Helping employers mitigate the impact of high-cost claims
The recent surge in million-dollar claims — especially among younger employees — is challenging employers to find ways to reduce the impact.
Health claims of $1M or more have increased by 29% in the past year and 61% over the last 4 years.1 In fact, 90% of employers with self-funded health plans have been impacted by these “catastrophic" claims1 — which just keep getting more costly. Multi-million-dollar claims are now becoming more common, even topping $12.7M.1
These claims may be difficult for employers to plan for because they often happen without warning. About half of the employees with these claims had no previous indicators, and only 5% showed an elevated risk in the previous reporting period.2
“For employers, high-cost claims have been a part of the overall cost of providing health care to employees for years. What’s concerning is that the frequency and size of these claims have risen rapidly in recent years,” explains Jocelyn Herrington, national spokesperson & vice president of strategic partnerships for Advisory Board.
What’s causing high-cost claims?
While high-cost claims are rising across all funding types, UnitedHealthcare data indicates that self-funded employers experience a consistently higher prevalence of catastrophic cases and spend. From 2023-2024, there was a 13% increase in per member, per month (PMPM) spend among self-insured employers.2 Fully-insured employers may feel the impact indirectly through rising premiums, but self-funded employers bear the financial burden directly.
90%
of surveyed employers with self-funded health plans were impacted by high-cost claims over the last 4 years1
According to UnitedHealthcare data, the predominant driver of these claims is cancer, followed by nervous system diseases and newborn care.2 Broader scale analysis also rank cardiovascular and musculoskeletal conditions rounding out some of the top conditions behind these claims.3
Employers are also seeing a rise in high-cost claims among younger employees. Individuals aged 20- to 40 now account for 10% of high-cost claimants, partly due to advances in treatment and improved survival rates for those with cancer.4
“With advances in treatment and mortality rates improving for those impacted by cancer, the leading cause of high-cost claims, we can expect this trend to continue,” adds Herrington.
How can employers reduce the financial impact of high-cost claims?
It starts with understanding the conditions that may be driving these claims and building a health plan strategy that works to proactively address underlying causes before a condition presents. Employers can also support members in making more informed decisions after a diagnosis.
This includes promoting preventative care, analyzing data to uncover trends, coordinating care with specialized providers, managing chronic conditions with targeted clinical programs, ensuring payment integrity and focusing on employee well-being.
“We’re in the middle of a significant evolution of health care in the United States. We’re seeing more people dealing with complex and chronic conditions, and we’re seeing them present in a younger population,” says Dr. Randall, chief medical officer for UnitedHealthcare Employer & individual. “Some of these are preventable with lifestyle modifications. Treating these diseases would cost less if detected earlier, and the chance of survivability would increase as well.”
Here are 7 strategies that may help:
1. Encourage employees to engage in preventive care
16%
more health risks are identified through workforce wellness screenings5
Employers can encourage employees to engage with their primary care provider (PCP) for annual wellness exams, which typically monitor biometric measurements and may reveal early indicators of chronic diseases. Regular screenings for certain types of cancers and other conditions are also key. Employers can also work with their carrier to offer on-site workforce wellness screenings to further support early detection. Many of these preventive measures are often included at little to no additional cost to employees and have the potential to make a significant difference in their overall health.
2. Analyze claims data to optimize care management
Choosing a carrier that leverages data and analytics to respond to claims data may enable earlier intervention and more effective care management. This includes identifying, predicting and analyzing needs in real time — such as hospital admission alerts that detail the condition, location and severity of care. These insights help ensure the correct claims are being submitted at the correct price point and help inform appropriate clinical care management during and after a health crisis. Regular claims analysis and advance notifications may also help employers prepare for potential future high-cost claims.
3. Encourage use of proven Centers of Excellence
25-42%
savings through a COE6
Managing complex and chronic conditions requires an integrated approach. Centers of Excellence (COEs) help identify the best available care for conditions where treatment protocols are evolving rapidly. The Clinical Sciences Institute developed by Optum® — an affiliate of UnitedHealthcare — collaborates with top clinicians and doctors to develop the criteria to evaluate COEs and is accredited by the National Committee for Quality Assurance (NCQA).
At UnitedHealthcare, these centers deliver value-driven pricing and stringent quality measurement which can lead to cost savings and improved outcomes. Specialized programs include centers for cancer, bariatric needs and cell, gene and molecular therapy.
4. Ensure access to clinical management programs
2M+
prior authorizations completed since Cancer Guidance Program launch in 2019.7
Employers can take chronic condition management a step further by working with a carrier that invests in clinical management programs focused on specific chronic conditions. Since cancer is the leading driver of catastrophic claims, it’s important to align providers, pharmaceutical companies and other stakeholders throughout an employee’s cancer journey.
The UnitedHealthcare Cancer Guidance Program provides the latest evidence-based treatment decision support for oncologists, based on analysis from both medical and pharmacy benefits as treatment plans are developed. This evidence-based program can help streamline the prior authorization process, allowing employees to begin treatment more quickly.
5. Instill confidence in claims and payment practices
6.8B
in employer savings generated from UnitedHealthcare Payment Integrity solution8
When claims are submitted, employers want to be confident in their accuracy. Proven payment integrity solutions are designed to lower costs for employers and protect their employees’ dollars. By putting checks and balances in place at each stage of the claim process, these solutions can help ensure that employers and employees are only paying for care and services rendered.
When carriers do this effectively, the results speak for themselves. An independent study found that UnitedHealthcare Payment Integrity solutions generated a greater total cost savings than other top national insurance carriers.9 These savings —$6.8B in 2023 — were achieved through the detection, prevention and recovery of payment related to fraudulent, wasteful or abusive billing practices.
6. Explore stop loss insurance options
Another strategy employers can consider is purchasing stop loss insurance. This sets an out-of-pocket maximum for employers, helping protect against significant financial losses from high-dollar claims by transferring a portion of the risk to the insurance carrier.
When integrated under one carrier – such as combining the UnitedHealthcare Stop Loss with a UnitedHealthcare, UMR or Surest® medical plan – employers get the advantage of a powerful network, renowned risk management initiatives and integrated systems. This can deliver affordability, consistency and administrative ease that may not be replicated with a third-party vendor.
6.7%
estimated claims savings among UHC Rewards participants11
7. Focus on employee well-being today and beyond
Employers can also build a well-being strategy that puts wellness front and center, including rewards programs that incentivize employees to build healthier habits. These programs are proven to boost overall engagement with their health plans. For instance, UnitedHealthcare Rewards program participants make 2.3x more visits to the UnitedHealthcare® app10 and saw an estimated 6.7% savings in claims costs.11
The power of engagement
Giving employees the information they need to make the best decisions for their health — and their wallets — may help mitigate some of an employer's catastrophic claims. Understanding whether members are making optimal health care decisions allows employers to identify potential areas of opportunity, and this is especially important when trying to reduce the impact that high-cost claimants can have. Each year, the UnitedHealthcare Health Activation Index® (HAI®) score analyzes and ranks over 100M choices made by more than 14M members to arrive at an employer’s score. The higher the score, the better choices employees are making. And for every 1-percentage point increase, employers may see an estimated 1.01% in cost savings.12 Using these HAI scores, UnitedHealthcare then works with clients directly to identify opportunities that may help to prevent future potential high-cost claims and reduce costs overall.
“By implementing certain strategies or solutions, employers may find that they are able to improve employee engagement which may be linked with lower incidences of catastrophic claims, lower costs and higher productivity,” explains Dr. Randall.
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