Killer Claims

First there’s been a gradual reduction in the level of psychiatric benefit available on schemes, as Alex Bennett, head of healthcare consulting at Aon, explains.

“Insurers used to offer up to 180 days inpatient benefit,” Bennett says. “This was reduced to 90 days and now most providers restrict it to 28 days in any policy year. We’re also seeing benefit changing to a fixed amount to cover both inpatient and outpatient treatment.”

Benefit levels for outpatient treatment have also been reduced, with caps placed on the cost of treatment.

“This is sensible,” says Glen Smith, managing director of health insurance intermediaries Healthcare Partners. “Unlike a hip replacement, it’s not always clear what’s the best treatment for mental health problems. Controlling outpatient treatment ensures that it is delivered in those cases where it is appropriate.”

Some insurers have ditched psychiatric cover altogether. For instance, MacEwan says WPA only offers cover to large schemes because of the nature of the condition.

“It’s very difficult to determine the most appropriate treatment for these conditions so we prefer to offer employers the option to include an employee assistance programme instead of having psychiatric cover,” he explains.

Where insurers are providing cover, each claim will be managed to ensure treatment is cost-effective and appropriate, says BUPA’s Bannerman.

“All of our psychiatric claims are pre-authorised and the treatment plans assessed. Additionally, every case is managed by one of BUPA’s psychiatric nurses, who will reappraise it every seven days or less.”

This hands-on approach is common among the other insurers too and helps to ensure treatment is appropriate and within benefit limits. For instance, at Standard Life Healthcare, very few claims go to the maximum inpatient limit with most needing no more than a couple of weeks of inpatient treatment.

Alongside insurer intervention, treatment has also evolved to help reduce the cost of psychiatric claims.

“Treatment tends to be much more intensive now,” says Julian Ross, head of marketing and communications at Standard Life Healthcare. “Where people used to be admitted on an inpatient basis for weeks, inpatient stays are much shorter and there’s a greater emphasis on outpatient treatment.

This is certainly the case the most common cause of psychiatric inpatient treatment claim, depression, where providing outpatient therapy is more acceptable now. Likewise, with another common claim, eating disorders, the length of inpatient treatment is much shorter and supplemented with outpatient treatment.

“Because the nature of treatment has changed we’ve become more flexible with the benefit, allowing customers to use their inpatient benefit for day-patient and outpatient treatment where necessary,” adds Ross.

While the situation with psychiatric claims demonstrates how insurer policy and advances in medicine can help to reduce the cost of claims, insurers are always on the look out for the next big financial threat.

“All sorts of new drugs and procedures are under development that will affect future medical insurance claims costs,” says Aon’s Bennett. “In addition to all the cancer drugs that are being developed we’re just beginning to scratch the surface with robotics and nanotechnology.”

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