Catastrophic Illness, Your Tribe, Your Coverage

Health Insurance

Earlier this year, a Native American Tribe in the Northwest had an eye-opening experience with the self-funded plan that provides benefits to the Tribe and its enterprises. One of its plan members, who was not a tribal member, was diagnosed with a rare genetic disorder which resulted in prescription drug costs for this one member that topped $200,000 per month (not a typo). Also, this member will need this medication every month for the rest of their life. Fortunately, this Tribe has strong individual stop loss support (insurance coverage that caps a self-funded plan’s exposure for claims over a certain limit for a given individual). This is a good thing since the stop loss carrier will be reimbursing the Tribe over $2 million for this member’s claims for the remainder of the plan year.

But did you know … At renewal, the current stop loss carrier and any proposed carriers have the ability to exclude this member from coverage. This individual exclusion is called a “laser” and is where the carrier sets an alternative limit level for a specific member (typically the projected claim liability for the next plan year). Most often, the current provider will also offer a non-laser renewal; however, the additional liability of the new large claim will be added into the premium so the non-laser renewal is not really a great option.

  • After the plan year, what happens to the member who has this life-altering and reoccurring debt?
  • What is the long-term implications for the Tribe?
  • Do you know if your medical provider would cover such a prescription?
  • Do you know if your Tribe has stop loss support?

Historically, plans incorporated lifetime maximum limits to protect the plan and the employer from these lasers in subsequent years. However, under the Patient Protection and Affordable Care Act (PPACA) large employers are no longer able to include these lifetime limits in their plans. This has put the stop loss carriers in a position to laser any known risk. In addition, with ever increasing access to good data (ICD-10 and trigger diagnosis reports) the stop loss carriers are also able to find out about these large claims prior to them hitting a large paid amount threshold.

As a Tribe, there are several options to help mitigate this risk for those Purchased and Referred Care eligible Tribal Members covered under the self-funded program. However, for those plan participants (both active and COBRA enrolled) who are non-native, this challenge can be much more difficult. Rest assured, there are some actions that can be taken to help alleviate the risk at renewal for these non-native large claimants.

Tyler Moore