- Key Insight: Discover how pooled stop-loss models are reshaping employer exposure to multimillion-dollar CGT claims.
- What's at Stake: Single $4M claim can spike premiums, destabilize self-funded plans.
- Forward Look: Expect growing CGT approvals; unit costs may decline but volatility persists.
Source: Bullets generated by AI with editorial review
As approvals for cell and gene therapies (CGT) priced between $2 million and $5 million expand beyond ultra-rare cases with anywhere from 2,000 to 4,000 new scripts in development, self-funded employers are bracing for more of these high-cost claims.
Knowing that a single case at that level could ripple through a plan year, pressure is mounting on benefit brokers and advisers to hatch a strategic approach to reassessing how those costs could affect premiums, plan design, and long-term affordability for workers.
Producers need to help employers prepare for this exposure rather than simply react to diagnoses that will trigger multimillion-dollar claims, suggested Mike Schaefer, VP of strategic partnerships for Amalgamated Life Insurance Company, who works with medical stop-loss captives to help employers afford CGT.
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He said it's critical that they examine the fine print on stop-loss contracts to ensure clarity on coverage for CGT and that proper reinsurance is in place to anticipate these claims. They also could help clients vet specialty companies and third-party administrators that have ancillary cost-containment programs to manage CGT more appropriately.
"This is a challenging space for employers that want to offer the most advanced life-saving technology and best science to their employees," noted Aradigm CEO Dr. Will Shrank.
While transformative — and even curative on the gene therapy side — for patients, he said CGT is extremely expensive. The trick is managing the volatility and unpredictability of that spend and risk for self-insured employers.
Bending the cost curve
Mindful of this financial obstacle, his company has developed a large-scale risk pool to cover and pay for all CGT drugs through a group medical stop-loss captive. Aradigm charges self-insured employers or fully-insured payers a modest per member per month premium and caps the risk at that amount.
"We take full responsibility paying for the cost of the care and pool the risk across all of our customers to create a lot more stability, predictability and smoothing," he explained.
Whatever funds are left over at the end of each year, they're returned to all captive members as a premium refund pro rata based on their participation in the pool.
While risk protection is critical, he argued that even more important is that with the pool's leverage, there are a variety of initiatives that can be implemented to improve quality, optimize value, and reduce cost. They may include: centers of excellence; preferred provider networks; direct contracting to lower unit costs and hold manufacturers accountable for performance; and a nuanced clinical policy that aims to ensure these therapies are reserved for patients who most likely would benefit from them.
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While not actually doing anything around optimizing quality and reducing unit cost, Shrank cautioned that many stop-loss carriers shift the risk back onto employers by lasering out some of these high-cost claims or using other kinds of tools to mitigate their risk.
Asked whether CGT solutions will become commoditized to a certain degree as scores of new products flood the market, he is hopeful that over time the unit-level cost will decrease and make these groundbreaking treatments more affordable.
"The expectation is that this is a category that will continue to grow considerably for many years to come, and the approach can't be just wait for those costs to come down," Shrank said. "It demands an approach that allows us to bend the cost curve to create more sustainability."
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While the Employee Benefit Research Institute estimates that CGT claims involve just one-tenth of 1% of the U.S. population, Schaefer said they hit plan sponsors hard — likening that impact to a hurricane. "You get one of these $4 million claims, then what?" he asks.
However, what makes CGT such a compelling investment is that lives can literally hang in the balance without it. "In today's uncertain environment and always increasing costs for healthcare, no group should be without gene therapy coverage," noted Bob Bergman, an independent benefits adviser. "Stop-loss insurance is used to stabilize and limit risk. All groups are looking for products that can help in doing that."
