Using Claims Data to Predict Plan Risk: What It Can and Cannot Tell You
Claims data shows where past money went. It predicts next year only in part, because a few large claims drive most of the variation in a small group. Use it to find cost drivers you can manage and to price risk, not to promise a number.
The Data You Get Depends on How the Plan Is Funded
Fully Insured
The carrier prices your renewal from its own experience and rarely shares claim-level detail with small groups. You see summary reports at best.
Level-Funded
You usually receive monthly reports of paid claims against the funded amount, and large claims are visible as they occur.
Self-Funded
The administrator reports claims in detail, with identifying information removed for the employer, which lets you find drivers by category.
Four Things Claims Data Does Well
Find Cost Drivers
Shows which conditions, drug classes and sites of care account for the largest share of spending.
Show Large-Claim Exposure
Identifies how much of the total came from a handful of members, which is what stop-loss coverage is for.
Test a Plan Change
Estimates how a different deductible, network or pharmacy design would have changed last year’s spending.
Price the Next Year as a Range
Produces a likely range for next year’s claims rather than a single figure, with the uncertainty stated.
Three Limits to Respect
Small Numbers
In a small group one member’s claim can swing the year, so one year of data is a weak guide. Weigh multiple years and the market’s experience.
Privacy
Federal privacy rules limit what a plan sponsor may receive and use. Employers generally see summary or de-identified data, not who had which claim.
Lag
Claims arrive months after care. Recent months look cheaper than they are until the unpaid claims are counted.
Forecasting and Underwriting for Funded Plans
Forecast the Year
For self-funded and level-funded plans we build underwriting and claims forecasts so you see a likely range before you commit.
Model the Large Claim
We test what a large claim would do to your renewal before it happens.
Turn Drivers into Actions
We pair the biggest cost drivers with a specific lever, such as a pharmacy review or care management.
Common Questions
Can an employer see which employees have large claims?
Generally no. Privacy rules limit the plan sponsor to summary or de-identified information unless an individual authorizes more.
How many years of claims do I need?
More is better. One year of a small group is volatile, so use two to three years of data where you can, and stop-loss to cap the swings.
Can claims data predict a large claim?
Not reliably. It can show members with conditions that tend to produce large claims, but it cannot tell you who will have one next year.
What is IBNR?
Incurred but not reported claims are services already delivered that the plan has not yet paid. They matter because recent months look better than they are.
Where These Rules Come From
45 CFR §164.504 (Uses and Disclosures, Plan Sponsors)
45 CFR §164.514 (De-identification of Protected Health Information)
CFH are licensed insurance brokers, not attorneys or tax advisors. This page is general information, so confirm your situation with your benefits attorney or tax advisor.
Related Guides
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Contribution split by tier
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