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.