Cost trends in the time of COVID

Professional Actuarial Topics Health/Disability
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Anybody on the payer side want to comment on month-over-month cost trends in 2021? Interested in commercial and/or MA. I have data from CMS through June, and it looks like the bottom of the trough was right around year end, and Q22021 saw a steep increase in costs. But I don’t have data after June, and this is just for a subset of Medicare FFS benes.

I’m just trying to figure out which way the wind is blowing, is Delta suppressing costs over the summer, or are elective procedures and whatever else continuing?

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  1. yes Delta appears to be suppressing costs currently
  2. as for MA & FFS, the age effects are much broader, not just seniors, the cost of COVID coverage made up for the actual suppression for MA & Original FFS.
  3. Though some hospitals are full, there are no explicit elective surgery mandates
  4. This seems very regionalized, similar to the 1st wave. Cases are increasing everywhere, but only a few states are in crisis
  5. The Trustees report cam e out a couple of days ago, strictly 2020, but I beliueve it stated they felt the bounce back would extend into 2023 and I agree. I haven’t yet found any actual estimates on how much claims were down in 2020 from elective moratoriums or projections on the bounce
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D’oh, I always forget that in my data, COVID costs are excluded. Specifically for MSSP, if there is hospitalization for COVID, all costs are excluded for that month and the subsequent month. Pretty heavy censoring of claims/costs. We have claims for COVID, but since they are excluded in reconciliation, none of my numbers include the COVID costs. But my MA and commercial programs include all costs, no COVID exclusion.

When you say delta is suppressing costs, relative to what? Are you seeing something like 6% YoY trends in Q1, and then they are ramping down to 3%, or are they going negative?

Point taken about regional variation, I’m sure Louisiana and California are in very different places right now, and I have contracts in both of those states!

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Relative to 2019, mostly, definitely compared to the bounce back costs expected in 2021. 2020 costs were 9 - 12% lower than expected, due to COVID. As much as 20% in Q2 2020. I expected that to come back at some level through 2022, but it is so hard to quantify yet and it seems extended until 2023. If you work around initial seasonality (early season deductible) which seems to not be occurring, meaning the 10% drop in costs seems to be continuing for MS

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Got it, thank you. This is helpful context as I think about what will happen to my value-based deals in the back half of the year.

Hopefully we’re all learning a valuable lesson about not setting prospective benchmark prices or trends here. :crossed_fingers:

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I’m in Supp Health, and our costs are mostly determined by utilization, not costs of procedures, etc. We have not bounced back as of mid 2021. We keep expecting to bounce back, and there’s still a lot of reserves in the mid-year numbers, but that’s where we stand, if that helps at all.

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