Managed Care - March 2009 - (Page 16) mid-size health plans purchase the coverage so can be pushed off on another type of carrier,” says that no single claim has a significant impact on Jason Beans, CEO and president of Rising Medical their overall balance sheet,” says One Beacon’s ManSolutions, a Chicago workers comp claims conzone. And some states may require plans to carry tainment company that often reviews claims filed reinsurance. Small and medium size self-funded with group health carriers. employers purchase a similar coverage, called stopIn addition, commercial policies can exclude loss. coverage for big-ticket items if competitive factors MCOs that never thought about seven-figure are not an issue. “As expensive new technologies claims are starting to worry more about them. “In come on the market, there is a push to exclude 2000, only a handful of our clients bought reinthem, but it starts to get away from the concept of surance coverage starting at $1 million,” says ING’s insurance,” says Harlan Levine, MD, a Towers PerSkar. “Today, about 25 percent of our clients buy rin principal in the care management practice. Selfprotection that starts at $1 million or more. Across funded employers unconcerned about competitive the country many MCOs learned a hard lesson and issues can cap annual benefits as low as $50,000, waited until they had a seven-figure though many are more generous. Still, claim before they secured reinsurance there are persistent employee fears of protection.” employers “reorganizing” and disBecause premiums are pricey, it may missing those whose families are in a make sense for some carriers to selfkind of million-dollar claim club, runinsure. “For larger plans, the net cost to ning up the cost of care. them is not favorable. By the time they pay the premium versus what they get Costly claims in return, they may have a tough time One of the most eye-popping hosjustifying the purchase,” says Rick pital bills is for organ transplantation. Chiocchi, vice president and managed Unfortunately for health plans, the care practice leader at Aon, an MCO numbers of nearly every type of transreinsurance broker. plant surgery rose significantly from “We have seen neonates reHowever, “Whenever you have low quiring heart transplants that 2004 to 2008, according to Milliman’s frequency and high severity, that’s a cost over $2 million,” says “2008 U.S. Organ and Tissue Transrecipe for high volatility,” adds ING’s Charles Crispin of Evergreen Re. plant Cost Estimates and Discussion.” Big-ticket items are one of the Skar. “That’s something no board of reasons for the increase in cataFor example, liver-kidney transdirectors wants to hear about.” plants, which have average billed strophic claims. Beyond buying protection from charges of $760,000, skyrocketed more seven-figure claims, plans are enacting various than 90 percent, from 279 performed in 2004 to 536 strategies to rein in costs. Expensive patients can’t in 2008. be dropped once they start triggering large claims An intestine transplant, potentially the most exbecause such a practice probably violates federal pensive single organ transplant, can cost a payer as and state discrimination statutes, says Mark Gallant, much as $4 million. There was a 40-percent ina Philadelphia lawyer who represents providers crease in the number of intestine transplants, from against health insurers. 52 in 2004 to 72 in 2008. The five-year survival rate But patients may be ineligible for benefits is 48 percent. through policy exclusions. “We have seen neonates requiring heart transSince 2000, health insurers have become more plants that cost over $2 million,” says Crispin. vigilant in making sure that they pay for claims Aon has experienced multivisceral transplants that they are responsible for, not those that could with costs in excess of $3 million. be transferred to a workers’ compensation, disIn 2004, there were 100 multi-organ transplants; ability, or auto carrier. “With data mining and more in 2008, there were 151, a 51 percent increase. modern databases, carriers can aggressively tag Perhaps the biggest claims spring from babies reICD-9 codes, dollar amounts, procedure codes, quiring stays in a neonatal intensive care unit even job classification codes to ferret out claims that (NICU). Average daily cost: $3,500–$4,500. These 16 MANAGED CARE / MARCH 2009
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