Pricing Data Issues
The cost of fully insured medical coverage is based on an underwriter's assessment of future claims. Carriers will often use the date from the medical billing codes they paid on behalf of a client when issuing a renewal rate. When carriers are quoting prospective clients, the data often comes from those covered through medical questionnaires. In recent years, some carriers have moved to Artificial Intelligence underwriting. Each of these data sources has potential issues, some of which are mentioned below.
Claims Data
Current carriers often use the medical billing codes they paid on behalf of your employees (claims data) to determine your renewal rates. However, the data’s integrity is problematic due to the following:
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Medical billing codes have error rates exceeding 30%.
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Medical Billing codes are estimated to have a fraud rate of up to 20%.
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Hospital bills exceeding $10,000 typically include errors averaging $1,300.
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Between 12-38% of prescribed medications are “off label”, meaning for uses not FDA approved.
This uncertainty is built into the carriers rates. Guided Benefits focuses on bridging the information gap between the people calculating your costs, and those you cover.
Medical Questionnaires
Employee medical information is mainly collected through an online application platform. Due to its complexity, counterintuitive nature and repetition, the locally used platform has received a one-star rating in 76% of Google reviews. People often become confused/frustrated and in the end submit applications with missing or inaccurate information. Some common errors include:
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Replaced medications still showing as active along with the new medication.
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Not reporting their last physical examination which would show that people were screened for hypertension, cholesterol, diabetes, and some cancers.
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Not updating entries from past shopping efforts where a pending elective procedure was initially reported and subsequently completed.
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Employees not reporting that are utilizing a non-insurance program that reduces/eliminates the cost of certain procedures/medications.
Guided Benefits helps employees complete the application process while correcting issues such as missing, dated, or incorrect information. This allows for underwriters to price more aggressively as they are less concerned with the unknown.
Artificial Intelligence
Artificial intelligence (AI) underwriting attempts to predict your medical claims based on primarily the prescriptions you filled and where you make credit card purchases. This method assumes that all prescriptions are paid by the carrier and that no medications are prescribed off-label. The other assumptions are that where someone uses their credit card is a predictor of medical claims. Carriers have been moving towards AI underwriting due to the issues with missing and incorrect medical history questionnaires (MHQ).
Guided Benefits does not discriminate between underwriting methods as the goal is to lower costs for the client. After AI quotes are provided, most carriers will still accept MHQs to explore offering lower rates.