The US Medical Reinsurance Market Is Changing and Clinical Intelligence Is Now More Important Than Ever

Across the entire U.S. medical insurance industry, the medical reinsurance space in particular is generating significant attention. Recently, several major reinsurers have stepped back from portions of the medical reinsurance market and although more may follow, it is widely agreed that this development is not a sign of crisis but a reflection of how they (and we) are thinking differently about healthcare risk. In fact, this shift reflects a deeper reality: healthcare risk itself is evolving.

For those who manage healthcare risk, whether you're a self-insured employer, a stop loss carrier, a captive organization or an underwriter/actuary, it's becoming increasingly clear that the underlying drivers of healthcare costs are becoming more and more clinical in nature. Put simply, a relatively small number of disease categories and treatment pathways are responsible for a disproportionate share of healthcare spending, and understanding those clinical dynamics earlier is becoming essential to effective risk management. Patients whose conditions develop suddenly or are chronic and go unmanaged don’t just suffer more. They eventually become a catastrophic claim that destabilizes risk pools, strains stop-loss carriers, and forces reinsurers to reconsider their exposure.

With its AI platform providing a clearer view, Evidium is actively addressing these challenges.

Evidium’s clinically grounded, explainable intelligence platform that models risk and treatment pathways, not only allows healthcare risk managers to better understand the risk they face but also to understand:

    · Why that risk exists

    · How that risk may change over time

    · What that risk will cost both annually and farther out into the future

A Larger Reflection of a Wider Shift

Rising costs continue to severely strain the entire healthcare ecosystem. There is still surprise when these bills arrive, and they are also arriving at a higher velocity and in ever-larger amounts. Many of these high-cost claims are tied to events, specialty medications (e.g. GLP-1’s), expensive therapies, surgeries and treatment pathways.

Historically, risk pricing has relied on large pools of claims data and statistical averages. While these methods remain useful, they can struggle to fully capture the clinical variation that increasingly drives the most severe healthcare costs. Often a small number of diseases or treatment patterns can account for a significant portion of the total costs.

Therefore, there is a greater emphasis placed on:

    · More disciplined risk pricing

    · Improved capital efficiency

    · Alternative risk transfer structures

    · Stronger analytical capabilities

As healthcare risk management overall reacts to these changes, organizations that will succeed in this environment will be those that can identify the risk sooner and understand the clinical drivers of the risk more clearly.

The Missing Link in Healthcare Risk Modeling

Actuarial models have been excellent at analyzing claims data. However, healthcare costs are not simply a financial event. They begin in the clinic with disease progression, treatment options, care paths and emerging new technologies all influencing how costs will develop in an individual and more broadly in a population.

Unless the ability to view the correct data is available, the ability to understand the underlying clinical drivers of the costs is limited.

For instance:

    · Two individuals may have the same diagnosis but follow very different care paths.

    · Some diseases have pathways of increasing treatments as the disease progresses.

    · New treatments are emerging that will have differing cost structures.

This is precisely where Evidium's computational clinical intelligence begins to add significant value.

Evidium Transforms Medical Knowledge into Actionable Risk Intelligence

Evidium bridges the gap in healthcare risk intelligence by creating both computationally usable and easily accessible medical knowledge.

In healthcare, a wealth of medical knowledge exists in a variety of formats including clinical guidelines, peer-reviewed literature and outcomes data. Unfortunately, this knowledge is not easily converted into actionable intelligence to inform decisions.

Evidium integrates clinical evidence, medical guidelines, outcomes research and claims data (among others) to model disease states and the treatment pathways patients are likely to follow, translating medical knowledge into actual computable intelligence for risk analysis.

Through this model of the clinical journey, stakeholders can now visually assess the progression of disease states and the effect of decisions made in treating those disease states on potential future costs. Similarly, risk managers are now capable of transitioning from a reactive approach to a more proactive one in managing healthcare risks. This allows risk managers to understand not only what risk exists, but why it exists in the first place. Stakeholders throughout the ecosystem can now ask questions that advance their understanding of the costliest disease states within a population, how disease states and their pathways may impact future claim severity, what clinical drivers are likely to impact future healthcare costs and what clinical factors are driving these outcomes.

Evidium's approach to providing healthcare risk intelligence is transparent, so that all partners can visually assess the outcomes as well as understand the clinical drivers of those outcomes.

As healthcare risk becomes increasingly concentrated in the roughly 5% of the population that drives 50+% of the cost, the ability to understand the clinical drivers of those risks earlier becomes mission critical. For reinsurers, stop-loss carriers, self-insured organizations and others, this insight can improve underwriting discipline, strengthen capital planning and reduce volatility within risk portfolios. When clinical intelligence is integrated into risk models, organizations gain the ability to anticipate the conditions and treatment pathways most likely to generate future claim severity – before those costs fully emerge in the claims data.

A New Way of Managing Healthcare Risk

How healthcare is delivered is changing rapidly. Therefore, the methods used to manage healthcare risk must also evolve.

Self-insured and other stakeholders are continually challenged to strike a delicate balance between prudent fiscal planning and responsible healthcare practices. Striking this balance requires tools that provide more than just insights but also instill confidence.

Evidium's model of disease progression, care pathways and financial impact provides a greater understanding of the variables influencing healthcare costs within their populations.

In contrast to using outdated averages, healthcare risk managers can now use meaningful insights in their decision-making processes, from condition to care to cost.

Given the fact that healthcare risk is not only more complex, but also more concentrated, this level of insight is more important than ever in today's evolving healthcare risk management landscape.

The Future of Healthcare Risk Intelligence

The changes occurring in the medical reinsurance market are not simply structural shifts in capacity or pricing. They reflect a deeper reality – that healthcare risk itself is becoming more clinically driven, more complex, more concentrated and nuanced. Understanding those clinical drivers much earlier than we do today is becoming essential to survival.

This represents a great opportunity for every organization involved, especially in the self-insured space, to utilize their fiscal expertise in combination with a greater understanding of healthcare. This is the guiding philosophy that supports the Evidium solution. By combining disparate medical knowledge into actionable intelligence, healthcare risk managers are now better positioned to understand the variables affecting healthcare costs. Organizations that integrate clinical intelligence into their risk frameworks will be better positioned to anticipate cost volatility, price risk more accurately and manage healthcare exposure with greater confidence. Changes in the medical reinsurance market serve as are minder that markets shift constantly, structures change, and tools emerge to enable organizations to adapt to the changing paradigm of managing healthcare risk.

Contact us today to learn more about how Evidium's clinically grounded intelligence can aid healthcare risk managers in enhancing their risk management strategies.