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Healthcare cost modelling

Individual Medical Underwriting Guidelines (IMUGs)

The Individual Medical Underwriting Guidelines (IMUGs) allow underwriters to evaluate the expected relative cost of an individual applying for coverage.

How the IMUGs are used:

  • 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 an individual or family based on conditions and prescription information shared in the application. 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 individual or family.
  • The IMUGs also provide detailed information about when to apply exclusion riders, and the impact this has on the expected claim cost for the applicant.
  • This relative morbidity score can be used to arrive at a rating action, such as accept, decline, accept with exclusion riders, or accept with an additional premium charged.

Advantages of using the IMUGs:

  • The IMUGs contain detailed ratings for an exhaustive list of over 1,400 medical conditions. These condition ratings include information for their relative costs, and how those costs differ based on specific factors relevant to each condition.
  • The prescription drug index includes more than 4,000 different medications, with expected costs that are calculated, including for dosage patterns, average discounted costs per fill, and compliance rates.
  • Drug/condition conversion tables allow 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 MUGs™ 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 MUGs is updated every six months.

Contact your Milliman consultant or the Health Cost Guidelines Manager at [email protected] if you are interested in licensing any of the Milliman underwriting products.


Individual Medica Underwriting Guidelines resources

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