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Plugging the Leak: How Employers Can Avoid High-Cost Claims That Can Sink the Employee Healthcare Budget

Published 1/6/2021

In many ways, chronic health conditions are like a tiny leak in the bottom of a sailboat. It doesn’t seem to be an immediate threat and you can still enjoy the ride, even if your feet get a little wet. Plugging the leak as soon as it’s found is the best chance the boat has to stay afloat for years to come, but all too often the leak isn’t repaired – eventually sinking the boat.

For employers, providing health plan options that encourage plugging the leaks of chronic health conditions can help minimize the effects of high-cost claimants.

A high-cost claimant is one whose medical care involves more advanced, and therefore more expensive, treatment and lengthy hospital stays averaging $122,000 each year per patient.

Surpassing spending related to medical inflation, pharmaceuticals, and any specific disease or condition, spending for high-cost claimants tops the list as the most expensive contributor to healthcare costs.1 In fact, they make up more than 30% of total healthcare spending and cost 29.3 times as much as average claimants.

High-cost claims include both unavoidable claims, such as those from catastrophic accidental injuries, and avoidable claims, such as those from unmanaged chronic illness. From a cost-control perspective, it’s these “avoidable claims” that offer fairly low-hanging fruit for potential savings and should be addressed as the priority by both healthcare providers and employers.

From the avoidable side of the spectrum, let’s look at a hypothetical example. A longtime employee who never took time off to get a well-check is now sick more often than usual – and it turns out he has uncontrolled diabetes that has led to previously undiagnosed heart disease. Eventually, he is admitted to the hospital, where he requires lengthy, extensive treatment. Even upon discharge, the patient must go home with durable medical equipment to monitor ongoing heart issues and remains at high risk.

For healthcare providers in an Accountable Care Organization (ACO) model, like Kelsey-Seybold, this scenario is a classic example of an avoidable high-cost claim. Had the patient been regularly seeing a primary care physician for routine screenings and well-checks, his healthcare team could have coordinated care to work with the patient in managing the risk factors associated with diabetes, minimizing related complications.

So, what can employers do to save the boat – that is, their employee healthcare budget?

Employers should start by implementing an ACO strategy to their employee health plan offerings. ACOs work collaboratively to prevent high-cost claims from happening in the first place by emphasizing preventive care, routine screenings, and effective management of chronic conditions.

Through a coordinated system of care, Kelsey-Seybold is able to share patients’ medical histories across specialties. This enables our providers to clearly see into a patient’s medical history and allows our doctors to offer the most appropriate treatments and interventions at the right time and in the most appropriate settings.

For patients who need extra encouragement, motivation, or a helping hand, Kelsey-Seybold offers several programs to help improve compliance, adherence, and engagement from the start:

  • Disease and Case Management – Kelsey-Seybold’s coordinated disease and case management programs provide resources for better health and interventions to help improve health outcomes and cost efficiency for patients with hyperlipidemia, congestive heart failure, diabetes, asthma, end-stage renal disease, and high-risk pregnancy.
  • Population Health – Kelsey-Seybold’s Population Health team takes high-touch care to the homes of patients who are considered high risk, helping bypass barriers that may prevent patients with chronic conditions from getting the care they need until acute care is necessary.
  • Real-Time Benefit Tool (RTBT) – With the high cost of prescription drugs, Kelsey-Seybold proactively looks for ways to help make medications more affordable for patients and employers. This intuitive program prompts the physician and pharmacist to consider lower cost medications when prescribing or filling prescriptions. For patients who need medications to manage chronic conditions, lowering the cost of prescription drugs helps reduce the risk for catastrophic issues resulting from medication non-compliance.
  • Virtual Visits – Patients can access primary and specialty care virtually, which makes access to healthcare easier and more convenient for employees with busy work schedules.
  • Behavioral Health – By looking at the psychosocial barriers and other social determinants of health, Kelsey-Seybold providers are able to find ways to meet the needs of patients who might otherwise become high-cost claimants.

ACOs are incentivized to keep patients healthier, rather than to administer expensive treatments. For example, through its capitation compensation model, Kelsey-Seybold providers are incentivized to manage the health of patients to help reduce healthcare costs for employers. When a physician-owned provider group and an ACO like Kelsey-Seybold has “skin in the game,” keeping patients healthy invariably results in a reduction in high-cost claimants.




Rajkumar Alagugurusamy, MD,

Hospitalist at Pearland Clinic

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NOTE: Each employer plan is separately underwritten and results will vary based on the population demographics and other factors.