High-cost claims, and the claimants incurring those expenses, are arguably the biggest cost pressure self-insured employers face within the healthcare ecosystem. Solutions are complicated, multi-faceted, and ideally implemented before a claim occurs. Although these solutions only impact a small percentage of the population, their overall effect is significant, and once established, the savings compound.

Employers should begin by defining high-cost claims for their organization and verifying the clinical drivers. From there, solutions can be considered that will directly impact current claims and future cost mitigation.

Defining High-Cost Claimants

The definition of high-cost claims is not uniform. Many employers use a targeted dollar threshold (for example, $100,000) to pinpoint high-cost claims, which are embedded in the insurance model through stop-loss contracts. While that benchmark makes reporting consistent, it is often more practical to consider plan size and risk tolerance when defining high-cost claims.

The National Alliance of Healthcare Purchaser Coalitions (2024), of which our client edHEALTH is a member, estimated that 1.2% of health plan members are high-cost claimants, making up approximately 33% of total healthcare spend. These individuals absorb 29 times the average member cost, with an average of $122,382 per claimant. By stratifying data, employers can start to pinpoint which individuals are high-cost claimants now, and who may become one in the future, and implement solutions to mitigate spend.

Clinical Drivers

When examining data across our book of business at Alera Group, oncology and specialty pharmacy conditions, such as rare diseases, are the top diagnoses associated with high-cost claims. Other common drivers are cardiovascular disease, newborn and infant care, and musculoskeletal disorders.

According to Sun Life’s 13th Annual High-Cost Claims and Injectable Drugs Trend Analysis (2024), cancer again tops the list as the most frequent and costly condition, nearly three times the cost of the second-leading condition, cardiovascular disease.

Employers should start by analyzing their own data and focusing on where they can make the most impact. Industry data, assuming the sample is broad, can serve as a helpful benchmark when developing a strategy, but understanding internal data is critical to success. In nearly all cases, specialty care is where savings will be found, and following the path of comorbidities often leads to the best outcomes. In addition, employers should implement broad market shifts and tactical actions that work together to address current costs and reshape future spending.

Cost Saving Through Broad Market Shifts

Self-insured employers seeking opportunities for savings related to high-cost conditions, claims, and claimants should consider the following broad shifts in thinking:

• Ownership of Plan Governance:
  Self-insured employers govern their plans but often do not build an internal structure, instead relying on vendor partners. Employers looking to target innovative solutions should maintain ownership of plan rules and understand the flexibility of their partners.
• Oversight of Steerage and Utilization Management:
  Plan management is complex, and vendor partners frequently revise rules related to steerage, utilization review, and care management. Understanding where flexibility exists allows employers to manage emerging therapies and carve-outs in the best interest of the plan.
• Value-Based Specialty Arrangements:
  Value-based arrangements create aligned goals and greater transparency, though they are less common in specialty care. Contract language should be carefully reviewed.
• Specialty Medication Solutions:
  Employers and their vendor partners must begin having detailed conversations about specialty medications, especially as the pipeline for these treatments expands beyond rare diseases.
• Partnering with Aligned Vendors:
  Some vendor partners may not have goals that align with employers. Those serious about managing high-cost claims should find partners willing to focus on value-based care, centers of excellence, and network management.
• Data and Analytics:
  Understanding plan data is a fundamental requirement for managing high-cost claims. It starts with utilization and baseline information but must extend to member-level analysis and predictive reviews that consider demographics and comorbidities. The goal is to establish protocols before claims are incurred so they can be proactively managed.

Tactical Actions Targeting High-Cost Claimants

At a tactical level, employers must be focused on opportunities that deliver savings at the condition level and continuously monitor results. This can be done with a partner, but if incentives are not aligned, methodology and key performance indicators should be established in advance.

Key first steps often include:

• Stop-loss design
• Prior authorization for top cost drivers
• Vendor contracting
• Centers of excellence
• Disease-state initiatives focused on prevention, care navigation, and overall management (for example, oncology, infusion site of care, cardiology, prenatal/neonatal, behavioral health, musculoskeletal, and others)

High-cost claims will continue to be a defining challenge for self-insured employers in higher education and beyond. Addressing them effectively requires a balanced approach that combines strong governance, meaningful data analysis, and proactive partnership with vendors and providers. Employers who invest the time to understand their data and align their strategies accordingly are best positioned to control costs while improving outcomes for their members. The goal is not only to manage high-cost claims when they arise but to build a framework that anticipates and prevents them wherever possible.

Sources:
National Alliance of Healthcare Purchaser Coalitions. High-Cost Claims Report, 2024.
Sun Life. 13th Annual High-Cost Claims and Injectable Drugs Trend Analysis, 2024.
Kaiser Family Foundation. Employer Health Benefits Survey, 2024.