QBE’s annual Accident and Health Report examines medical claims data and a number of current issues that self-funded employers should consider, including prescription drug cost law reform.
QBE North America’s 2024 Accident and Healthcare Market Report shows that neoplasms remain the leading cause of stop-loss reimbursements, while preterm births are now the most serious cases. The global insurer’s annual report examines current healthcare spending trends and offers valuable insights for employers offering self-funded health insurance plans.
The report finds that the frequency of medical stop-loss claims over $200,000 per 10,000 insured persons increased by 39% starting in 2022. Consistent with previous observations, neoplasms continue to have the highest claim frequency, accounting for 41% of all stop-loss claim recoveries in 2023.
The cancers cited in the report vary in the amount of the deductible. For example, breast cancer accounts for about 17% of cancer claims with a $100,000 deductible, but only 7% with a $500,000 deductible and 3% with a $1 million deductible. Lymphatic leukemia accounts for only 3% with a $100,000 deductible, but 17% of cancer claims with a $500,000 deductible and 38% with a $1 million deductible.
At the same time, specialty drugs have significantly increased the cost of treatment for certain cancer patients. Given this development, it is becoming increasingly important for employers to have transparency about the cost drivers and the best options for switching or changing.
QBE’s latest Accident and Health report also examines a number of topics and issues that employers should consider in their long-term claims funding and risk transfer planning, including the rise in preterm birth rates, the growing market for GLP-1 weight loss drugs, advances in cell and gene therapy, and key legislative changes to consider.
From a legislative perspective, as medical and prescription drug prices continue to rise, both the House and Senate are proposing price transparency reforms to keep costs under control. There are currently several different bills pending that aim to reduce costs and increase transparency in pharmacy benefit management. The Senate recently introduced the Pharmacy Benefit Manager Reform Act, which would require PBMs to disclose detailed information about their pricing practices to plan sponsors, including price differences with affiliated or unaffiliated pharmacies. The bill would prohibit PBMs from engaging in “spread pricing,” that is, charging more for a drug than the pharmacy is reimbursed, thereby making a profit.
If passed, this bill would provide employers with transparency into PBM rebates and a better understanding of where margins have been built in. Data shows that only 37% of the drug price comes from the manufacturer, while the remaining 63% of the cost goes to third parties. This discrepancy points to the current design flaws in the system. Although both sides of Congress are eager for further reform, the House and Senate have been unable to agree on language to move forward.
Medical stop-loss coverage remains an important consideration for self-insured health plan risk managers. Given the nature of the health economics and evolving health care trends, it is imperative to protect a self-funded employer’s ability to pay. As part of ongoing efforts to control costs, many health plan carriers, creative risk consultants and entrepreneurs have used medical stop-loss captives to create value in the marketplace. This strategy has proven effective because it further incentivizes employers to procure cost containment solutions that manage the higher level of self-insured risk that would typically be transferred to a stop-loss carrier.
With 65% of covered employees currently enrolled in self-funded health plans, medical stop-loss insurance and similar products will continue to play a key role in providing employers with the visibility needed to develop customized solutions to reduce costs. For more information on QBE North America’s A&H solutions, visit https://www.qbe.com/us/ah.
