Small Group Medical Underwriting Guidelines (SGMUGs)


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The Small Group Medical Underwriting Guidelines (SGMUGs) are underwriting guidelines that enable underwriters to use information provided during initial underwriting to estimate the relative costs of small groups applying for coverage, used as an input in developing the rate to quote each small group.

How to use the SGMUGs:

  • Using the information provided on initial underwriting applications, identify conditions that are present along with current prescription drug, height/weight, and tobacco use status.
  • Determine debit points for each individual in the group based on conditions and prescription information shared in their applications. Debit points assigned represent the estimated average cost for the first 12 months of coverage for an individual with a given condition relative to those without the condition.
  • The debit points can then be used to estimate the relative morbidity of the small group.
  • This relative morbidity score can be used to arrive at a premium rating factor for the group.

Advantages of using the SGMUGs:

  • The SGMUGs contain detailed ratings for over 1,400 medical conditions indicating the relative cost of these conditions and how they differ based on specific factors relevant to each condition.
  • The Prescription Drug Index includes more than 4,000 different medications, with points assigned based on dosage pattern, cost, and compliance information.
  • Drug/condition conversion tables enable easy identification of what conditions are indicated for each prescription drug, to provide an easy reference guide.
  • Average debit point distributions show frequencies and relative costs, to form the basis for related actuarial calculations.

The SGMUGs are comprehensive in scope and are updated every 12 months to reflect changes in medical technology and underwriting practices. The prescription drug portion of the SGMUGs is updated every six months.

Contact your Milliman consultant or the Health Cost Guidelines Manager at HCGManager@Milliman.com if you are interested in licensing any of the Milliman underwriting products.