Medicare Supplement Claim Review: 2021-2023
Medicare Supplement claims have been trending up over the past three years since the COVID-19 pandemic. We’ve seen an increase in the overall market loss ratios and have seen carriers reacting by applying for larger rate increases.
This article will summarize some of the emerging claim statistics that are driving the higher loss ratios we are seeing on Medicare Supplement Plan G blocks of business. Note that these claim statistics are not normalized for underwriting wear-off, aging or any changes in demographic or geographic mix.
Claims by Benefit Type
The following table shows the breakdown of Plan G paid claims per policy by incurred year and benefit type.
Some key take-aways:
1. Part B claims account for 85% of claims in each incurred year.
2. Part A deductible claims are 10-11% of claims in each incurred year.
3. Overall claim cost grew by 25% in 2022 and 15% in 2023.
Part B Claims by Primary Diagnosis
The next table shows the twelve diagnosis codes that generated the highest claim costs in 2023 along with the average claim cost per policy. These are split between ‘low frequency, high severity’ and ‘high frequency, low severity’ claim types.
Cancer Treatment
In this final table we’ll look at some of the trends in the three main types of cancer treatments (i.e., chemotherapy, immunotherapy and radiation therapy) that were included in the table above. Most cancers are treated with one or more of these types of therapies and the prevalence of cancers has been on the rise across different insurance populations. Within this table we are calculating the claim frequency as the number of paid claims divided by the number of policy year exposures.
Here we are seeing an increase in the frequency and the average claim amount for all three types of cancer treatments. The overall claim cost increased by 31% in 2022 and 20% in 2023. The increase in these three diagnosis codes accounts for $33 of the total $549 increase in claim costs from 2021 to 2023.
Medicare Supplement claims are increasing across benefit types and across many different types of diagnosis codes. We continue to see double-digit increases in the overall claim cost and for each of the main Med Supp benefit types. Successful block management will require a combination of claim monitoring (e.g., watch out for fraud and opportunities to negotiate provider payments) and diligent rating plan implementations.
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