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Health Care Utilization Stabilizes: Strategies to Manage Cost Remain Critical for Employers

oswaldcompanies May 22, 2023

“We’re back.” That was the mantra repeated throughout 2022 in many spaces of American life. After two years disrupted by a pandemic and its aftermath, 2022 was the beginning of the post-COVID-19 normal – and that included a normalization of health care utilization after two tumultuous years.

Due to the pandemic in 2020, many delayed non-essential medical care. These visits were either skipped entirely or delayed, causing increases in services per member across all categories in 2021 as the health care system reopened and patients started to feel more comfortable seeking care.

Oswald’s book of business, encompassing several hundred thousand lives, shows some interesting trends as health care visits and treatment resumed. In 2022, the book of business sought fewer outpatient and pharmacy services per member, compared to 2021.

Inpatient admissions increased 0.4%; outpatient visits decreased 6.1%; professional visits increased 1.4%; and prescriptions decreased 1.2%.

COVID-19 treatment, testing and vaccinations accounted for 1.7% of total paid claims in 2022, down from 2.4% in 2021.

Overall, Oswald’s clients experienced lower health care trends in 2022 compared to the industry average. Medical claims paid per employee per year decreased 0.4%, and pharmacy claims paid per employee per year increased 3.4%. These trends are dramatically lower than 2022 projected trends in Segal’s 2023 Health Plan Cost Trend Survey, 7.3% and 8.4%, respectively.

In 2022, members with claims greater than $1M occurred at a rate of 0.50 per 10,000 members, a slight decrease from 0.51 per 10,000 members in 2021. Members with claims greater than $500,000 occurred at a rate of 4.48 per 10,000 members in 2022, an increase from 4.21 in 2021.

The most expensive leading diagnostic categories for claimants with greater than $500,000 in paid claims were cancer and premature births (categorized as Factors Influencing Health Status, Neoplasms, and Certain Conditions Originating in the Perinatal Period). Claims for cancer-related diagnoses nearly tripled from 2021 to 2022 for these claimants. Earlier detection of cancer leads to lower-cost treatment and may have helped control costs and improve treatment options for these members. The Galleri test, provided by Grail, is one potential solution. By complementing routine screenings with the Galleri test, cancers can be identified earlier, potentially reducing Stage III and Stage IV diagnoses. This can also result in a significant reduction in cancer-related deaths.

Musculoskeletal issues, cancers, and circulatory issues remain the largest drivers of medical spend, with cancers often contributing to claimants who exceed $1 million in paid claims.

Across the entire book of business, top diagnostic categories by paid amount in 2022 were:

  • Factors Influencing Health Status
  • Musculoskeletal and Connective Tissue
  • Neoplasms
  • Circulatory System
  • Digestive System

The top four categories are unchanged from 2021. Digestive System was ranked sixth last year. These five categories account for more than half of all medical claims in 2022.

With COVID-19 under control, health care in America largely reached a new normal, but utilization by our clients increased by lower amounts and in some cases slightly decreased.

Despite these positive trends, the pipeline of high-cost gene therapies to treat rare conditions is strong, likely causing an increase in claims over $1 million in the coming years. This could impact health care inflation across the country.

Oswald Companies continues to identify and implement strategies to control medical and pharmacy spend. Stay tuned for a deeper dive into some specific focus areas.

For more information, contact us here.


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