Category Archives: Cost

Critical Point podcast: “Healthcare waste and how to find it”

Milliman’s new podcast, Critical Point, presents unique perspectives from the firm’s professionals. The podcast’s debut episode, “Healthcare waste and how to find it,” features Jackie Sehr, Marcos Dachary, and Dr. David Mirkin from Milliman MedInsight®, a data warehousing and healthcare analytics platform. In this episode, they discuss healthcare waste and approaches to minimize waste and reduce unnecessary costs across the American healthcare system.

To listen to this episode of Critical Point, click here.

U.S. group disability insurers experience market consolidation, 7.3% growth in new sales in 2017

Milliman recently released the results of its 2017 U.S. Group Disability Market Survey, a comprehensive report that analyzes the short- and long-term disability (STD/LTD) market, including sales and in-force business.

In total, 25 disability insurers representing over 90% of the market contributed data to the survey, which provides analysis of premiums, cases, and covered lives in 2016 and 2017 for all participating companies. The report ranks participating companies by both STD and LTD in-force premium and new sales totals, and offers insight into current trends in the group disability market.

We’re continuing to see strong growth in the marketplace despite consolidation among U.S. group disability insurers. And while the market consolidation may have played a factor in poorer performance for some insurers in 2017 compared to previous years, overall new sales for STD and LTD markets are up by a combined 7.3%.

Survey highlights include:

• Combined STD and LTD in-force premium for participants was approximately $16.7 billion in 2017 compared with $16.0 billion in 2016.
• STD new sales premiums saw an 8.5% increase from 2016 to 2017, while LTD new sales premiums increased by 6.6%.
• Unum, Lincoln Financial Group, and Cigna retained the top three spots for new STD sales premium in 2017. Unum, The Hartford, and MetLife took the top three spots for new LTD sales premium.
• Average STD premium per life increased by 0.9% for in-force business, and by 2.0% for new sales; average LTD premium per life increased by 2.7% for in-force business and by 3.3% for new sales.

Copies of the full report are only available to participating companies. For a summary of results, click here.

Healthcare costs for typical American family reach $28,166 despite low annual rate of increase

Milliman today released the 2018 Milliman Medical Index (MMI), which measures the cost of healthcare for a typical American family of four receiving coverage from an employer-sponsored preferred provider organization (PPO) plan. In 2018, costs for this family will increase by 4.5%, approaching the lowest rate on record. Last year’s 4.3% increase was the lowest in the MMI’s 18-year history, and points to the recent deceleration in healthcare cost increases.

“There are two ways of looking at this year’s MMI,” said Chris Girod, coauthor of the Milliman Medical Index. “On the one hand it’s heartening to see the rate of healthcare cost increase remain low. On the other hand, we’re still talking about more than $28,000 in total healthcare costs for the typical American family.”

So is the American healthcare system bending the cost curve? What could be behind this apparent moderation in the annual rate of increase?

“We asked key stakeholders across the healthcare system what might be driving the decline in growth rates,” said Sue Hart, coauthor of the MMI. “Several common themes emerged, in particular provider engagement, more effective provider contracting, value-driven plan design, and spillover effects from public program initiatives.”

For the third straight year, prescription drug cost trends are down, though at 6% the rate of increase still exceeds other components of the MMI.

“Prescription drug costs have steadied, but this trend is volatile and hard to predict,” said Scott Weltz, coauthor of the MMI. “High-cost drugs can have a big impact on trends, as we witnessed a few years ago when hepatitis C treatments hit the market. Alternatively, point-of-sale rebates could push a consumer’s costs in the other direction, particularly for people taking high-cost drugs. As the environment evolves, changes in drug prices can be deployed quite quickly.”

To view the complete MMI, click here.

Genomic testing: Cost-savings or cost-inflating for payers

Private payers are gradually adopting genomic testing to guide decision making in treatment pathways for selected disorders. There is still some uncertainty regarding the future uptake of genomic testing and the levels of sophistication of new tests. An article by Milliman’s Didier Serre and Joanne Buckle discusses some relevant considerations that can support a greater appreciation of the risks and gains to payers involved in funding these tests now.

This article was originally published in the February 2018 issue of Health Watch.

Cost control measures for growing employer medical and pharmacy exposure

Rising prescription drug costs are old news. What is new, however, is just how high they have gone. Take the recent case of a member whose annual pharmacy spend is expected to exceed $7 million per year. That is the annual spend for one member. It turns out the medication is for a life-threatening, chronic, hereditary condition, and the medication will be needed for the remainder of the member’s life. This means no end in sight for the employer-sponsored insurance plan.

In the first year, the stop-loss coverage will cover the majority of this cost; however, there is the potential for a 40% to 60% increase in stop-loss premiums the following year, and even so, this member will be lasered out of any coverage in following years. In other words, the employer-sponsored health plan will be liable for this full amount going forward, plus any additional costs for this individual for medical or other pharmacy expenses (e.g., emergency room visits, hospitalizations, etc.).

Can employer-sponsored plans afford to absorb that kind of additional, annual spend in their healthcare budgets? In this particular case, the drug keeps the member alive, so not covering the medication is not an option, morally or ethically. But if this cost potentially bankrupts the plan, there will be no coverage for this member anyway.

So what can employers do to protect against this claim and others?

Continue reading

Chronic disease management considerations

Disease management strategies can include a range of activities with varying approaches and levels of intensity. These strategies are also often mixed with other care management approaches.

Differentiating the disease management programme components, targets and interventions is important before evaluating return on investment or cost and quality impact. There are three broad programme designs to consider:

• Transitional care models
• Telephone-based disease management
• Utilisation and case-based disease management programmes

Although demonstrating savings in disease management programmes has proven difficult, it is not impossible. In this paper, Milliman’s Lalit Baveja and Mason Roberts explain the reasons why and also explain why it’s important to thoughtfully manage and continually review performance.