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The article below was written prior to the recent election and assumes continuation of the ACA and public exchanges. There is strong evidence to suggest that the incoming administration will look to dismantle the ACA over time. With the proliferation of private exchanges and the ongoing shift to value based reimbursement payers will still face similar challenges as they compete for business and look to be profitable. The need to be lean, agile and focus on the relentless engagement of consumers is just as important in a post ACA world than it is now.
Since some private health payers are struggling with enrollment and the ability to make a profit on the health insurance exchanges, engaging consumers, reducing the administrative burden, and creating a narrow provider network will become an imperative in the coming years.
Proteus Duxbury, Healthcare Insurance Industry Expert for PA Consulting, spoke with HealthPayerIntelligence.com about some of the ways commercial payers can succeed when selling health plans on the Affordable Care Act’s health insurance exchanges. Duxbury emphasized the importance of creating lean, narrow provider networks.
“Payers have learned what works and what doesn’t work on the exchange and are tightening their offerings. Creating leaner, narrower networks where they can negotiate better deals with providers [is important],” Duxbury pointed out. “The Medicaid plans are well versed in how to succeed in this market and on the whole are faring better. A new generation of plans are about to launch: some start-ups and some leaner off-shoots that are being set up by the larger more established payers, and some of who have themselves exited the public marketplace. We expect to see a new wave of activity in this market starting in 2018.”
Additionally, consumer engagement and patient satisfaction will be imperative in the new environment payers are finding themselves in after the Affordable Care Act was passed.
“Payers have been talking about engaging the consumer for many years, but few have realized a significant return on their investments to date or been able to really generate lasting value through the execution of their strategies,” Duxbury continued. “Increasing medical loss, however, and low healthcare literacy of consumers within the exchange market is creating renewed impetus to succeed in helping the consumer enroll in the right plan and utilize it in a cost effective fashion. Payers that succeed will be those that can create a ‘sticky’ and meaningful relationship with their members, enhance the overall experience and improve health outcomes utilizing the next generation of Customer Relationship and Care Management Systems.”
Using data to determine the needs of their consumer base is key, Duxbury explained. This need goes beyond automation technology or even cutting out-of-pocket costs for health plan members.
“Not just reducing the overall per member per month cost through higher levels of automation but also reducing the cost of care and increasing market share and competitiveness in a difficult market [is necessary],” said Duxbury. “Investing in new models of patient directed and facilitated care and harvesting the power of big data and analytics will give payers the edge in understanding their customer in richer ways such as their purchasing psychology and engagement preferences.”
Currently, there are a number of different factors why operating through the health insurance exchanges is causing problems for commercial payers. First, payers are struggling to enroll consumers and provide the information necessary for them to choose the right health plan.
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“Enrolling consumers through the marketplace can be challenging when the payer has no direct way to influence the purchasing decision,” explained Duxbury. “Consumers on the exchange often have difficulty in knowing which payer and which plan is right for them. Good online decision making tools are not available through the public exchanges and consumers frequently make sub-optimal decisions based on incorrect notions such as ‘Gold is good,’ or ‘Lower premium is better.’ A payer has no way of differentiating their plans against those of their competitors on the exchange and plans are often simply ordered alphabetically.”
“Convincing the uninsured, especially the healthy, to purchase is an ongoing challenge,” he said.
Another problem facing payers is the potential to lose more money on the health insurance exchanges. High financial losses is why some insurers like UnitedHealthcare have completely pulled out of serving consumers through the exchanges while others like Aetna have cut back on the number of regions they’re serving.
“Payers have been losing money on the exchange. Many payers that went in aggressively with low premiums and captured a large portion of the market have either subsequently gone out of business, exited the marketplace or significantly reduced their offerings through narrowing their networks or geographical reach,” added Duxbury. “The ‘special enrollment’ loophole has unintentionally allowed sicker customers to adverse select, i.e. purchase insurance on an ad-hoc basis when they need it and then drop coverage through non-payment.”
“The predicted ‘death spiral’ is in-part playing out. Medical losses are resulting in premium rises which in turn are forcing healthier customers out of the risk pool,” Duxbury noted.
A few other issues that plague health insurers operating on the exchanges include retaining their members and keeping consumer satisfaction high, Duxbury explained. Also, payers without the funds necessary to upgrade to new technologies may see some challenges in selling products on the health insurance exchanges.
“With the proliferation of the marketplace for selecting and comparing plans it has become significantly easier for customers to move between health plans from year to year and more difficult for payers to retain new members,” Duxbury continued. “The customer experience is initially owned by the exchange who have less resources to direct at keeping members happy than the health plans. The source of a customer’s frustration may be with the exchange but often the health plan has to bear the brunt of the dissatisfaction regardless of actual culpability.”
When asked what may happen if the majority of payers faced financial losses on the exchanges or dropped out, Duxbury responded, “An abundance of choice was one of the underpinning tenets of the ACA and the exchange model. Without choice and competition in the marketplace, premiums will continue to rise and consumers will be worse off financially with fewer options regarding their healthcare. Some consumers now have only one single health plan to choose from in their state. This will further expedite the dreaded exchange death spiral that was predicted by many in the industry.”
Duxbury offered a number of solutions to prevent this from happening. First, smaller and leaner health insurance companies would be able to operate more effectively in the public marketplace. “Tightly-controlled, narrow networks” would also benefit these payers.
“[Payers should] reduce administrative overhead,” explained Duxbury. “[They should] look to automate as much process and outsource as many non-value creating activities as possible, re-configure purchasing and vendor management capabilities, and reduce the number of vendors and contracts that are being managed.”
“Now is the time to really move the needle on engaging your consumers,” Duxbury concluded. “Keep your members healthy and out of the hospital. Keep them happy and loyal to your brand. Switching costs for consumers has never been lower and the cost of healthcare never higher.”