High drug costs are an ongoing thorn in the side of the U.S. healthcare system. New reports show that in 2023, the country spent $722 billion on prescription drugs. That’s a 14 percent increase from the previous year. The main reason for this high expenditure is the growth in spending per prescription as the cost of individual drugs soars.
For pharmacy benefit management (PBM) stakeholders—employers, health plans, third-party administrators (TPAs), and PBMs themselves—managing these high-cost claims is critical. By identifying and addressing both medical and pharmacy claims in real time, stakeholders can improve their bottom line and provide better patient care. Here’s how understanding high-cost claims and leveraging real-time data can make a difference.
Understanding High-Cost Claims
High-cost claims are medical and pharmacy claims that exceed a certain threshold, often driven by chronic conditions, expensive treatments, or complex medical procedures. These claims can quickly add up, straining a health plan’s resources and becoming a significant cost driver for employers. To maintain sustainable healthcare costs, it’s essential to track and manage these key drivers efficiently. Here are the primary reasons for the ongoing growth in costs:
- Chronic diseases like diabetes and cardiovascular issues are major contributors: These conditions often require ongoing treatment and medication, leading to repeated high-cost claims over a patient’s lifetime.
- Specialty drugs can be extremely expensive: These medications are often necessary for treating complex conditions but come with a high price tag, significantly impacting overall healthcare costs.
- Complex surgeries: These often involve multiple procedures, lengthy hospital stays, and extensive follow-up care, all contributing to high-cost claims.
- Cancer treatments often result in high claims: These procedures and therapies are vital for patient survival and recovery but are among the most expensive medical services available.
- Long-term rehabilitation and substance abuse disorders also drive up costs: These treatments require extended care and support, resulting in continuous high-cost claims over a long period.
- Systemic issues like healthcare inflation and administrative costs add to the problem: Rising prices for medical services and the high administrative burden increase the overall cost of healthcare, making high-cost claims even more challenging to manage.
A report by Blue Cross Blue Shield states that high-cost claims account for a significant portion of total healthcare spending. Understanding these drivers is the first step in managing costs effectively.
Benefits of Identifying High-Cost Claims in Real Time
New technology enables companies to tap real-time data analytics to help manage high-cost claims. This allows plans to monitor and address high-cost cases as they arise. With real-time data, you can make informed decisions that save money and improve care. The benefits of real-time identification include:
Proactive Intervention
By identifying high-cost cases early, health plans can provide timely care and prevent further costs by effectively identifying and managing high-cost claimants. This proactive approach ensures that patients receive the care they need when they need it, reducing the likelihood of complications that can drive up costs even more.
Fraud Detection
Real-time monitoring can detect unusual patterns or spikes in claims, signaling potential fraud. This helps protect health plans and employers from unnecessary expenses. Detecting fraud early can save significant amounts of money and ensure that resources are available for those who truly need them.
Utilization Reviews
Timely utilization reviews and prior authorizations can be conducted, ensuring that treatments are necessary and cost-effective. This process helps to avoid unnecessary procedures and medications, reduce wasteful spending, and ensure that patients receive appropriate care. It also helps to control claim costs by maintaining a balance between cost and quality of care.
Better Negotiations
PBMs can use data to negotiate with manufacturers or explore alternative medications that are more cost-effective. Access to real-time data strengthens the bargaining position of PBMs, allowing them to secure better prices and terms for medications, which can lead to substantial cost savings for the health plan.
Dynamic Budgeting
Real-time data also allows for dynamic adjustments in budgeting and resource allocation, helping health plans stay flexible and responsive. Health plans can reallocate resources quickly in response to emerging trends and patterns in claims data, ensuring that funds are used efficiently and effectively to manage costs and provide the best possible care.
For example, Segal’s consulting insights show that using data analytics can reduce overall healthcare costs by effectively identifying and managing high-cost participants.
Harnessing Real-Time Data for Collaborative, Cost-Effective Care
When all players—PBMs, providers, payers, and others—are aligned with the same goal, they can use data to reduce costs and improve care quality. Collaboration and data sharing are key to achieving these goals, and that’s how technology is helping to reshape the future of healthcare.
Xevant delivers real-time data analytics that helps identify and address high-cost claims as they arise. With more timely information, we’re helping PBM stakeholders make informed decisions that save money and improve care.
Want to learn more about how real-time data analytics can help optimize your drug spend? Ask us.
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