Tag Archives: healthcare claims

Infographic highlights potential out-of-pocket costs for patients requiring COVID-19 hospitalization

Although it is too early to analyze actual healthcare cost data for those who have been treated for COVID-19 in the United States, historical data from patients who have sought medical attention for influenza or pneumonia may be informative for understanding patient out-of-pocket costs due to treatment for COVID-19.

This infographic, based on Milliman’s recent paper, “Potential out-of-pocket costs for patients requiring hospitalization for COVID-19,” depicts what hospital costs could look like for patients admitted for COVID-19, broken down by insurer type, geography, and age.

How will the coronavirus pandemic impact patients’ out-of-pocket costs?

The unique structure of the U.S. healthcare system means that the out-of-pocket costs for patients requiring hospitalization due to COVID-19 can vary substantially among those with different types of health insurance. In addition, costs to those of different age groups, living in different parts of the country, experiencing different levels of severity, or facing the illness at different times of the year will also vary substantially.

Although it is too early to analyze the healthcare cost data for those who have been treated for COVID-19 in the U.S., historical data from patients who have sought medical attention for influenza or pneumonia may be informative for understanding out-of-pocket costs resulting from COVID-19 treatment. The biological and clinical characteristics of COVID-19 differ from other respiratory infections, but the signs and symptoms that necessitate hospitalization and intensive care for severe cases of the disease are also seen in severe cases of other respiratory infections.

In this report by Milliman’s Stoddard Davenport, healthcare claims data from three large national research databases is used to investigate the variation in out-of-pocket costs for patients who historically experienced acute inpatient hospitalizations involving treatment of acute respiratory infections (pneumonia and influenza). In this analysis, the focus is exclusively on cases that required hospitalization.

“In sickness and in health”—does your spouse’s well-being affect LTC insurance?

The influence of “contagion” among spouses has been widely studied and observed for everything from emotions and depression to dementia, obesity, and mortality. Does spousal contagion affect long-term care (LTC) needs, too?

Spouses often serve the role of informal caregiver, which can result in both physical and psychological “wear down” effects that eventually lead to LTC claims for the spouse providing the care. Alternatively, when one spouse dies, the other may no longer be able to care for himself or herself and may require formal LTC services.

Milliman consultants Al Schmitz, Ali Yeager, and Jeremy Hamilton studied LTC insurance claim data of married couples, where both spouses have LTC coverage, to examine the influence on claim incidence (or frequency of claim occurrence) for one spouse when the other spouse commences a claim or dies. The higher level of claim incidence in the presence of a contagion factor is significant. The consultants provide high-level results of spousal claim analysis and discuss potential implications to the LTC insurance market in their article “Is your spouse contagious?

Benefits of cohort analysis for India’s private medical insurers

Annual claims ratio projections for private medical insurance (PMI) business can help various stakeholders understand the factors that affect the future profitability of the business. For PMI business, one of the effective ways to project claims ratios is through a cohort analysis. Such an analysis tracks the claims ratios of a group of policies underwritten in a particular year for its subsequent durations, repeating the process for each underwriting year.

The advantage of conducting a cohort analysis is that the user can project claims ratios at different durations for each underwriting year. This gives a more comprehensive view of how the portfolio is going to perform at future durations and policy years. This paper by Milliman actuaries Joanne Buckle and Ankush Aggarwal focusses on claims ratio projections in the context of the Indian health insurance market.

What is your Medicare Supplement experience REALLY telling you?

Medicare Supplement (Med Supp) carriers often ask, “What’s going on with my Med Supp experience?” It’s a good question. And the answer isn’t always directly in front of you in a report or a chart.

In response to this question, my first question is, “What are you referring to: Loss ratio? Claims costs?” Loss ratio experience is impacted by both sides of the ledger, premium revenue and claims. There may be issues on both sides.

My second question is, “What were you expecting?”

It’s a difficult question to answer. Often, Med Supp carriers reply, “Our claims are going through the roof!” That may be so. But what is critically important to understand is the following:

1) Too high relative to what?
2) Where are claims too high?

Without answers to these questions, a carrier is left without a clue about the source, a potential solution, or a basis for future action.

The approach I often use includes measuring historical claims experience relative to benchmark (or expected) values at a refined level and then rolling up the results in total as well as by key risk characteristics. This type of actual-to-expected (A/E) analysis does two things to answer the questions above:

1) It provides an overall claims level measure (referred to here as morbidity level) together with the variation over time as well as specific risk characteristics (which we will expand on later).
2) It can provide the inherent underlying pure claims trend experienced after adjusting the measurements for other influences such as changes in the demographic and/or geographic mix, etc.

The hypothetical case study of InsureU Insurance Company provides a simple example.

Case study: InsureU Insurance Company

InsureU’s actuary, Cliff Diver, provides his boss, CEO Wanda Profits, with quarterly experience reports of among other things the new Med Supp line of business that InsureU has been selling for the last three years in the state of Bliss. InsureU has spent significant resources and capital to enter this market in order to expand membership base and hedge its risk in the commercial Patient Protection and Affordable Care Act (ACA) market. Given the lack of expertise in-house, InsureU turned to the support of consultant Sonny Days to price the product line. Premiums were priced based on various assumptions and expected to yield initial loss ratios in the low 70s. Projected financial results look something like Figure 1.

The launch of the product line had been seen as providing mixed results at best with regard to sales targets. Original sales targets were 800 policies in the first year but only 400 were issued. Competition has been fierce in the state of Bliss but InsureU weathered the storm and, on a bright note, the financial results were fantastic! So fantastic that Wanda convinced Cliff that rates were fine where they were and no rate increase in the first year was necessary. This was in spite of the recommendation by Sonny Days to file for a nominal rate increase equal to expected claims trend.

Fast-forward to year three. As sales have grown, Cliff nervously notices the quarterly reports showing financials going in the wrong direction. See Figure 2.

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Healthcare entities must account for hurricane-related disruptions

Hurricanes can have a significant operational and financial effect on healthcare providers, insurers, and payers. Organizations that deliver or finance healthcare services in impacted areas must consider the various outcomes resulting from any disruptions. In this article, Milliman’s Lynn Dong, Scott Jones, and Michael Polakowski highlight a list of short-term and long-term effects for organizations to evaluate.