Here’s How Employers Are Measuring their Medical Trend Drivers in the COVID-19 Era

Just a few months ago, as the coronavirus shut down cities and states around the country, we would have predicted one big medical trend driver for 2020: COVID-19, the illness caused by the novel coronavirus. As much of the country reopens and businesses begin assessing the damage, it seems as though the cost of treating coronavirus may not be as impactful as we’d imagined. 

For one thing, population health antibody studies have shown larger and larger numbers of asymptomatic people who did contract COVID-19. One study in Indiana suggested that as many as 45% of people who tested positive for antibodies experienced no symptoms of COVID-19 at all. If this holds true as we learn more about the virus, mortality rates may drop dramatically. As NPR reports: 

“And the data allowed them to calculate something called the infection fatality rate — the odds that an infected person will die. Previously, scientists had relied on what's known as the case fatality rate, which calculates the odds that someone who develops symptoms will die...In New York, for example, an antibody study indicated the state has an infection fatality rate around 0.5%. Studies in Florida and California have suggested even lower fatality rates, but the results are less certain.”

What does this mean for self-insured employers and advisors, who are trying to plan for and predict COVID-19 costs for their organizations? If fewer people fall ill, require hospitalization, or even simply miss work days due to COVID-19, coronavirus may not be a major trend driver in 2020 after all. We recently wrote about a way to calculate the costs and impact of COVID-19 on a member population, and hope the formula is still helpful to those with employees in hot spots or high-risk industries. However, many benefits industry experts have told us that they’re seeing costs actually go down during the pandemic. Why would that happen? 

There are a few reasons healthcare costs may have fallen for employers during March, April, May, and even early June. 

1. Elective procedures were postponed. Many healthcare providers put off procedures like knee surgeries, hip replacements, and other non-urgent surgeries to keep hospital beds open for COVID-19 patients. 
2. Patients were scared. There are numerous studies showing that people aren’t seeking care during the pandemic because they’re afraid of contracting the virus at a healthcare facility. This includes patients who need life-saving care for heart conditions, stroke, and other serious illnesses. 
3. People were/are staying home. It stands to reason that when people are sticking close to home and limiting their activities, they’re less likely to be injured in traffic accidents, twist an ankle during a pickup basketball game, or catch a cold from a coworker. 
   

So with coronavirus potentially presenting less of a medical trend driver than initially imagined, what are employers and their advisors tracking for the remainder of 2020? Here are some of the key metrics benefits leaders are tracking. 

Paid Amounts Year over Year

Using sample data, we calculated the year-over-year medical spending for both the employer and the members. The data showed that employer spending had increased by 2% compared to the prior year, while member spending increased by 1% in the same period. For some employers, this wouldn’t be a big surprise or a cause for concern. Others, however, might want to look at member contributions to costs and adjust for next year. 

In the COVID-19 era, it is even more important to keep track of costs for both the organization and the employees. It will be crucial to have a historical record of what happened with your benefits in 2020 so you can plan for possible future outbreaks and adequately prepare for costs. 

Medical Plan Utilization

It seems simple, but tracking the percentage of members who utilize their medical carrier is a key step to understanding member health. In this sample data, 84% of members had some utilization of their medical plan in both periods. This is a metric that you’d expect to remain fairly steady from year to year unless there were big changes to your member demographics or out-of-pocket costs. The coronavirus outbreak is a good example. In a year with stay-at-home orders and a worldwide public health crisis, you would expect to see utilization fall off overall. But you may also see in a month-by-month view that member utilization of medical benefits falls off for a few months, then resumes as normal, or possibly even surges toward the end of the plan year. 

Employers and advisors may also see utilization change if their organization has to go through a round of layoffs or hires to meet a surge in demand. New employee demographics means new medical utilization numbers. 

Inpatient Admissions

Inpatient hospitalization is expensive. The Kaiser Family Foundation calculates the average cost of a hospital stay in the U.S. as about $2,500 per day. Our sample data shows that for both admits per 1,000 members and length of stay, the trend is positive. Fewer patients are being admitted to the hospital compared to the previous period, and they’re being released sooner. 

Employers and benefits consultants are tracking this metric to look for clues about the impacts of coronavirus on their populations. Hospitalization rates and length of stay will vary, but will provide some key data about the members being treated for COVID-19 and how they may cope with the recovery long-term. Studies show that U.S. COVID-19 patients are facing longer hospital stays than those in China, and this may well impact the overall cost (both financial and human) of this illness on employers and their employees. 

Condition Trends

In our sample data, pregnancy and childbirth is the #1 condition driving in-patient admissions. That’s actually good news, as it’s an appropriate condition for hospital admission. However, the third most common group condition is mental health disorders. If this was live employer data, they may want to look at better support, coverage, and wellness programs for those with mental health conditions in their population. 

Many experts are predicting a mental health crisis in the wake of coronavirus, and we’re hearing from benefits teams who are tracking this trend, reaching out to employees, and taking steps to boost their behavioral health coverage. 

Now for some organizations, looking at medical trend drivers means a heavy lift: 

1. Gathering data from each carrier (most self-insured companies work with several)
2. Gathering historical data too (“trends” suggest you need to see the change over time) 
3. Comparing across multiple feeds and time periods 
4. Doing some complex math
   

The lucky employers have an in-house analyst, a talented consultant, a data partner, or all three to help with this. If you’re not able to do an analysis like this, you’ll have a hard time tracking medical trend drivers, the effects of coronavirus, the impact of the pandemic on mental health, and more. A great data partner makes it fast and easy to keep an eye on trends in healthcare and benefits in 2020. 

Do you have this kind of insight into your medical trend drivers? Are you able to see which costs are rising and why? If you’re working with a data partner, you probably have easy access to this kind of information. If you’re working with a great data partner, you’ll be able to pull a report like this together easily, create clear visualizations like the ones above, and share it with stakeholders from your organization, your consultant, and more. 

If you’d like to learn more about COVID-19 and employee benefits, visit our Resource Center.