Catastrophic health claims: 8 things to know

Beckers Payer Issues
Full article on: beckerspayer.com

Catastrophic health events — such as brain injuries and amputations — are life altering for patients, but these claims also weigh on insurers. From rising utilization and medical costs to expanded eligibility for catastrophic health coverage, the role of these claims has become increasingly relevant. 2025’s “Catastrophic Diagnoses Trends Report” from care management organization Paradigm unpacks what insurers should know.

“It is in the interest of the plans to have more of a long-term view of these cases,” Cathy Hartman, Paradigm’s chief healthcare solutions officer, told Becker’s.

Here are eight big takeaways:

1. There is minimal churn for health plan members facing these challenges. A year after their diagnosis, 68% are still on their health plan.
2. The annual cost of catastrophic claims per 100,000 members is over $10 million.
3. Only 1 in 7 catastrophic cases are likely to hit the stop-loss threshold. “Even if they are hitting stop-loss, that affects the health plans’ premiums in subsequent years … but it hits it less than I think people would realize,” Ms. Hartman added.
4. Catastrophic medical cases typically include over 100 medical and surgical encounters for patients in year 1. “I don’t think it is 100 because it’s a drastic event. I think it’s 100 because it’s uncoordinated care,” Ms. Hartman said. “These are complex conditions, and lots of specialists are going to need to be engaged, but part of the problem is how disconnected all of the care is.”
5. While the average case cost is $90,000, unmanaged cases can surpass $500,000.
6. 80% of all readmissions are unplanned, and 40% of post-acute costs stem from unplanned complications.
7. Sepsis is the main cost driver when it comes to unplanned readmissions, costing $55,000 each time.
8. Average lifetime costs for a spinal cord injury range from $1.2 million to $5.1 million.