A heart transplant, now considered a relatively routine transplant procedure, went badly for a member of a large, regional health plan, requiring extensive follow up care and eventually re-transplantation. The member was inpatient confined for over 180 days with total billed charges of just under $12 million.

Evergreen Re had previously advised the health plan to carve-out their transplant risk on a first dollar basis based on an analysis of their transplant experience, including both frequency and severity within the plan’s membership, and review of the plan’s transplant management capabilities and referral patterns.

Part of the analysis recognized there are a variety of potential carve out programs, all with different underlying cost bases. Therefore in order to better manage future cost of the carve out program for the client; we had to take into account what the underlying claims’ cost would be to the entity accepting the (carved out) risk.

We knew that one network in particular had very favorable contract rates with the key referral facilities where utilization would be expected to occur. As with any underwriting process, historical experience is a primary driver of future insurance pricing.  If this particular transplant had occurred through a network that had a billed charge outlier valuing the claim at 40% of billed charges, the experience of this one transplant would have represented more than 100% of the total cost to the client of the carve out program. This same client had 29 other transplants during the year. However, as a result of carving out the risk, and the strength of the underlying carve out risk contracts; the overall result was tremendous catastrophic protection to the plan and lower historical transplant claims experience, thus making future transplant costs more predictable.

In addition to full risk transplant carve out programs, Evergreen Re provides clients access to transplant risk programs on an excess and ASO only basis. For clients whom wish to retain risk for transplants, the company also provides access to the four leading transplant networks in the country, enabling them to minimize their transplant cost exposure. For more information on managing your transplant risk, go to our website www.evergreenre.com or email reinsure@evergreenre.com