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Spring 2002
Medical Committee Review
By Jim Wilmot
Blue Cross Blue Shield of IllinoisTools of the Trade
Committee member Ann Marie Wood of Trigon Blue Cross lead the interactive discussion of mid-market to large group underwriting processes. Topics mentioned were preparedness for bio-terrorism, terrorism, and the fallout from September 11th as it affects group underwriting. Many participants said that mental/nervous claims had increased as a result of recent world events. High trend increases and increased utilization leading to higher renewal increases were also discussed. One observer shared that compared to 1995, their members now go to a physician twice as much. Other items addressed were:
a.new types of benefit plans to try to keep costs down while getting the employers involved in the incentives to maintain control of claims;
b. Increased emphasis on disease management;
c. drug carve outs to;
d. early retirees;
e. revisiting census information more frequently in dire economic times of layoffs;
f. in cases of multiple carriers, understanding what the other carriers offer can reduce anti-selection; self-funding activity and reinsurance premiums for self-funded plans.
Self Funding: An Island or Peninsula
Committee member John O' Connor moderated a spirited discussion of the self-funding marketplace. One popular topic was the effect of lasering certain diagnostic claims in an effort to keep costs at a reasonable level.
Many participants questioned if employers really understand the self-funded details of the contracts and are concerned enough to enhance disclosure statements to better communicate the facts of each case.
The audience agreed that the average increase in this line of business is 30-35%. A final discussion topic was the matter of requesting experience on self-funded cases, the level of detail of the experience, the difficulty of receiving the experience data due to broker delays.
Let's Talk Shop: Small Group
Committee member Elaine Owens facilitated the Let' s Talk Shop workshop. A topic generating a great deal of discussion dealt with the information provided to brokers on small group renewals. The data was as varied as the companies represented, but overall minimal detail information is provided. This is difficult for underwriting managers because the rate increases are continuing into the high teens and low 20' s. Other information addressed was state mandates, reformation, two life groups, eligibility, late enrollees, eligibility audits, Medicare coinsurance, and level of detail of medical questions.
The Rising Cost of Prescription Drugs
Ron Klein, president of ClaimsPro, a national Pharmacy Benefit Manager, discussed the rising costs of prescription drugs. Mr. Klein had informative details about drug trends, costs, research and development, and future developments. Mr Klein stated there is no magic pill, no easy solution to try to maintain drug costs; however the trend can be slowed down with a few changes.
Twenty years ago prescription benefits represented an average of 4% of total health plan costs, but today they are four times that amount. 60% of today's physician visits end with the writing of a prescription, and rising sales of just 23 drugs accounted for half of the 21 billion dollar rise in the cost of prescriptions last year. A third party pays 82% of drugs. There are 82 drugs coming off patent in 2002, while 282 new drug launches are scheduled for 2002.
Medical Underwriting System
Medical Committee co-chair Jim Wilmot and Mark Traub of Blueridge Software presented a workshop on the research and analysis needed while investigating a system to provide automated medical underwriting analysis and subsequent increases as a result of the evaluation of each employee's medical history.
Jim presented a summary of a previous GUAA presentation in 1998 by John Friesen of Blue Cross of North Carolina, who was unable to attend but had installed a system in 1998 and how much has changed since then.
Jim Wilmot detailed the due diligence required in his company search for a system in a time of huge volume increases. There are various systems on the market that may satisfy the needs of various companies, depending on the culture, structure, and internal factors of each company. Jim was clear that the purpose of the seminar was not to sell a software package but present all of the steps necessary in evaluating whether to develop a system or purchase one. Mark Traub presented the advantages of a medical underwriting system, the factors contributing to why a company should invest as well as the factors why a company should not invest in a system.
Let's Talk Shop: Large Group
Committee member Patrice Hammond facilitated a lively group in talking about common problems in today' s environment. One interesting item was in determining the rate of some groups by quoting the address of the employee or the address of the business, especially in relation to geographical differences. Discussions took place on changes in enrollment that affect rating practices, approval percentages, employee waivers, and other coverage.
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