|
Problem:
A large municipal account experienced medical costs requiring our Client Health Plan to propose
an increase in premium significantly higher than its competitors. The account’s health benefit consultants
were preparing to recommend that our Client be eliminated, unless the premium was similar to others in the marketplace. Given the account’s experience, this premium level would have been
unacceptable to the Health Plan. When confronted with an apparent Win/Lose
situation, CareAdvantage was asked for assistance.
Solution:
Using RPNavigator, CareAdvantage’s population risk stratification tool, along with
CareAdvantage’s consulting services, a report was prepared for the Client that
described the covered population from a clinical and cost perspective. The
report clearly showed why the requested premium increase was needed in light of
the account’s cost trends. The municipal account had:
- A 12% higher rate of chronic illness than the Client’s entire commercial book of
business and had a 40% higher rate than other municipal accounts in
CareAdvantage’s database of similar accounts.
- An overall burden of illness, which increased by 12% over the course of the analysis
period and at a faster rate than the commercial book of business. The latter
was in part due to a doubling of individuals with HIV and bone marrow
transplant costs of over $500,000. The adverse selection of the Client, by
individuals from the account was also seen in a substantially higher rate of
emergency room use and hospitalization than experienced by the Plan’s overall
book of business.
- The case mix adjusted cost trend during the
past two years increased at twice the rate of the Client’s book of business
Results:
The Health Plan presented a clear, quantitative picture of the adverse selection it
was experiencing with this account and effectively provided the
account and their benefit consultant with a deeper understanding of
medical cost and disease trends. Our Client was also able to demonstrate quality of care and
their ability to effectively manage utilization despite an unusually
sick cohort of this account’s members. It was determined that the
account would be very costly to any carrier, if not more so, since
the Client was able to demonstrate its ability to curb medical cost
trends in their overall commercial membership. It became clear to the account that discontinuing an
attractive option for their membership would not be constructive. A
business case was made to stay with the Health Plan and to accept
the premium increase. As a result, the municipal account remained with our Client,
and a Win/Win was achieved.
|
