several strategies to manage pharmacy costs

In recent years, pharmacy costs have been a hot topic. Plan sponsors must remain vigilant and stay current on industry strategies used to manage pharmacy costs. In this article, Milliman consultant Ajanthan Balasinkam outlines a number of important considerations for plan sponsors, including plan design, contracts, the opioid crisis, and the specialty pipeline.

Has the MPL specialty industry reached its peak in financial strength ratings?

The profitability experienced by the medical professional liability (MPL) industry since the mid-2000s, and the resulting strengthening of balance sheets, has not gone unnoticed by A.M. Best. This article by Milliman’s Eric Wunder and Sarah Rice examines the A.M. Best financial strength ratings as well as A.M. Best’s outlook for MPL specialty insurers.

This article was originally published in the 2018 First Quarter issue of Inside Medical Liability.

Maximizing value-based care program performance

Over the past few years, there has been a proliferation of value-based care programs offered by health plans and government payers. These programs, including accountable care organizations, bundled payment programs, and quality incentive programs, often include a multitude of measures related to costs, quality, patient experience, and outcomes, along with various methodologies to determine success.

As the use of value-based reimbursement programs and the associated financial impact increases, it is important for providers to learn the program’s intricacies as well as the analytical, operational, and clinical requirements to ensure its success. In this paper, Milliman consultants Rod Martin and Laurie Lingefelt discuss how success with these programs is possible.

Effect of recently enacted laws on employer-sponsored group health plans

Employer-sponsored group health plans have been directly impacted by changes under three statutes enacted since Dec. 22, 2017. This Benefits Alert summarizes the new laws’ healthcare provisions affecting employer-sponsored plans.

The Tax Cuts and Jobs Act of 2017 (TCJA) was enacted on Dec. 22, 2017, with a healthcare-specific provision that reduces the Affordable Care Act’s (ACA) individual mandate penalty to $0 beginning in 2019.

• For group health plan sponsors, perhaps a more significant provision is the TCJA’s change to the methodology in which the high-cost health plan excise tax (“Cadillac tax”) thresholds are indexed. Originally, the ACA increased the cost thresholds triggering the tax based on the Consumer Price Index for Urban Consumers (CPI-U). However, the TCJA changed the basis for the Cadillac tax (and other) purposes, from CPI-U to Chained CPI-U, which has measured, on average, approximately 0.25 percentage points lower than CPI-U (or about 90% of CPI-U). This change will cause employer health plans to cross the cost threshold earlier than under the original law and expose them to a higher excise tax unless employers make plan design changes or other action to avoid the excise tax. The estimated impact of this change is an increase of approximately 2%-4% in a plan’s long-term cost, based on Milliman’s healthcare cost trend model.

The Continuing Appropriations Act, 2018 (CAA ’18), signed on Jan. 22, 2018, delayed the application of the Cadillac tax to 2022 from 2020. For any employer health plan projected to begin paying the excise tax in 2020 or 2021, the delay will provide relief for one or two years. For plans not projected to have to pay the Cadillac tax prior to 2022, this delay will have no effect.

• Also in the CAA ’18, for 2019 only, fully insured plans are exempt from the ACA’s health insurer fee (HIF), an annual assessment that health insurance companies typically pass on to plan participants through premiums. This moratorium could produce a one-year savings of 2%-3% for fully insured plans covering active employees and/or non-Medicare retirees. For Medicare Advantage plans, the percent reduction in premiums will be much larger, because the HIF is applied to estimated premiums prior to reimbursements by the Centers for Medicare & Medicaid Services.

Finally, in the Bipartisan Budget Act of 2018, signed on Feb. 9, 2018, two changes impact employers with an employer group waiver plan (EGWP).

• The Medicare Part D coverage gap (which under prior law would occur when a beneficiary accumulates $3,820 in total drug spending in 2019) will be eliminated in 2019 instead of 2020. The law also provides a reduction in beneficiary coinsurance to 25% (from 30%) in 2019, which is the same coinsurance the beneficiary pays prior to the coverage gap (hence, the coverage gap is “closed”).
• Simultaneously in 2019, the pharmaceutical manufacturer discounts for Medicare beneficiaries reaching the coverage gap will increase to 70% from 50%.

The net effect of these two changes on EGWPs is that an employer’s health plan liability will be reduced to 5% (from 20%) of total prescription drug costs in the coverage gap, which will result in savings to the employer (see How will the Bipartisan Budget Act of 2018 impact Part D in 2019 and beyond?).

For further information about how these changes may impact your plans, please contact your Milliman consultant.