Case Study: The Silent Surge
Employer & Advisor MaterialsCase Study
The Silent Surge
How Routine Care Adds Up to Big Costs
We looked at the claims data of 795,505 unique individuals across 7,667,620 episodes of care...
Most of your health plan members don’t spend much money at all.
A very few spend a whole bunch.
And a sizeable group spends money on things you can actually impact.
So let’s dig a little deeper over the next few slides...
The data set we looked at encompassed employer and employee spend of $6,171,593,437 and looking at billions of dollars in spend taught us a few things...
49.2% of plan members spent less than $1,000 and 77.1% of members spent less than $5,000 and accounted for only 11% of total spend.
This means that for roughly 8 out of 10 people there isn’t that much you can do to lower cost because they simply aren’t driving much of your costs.
| Paid Band | # Patients | % Patients | Total Paid | % Total Paid |
|---|---|---|---|---|
| <$500 | 282,793 | 35.53% | $46,386,071 | 1% |
| $500 - $1,000 | 108,853 | 13.68% | $78,435,727 | 1% |
| $1,001 - $5,000 | 221,319 | 27.81% | $529,847,105 | 9% |
| Totals | 612,965 | 77.02% | $654,668,903 | 11% |
Then we looked at the outliers on the other end of the spectrum - the relatively few people who account for the biggest part of spend...
2.7% of plan members spent more than $50,001 and accounted for a whopping 49.7% of total spend.
Most of the real big ones (think $100,000 and up) you can’t prevent — these are specialty drugs, malignant neoplasms, leukemia, premature babies, transplants, hemophilia, etc...
| Paid Band | # Patients | % Patients | Total Paid | % Total Paid |
|---|---|---|---|---|
| $50,001 - $100,000 | 12,836 | 1.61% | $886,062,926 | 14.36% |
| $100,001 - $250,000 | 6,727 | 0.85% | $1,002,068,703 | 16.24% |
| $250,001 - $500,000 | 1,578 | 0.20% | $538,746,810 | 8.73% |
| $500,000+ | 670 | 0.08% | $642,018,146 | 10.40% |
| Totals | 21,208 | 2.74% | $3,068,896,585 | 49.73% |
Those first 2 groups accounted for 79.7% of the population and 60.3% of the total spend
So what about the other 40% of spend?
20.2% of plan members spent between $5,001 and $50,000 and accounted accounted for a whopping 39.6% of total spend.
This is the drip, drip, drip of your health plan, all the everyday stuff that just adds up — these are things like CT scans, MRIs, lab draws, physical therapy visits, colonoscopies, ACL repairs and ear tubes for the kiddos...
| Paid Band | # Patients | % Patients | Total Paid | % Total Paid |
|---|---|---|---|---|
| $5,001 - $10,000 | 69,328 | 8.71% | $490,063,505 | 7.94% |
| $10,001 - $30,000 | 73,825 | 9.28% | $1,268,393,597 | 20.55% |
| $30,001 - $50,000 | 17,976 | 2.26% | $689,570,847 | 11.17% |
| Totals | 161,129 | 20.25% | $2,448,027,949 | 39.66% |
Targeted interventions can actually produce cost savings and improve health outcomes for those with moderate to high expenses. Focusing on this smaller, 20% group is way more cost-effective than spreading resources thinly across your entire employee population...
These people are often just overpaying for everyday care...
$340
Labs
That should only cost $6
$4,000
CT Scans
That should only cost $325
$7,000 Colonoscopies
That should only cost $1,200
$72,000 Knee Replacements
That should only cost $19,000
So we have talked about the 3 groups that make up your population...
- The 77% that spend 10%
- The 2.5% that spend 50%
- And the 20% that spend 40%
77% of your health plan members don’t spend much money at all.
2.5% of your health plan members spend a whole bunch.
20% of your health plan members spend money on things you can actually impact.
So here is the playbook for each of those groups and a clear idea of what you can do to lower cost and improve employee experience...
This big group of almost 80% account for only about 10% of your health plan spend. You just need to make sure they have access to high value primary care, navigation support and a benefit plan that is easy to understand
Stop trying to plan and prevent these things for this group of 2.5%. This is where insurance comes in and you absolutely need to transfer the risk for the large claims.
The problem is your traditional stand-alone stop-loss policy won’t work long term. Individual stop-loss is great at giving you protection against large claims that can be taken care of within 12 months (like knee replacements, childbirths, heart attacks and so on) BUT it’s awful at protecting against those ongoing, catastrophic large claims (like Hemophilia, MS drugs, antiarthritics, and dialysis treatment). This is why we are seeing so many employers look at stop-loss captives to spread the risk over thousands of employers (and yeah we have one we love if you want to meet them!)
Now let’s chat about the 20% of the population that accounts for 40% of the cost. Remember, this is the everyday stuff that people are just overpaying for. The play here is direct contracting.
This is exactly what we do.
We call it Direct Contracting as-a-service and we already have over 6,200 provider locations all at the right price and you can save close to 40%.
Thanks!
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