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QBE’s annual Accident & Health Report examines medical claims data and a range of current issues for self-funded employers to consider, including legislative reform for prescription drug costs
QBE North America’s 2024 Accident & Health Market Report shows that neoplasms remain the most frequent source of stop loss reimbursements, whereas premature births now exhibit the highest severity. The global insurer’s annual report explores the current trends in healthcare spending and provides valuable insights for employers who offer self-funded health plans.
The report notes that the frequency of medical stop loss claims exceeding $200,000 per 10,000 covered individuals rose at a rate of 39% from 2022. Consistent with prior observations, neoplasms continue to have the highest claim frequency, accounting for 41% of all stop loss claim reimbursements in 2023.
The types of cancer claims noted in the report vary by deductible size. For example, breast cancer accounts for about 17% of cancer related claims with a $100K deductible, but only 7% for a $500K deductible, and 3% for a $1M deductible. Lymphoid leukemia accounts for only 3% at a $100K deductible, yet 17% of cancer claims at a $500K deductible, and 38% for a $1M deductible.
At the same time, specialty drugs have significantly driven up the treatment costs for certain types of cancer patients. As this trend develops, transparency into what’s driving costs and how best to transform or make change will become increasingly important to employers.
QBE’s latest Accident & Health report also examines a range of topics and issues for employers to consider in their long-term claim financing and risk transfer planning, including the rise of preterm birth rates, the expanding market for GLP-1 weight loss drugs, advances in cell and gene therapy, and key legislative updates to be aware of.
From a legislative perspective, as medical services and prescription drug prices continue to rise, both the House of Representatives and the Senate are proposing reform for price transparency to control costs. Currently, there are several different bills aimed at reducing costs and increasing transparency of Pharmacy Benefit Management. The Senate recently introduced the Pharmacy Benefit Manager Reform Act, which calls for PBMs to disclose detailed information about their pricing practices to plan sponsors, including price differences from any affiliated or nonaffiliated pharmacies. The Act would prohibit PBMs from engaging in “spread pricing,” meaning charging more for a drug than what is reimbursed to the pharmacy, thereby creating a profit.
Should this bill pass, employers would have transparency into PBM discounts and better understand where margin has been built in. Data shows that only 37% of the drug price is from the manufacturer, with the remaining 63% of the cost going to third parties. This variance points to the current system design flaws. Despite both sides of Congress being eager for continued reform, the House of Representatives and the Senate have failed to agree on language to move forward.
Medical stop loss coverage remains an important consideration for risk managers of self-insured health plans. Protecting the solvency of a self-funded employer is imperative given the nature of healthcare economics and evolving healthcare trends. In an ongoing effort to control costs, medical stop loss captives have been used by many health plan sponsors, creative risk advisors and entrepreneurs to inject value in the marketplace. This strategy has proven to be effective as employers are further incentivized to procure cost containment solutions that manage the higher level of retained risk typically transferred to a stop loss carrier.
With sixty-five percent of covered workers currently enrolled in healthcare plans that are self-funded, medical stop loss insurance and related products will continue to play a key role in providing employers the transparency needed to create tailored solutions that reduce expenses. For more information on QBE North America’s A&H solutions, please visit https://www.qbe.com/us/ah.