How to Stem the Rise of High-Cost Medical Claims

Filed under: Benefits

Studies routinely show that, while not everyone is a regular user of the healthcare system, a small subset of the population represents prolific, high-volume users. This means that the largest amount of expenses is generated by the smallest number of people. They are referred to as high-cost claimants. The majority of high-cost claimants suffer from chronic conditions such as cancer, heart disease, and blood-borne illnesses. A smaller subset experience serious acute conditions, such as complex childbirths.

In recent years, high-cost claims have been on the rise. In the past, a $50,000 claim was considered extraordinarily high. Today, many claims start at $100,000, and multimillion-dollar claims covering congenital disorders, organ transplants, and gene therapy are not uncommon. Past surveys of self-insured employers reveal that 20% to 31% incurred more than $1 million in claims per year. In 2026, healthcare expenses are projected to increase by another nine percent.

What Is Driving High-Cost Claims?

There are factors driving up costs that are not directly attributed to medical care. For example, health systems have been consolidating and private equity firms are acquiring medical groups and surgery centers. While mergers may yield some cost savings for behemoth corporations, they do not appear to be reducing the cost of healthcare for consumers, health plans and, in particular, self-insured groups. 

Among our aging population, a single acute illness often triggers a series of complex, chronic conditions that require expensive lifelong care. Examples are cancer, cardiovascular disease, sepsis, neurological and blood disorders. However, high-cost claims are not exclusive to older generations. Today’s younger adults are increasingly using fertility services, prenatal, delivery, Neonatal Intensive Care Unit (NICU) stays, and postpartum services. Furthermore, specialized, ongoing care supporting genetic disorders, neurodivergent conditions, and the growing mental health crisis are featured among all demographics, from children up to the elderly.

To help mitigate the rise of high-cost medical claims, the following are claim-reduction strategies that organizations can deploy.

Data Analytics

Analyzing today’s claims data can go a long way to helping manage high-claim medical care and generate predictive analytics to reduce costs in the near future. While claims data may describe current primary conditions, examining comorbidities (e.g., excess weight, hypertension, asthma, arthritis, joint issues, osteoporosis, poor mental health) are  key predictors of higher-cost trends.

Employers identifying high-cost claims can develop strategies to help moderate health conditions that generate high-cost care. For example, early intervention programs (e.g., weight management, smoking cessation) and early detection of health conditions (e.g., preventive care, health fairs, onsite screenings), followed by timely treatment can greatly reduce healthcare expenses.

Claims data and predictive analytics can yield insights into:

• Stratify high-spend claims, such as:
  • By service - inpatient, pharmacy, mental vs physical health
  • By cost - $50K, $100K, $500K and $1M+ claims
  • Network vs out-of-network claims
• Flag rising-risk members for outreach support, screenings, and interventions
• Gauge the impact of comorbidities and social factors on outcomes and costs
• Categorize preventable versus non-preventable, lifestyle-related conditions
• Assess claim durations (e.g., acute, long term, or recurring)

Plan Design Adjustments

Data analytic insights can help strengthen health insurance plans. For example, if high-cost claims represent a large number of chronic conditions among the workforce, it may be worth the investment to incorporate a robust case management program into health plans.

Assigned case managers offer higher-touch services, including ongoing encouragement and assistance to help plan members adhere to a personalized treatment plan. This can be particularly productive to optimize high-cost therapies.

For example, say a plan member has transportation issues that prevent him from attending regular provider appointments. Or cannot afford a prescribed diet plan or medication. Or suffers from depression – making it more difficult to keep up with a daily exercise regime or workplace responsibilities. A case manager can provide support via reminders for taking medication, exercise, attending appointments, exploring telehealth options, and researching local community resources to help meet the logistical needs of plan members.

Case management is also helpful for plan members who undergo a hospital stay. An assigned case manager can help coordinate patient care among multiple providers both in and out of the hospital, assist with logistics specific to discharge planning, and help the patient comply with a personalized treatment plan to avoid readmittance. By reducing the number of emergency room visits and readmissions, high-cost medical claims can be substantially reduced.

Other plan design adjustments may include:

• Expanding telehealth and virtual care options
• Considering onsite/near-site clinic access and coverage
• Expanding and promoting mental health support via employee assistance programs (EAP), centers of excellence, expanded network access and coverage
• Facilitating collaboration across providers and partners
• Adopting care models that focus on patient experience and outcomes
• Using behavioral economics to guide members to high-quality, cost-effective care best suited for their individual needs (e.g., number of dependents, income, location, etc.)
• Streamlining claims analysis (e.g., high-expense coding, demographic location, tenure, income band, job role)
• Tiering medications based on usage/cost/value assessment (e.g., specialty meds, GLP-1s, biosimilars)
• Modifying prior authorization rubrics and vendor contracts

Early Intervention Tactics

The most effective way to reduce healthcare intervention costs is to maintain good health. For starters, plan sponsors should offer incentivized wellness programs to address preventable, lifestyle-related behaviors. Early intervention wellness programs may include:

• Mental health and stress management resources such as counseling, stress management seminars, resilience training, and mindfulness programs
• Discounted gym memberships, fitness classes (e.g., Pilates, dance classes), mind-body exercise (e.g., yoga, tai chi)
• Company intermural sports teams or sponsor community leagues
• Personalized nutrition advice
• Weight-loss programs, apps, and other resources
• Smoking cessation counseling and resources
• Substance abuse counseling and resources
• Chronic condition-specific programs (e.g., diabetes, heart health, obesity)
• Discounts/resources for alternative pain management techniques (e.g., chiropractor, acupuncture, transcranial magnetic stimulation)

Incentives may include monetary rewards such as cash bonuses, HSA employer contributions, or reduced health insurance premiums for participation and reaching established benchmark health goals. Also consider time-off rewards such as extra PTO, or tangible rewards such as gift cards, fitness trackers, or gym gear. In some corporate cultures, health incentives may be promoted via structured team-based competitions with shared prizes and inclusive events.

One of the key trends in this high-cost medical claims era is that plan sponsors are seeking more clinical-driven strategies.  Member and claims data can offer direct insight into high-cost areas so that the solutions deployed lead to more clinical effectiveness, multi-provider collaboration, and identifiable accountability for both cost and patient outcomes. Today’s efforts to stem the rise of high-cost medical claims require a broad commitment to long-term cost control while offering competitive benefits that meet the needs and expectations of today’s workforce.

 

 

 

 

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