Post-Election, State Insurance Exchange Planning Must Accelerate

Jeff Bak

The outcome of the 2012 presidential election eliminated many of the immediate uncertainties surrounding implementation of the Patient Protection and Affordable Care Act (ACA)– and the state health insurance exchanges that are integral to expanding access to coverage under the law. For HealthPlan Services (HPS), President Obama’s victory and the Democrat’s retention of Senate control means the gamble we took pushing forward with an exchange solution, despite nagging industry uncertainty, will ultimately pay off for our clients.

Exchange deadlines are rapidly approaching. Carriers are under enormous pressure to build the technical infrastructures and put in place the administrative processes necessary connect, recruit, manage and retain customers acquired through state exchanges.

While other organizations waited in the wings, HPS focused on eliminating barriers to entry into the potentially lucrative exchange market. We deployed our IT resources and industry expertise to create a toolset and playbook that allows carriers to quickly ramp up state exchange operations. The end result is our Go-To-Exchange™ strategy, an innovative platform that provides comprehensive management of the administrative and technical needs of health plans participating in state exchanges, speeding deployment and reducing costs.

The Go-To-Exchange technology framework provides carriers with an end-to-end solution that combines proven technology and business processes. It leverages industry best practices and advanced web-based technologies to deliver a scalable, powerful platform that integrates seamlessly with state exchanges and provides comprehensive management of health plans’ administrative and technical needs.

But we didn’t stop there. We also have established relationships with other strategic partners that, if needed, will help ensure rapid ramp-up and response to the sharp volume fluctuations many anticipate when exchanges open on October 1, 2013.

By working with a qualified partner like HPS, even those carriers that have delayed exchange planning won’t be left on the sidelines. Our Go-To-Exchange strategy lets them launch quickly, effectively and compliantly—regardless of how many states they have targeted for exchange participation.

Contact us today to learn more about our Go-To-Exchange strategy.

Final HHS Regulations Ease Some of Carriers’ Rebate Burdens

Jeff Bak

When the Department of Health and Human Services (HHS) issued its Medical Loss Ratio Final Rule in December, the revised regulations held several pleasant surprises for health plans. Most notably, the final rules eased some of the most onerous mandates related to issuing rebates for those plans that fall short of the MLR threshold.

Among the most significant concessions was how rebates are issued to enrollees. In the interim rules, carriers were required to identify all past and present enrollees of both individual and group plans and issue rebates to each. In the final rule, health plans are required to issue a lump sum rebate to group plan policyholders, who must then use it in a manner that benefits all subscribers, for example as a premium reduction or cash refund. For individual plans, rebates must be distributed to each enrollee or, in the case of a policy that covers more than one person, to the subscriber.

The final rule also eliminated the need for carriers to calculate how the rebate should be divided between policyholder and enrollee based on the percentage of the premium each paid. The minimum rebate was also increased from $5 to $20 per group policyholder.

This shift in administrative accountability from carriers to employers was a huge relief to the industry. From a tactical standpoint, the complexities associated with the interim rebate requirements made it unlikely that smaller carriers in particular would be able to comply within the established timeframe.

However, carriers should not let the fact that HHS eased some of the more arduous requirements surrounding the MLR rebates lull them into passivity. The agency did not extend any of the compliance deadlines. With few exceptions, carries must still report MLR calculations to HHS by April 1, 2012, submit MLR reports by June 1, 2012, and issue rebates by Aug. 1, 2012.

A great deal of work must be done in a short amount of time. Processes and procedures must be put into place, and technical and human resources shored up to handle the spike in workflows generated by the rebate process.

Carriers should also take the agency’s stance on deadlines as a sign that HHS will be equally resistant to changing the dates of other key elements of healthcare reform. In particular, the agency has made it very clear that it has no intention of changing the dates by which insurance exchanges must be operational.

In less than two years, the first consumers will be shopping for and selecting subsidized coverage through exchanges. Carriers must be ready with the systems, processes and marketing necessary to make the necessary connections – which will be the focus of our next blog.

Navigating the Stormy Seas of Healthcare Reform’s Rebate Requirement

Jeff Bak

Based on 2010 baseline data, had the Medical Loss Ratio (MLR) mandate been in effect last year $1.3 billion in rebates would have been paid out by publicly traded carriers. That is according to a report by Citigroup Global Markets.

When those findings are combined with U.S. Department of Health and Human Services estimates that 45% of consumers with individual coverage are in plans that don’t meet the MLR, it becomes clear that rebates are a very real – and very complex and costly – possibility for many health plans.

In fact, were the mandate in effect today, an estimated 9 million people would be eligible for rebates averaging $164 per person. In 2012, rebates are expected to cost the industry $1.4 billion.

The numbers alone are enough to keep carrier executives awake at night. But many are also increasingly troubled by the realization that they are ill-equipped to manage the rebate process. Their systems and processes are simply not flexible enough to adapt to the complex rebate regimen.

The challenge is not just determining the amount of the actual rebate. It is tracking the customer data required in the event a rebate must be issued and ensuring that payments are issued within the mandated timeframe — no later than August 1 following the end of the MLR reporting period.

Compliance for these carriers requires a comprehensive retooling of critical business processes and deployment of enhanced and highly agile IT systems – all at a time when they are already grappling with the increased costs of complying with multiple other mandates. These include reform-driven mandates such as guaranteed issue and elimination of lifetime limits as well as non-reform requirements such as HPAA 5010 and ICD-10.

To succeed, carriers must focus on deploying the systems necessary to streamline the rebate process. For example, they must find ways to deploy integration pathways to ensure necessary data feeds and workflows and develop processes that facilitate interactions with members and employers so that critical data elements can be obtained.

Carriers must also execute strategies that enable them to convert the rebate requirement from a cost center to a marketing opportunity. Programs must be designed that minimize rebate payouts and leverage the process to enhance revenues by cross-selling non-traditional products to existing subscribers and reengaging terminated ones.

The catch is that it may not be enough to make the changes necessary to comply with current rebate requirements. Thanks to the forthcoming Supreme Court ruling on legal challenges to healthcare reform – particularly with regards to the lack of a severability clause – and pending legislation, implementation and enforcement of the MLR mandate is likely to be modified. That is why any adaptations carriers make must be flexible enough to accommodate any future changes that may result from these challenges.