New Paradigm Report Sheds Light on Underrecognized Category of Catastrophic Diagnoses, Highlighting the Financial Strain on Payers and Patients

09/30/2025

The report analyzes the costs associated with catastrophic diagnoses and equips payers with strategies to mitigate risk, manage costs, and improve recovery outcomes 

Walnut Creek, CA — September 30, 2025 — Today, Paradigm, a specialty care management organization delivering value-based solutions to improve health outcomes, released its Managing Complex Recoveries: Catastrophic Diagnoses Trends Report. The report analyzes the costs of catastrophic diagnoses and their impacts on patients, health plans, and employers.  

Although catastrophic diagnoses (including spinal cord injuries, traumatic brain injuries, amputations, severe burns, multiple trauma, and more) are not formally designated as a separate claims category by most payers, these diagnoses and their related comorbidities account for disproportionately large costs. The report quantifies the substantial costs, resources, and human toll of these cases and highlights the need for payers to rethink their approach to these high-cost claims—not just as individual financial outliers, but as systemic challenges with identifiable trends and repeatable solutions. 

Paradigm analyzed more than 2 billion claims for commercial members in the United States. The findings aim to help payers mitigate the risks and costs associated with catastrophic diagnoses and their subsequent recoveries. The report also offers guidance on what payers should look for in a specialty care management partner to help bring order to complexity, manage costs more effectively, and improve outcomes for members and their families. 

“With so much at risk throughout the recovery process from a catastrophic diagnosis, we must fundamentally rethink how we manage care and do a better job of leveraging data to accelerate recovery, prevent complications, and improve outcomes for everyone involved,” said John S. Watts, Jr., CEO of Paradigm. “Paradigm has managed more catastrophic cases than any other organization, and we see time and time again that when payers have a proactive management strategy in place, recoveries become more predictable, cost-effective, and most importantly, more human. The insights we’ve uncovered can help payers establish a successful approach to complex recovery management.” 

Key findings from the report include: 

• Catastrophic diagnoses rank among plans’ most expensive claims. Catastrophic injury claims cost $10 million or more per 100,000 members annually. While the average cost per case is about $90,000, unmanaged cases can escalate to more than $500,000.   
• Early intervention is key. The recovery journey for catastrophic diagnoses is extensive and unpredictable, with 40% of post-acute costs resulting from unplanned complications. Additionally, 80% of all readmissions are unplanned, with each costing an average of $35,000. Payers must have a strategy in place to intervene in catastrophic cases early, setting their recoveries—and costs—on the right path from the start.     
• The impacts of catastrophic diagnoses aren’t isolated to health plans—they have wide-ranging and long-lasting effects for patients, their families, and employers. In addition to the financial burdens, complications, and long-term realities of catastrophic diagnoses for patients and their families, Paradigm’s analysis found that each catastrophic case involves an average of more than 60 different providers, requiring complex coordination of appointments, authorizations, and treatment plans. Employers also face volatility and financial exposure, as only 1 in 7 catastrophic cases are likely to hit stop-loss insurance protection. 

“As the costs and prevalence of catastrophic diagnoses continue to rise, creating risks and strains for payers, employers, and patients alike, the industry must re-evaluate the care management process to bring more clarity, consistency, and compassion to the recovery journey,” said Cathy Hartman, Chief Healthcare Solutions Officer of Paradigm.  

To learn more about management strategies for catastrophic diagnoses and to download the full report, please visit: Managing Complex Recoveries: Catastrophic Diagnoses Trends Report.  

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About Paradigm 

Paradigm is a specialty care management organization dedicated to delivering value-based solutions for nearly 35 years—driving the best possible outcomes for patients, payers, and providers. The company brings deep clinical expertise to enable successful recoveries for individuals facing the most challenging injuries and diagnoses, and it has supported more than one million members through an evidence-based digital solution that improves health literacy and enables a personalized care experience. The company consistently delivers proven cost savings for health plans, while improving outcomes across the continuum of care. For more information, please visit www.paradigmcorp.com/healthcare.  

Contact: 
Walker Sands 
paradigm@walkersands.com