Stop-loss protection is designed to provide self-insured employers with risk coverage for catastrophic claims. When put in place for a pharmacy plan, say for $250,000 for any individual, what happens is that when a claim for that individual exceeds $250,000, the stop-loss insurer will pay for any overage above that amount. Determining that $250,000 amount comes back to what is going on in the plan and what utilization has already occurred for this plan, as well as what premium the plan is willing to pay to a stop-loss reinsurer to have that threshold.
Why Your Clients Need Stop-Loss Protection
Self-insured employers need it because they never know when something will happen. A good example is with rare diseases. There are more than 7,000 rare diseases identified in the United States. Because there are so many, an employer may find that 1 in 10 of their members will be diagnosed with a rare disease in their lifetime. Rare diseases are treated with what is called an orphan drug, and a lot of times these orphan drugs can cost from $250,000 to $500,000 over the course of a year. In many cases, you don’t know when these may occur. You don’t know what a member that you hire on to your plan may have previously. Having stop-loss insurance is there to serve as a protection mechanism; you hope you never need it, but it’s there in case you do.
How to Mitigate Stop-Loss Claims Proactively
The idea of having stop-loss is to prevent a potential catastrophic claim, but if your clients have to pay out a catastrophic claim and access stop-loss, you want to know they’re doing it for the right reason. Having mitigation techniques in place to prevent that stop-loss claim – or potentially mitigating that expense from going toward stop-loss – is highly important. Here are some things you can help your clients do on a proactive basis:
Keeping utilization management up to date: Having the ability to review expensive claims to make sure that they are appropriate will help mitigate stop-loss insurance claims. At RxBenefits, we’ve always said that the most expensive drug is an unnecessary drug. Having a review process in place to make sure that a member qualifies for that drug is one area that can help potentially stave off a stop-loss claim.
Having routine monitoring patterns associated with expensive claims: If your clients have a hemophilia patient on their plan, for example, they are going to exceed that stop-loss by a large amount. What that does is what’s called “lasering” of that member. When someone is “lasered,” they are pulled off the existing stop-loss pool and treated separately – and the plan is then on the hook for covering that member’s claim. At RxBenefits, we believe in routine monitoring of that claim. In some cases, like with hemophilia, medications are based on weight, and so it’s highly important to check in with that member and the doctor to ensure that their care plan is consistently updated with any fluctuations in weight and experiences with the member’s response to the drug. If the plan happens to have exceeded stop-loss, we want to make sure they don’t pay more than they have to on an ongoing basis.
The Importance of Independent Clinical Oversight
As the old saying goes, an ounce of prevention is worth a pound of cure. It’s true in pharmacy benefits. Having a review process independent of a pharmacy benefit manager (PBM) is highly important, allowing the independent entity to look at these claims with a critical eye. The reviewer can make sure the claims are supported with proper documentation, verifying that the member qualifies for a catastrophic stop-loss claim.
In case your clients do have stop-loss claims involved, we want to make sure the rest of their pharmacy plan is proactively managed as well. Removing medications from the formulary that shouldn’t be there without causing contract issues or looking at other medications outside high-cost medications are both extremely important. These strategies serve to provide a long-term sustainability for the plan. Everything goes into stop-loss eventually; stop-loss touches everything eventually. The idea is proactive management – that’s the key to mitigating stop-loss.