2016 Million Dollar Claims: 7.1 per 100,000

The Centers for Medicare & Medicaid Services (CMS) Continuance Tables and the CMS Minimum Value calculator are based on a Mean (Average) Inpatient (IP) value of $1,657 (trended to 2016) and a Standard Deviation (SD) of 3.5 times the Mean for all benefit types combined.  If we call the ratio of Mean to SD the "Coefficient of Variance" (CoV), then we can say that it makes sense to use a larger CoV for IP costs and a smaller CoV for the non-IP costs. Since IP costs fluctuate much more than the other benefits,  I will use a CoV of 5.0 for IP costs and 3.0 for non-IP costs.

Based on the HCUP Statistical Brief #180 *, I estimate the estimated frequency of someone aged 0-64 having one or more hospital stays to be .1 (or 1 out of every 10 people).

This allows me to back into a average cost per hospital stay of $16,500 ($1,657/.1, rounded).

Using our internal MCS tool, I assumed a lognormal distribution and simulated 1,000,000 years of possible outcomes for one individual and found that the likelihood of a hospital claim or claims totaling $1,000,000 or more to be approximately 7.1 out of every 100,000 lives.

(Also note that 5.9 trended upward at 6.5% per year from 2014 to 2016 is 5.9 x (1.065) x (1.065) = 6.7 million-dollar claims for 2016 estimated. See 2014 Million Dollar Claims: 5.9 per 100,000.)

* Weiss AJ (Truven Health Analytics), Elixhauser A (AHRQ). Overview of Hospital Stays in the United States, 2012. HCUP Statistical Brief #180. October 2014. Agency for Healthcare Research and Quality, Rockville, MD. http://www.hcup-us.ahrq.gov/reports/statbriefs/sb180-Hospitalizations-United-States-2012.pdf.

2014 Million Dollar Claims: 5.9 per 100,000

HM Insurance Groups has reported that, for the years 2010-2014, "a tripling of claims incidence of $1 million or more, rising from 1.8 to 5.9 per 100,000 employees".

page 48, Ryan A. Siemens, CEBS, Aegis Risk LLC, "Catastrophic Medical Claimants After ACA's Removal of Annual and Lifetime Limits" published by International Society of Certified Employee Benefit Specialists, 4th quarter 2015 issue of BENEFITS QUARTERLY.
Also see "Avoiding Catastrophe"  from The Self-Insurer, November 2015,published by Self-Insurers' Publishing Corp, The Self-Insurer, PO Box 1237, Simpsonville, SC  29681

CMS Continuance Tables - based on allowed total charges

The CMS continuance tables are based on allowed total charges (after any provider discounts but before any member cost-sharing).

See MV Calculator Methodology.

The Impact of Family Structure on Spare Capacity and Health Care Utilization

Click on this link: Spare Capacity article.

THINKBYTE: IRS Notice 2014-69 MV Issue

From: Carlton Harker, April 5, 2016

IRS Notice 2014-69 provides that the so-called Minimum Benefit Plans will fail the Minimum Value Test, unless they provide “substantial” hospital and physician benefits.

An IRS regulation/ruling was to have been issued in 2015 but has not. Until a clarification of the meaning of substantial, the preferred course of action is to mark time. Any non-compliance penalties will be waived during this wait time.