Practical Approaches for Employers to Manage High-Cost Claimants in Health Plans

Rising healthcare costs continue to challenge employers, particularly those who self-fund their employee health plans. One key driver of this financial burden is a small group of individuals known as high-cost claimants—employees or dependents whose medical expenses are significantly higher than average, often due to chronic conditions, catastrophic events or specialty drug usage. According to a recent Employee Benefit Research Institute (EBRI) analysis, 5% of those with employment-based health coverage account for 57% of health spending¹.

Employers are turning to strategic, data-driven, and compassionate approaches to address this issue without compromising care quality. This article outlines practical steps employers can take to manage high-cost claimants effectively while maintaining a competitive and supportive benefits program.

1. Leverage Data Analytics for Early Identification

Employers can partner with third-party administrators (TPAs), benefits consultants or data analytics firms to mine claims data and identify high-risk individuals before costs escalate. Predictive analytics tools can flag:

• Members with rising cost trends
• Gaps in care for chronic conditions
• Frequent ER visits or hospital admissions
• High pharmacy utilization

Proactive identification allows employers to intervene earlier with targeted support and care management.

2. Implement Robust Care Management Programs

Once high-risk individuals are identified, employers should ensure strong care management or case management programs are in place. These programs help members:

• Navigate the healthcare system
• Access high-quality providers
• Adhere to treatment plans
• Manage chronic conditions (e.g., diabetes, heart failure)

Care management can help improve outcomes and significantly reduce unnecessary utilization and readmissions.

3. Adopt a Centers of Excellence (COE) Strategy

Centers of Excellence are healthcare facilities or provider groups recognized for their superior outcomes in treating specific complex conditions like cancer, orthopedic surgery or organ transplants. Employers can:

• Steer members to COEs through plan design incentives (e.g., lower out-of-pocket costs)
• Mandate COE usage for certain procedures
• Cover travel expenses to access COEs

This strategy enhances quality and reduces complications and readmissions, ultimately lowering long-term costs.

4. Optimize Pharmacy Benefit Management

Specialty drug costs are a growing contributor to high-cost claims. Employers should work with pharmacy benefit managers (PBMs) to:

• Conduct formulary management and prior authorizations
• Explore biosimilar and generic alternatives
• Evaluate site-of-care strategies (e.g., switching from hospital-administered infusions to home or clinic settings)
• Implement copay accumulator or maximizer programs where appropriate

Transparent, outcomes-focused PBM partnerships can produce significant savings without reducing member access to necessary therapies.

5. Incorporate Stop-Loss Insurance with Data-Driven Underwriting

Stop-loss insurance protects self-funded employers from catastrophic claims. However, selecting the right policy is crucial:

• Use historical claims data to assess appropriate deductible levels
• Consider policies with “lasering” exclusions carefully
• Look for carriers offering risk management insights or reporting tools

Pairing stop-loss with proactive risk management strategies helps ensure better financial protection.

6. Promote Employee Engagement and Health Literacy

Engaging employees in their own health can reduce the risk of high-cost claims in the first place. Employers should:

• Offer wellness programs that are evidence-based and targeted
• Provide decision support tools and concierge services
• Educate employees about preventive care, chronic condition management and appropriate use of healthcare resources

When employees are informed and supported, they are more likely to seek care early and avoid preventable complications.

7. Review and Update Plan Design Regularly

Plan design plays a major role in how and when members use healthcare. Employers should:

• Consider value-based insurance design (VBID), which lowers cost-sharing for high-value services
• Integrate telemedicine and virtual care for chronic disease monitoring
• Apply steerage strategies (e.g., tiered networks or reference-based pricing)

These plan adjustments can incentivize smarter utilization without reducing benefits.

8. Coordinate with Point Solutions—But Avoid Fragmentation

Digital health and point solutions for diabetes, mental health, weight management and more can be useful tools. However, too many uncoordinated vendors can lead to fragmented care and disengaged members. Employers should:

• Evaluate the ROI of point solutions
• Choose vendors that integrate with care managers and data platforms
• Ensure alignment with broader population health goals
• Develop a data strategy to measure and monitor the effectiveness and VOI of these solutions

Conclusion

Managing high-cost claimants requires a delicate balance of cost control, care quality and employee experience. Employers who invest in data-driven decision making, proactive care management and thoughtful plan design are best positioned to reduce the financial impact of high-cost claimants without sacrificing the well-being of their workforce.

By taking a strategic and holistic approach, employers can turn a major cost challenge into an opportunity to enhance healthcare delivery, improve outcomes and foster a healthier, more productive employee population.

¹ EBRI Fast Facts, September 4, 2025. “A Small Number of Workers Account for Most Health Costs — Here’s What to Know.”