Baldzicki was part of a breakout session on "Innovative Practices to Mitigate Shock Claims" during the National Alliance of Healthcare Purchaser Coalitions' virtual 2020 Annual Forum.

First things first. What exactly is a shock claim?

"I am talking about the very high-cost claims, the catastrophic claims," said Christine Hale, vice president of clinical consulting for Lockton Companies. "They are different. We as an industry have done a lot of legwork into interventions such as population health and disease management to tackle those more-chronic lifestyle, somewhat predictable, conditions. But a lot of the high-cost claims are not those conditions. We are talking about the unexpected, like premature babies, genetic conditions, hemophilia — things that are just unpredictable."

Numerous smaller claims can be as challenging as one large one, said Renzo Luzzatti, president of US-Rx Care.

"What is a shock claim? Is it $100,000, is it $500,000 or is it $1 million?" he asked. "Regardless, any self-insured employer is more likely to have dozens or hundreds of high-cost claims in the tens of thousands of dollars that together can exceed the cost of less-common shock claims.

There are plenty of options to mitigate the more frequent high-cost claims that employers see every month.

Moderator Chris Syverson of the Nevada Business Group on Health asked the pertinent question: "As medical and pharmacy advances keep growing, employers are faced more often than not with shock claims or high-cost claims for the life of a member. What is an employer to do to combat these skyrocketing or many times unpreventable claims?"

The problem with shock claims is that they are by definition unpredictable, Hale said. "The bottom line is you can have the best population-health and disease-management programs in the world and still suffer from catastrophic claims, so we know there is a need to tackle this in a different manner," she said. "It's not good enough to hear, `sorry for your luck and there's nothing you can do,' which frankly is what many of us have heard for years.

"Rather, there are things you can do. While you can't solve the entire problem, there actually are meaningful things you can do to improve quality and lower costs. It really takes a case-by-case approach in the most-complex cases, but there are a lot of things we can do if we have the data and can work with partners who are willing to help meet the need."

Specialty pharmaceuticals are one of the largest and most unpredictable expenses, Luzzatti said.

"Most employers have exceeded more than 50 percent of their pharmacy spend going to specialty pharmaceuticals," he said. This trend is unsustainable for most employers and is desperately in need of management. What is not so clear to many employers is what to do about it."

The product development pipeline is filled with new and higher-cost pharmaceuticals, and pharmacy benefit managers often are incentivized to dispense them, he said.

"The good news is that there are many strategies available to employers right now to dramatically change the trajectory of specialty pharmaceutical spend in the realm of 25 to 35 percent cost reduction in most cases and more than 80 percent reductions in many cases," Luzzatti said.

Employers must do two things to capture savings.

"No. 1, employers have to deconflict the clinical management component of their benefit," he said. "The simplest means is to carve out this function from the carriers and PBMs. No. 2, you need to get outside the traditional PBM and medical carrier models to source medications at dramatically lower costs."

One of the best strategies for employers is to simply ask questions, evaluate new options and not always default to the status quo. "Most employers have to address an array of management tactics," Baldzicki said. "It will be necessary to look at this area of focus."

Read more:

• Genetic testing, precision medicine and benefits design
• How to prepare self-insured businesses for rising pharmacy costs
• Balancing between compassion and responsibility in covering high-cost drug claims