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5 ways to improve care and lower healthcare costs of high-cost claimants

Health and Benefits

By Vincent Antonelli and Anne Richter, RN, MBA | May 11, 2021

High-cost claimants are helping push healthcare expenditures to new highs, but employers can rein in costs while improving quality of care.

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About the series

Transform 2021: Solving for new health and benefits imperatives

This series covers opportunities for employers to transform key elements of their health and benefits program to generate greater value to the company as well as improve the employee experience.

High-cost claimants have had an increasing impact on the total cost of healthcare in recent years. In fact, there are now almost twice as many claimants with costs greater than $250,000 in one year as there were in 2015 (figure 1). Additionally, pharmacy costs – having increased 39% from 2015 to 2019 – are one of the factors pushing healthcare expenditures to new highs, threatening the affordability of healthcare for both employers and their employees. But employers can rein in this growing cost by identifying future high claimants and deploying healthcare benefit strategies that improve care and lower costs for this vulnerable group of employees.

Chart showing the impact of high-cost claimants on annual medical and pharmacy costs between 2015-2019. >$50k up 60% is the highest between 2015-19 ($150 to $250 range), followed by >$100k up to 70% ($50 to $100 range) and finally, >$250k up 89% ($0 to $50 range)
Figure 1. Impact of high-cost claimants on annual medical and pharmacy costs, 2015-2019

Source: Willis Towers Watson calculations from IBM Watson MarketScan©

Transform 2021: 5 strategies employers can use to manage high-cost claimants

Traditional approaches to managing high-cost claimants are a good place for employers to start. For example, stop-loss insurance can protect against excess risk, predictive modeling can identify those most likely to benefit from intervention and expert medical opinion and steerage to higher value providers and settings can reduce utilization and cost. Additionally, better care coordination can prevent readmissions and waste, and conducting periodic evaluations of clinical program performance can help hold health plans accountable to provide the best medical management services. However, in order to truly make strides, employers can go even further.

Employers can rein in this growing cost by identifying future high claimants and deploying healthcare benefit strategies that improve care and lower costs.

Five ways to transform your approach to managing high-cost claimants

  1. 01

    Focus your advocacy program on high-cost claimants

    Most high-cost claimants face a fragmented and complex health care delivery system that is difficult to navigate. Similarly, the numerous programs, solutions and resources many employers offer can create confusion, delays and redundant outreach to members.

    Advocacy programs that provide a single point of support to help members navigate the health care system can directly improve member experience as well as clinical and financial outcomes by connecting members and their caregivers to timely education, support and services.

    Advocacy programs for high-cost claimants:

    • Identify emerging risks in the population and deploy targeted interventions that may include member or provider outreach, invitations to participate in programs or referrals to self-guided tools and resources
    • Assist members in understanding their options for seeking treatment and connect them in real time to treatment-decision support or expert medical opinion services
    • Educate and steer members to in-network, high-performing providers and services and assist with scheduling and coordination of care, including durable medical equipment, transportation and follow-up care
    • Provide short-term support to the member and caregiver, including referrals and access to other programs offered by the employer
  2. 02

    Create smart plan designs that limit unnecessary financial exposure

    Managing high-cost claimants doesn’t mean limiting benefits or care. Employers can offer comprehensive health care benefits that mitigate unnecessary financial exposure by creating smart plan designs that lower costs and improve member experience without sacrificing clinical outcomes.

    For example, eliminating out-of-network coverage for dialysis services can help manage costs associated with end-stage renal disease. Nearly two out of three Americans with kidney failure receive dialysis at least three times per week, and in-network dialysis services are widely available in most markets. The wide variety in dialysis cost treatment – driven by out-of-network providers that are often two to three times higher – can be managed by eliminating inefficient out-of-network care. Furthermore, there are emerging home dialysis approaches that may additionally decrease costs and improve the member experience.

    Smart fertility program design can help address diversity, equity and inclusion considerations while lowering aggregate cost. Access to fertility care providers that focus on single embryo transplant and avoid excess in-utero insemination can help prevent multiple births, while helping members form families.

  3. 03

    Connect your expert medical opinion program to centers of excellence

    Centers of excellence (COEs) offer members access to providers that specialize in care for complex (and often costly) conditions that can benefit from a high degree of expertise or skill. For example, COEs for complex spine surgery can ensure members are receiving care from medical experts who follow evidence-based treatment protocols and perform the least invasive procedures. Some COE programs reduce the number of preference-sensitive surgeries performed, increasing quality while reducing total cost, which can lower costs and improve clinical outcomes due to lower readmissions and post-surgical complications.

    Expert medical opinion (EMO) programs help members receive the right diagnosis and treatment plans to avoid unnecessary procedures, delays and costs. The EMO program can be a powerful tool to steer members to efficient, high-quality providers.

    Plan design can help too. Some employers provide incentives such as waived cost sharing and travel benefits for members to get care at COEs. Some employers also mandate expert medical opinions for certain elective procedures that are often overutilized. Advocacy and care management programs can navigate members through the process.

  4. 04

    Maximize your utilization management programs

    Utilization management programs can ensure members receive care that is medically necessary and appropriate to their unique conditions. Targeting procedures and medications where there are equally effective outcomes available at often vastly different costs and quality outcomes make these programs important not just in managing costs but also health outcomes and member satisfaction. These are most often applied to high-cost radiology and surgical procedures, but pharmacy utilization management and site-of-care options can also help manage and control the use of high-cost specialty drugs.

  5. 05

    Develop a complete line of sight into your medical costs through data and analytics

    Investing in data and analytics can transform your approach as well. Employers tend to identify and focus on high-cost claimants late in the course of their illnesses, missing earlier opportunities to intervene. Employers can be more proactive and collaborative with their vendor partners to get a full line of sight into populations of high-cost claimants and understand the conditions and types of services driving costs.

    Such strategies include:

    • Combining medical and pharmacy claims for a comprehensive view of total costs. Specialty drugs are a key driver of high-cost claim costs and reviewing medical claims alone can underestimate your exposure and limit your ability to impact costs going forward.
    • Collaborating with your medical and pharmacy vendor partners to review high-cost claims monthly to assess the quality, appropriateness and consistency of member interventions associated with utilization management and case management and identify potential improvement opportunities to better support members with complex medical conditions.
    • Using the data and insight to continuously tailor your strategy to address the high-cost claim drivers in your population.

    Medical costs went down in 2020 due to foregone care during the pandemic, but that is an anomaly. As costs rise again in the coming years, high-cost claimants will represent a growing share of an ever-larger total medical bill. It is therefore imperative for employers to manage these costs proactively. These five strategies provide employers with a path to do just that, i.e., lower the cost and improve the care for this especially vulnerable population.

Colorful wheel showing 5 sections. Middle section: 5 ways to manage high-cost claimants. 1. Help members navigate the health care system. 2. Create smart plan design. 3. Connect your expert medical opinions program to COEs. 4. Maximize utilization management programs. 5. Invest in data and analytics.
Figure 2. Five ways to manage high-cost claimants


Senior Director, Health & Benefits

Co-Leader North American Health Management Practice

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