BHI Database Provides Insight Into Large Claim Diagnoses

Craig Irvine

In a review of the BHI data, BCS’s initial findings reveal the top ten high cost diagnoses. These top 10 diagnoses comprise about 40% of all large claims costs and represent about $9.2 billion in ground up claims. Large claims are defined as total paid claims over $500K per member per year. In addition to total claim dollars, the chart below includes the frequency rate per 100,000 members, average severity of each claim, and the highest cost single claim amount. Stay tuned for our next blog post that will examine the 10 most expensive claims incurred within a one year period.

Slide08
Top  ▲

BCS and BHI Contractual Relationship Offers Powerful Insight for Blue Plans

Craig Irvine

BCS recently entered into a contractual relationsip granting it access to the BHI Database. The significance of the BHI Database is extraordinary with 40 million Blue Plan members and $100 billion in claims per year. As the largest, most comprehensive database in the industry by far, it grants a unique opportunity for BCS to study and merge the unique perspectives of the Blue System and BCS. This graph illustrates a key finding in our initial study of the data – large claim trend is about 5 times higher than first dollar medical trend when we define large claims to be over $500K per member per year.
blog post trend analysis


It is important to note the following when considering the ramifications of this data:
  • The main driver behind the high large claim trend is due to an increase in the frequency of large claims as opposed to their severity.
  • The leveraged trend for large claims over $500K was even higher at 26.1% (i.e., trend for the claims costs in excess of $500K).
Stay tuned for our next blog post that will include more detailed information about large claim diagnoses that we are seeing in the BHI data.
Top  ▲

What’s the difference between Pro Rata and Excess of Loss Reinsurance?

George Relyea

While reinsurance arrangements are frequently utilized by property and casualty insurance companies to mitigate the effects of catastrophic losses, life and health insurance carriers historically have been less likely to employ reinsurance tools. In the post healthcare reform market, health insurance companies may benefit from acquiring reinsurance coverage. Most notably, the elimination of individual lifetime maximums creates new exposures for health insurers never seen before. This article demonstrates the difference between different types of reinsurance arrangements and how they may potentially be utilized by health insurance carriers—most notably Excess of Loss Reinsurance.

Pro Rata vs. Excess of Loss Reinsurance | MyNewMarkets.com

Top  ▲

2014 Reforms Spur Interest in Excess Reinsurance for Medical Blocks

Greg Petit

2014 market reforms under the Affordable Care Act, effective January 1, 2014, are spurring interest in excess reinsurance for medical blocks of business.

The article Implementing the Affordable Care Act: State Action on the 2014 Market Reforms, published by The Commonwealth Fund, examines new state action on a subset of ACA protections, such as guaranteed access to coverage and a ban on pre-existing condition exclusions that go into effect in 2014. While the article looks in detail at state action, it also provides an overview of seven market reforms under the Affordable Care Act that will be effective next January. Guaranteed issue, waiting periods, rating requirements, pre-existing condition exclusions, essential health benefits, out-of-pocket costs, and actuarial value are all paying a role in spurring interest in excess reinsurance coverage for medical blocks of business.

Implementing the Affordable Care Act: State Action on the 2014 Market Reforms | Commonwealth Fund Issue Brief

Top  ▲

Enrollment Increase for Self-Insured Companies

Chuck Harvey

There is rising opportunity for stop loss business with self-funding up. Mark Farrah Associates present key findings of third-party administrators, in particular those for ASO business for health insurance companies, in this review.

Health Insurance Enrollment in Self-Insured Companies Up Significantly | Mark Farrah Associates

Top  ▲

Unlimited Maximums and Their Impact on Carrier Risk

Chuck Harvey

Munich Health North America, Inc. recently published a newsletter dealing with unlimited maximums and their impact on carrier risk, along with other pertinent issues. Joseph Sabol, Vice President, Senior Underwriter for Munich Re points out that, “because so many carriers have been operating for years with annual policy maximums in place, they may now have a false sense of security that doesn’t match the new environment.” As an actuary at BCS, I wanted to share this article with you so that we can all gain a better perspective on potential effects of the post-healthcare reform environment on our risk.

New Carrier Risk in a World of Unlimited Maximums | Munich Health

Top  ▲

Enabling the System to Reinsure its Future

Craig Irvine

When it comes to healthcare reform, many organizations won’t feel its full impact until 2014 and beyond–especially when it comes to catastrophic claim risk exposure. This issue of Exchange illustrates our vision for protecting the Blue Cross and Blue Shield System.

November 2012 Exchange
Top  ▲

Top  ▲