Dedicated to Lymphedema Patients and the Therapists Who Treat Them
Measuring the Cost of a Lymphedema Treatment Mandate -
5 Years of Experience in the Commonwealth of Virginia (Revised December 2009)
BACKGROUND: One of the most urgent of problems today is our inability to afford quality healthcare. Lymphedema, once acquired, is a lifelong disease with no currently known cure. However, the quality of that treatment is greatly to be questioned, and often does not meet the recommended standards of knowledgeable lymphedema specialty groups. These standards include the treatment by specially qualified therapists, a course of treatment limited only by medical necessity, patient instruction in self-treatment and the provision and daily use of compression bandages, garments and devices. It can be shown that lymphedema treatment in accordance with these protocols, with high patient adherence, is an effective way to REDUCE healthcare costs by reducing the periodic infections for which the lymphedema patient is at risk.
Lymphedema mandates are being considered in a number of states similar to the lymphedema treatment mandate passed by the Commonwealth of Virginia in 2003. Virginia also has in place a rule that requires every insurer, health services plan and health maintenance organization (HMO) to report to the State Corporation Commissioner the yearly cost and utilization information for each of the 30 mandates currently in effect.
This document is an abstract of the costs of the Virginia lymphedema treatment mandate for the years 2004 through 2008, the first 5 years the mandate has been in effect. It contains claims and utilization data, and estimates by the healthcare providers of the insurance premium impact of each mandate. These impacts are spending impacts only, and do not consider the beneficial effects of lymphedema treatment on reducing medical and hospital costs by the inevitable reduction of lymphedema-related cellulitis.
DATA SOURCE: The source of data for this document is the series of "Report of the State Corporation Commission to the Governer and the General Assembly of Virginia: The Financial Impact of Mandated Health Insurance Benefits and Providers Pursuant to Section 38.2-3419.1 of the Code of Virginia: 2006, 7 &8 Reporting Period" Reports RD191, RD289, RD246, RD322 and RD294, available at the Virginia Department of Insurance website at URL: http://leg2.state. va.us/DLS/H&SDocs.NSF/Published%20by%20Year?
The cost data for the lymphedema mandate is abstracted and presented with a discussion of other states' lymphedema mandate analyses. This Virginia report is the only comprehensive and authoritative report to date of the cost of lymphedema care, and covers 26-28 major insurance companies and 14-16 HMOs representing 77-80% of the Virginia insurance market, and 1.3 to 1.7 million units of coverage.
VIRGINIA LYMPHEDEMA MANDATE: Section 38.2-3418.14 of the Code of Virginia requires that insurers, health service plans and HMOs provide coverage that shall include benefits for equipment, supplies, complex decongestive therapy, and outpatient self-management training and education for the treatment of lymphedema.
CPT AND ICD-9-CM CODES COLLECTED: The codes collected and costed in the company claims reports included ICD Codes 457.0 Postmastectomy lymphedema syndrome, 457.1 Other lymphedema, 757.0 Hereditary edema of legs, CPT Codes, 97124 Massage, compression, 97140 Manual therapy techniques, manipulation, 97535 Self-care/home management training.
CLAIM EXPERIENCE: Claim experience provides the most direct measure of the cost of a lymphedema treatment mandate. The lymphedema claims filed as a percentage of the total claims for individual contracts was 0.04-.06%, and for group contracts was 0.06-0.09%. The average lymphedema claim cost per individual contract per year was $1.12-1.79 and for group contract $2.16-2.82. [Tables 5 & 6]. Since most insurance contracts included lymphedema treatment prior to the mandate and separate claim data for lymphedema treatment were not required to be reported, it is not possible to determine what portion of these claim costs are new costs resulting from the mandate.
UTILIZATION OF SERVICE: Data are provided on the number of visits and the number of days attributable to each mandated benefit for the year. The group data was held to be more reliable than the individual contract data. The average number of visits per contract for lymphedema treatment was 0.09, and the average number of days per contract was 0.01. [Table 7]
PREMIUM IMPACT: Companies are required to use actual claim experience and other relevant actuarial information to determine the premium impact of each mandated benefit. The estimated premium impact of the lymphedema mandate ranged 0.27% to 0.56% of the overall average contract premium on individual contracts, and 0.12% to 0.25% on HMO contracts. It is not possible to explain why the estimated premium impacts are so much greater than the actual claims experience.
MANDATE ANALYSES IN OTHER STATES: A 2004 analysis of a similar Massachusetts bill estimated per member per month costs of $0.03 for coverage of lymphedema treatment. In 2005 the California Health Benefits Review Program estimated an increase of 0.0003% or $0.01 per person per year for implementing AB-213 Liu. None of these analyses accounted for significant avoided costs due to reduced infection that could be passed on to the customer as REDUCED premiums.
CONCLUSIONS: An upper bound on the costs of implementing a lymphedema treatment mandate can be estimated using the actual claims data in Virginia, where a lymphedema mandate has been law since January 1, 2004. It is an upper bound since: 1) the estimated premium increases are many times the actual claims experience for the years analyzed; 2) the reported claims experience represents the total lymphedema treatment claims instead of the incremental increase due to the mandate, and; 3) the reduction in total claim costs due to resulting lower cellulitis rates are not used to reduce estimated premiums.