What Employers Should Take Away from Sun-Life's High-Cost Claims Report: Issue 56

Sun-Life, one of the largest carriers for stop-loss insurance, released the 2024 edition of their trends report on high-cost claims and injectable drugs. This is always a treasure trove of insights and something every plan sponsor should at least glance over.

If you want to discuss anything below in more detail, grab some time on my calendar.

Their report looks at claims data covering nearly $13.5 billion in total costs across 60,000 members over the last 4 years. Below are some key insights, along with my comments:

90 percent of all medical spending is due to 7 conditions and 72 percent of all stop-loss claims come from the top 10 conditions

The 80/20 principle applies to your health claims and is why you have to analyze your High Cost Claimants (HCC). We as consultants can create wins for everyone involved when we take steps to control the frequency and total cost of those claims.

One example for conditions with high cost drugs is to explore ways to administer the drugs in a lower cost setting by having a policy for injectable drugs in your plan document.

Cardiovascular has moved into the #2 spot, pushing blood cancers (leukemia, lymphoma, and multiple myeloma) into #3. The top 3 conditions represented 37% of total reimbursements

This was driven by a decrease both in the number of members with a claim and a 19% decrease in average cost. Solid cancers (malignant neoplasms) are still the #1 condition in both stop-loss reimbursements and total spending. In fact, cancer was the cause of more than twice the reimbursements of #2.

A key issue with cancer is that the average stage of a cancer diagnosis at detection has been increasing, which drives up costs and increases mortality.

Early cancer detection and treatment is one of the best ways to reduce your high cost claims, one example of this is Galleri cancer early detection test by GRAIL which can be offered to all of your employees.

87% of employers were likely to experience a stop-loss claim once over the 4 years

The percentages above are the likelihood of each claim in any given plan year. Note that there is also a 70 percent chance of an injectable drug claim and a 62 percent chance of a cancer claim.

How does your plan treat J-Code drugs (those administered in an office setting)?

What early cancer screenings do you offer/support for employees?

The frequency of million-dollar claims rose 8% over the past year and are up 50% over the past 4 years

The chart above shows the frequency of million-dollar claims per million covered employees and a steady upwards march in frequency. While still rare, it is increasingly possible your plan suffers one. Understand your stop-loss contracts and study the numbers if you receive a quote with a laser for any one member.

The top 10 injectable drugs all had over $10M in spend and Keytruda held the #1 spot

Cancer drugs held the top 3 spots and make up more than half of the top 20 high-cost injectable drugs. Many of these drugs carry very high average costs and very few users. As an example, Krystexxa, which treats gout, carries an average price tag of $460,000 and was used by just 19 members in 2023.

Where are gene therapies? You might be asking: They're used less frequently and on rare conditions, so you tend not to see them in these reports. But employers are paying for them, and that cost continues to rise.

Different ages, different issues: Most of the high-cost conditions average age of onset is 45-55

This highlights the value of age-specific education and communication, screenings, and from a plan finance perspective, the value of driving enrollment of younger employees.

Typical deductibles by employer size range from $50k for under 200 employees up to $300k for 1,000+ employers

We see a lot of mid-market groups currently in fully-insured plans and exploring self-funding. Keep in mind the balancing act with your deductible; a lower deductible means less variability, but higher fixed costs, while a higher deductible will increase your variable costs but reduce your fixed costs.

You should analyze a few different deductible levels, model the potential outcomes, and come to a decision as a team.

That's it for this week's Competitive Advantages! If you'd like to discuss the Sun-Life report or any note above in more detail, let's connect.