Predictive model for high-risk healthcare clients and claims frequency

Abstract

Global healthcare spending surged to approximately USD 9.8 trillion in the aftermath of the COVID-19 pandemic, intensifying the need for effective risk management strategies in healthcare insurance. This study proposes a predictive model designed to identify high-risk clients for timely targeted interventions and to forecast claims frequency for optimized resource allocation. A real-world claims dataset from a healthcare insurance provider was utilized. Bayesian optimization was employed to enhance data labelling. A deep learning (DL) model with sigmoid activation was used to classify high-risk clients, while a regression model forecasted claims frequency. The model was trained and validated, and gave an accuracy of 97%, a precision of 95.2%, a recall of 98.1% and an F1-score of 96.6%. The results confirmed the model’s accuracy in identifying high-risk clients and its ability to provide reliable forecasting of future claims frequency. Importantly, the model also provided the reason behind its classification decision, enhancing transparency and trust. This research provides valuable data-driven insights to both the healthcare insurers and clients, giving them the power to stay ahead in managing key risks, which ultimately reduces the cost of healthcare insurance. This work contributed a scalable and interpretable solution for risk prediction in healthcare insurance.