Typical runout for health plan

The Drunken Actuary · #1 08-04-2009, 05:08 PM

OK, health actuaries, what's typical runout for a medical plan? Not including fees. I need it as a percentage of annual paid claims.

Thanks!

douglan · #2 08-04-2009, 05:26 PM

Quote:

Originally Posted by The Drunken Actuary

OK, health actuaries, what's typical runout for a medical plan? Not including fees. I need it as a percentage of annual paid claims.

Thanks!

ooh, IANAHA...but can I guess? I guess approx. 20% (i.e., 2.5 months of average annual claims). I'm prolly a little off though

DudeMan · #3 08-04-2009, 05:30 PM

what type of product? Regular Group MC products about 6-10%

douglan · #4 08-04-2009, 05:33 PM

LOL, was I (way) too high? This issue comes up in practice from time to time. I usually tell my clients 2-3 months worth of claims. Of course, I have been known to be

from time to time.

FormLetter · #5 08-04-2009, 05:41 PM

Can you be more specific on the question?

thing · #6 08-04-2009, 05:51 PM

Really, really varies by company. A fast payer might be in the single digits, a slow payer might be over 20%. I'm thinking commercial business here, BTW. You'd have to be doing some pretty cutting edge stuff to get below 6%. You'd have to be in a pretty poor cash-flow situation to be over 25%. Midpoint: 15.5%. Enjoy!

Dr T Non-Fan · #7 08-04-2009, 06:32 PM

Quote:

Originally Posted by The Drunken Actuary

OK, health actuaries, what's typical runout for a medical plan? Not including fees. I need it as a percentage of annual paid claims.

Thanks!

Are you referring to what's yet to be paid, divided by what's already been paid?
Questions, since you're looking for free professional advice:
1. "Annual Paid Claims" = All Claims Paid during the year (including payments for prior year's incurred claims), or All Claims Incurred For the Year, Paid during the year?
2. I wouldn't ever think that a guess of this percentage was credible for all kinds of situations. New block of business, perhaps with a complicated benefit design, will be slower. The final months' payments could be unusually more paid or less paid, depending on holidays or deductibles or such.
3. Douglan's estimate is as reasonable as anyone who actually knows anything. Check the poor stat "Days of claims payable in the various health company's quarterly releases. Usually around the 60-day mark.