A Message from the CEO
 by Charles Crispin, President & CEO, Evergreen Re

Preparing for the Shift in Risk

A C-level executive at a health plan in the Midwest called to ask my advice on an unexpected outpatient claim that was quickly reaching $5 million.  Although not an Evergreen Re client, he had heard me speak about the surge in catastrophic claims, and he wanted to know if I had ever heard of a case like his.

Unfortunately, the answer was yes. Like many health plan executives across the country, he was surprised to learn about the growing incidence of claims over $1 million.  And even more surprised to learn that many of these claims are for services provided outside the traditional hospital setting as well as for high cost specialty drugs and therapies designed to improve outcomes and health.

In his particular case, it involved a member with hemophilia.  He wrote: “We project the total cost of care for this case will reach $5 million over the course of four months from pre-surgery to post-surgery. Outpatient costs alone (which included the factor product the member was prescribed) will exceed $3 million.  I have never heard of such a large case, let alone the fact that such a significant portion was outpatient.”   Unfortunately, this plan’s reinsurance did not cover outpatient, pharmaceuticals or biologics.

The nature of risk is shifting constantly and understanding those shifts is an ongoing process that will help determine the best type of coverage to protect against these changes.  Traditional reinsurance structures do not protect  health plans against and  these new challenges, leaving a plan totally exposed. 

In this newsletter you can read about one area – specialty drugs – that have the potential of generating massive claims from a few members.  Developing a strategy to handle these types of cases is critical, as is the need to protect against the growing number of outpatient procedures with the potential for costs to cross the $1 million mark.

At a time when so many great advances in medicine are providing positive outcomes for so many, payors will be caught in the middle of this storm without cover if they fail to protect themselves properly.