How to manage risk by analyzing claims data Featured

7:45pm EDT December 31, 2012
How to manage risk by analyzing claims data

Rising health care costs have companies looking everywhere for ways to get expenses under control.

“In years past, we would meet with human resources personnel and explain their renewal increase to them. Nowadays, with benefits costs rising so quickly, it’s an important and high-dollar line item on budgets and profit and loss statements. CFOs and CEOs are asking how to stem the tide of these increases. It’s captured everyone’s attention,” says Dan Wilke, Director of Underwriting at Benefitdecisions, Inc. Wilke says solutions can be found by analyzing medical claims to identify problem areas that can be addressed through plan changes and wellness programs.

Smart Business spoke with Wilke about reviewing claims data and what to do with the results.

What are the major categories of medical claims that impact insurance costs?

Most employee groups are going to have medical claims that fall into six major categories:

• Coronary heart disease

• Obesity

• High blood pressure

• Depression

• Asthma

• Diabetes

How do you gather claims data to analyze?

Most companies can obtain this data from their insurance carrier if the group is larger. There are also analytical tools that mine this data and produce reports that can be reviewed to pinpoint areas of concern that show extraordinary claims history or occurrences. These analytical tools provide detailed claims benchmarks in comparison to other companies of your size and industry. Your benefits consultant should be doing this analysis on a regular basis to advise you on the best strategies for your company.

How can companies use the claims data to lower health care costs?  

One method for fully insured plans is to obtain Size of Payments reports from your insurance carriers. These categorize how many claimants incur medical claims in specific dollar ranges. Upon reviewing the data, employers may be able to capture significant premium savings of 25 to 30 percent by pairing a Health Reimbursement Arrangement (HRA) with a High-Deductible Health Plan (HDHP), with limited impact to total out-of-pocket costs.

Can you look at claims reports and tailor wellness programs to fit problem areas?

Absolutely. Some programs, such as smoking cessation, will affect all claim categories and chronic conditions. Companies can educate employees on the damage smoking and poor lifestyles can do, since on average, employees incur three to four times more claims per year if they have negative lifestyles.

When the claims incurred are higher than average in the high blood pressure category, strategies such as a walking program with pedometers can target high blood pressure and help reduce the risk of heart failure.

What else can you do to manage rising costs of health insurance?

The other direct way to manage costs is to have a healthy employee group. Getting employees to participate in a wellness program is the first step, and money can help motivate them. Give them choices whereby if they take a health risk assessment or participate in a wellness program, they’ll get a reduction in their medical insurance premiums, and you’ll start to get their attention.

HR departments also need to work with the C-suite and the owners of the company. When management buys into the concept of wellness, it goes a long way toward improving the culture and motivating employees to change their lifestyles. Even the healthiest groups will include people who have claims resulting from the lifestyles they lead. Companies should promote wellness by changing the culture and getting employees to change their lifestyles, whether it starts with a simple walking program or charging different premium rates based on whether they’re a smoker or nonsmoker.

Claims can be analyzed in a variety of ways to provide cost saving ideas to help manage your medical insurance costs. Work with your benefits consultant to strategize and develop cost-savings options.

Dan Wilke is director of underwriting at Benefitdecisions, Inc. Reach him at (312) 376-0437 or

Insights Employee Benefits is brought to you by Benefitdecisions, Inc.