Second Quarter 2015
Exchange
About Innovative Health and Benefit Marketplaces
Back to the Future
It’s not fantasy. Health management strategies crucial to exchanges’ long-term survival.
Cadillac Tax Driving Growth Private Exchange Questions? Liazon Has Answers
The Official Magazine of
www.theihcc.com
WHAT’S YOUR EXCHANGE STRATEGY? WHAT’S YOUR Let Softheon help plan your next move. EXCHANGE STRATEGY? Let Softheon help plan your next move.
INSIDE FEATURE 13 Taking Private Exchanges Back to the Future Health management strategies key to future sustainability
PERSPECTIVES 9
So Many Private Exchange Questions. Finally, Some Answers. How do employees shop for benefits in an environment of choice? Are they making smart decisions for themselves? With the latest statistics pointing to the number of people enrolled on a private exchange for benefits selection having doubled for the past year’s enrollment, the answers to these and other questions are becoming increasingly necessary for the industry to understand.
It’s been billed as the solution to rising costs. But many in the private exchange world — solution providers and employers alike — have been so focused on the here and now that they’ve neglected to look a few years down the road.
By Ashok Subramanian, Chief Executive Officer and Co-Founder, Liazon
10 “Cadillac Tax” Driving Rampant Growth in Private Exchange Enrollment The health care conversation among employer groups has changed from “What is a private exchange?” to “How do we enroll?” The reasons are simple: better cost management, improved population health and the looming implementation of the “Cadillac Tax.” Analysts predict that the shift to private exchanges will be dramatic. By Joseph Berardo Jr., Chief Executive Officer, MagnaCare
A private exchange in and of itself will only succeed for a while. But, take a private exchange, combine it with a health management strategy and, according to many, the result is a recipe for success. “A health management strategy in conjunction with a private exchange is critical to the employer,” said Scott Brown, private exchange offering lead at Accenture. “In terms of the evolution of private exchanges, I think much has focused on the shopping experience and purchasing benefits. In the long run it’s crucial that private exchanges, wellness strategies and incentive tools come together.” Less than a year out of the first open enrollment for many private exchanges, it’s still uncharted territory to some extent. Employers are still understanding what private exchanges are and how — or if — they will benefit them and their employees. But one thing is becoming clear to those in the industry; health management — though crucial — is often overlooked. By Heather Loveridge, Senior Editor, The Institute for HealthCare Consumerism
11 Member Perceptions of the Exchange Experience, Their Plans and Where We Go From Here The J.D. Power Healthcare Practice released the findings from its 2015 Health Insurance Marketplace Exchange Shopper and Re-enrollment Study (HIX) on April 23 and found that satisfaction with the health exchange marketplace enrollment and health plans obtained through the marketplace have performed well in terms of overall plan satisfaction. By Rick A. Johnson, Director, Healthcare Practice, J.D. Power
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Publisher’s Letter CEO and Publisher Doug Field covers the latest trends in private exchanges and shares what’s happening at The Institute for HealthCare Consumerism around exchanges.
6-7 Briefs & Innovations Keeping you up-to-date with the latest news, research and innovation in health insurance exchanges (both public and private) and defined contribution.
HealthCare Exchange Solutions™ I www.TheIHCC.com I Second Quarter 2015
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PUBLISHER
Exchange www.theihcc.com VOLUME 2 NO. 2 | SECOND QUARTER 2015
Forward Thinking
Published by FieldMedia LLC 292 South Main Street, Suite 400 Alpharetta, GA 30009 Tel: 404.671.9551 • Fax: 770.663.4409 CEO
While much talk has focused on the basics of implementing private exchanges — educating consumers, providing basic decision support tools, gathering data and so on — few have strayed from the here and now to focus on the future.
Doug Field 404.671.9551 ext. 101 · dfield@ theihcc.com NATIONAL SALES DIRECTOR
Brent Macy 404.671.9551 ext. 103 · bmacy@theihcc.com CHIEF MARKETING OFFICER
That’s slowly changing, though. As we move further into the experience, it’s becoming apparent that long-term sustainability of private exchanges rests on a few key factors — a big one being health management. Our cover story in this issue discusses that very topic. We need to go “back to the future” to ensure success now and in the long run. Our Senior Editor Heather Loveridge interviewed key players in the private exchange space to get their perspective on combining health management with private exchanges. You’ll want to read what Scott Brown, private exchange offering lead at Accenture; Cathy Kenworthy, CEO of Interactive Health; John Young, CEO of Consumerdriven; and Rob Harkins, practice leader, private exchanges for Willis all have to say. We hope you’ll find their comments thought provoking and helpful as you consider long-term strategies for private exchanges.
Andrew Dietz adietz@theihcc.com MANAGING EDITOR
Jonathan Field 404.671.9551 • jfield@theihcc.com SENIOR EDITOR
Heather Loveridge hloveridge@theihcc.com ART DIRECTOR
Kellie Frissell 404.671.9551 ext. 107 · kfrissell@fieldmedia.com ASSOCIATE DIRECTOR OF EDUCATION SERVICES AND PROGRAMS
Dusty Rhodes CHAIRMAN OF IHC ADVISORY BOARD
Ronald E. Bachman, CEO, Healthcare Visions EDITORIAL ADVISORY BOARD
Also in this issue is a look at how members are perceiving the exchange experience, presented by Rick Johnson, director of healthcare practice at J.D. Power. You’ll also want to read about Liazon’s newest venture, the Private Exchange Research Council — a think tank formed to analyze and share findings concerning the private exchange space; and MagnaCare’s CEO Joseph Berardo, Jr.’s comments on the Cadillac Tax driving rapid exchange enrollment. There’s much talk surrounding private exchanges, and I am excited to further those discussions even more with the advent of our newest forum, the Private Exchange FORUM Baltimore. Held September 1-2, 2015, the Private Exchange FORUM Baltimore features industry leaders such as John Young, CEO of Consumerdriven; Ernie Harris, NPDP, Conference Co-Chair, EVP of Exchange Solutions, Maestro Healthcare Technology; Barbara Gniewek, Principal, GHRS, PricewaterhouseCoopers and many more! For more details, visit www.theihccforum.com/ private-exchange-forum-baltimore. I hope you will join us this September. It’s an exciting time in the private exchange world! Sincerely,
Kim Adler, Allstate; Diana Andersen, Zions Bancorporation; Bill Bennett; Doug Bulleit, DCS Health; Jon Comola, Wye River Group; John Hickman, Alston+Bird LLP; Tony Holmes, Mercer Health & Benefits; Marc Kutter, Aflac; Sanders McConnell, TSYS Healthcare; Roy Ramthun, HSA Consulting Services LLC; John Young, Consumerdriven LLC WEBMASTER
Tim Hemendinger timh@fieldmedia.com DIRECTOR OF CONFERENCE SPONSORSHIP/ CORPORATE MEMBERSHIP/REPRINTS
Rogers Beasley 404.671.9551 ext 109 · rbeasley@fieldmedia.com ACCOUNT MANAGERS
Michelle Gatehouse 404.405.3007 • mgatehouse@theihcc.com Ted Arvan 678.296.1906 • tarvan@theihcc.com PARTNERS/ALLIANCES
Joni Lipson 800.546.3750 · jlipson@fieldmedia.com BUSINESS MANAGER
Karen Raudabaugh 404.671.9551 ext. 108 · kraudabaugh@fieldmedia.com
Doug Field CEO/Publisher dfield@fieldmedia.com
HealthCare Exchange Solutions™ Volume 2 Issue 2 Copyright ©2014 by FieldMedia LLC. All rights reserved. HealthCare Exchange Solutions™ is a trademark of FieldMedia LLC. HealthCare Consumerism Solutions™ is published eight times yearly by FieldMedia LLC., 292 South Main Street, Suite 400, Alpharetta, GA 30009. Periodical postage paid at Alpharetta, GA and additional mailing offices. TO SUBSCRIBE: Make checks and money orders payable to HealthCare Exchange Solutions ™ magazine 292 S. Main Street, Suite 400, Alpharetta, GA 30009 or visit www.theihcc.com. Non-qualified persons may subscribe at the following rates: single copy $7.50; $75.00/yr in the U.S., $105/yr in Canada and $170/yr international. Please contact FieldMedia at 404.671.9551 or subscriberservice@fieldmedia.com for name/address changes. PRINTED IN THE U.S.A. HealthCare Exchange Solutions™ is designed to provide both accurate and authoritative information with regard to the understanding that the publisher is not engaged in rendering legal, financial or other professional service. If legal advice is required, the services of a professional adviser should be sought. The magazine is not responsible for unsolicited manuscripts or photographs. Send letters to the editor and editorial inquiries to the above address or to jfield@fieldmedia.com. Permission to reuse content should be sent to, jfield@ fieldmedia.com.
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Second Quarter 2015 I www.TheIHCC.com I HealthCare Exchange Solutions™
15.2%
Offer a wider array of options
Continue to offer benefits that
14.8%
for benefit plans
would otherwise be in jeopardy
NEWS BRIEFS & INNOVATIONS
Where are you in the process of exploring or adopting a DCP to offer on a private exchange?
NEWS BRIEFS 24.5%
12.8%
41.9%
Have not begun to explore DCPs
Already using DCPs (not on a
Still learning
Towers Watson Acquiresprivate Acclaris to Administer Consumerexchange) Driven Benefits for Exchange Solutions Segment
Infogr
Defined Contribution & Private Exchange Trends
How familiar are you with defined contribution Towers6.8% Watson announced that it has acquired 6.8% Acclaris, a provider health benefit plans (DCPs) & private exchanges? Using DCPs on a private exchange Are considering exploring/adopting of software-as-a-service-based technology and services for consumDCPs to offer on a private exchange er-driven health care and reimbursement accounts, including health in the future Familiar Not Familiar savings accounts, health reimbursement arrangements and other consumer-directed accounts. The acquisition enhances Towers What partners would you depend on to help you learn Infographic Benefits a DCP wouldexperts bringand to your company: Watson’s position as a leading benefits administration and exchange comprised of private benefits exchange top national about new health benefit designs and distribution models? provider. Acclaris’ CEO, Dean Mason, will join the leadership team brokers and consultants. As private exchanges are poised to of Towers segment. strengthen employee engagement, empowerment and education, InsuranceSolutions Brokers Benefit Consultants Employees will have a better 50% Watson’s Exchange Help employees make mo 30.2% 31.9% 17.9% understanding costs this think tank will provideof benefit the market with insights into how benefit de cost-conscious Research Independently Insurance Carrier 26% people are making decisions when shopping for their benefits. Benaissance Announces Partnership 16%GoHealth How familiar are you with definedwith contribution PERC plans to explore frequently asked questions with respect Benaissance® announces plans to bring the GoHealth Marketplace health benefit plans (DCPs) & private exchanges? Third Party Administrator Industry/Trade Association 11.8% 11.1% to private exchanges, such as delving into how demographic and to its COBRApoint® platform, which provides access to benefits for Offer a wider array of options Continue to offer benefits behavioral factorsfor influence buying decisions, the 14.8% impact of decision millions of COBRA-eligible and retiree consumers. The partnership 15.2% benefit plans would otherwise be in jeo 4.6% Familiar Payroll Companies Not Familiar support on buying patterns and the benefit to employers of greater provides consumers with enrollment support, giving them the option consumerism, among others. of continuing their health insurance through COBRA or enrolling in Benefits a DCP would your in company: Employer utilities youbring wouldtovalue offering health Where are you in the process of exploring or adopti a new individual Marketplace health plan — putting the consumer plans in an exchange environment: offer on a Companies private exchange? in the driver’s seat. The GoHealth Marketplace provides education Blue CrossDCP andtoBlue Shield to Launch Employees will have a better Help employees makeRetiree more and 31.9% accessibility to a wide range of individual insurance options Health Insurance Exchange 17.9% understanding of benefit costs 41.9% 24.5% 12.8% cost-conscious benefit decisions and allows consumers to compare benefits from the nation’s top Blue Cross and Blue Shield companies will launch a health 82.6% 78.3% 82% Already using DCPs (not on a Still learning Have 65.3% 65%not begun to explore DCPs insurance carriers, apply for subsidies (to reduce health insurance insurance exchange this summer that will support employers’ private exchange) premiums and out-of-pocket expenses) and enroll in an individual Health efforts to help retirees transition from group health benefits to Spending Carrier Integration COBRA Compliance Premium Payment Payroll Processing Offer a wider array of options Continue to offer benefits that health insurance plan. individual Medicare coverage that starts 6.8% Jan. 1, 2016. BCBS Accounts Automation 6.8% 15.2% 14.8% for benefit plans would otherwise be in jeopardy Marketplace will offer Blue Cross and Blue Shield Using DCPs on a private exchange Are considering exploring/adopting DCPs to (Medigap), offer on a private exchange If considering defined contribution plans for future, when? Medicare Supplement Insurance in the future Medicare Advantage Plans and Medicare Part D 61.1% of exploring or Where are you in the process adopting a 11.1% 22.2% prescription drug coverage in more than 45 states DCP to offer on a private exchange? 2017 What partners would you depend on to help you le 2015 2016 and Washington, D.C. The personalized exchange about benefit designs andfor distribution m will new help health Medicare-eligible retirees shop the 41.9% 24.5% 12.8% coverage that best meets their health care needs. Already using DCPs (not on a Still learning Have not begun to explore DCPs Insurance Brokers Benefit Consul 50% 30.2% private exchange) BCBS Marketplace can help employers reduce the costs of benefit Maestro Health Adds Two Key Industry Leaders What employee features would you to include if you could administration and support contributions to Insurance Ca Executivedesign Team as Rapid Growth Continues Researchemployers Independently who provide a benefit offering using an insurance 26% 16% 6.8% 6.8% retiree coverage, all while providing a near-paperless process for As an innovator of health environment? insurance exchange and employee benefits exchange Using DCPs on a private exchange Are considering exploring/adopting Third Party Administrator Assoc 11.8% 11.1%co-brandIndustry/Trade Medicare-eligible members. Employers can optionally the management, Maestro Health is continuing DCPs expansion with the to offer on a private exchange Plan and Cost Comparison Tools 67.9% BCBS Marketplace with their logo to demonstrate their partnership addition of two new members to its key executive team. Maestro in the future Payroll Companies 4.6% in ensuring a smooth coverage transition. Health appointed Nancy Reardon as chief product Online Access 50.4%officer and Jeff Yaniga asWhat executive vice president exchange in the partners wouldofyou depend onfirst to quarter help you learn Progressive Cost Tracking Tools 46.9% Employer youHealth would value in offering he of this year. Three Results in theutilities Aon Active Exchange about new health benefit designs and distributionYear models?
77.5%
22.5%
Defined Contribution & Private Exchange Trends 77.5%
22.5%
plans in an exchange of environment: Underscore Long-Term Sustainability Private Exchanges
38.5%
Help Line
50% Research
Council Forms to Provide Insights 30.2% on Combined Benefit Enrollment 37% Consumer Behavior in Private Exchanges
Aon Hewitt has announced that the third-year enrollment results from the Aon Active Health Exchange further demonstrate that Consolidated Employer BillingIndependently Research Insurance Carrier 82.6% 26% 16% 78.3% 82%exchanges can 29.4% 65.3% 6 Services well-designed private health deliver on their promise Liazon announced an initiative to analyze data from hundreds of to control cost, engage consumers and offer broad choice. All of thousands of employees who have purchased benefits through Mobile 29.4% Third Party Administrator Industry/Trade Association 11.8% 11.1% Health Carrier Integration COBRA Compliance Premium Payment Payroll Processing the companies and insurance carriers that participated in the Aon Liazon’s Bright Financial Account Choices® Exchange and other Liazon-powered Acc Automation 22.1% Options Companies 4.6% Active Health Exchange in 2014 returned in 2015. Companies private exchanges. ThePayroll Private Exchange Research Council is If considering contribution forhad future, wh that wentdefined through their second-yearplans renewal Private exchange features most important: average annual health cost increases of 2.6 percent Employer utilities you would value in offering health 61.1% 11.1% over the two years they were in the exchange,22.2% plans in an exchange environment: The exchange actively screens and 2015 including costs associated A large choice of plans with the Affordable Care 2017 2016 restricts the number of plans that available at your company’s Act and administration. This compares favorably to 43.1% 40% may participate on the exchange targeted benefit level industry data reflecting the average health care cost 82.6% according 78.3% 82% 65.3% to price and quality 65% increase for large U.S. companies for you comparable What employee features would include if you plan designs will be approximately 6.5 to Health Spending Carrier Integration COBRA Compliance Premium Payment Payroll Processing design a benefit offering using anpercent insurance The exchange allows any plan to Accounts Automation eight percent in 2015. The exchange is government-run exchange environment? 39.2%
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Insurance Brokers
Benefit Consultants
21.4%
meet the exchange’s minimum
standards to participate If considering defined contribution plans for future, when?Plan and Cost Comparison Tools Second Quarter 2015 I www.TheIHCC.com I HealthCare Exchange Solutions ™
11.1%
61.1%
22.2%
Online Access
67.9%
77.5% Familiar
22.5% Not Familiar
6.8%
6.8%
Using DCPs on a private exchange
Are considering exploring/adopting
Benefits a DCP would bringDCPs to toyour company: offer on a private exchange in the future Employees will have a better
Help employees make more
31.9% Whatunderstanding partnersof benefit would costsyou
depend to help you 17.9% oncost-conscious benefitlearn decisions about new health benefit designs and distribution models?
50% 15.2% 26%
Insurance Brokers
Offer a wider array of options for benefit plansIndependently Research
11.8%
Third Party Administrator
30.2% 14.8% 16% 11.1%
Benefit Consultants
Continue to offer benefits that would otherwise be in jeopardy Insurance Carrier Industry/Trade Association
Where are you in the process of exploring or adopting a DCP to offerPayroll on Companies a private exchange?
that will complement SAP’s market-leading core human resources and talent management solutions and help its customers with U.S. employee benefits enrollment and management.
Gravie Receives An Additional $12.5M in Funding to Meet Growing Demand
Gravie recently announced that it has raised a $12.5M Series B round of funding, led by new investor Split Rock Partners, with existing investors 41.9% 24.5% 12.8% Employer utilities you would value in offering health also participating. The company had previously raised $10.5M in Connecture Names Steve Cohen VP of Sales Overseeing Already using DCPs (not on a Still learning Have not begun to explore DCPs plans in an exchange environment: Series A funding, and the new infusion of capital will help Gravie Private Exchange Product for Brokers privateLine exchange) keep pace with the high demand for its platform and services that Connecture, Inc. announced that Steve Cohen will serve as the vice help employers transition their employees to the individual health president of sales for Connecture’s On Ramp product. Cohen brings 6.8% 6.8% 78.3% 82% 65.3% 65% Using DCPs of on asales privatemanagement exchange Are considering exploring/adopting insurance market. Gravie helps organizations make the shift from more82.6% than 25 years experience working in the DCPs to offer on a private exchange group to individual coverage by making available a state’s entire fields of health insurance, human resources and employee benefits in the future Health Spending Carrier Integration COBRA Compliance Premium Payment Payroll Processing insurance marketplace, including offerings in the private market to the company. As vice president of sales, he will oversee sales Accounts Automation as well as public exchanges. Gravie then helps employees pick teams serving customers for On Ramp — a robust, secure and timeWhat partners would you depend on to help you learn a plan that works best for them, identifies and pursues tax credit tested online benefits marketplace. If considering contribution plans future, when? about newdefined health benefit designs and for distribution models? eligibility on behalf of employees, manages employer contributions 61.1% 11.1% 22.2% and provides an integrated online and mobile platform for people to GetInsured Unveils New Shared HIX Platform to Insurance Brokers Benefit Consultants 50% 30.2% manage their health care in one spot. Address2015 State-Based Exchange 2016 Sustainability Concerns 2017 Research Independently Insurance Carrier 26% 16% GetInsured recently unveiled the GetInsured Shared HIX Platform as an alternative to existing state-based marketplaces that have selfSoftheon Confirms Web Broker Entity Status with the Third Party Administrator Industry/Trade Association 11.8% 11.1% sustainability concerns. With thefeatures Shared HIX Platform, will if you Centers of Medicare & Medicaid Services What employee would you states include could have 4.6% accessdesign to a full-featured, ACA-compliant Individual and Small Softheon, Inc. has confirmed its status as a Web Broker Entity Payroll Companies a benefit offering using an insurance Business Health Options Marketplace. The GetInsured Shared with the Centers of Medicare & Medicaid Services. Under this exchange environment? HIX Platform offers states a pathway for continuing marketplace agreement, Softheon will establish an enrollment channel with EmployerTools utilities you would value in offering health Plan and while Cost Comparison innovation advancing self-sustainability through a solution67.9% that access to the Federal Data Hub to assist and facilitate the plans in an exchange environment: carries no upfront cost and offers a predictable per-member-perenrollment of eligible consumers into qualified health insurance Online Access 50.4% month cost structure. plans. Through this agreement, Softheon will exchange real-time Progressive Cost Tracking Tools 46.9% eligibility information with the Federally-Facilitated Marketplace that 82.6% 78.3% 82% 65.3% 65% will provide information regarding eligibility as well as the amount Benefitfocus Announces Reseller38.5% Agreement with SAP Help Line of subsidy for which consumers qualify. Softheon has completed all Benefitfocus recently announced the signing of a reseller agreement Health Spending Carrier COBRA Compliance Premium Payment Payroll Processing Combined Benefit Enrollment 37%Integration necessary training and requirements needed to meet the FederallywithAutomation SAP. SAP will resell BENEFITFOCUS® Marketplace as the SAP® Accounts Employer Billing 29.4% Facilitated Marketplace standards. This integration resembles the U.S.Consolidated Benefits Management application by Benefitfocus. Through this Services If considering defined contribution plans for future, when? Direct Enrollment solution utilized by all of Softheon’s Health Plan agreement, SAP will offer customers in the U.S. a powerful, endMobile 29.4% Partners offering Qualified Health Plans in FFM States. to-end human capital management solution that improves benefits 61.1% Financial Account 11.1% 22.1% 22.2% Options administration efficiency and platform user experience throughout the 2015 2016 Management by Benefitfocus 2017 employee lifecycle. SAP U.S. Benefits Array Health and HealthEquity Partner to Address Private exchange features — scheduled to be available soon from SAP — ismost a cloudimportant: application Growing Demand for Health Accounts Array Health and HealthEquity, Inc. announced a partnership to provide personal health accounts on What employee include if you could The exchange actively screens and A large choice of plans features would you restricts the number of plans that available at your company’s the Array Spectrum e-commerce platform. Through a benefit offering using 43.1% design 40% an insurance may participate on the exchange targeted benefit level this partnership, the Array Health private exchange exchange environment? according to price and quality solution will provide seamless access to HealthEquity’s Plan and Cost Comparison Tools 67.9% personal health account offerings, including HSAs Online Access The exchange allows any plan to and FSAs. The Array Health private exchange solution 50.4% The exchange is government-run meet the exchange’s minimum 39.2% 21.4% enables health insurers to deliver their own branded standards toTools participate Progressive Cost Tracking 46.9% online exchange — a strategic channel that helps Help Line 38.5% them differentiate their offerings, better serve their © Copyright 2015. Healthcare Trends Institute. existing customers and attract new members. Source: 2014 Healthcare Benefits Trends Combined Benefit Enrollment 37% 4.6%
www.HealthcareTrendsInstitute.org Consolidated Employer Billing 29.4% Services
Benchmark Study Sponsored by Evolution1®
29.4%
Mobile Financial Account Options
22.1%
Private exchange features most important:
* The infographic on defined contribution and private exchanges included here has been reprinted with permission from Healthcare Trends Institute. The data is sourced from the 2014 Healthcare Benefits Trends Benchmark Study. For more information, visit www. HealthcareTrendsInstitute.org. HealthCare Exchange Solutions™ I www.TheIHCC.com I Second Quarter 2015
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PRIVATE EXCHANGE Q&A BY ASHOK SUBRAMANIAN CHIEF EXECUTIVE OFFICER AND CO-FOUNDER LIAZON
So Many Private Exchange Questions. Finally, Some Answers.
H
ow do employees shop for benefits in an environment of choice? Are they making smart decisions for themselves? With the latest statistics pointing to the number of people enrolled on a private exchange for benefits selection having doubled for the past year’s enrollment, the answers to these and other questions are becoming increasingly necessary for the industry to understand.1 That’s why Liazon, as one of the longest-standing private exchange providers in the space, has joined forces with several of our broker partners and other researchers and experts to form a think tank to analyze and share findings that will truly move the industry forward. Launched last month, the Private Exchange Research Council was formed to gather insights from the rich data that we have acquired working with nearly 1,000 employer clients and will develop unique insights about consumer behavior on a private exchange to address such questions as: t What are people buying when presented with choice in an exchange environment? t Are people buying enough coverage, and the right types of coverage, to provide themselves with adequate financial protection? t What factors (demographic, behavioral, geographic) affect these buying patterns? t How does the amount of employer contribution influence buying behavior? t How do recommendations and access to educational materials affect buying decisions? t How do people’s choices in an exchange environment change over time? The data garnered through PERC promises to have value not just for the benefits industry, but for behavioral scientists, economists and thought leaders in consumer behavior and decision making. Rick Strater, division vice president & national exchange practice leader of Arthur J. Gallagher & Co., and a member of PERC, is a strong proponent of the initiative: “We made the decision to partner with Liazon for three reasons: They have very smart people; their decision support is best-in-class; and they have implemented far more exchanges than any other firm. The opportunity to mine the data from those implementations is exciting. The data can be a huge differentiator as we continue to look for ways to help our clients and their employees make better benefit decisions and control costs.” Here’s an example of the type of research Liazon is able to generate based on our eight-plus years of market experience: When given a choice in benefits selection, not all employees will opt for the lowest-priced plans. Instead, they are buying based on their needs, which has led to a much higher uptake in HSA-qualified plans
versus the national average, as well as a strong appetite for ancillary products to ensure they have the financial protection they need. Other past insights based on Liazon’s own data include the following: t Eighty percent of employees are choosing to put additional money toward their benefits on top of what their employers are providing through the defined contribution, in order to buy the benefits they feel would provide the best coverage for their families. Conversely, 20 percent of employees buy their benefits without spending any money out of their own pockets.2 t When shopping with their own money and given a choice, nearly 90 percent of employees would consider a less expensive plan that allowed access to only in-network doctors and facilities or required referrals from a gatekeeper — or both. Given the two options, employees gravitate more towards the in-network provider plans, with 83 percent of employees open to this option. 3 t Factors that influence decision making on an exchange include: t Age: Younger employees are more likely to take the systemgenerated recommendation than choose products on their own. t Gender: Men are more likely to take the system-generated recommendation than women. t Salary: Lower-paid employees are more likely to take the system-generated recommendation. Our vision for PERC is to work together with our broker and other partners, to identify new research frontiers through discussion, sharing experiences in the market and helping us to see the results from their perspective. “The private exchange industry needs its own ‘think tank’ to analyze the millions of health care decisions that have been made by consumers who have shopped for a health plan through a private exchange platform,” says PERC member Chris Condeluci, an expert in tax law, ERISA and the Affordable Care Act. “Understanding consumer behavior, understanding the tools that can aid a consumer in making a decision that is right for them and understanding how to simplify the shopping experience and the administrative complexities associated with employee enrollment is critical to the long-term future of the private exchange industry.” With more than eight years’ experience in the private exchange marketplace, during which time we’ve collected hundreds of thousands of data points on enrollments, we believe we’re best suited to address everyone’s burning questions for the long-term and bring the first of its kind think tank for private exchanges to the industry. Results of the first of a series of PERC analyses will be available later this year. 4 To see the footnotes, see the online version at www.theihcc.com. HealthCare Exchange Solutions™ I www.TheIHCC.com I Second Quarter 2015
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PRIVATE EXCHANGE ENROLLMENT
“Cadillac Tax” Driving Rampant Growth in Private Exchange Enrollment BY JOSEPH BERARDO JR. » CHIEF EXECUTIVE OFFICER » MAGNACARE
The health care conversation among employer groups has changed from “What is a private exchange?” to “How do we enroll?” The reasons are simple: better cost management, improved population health and the looming implementation of the “Cadillac Tax.” Analysts predict that the shift to private exchanges will be dramatic. Private Health Exchange Annual Enrollment 40 Projected
40
Estimated Actual
30 Enrollment (Millions)
In fact, an estimated six million individuals enrolled on private exchanges for the 2015 plan year and, according to Accenture, that number will spike to 12 million in 2016, 22 million in 2017 and 40 million by 2018 – the year when “Cadillac Tax” penalties kick in. This 40-percent excise tax on high-cost plans could affect 38 percent of large employers and 17 percent of all American businesses.
22
20
High-performance networks A number of insurers selling plans on the exchanges are looking at highperformance networks in order to leverage more favorable pricing from providers, drive down unit cost and lower premiums.
Also known as narrow networks, high-performance networks consist of 6 3 carefully selected health care providers 0 and health professional organizations Source: Accenture 2015; Calculation includes pre-65 employees and dependents recruited to serve a defined patient Private Exchange Advantages An estimated 6 million members enrolled in private health exchanges for 2015 employer benefits, says Accenture. population. These networks are and Options designed to raise the level of care while Typically, private exchanges use a defined also helping to make health care more affordable. contribution approach to health care. In this model, employers give a set amount of money to employees, who then choose a health Health plans say they can lower costs with high-performance plan from participating payers on the exchange. network plans because they are able to choose more cost-effective providers and, in some cases, pay them lower reimbursement rates Private exchanges offer key advantages: in exchange for sending them more patients. t Positively impact total cost of care t Lower spending t Simplify employer administration Bottom Line t Offer more choice for employees While private exchanges do not provide access to premium t Improve cost-consciousness among employees subsidies like the public exchanges, they do have the potential to reshape the employer-sponsored health insurance landscape. To realize these advantages, employers should consider every That said, employers should keep in mind potential pitfalls and factor. For instance, employers striving to maximize the health and learn how best to provide guidance and support for employees. productivity of their employees should not neglect prevention and wellness initiatives, despite offering coverage through a private A health services company can help to ensure a successful rollout, exchange. making it possible to achieve that rare feat: Group employee health benefits that work for both the employer and employee. They should also weigh the differences between the two private exchange models that are emerging: Private exchanges give employers an effective way to cap costs t Single-carrier exchanges target employers that want to retain and make it possible for them to continue offering benefits, rather some role in choosing both the insurance carrier and plan than setting employees adrift on the public insurance exchanges. design. Depending upon the employers involvement, benefit Ultimately, private exchanges can help companies to stabilize design can be customized to provide a unique plan tailored to a rates, shape the health and wellness of their employees and take given employee population. greater control over their financial future. t Multi-carrier exchanges provide a broad range of payer and plan design options, but appeal more to employers that prefer Joseph Berardo Jr. is chief executive officer of MagnaCare, an administrator of self-insured health plans for employers and Taft-Hartley Funds in New York and to be hands-off. 10
12
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New Jersey.
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Second Quarter 2015 I www.TheIHCC.com I HealthCare Exchange Solutions™
PERCEPTIONS
Member Perceptions of the Exchange Experience, Their Plans and Where We Go From Here BY RICK A. JOHNSON » DIRECTOR, HEALTHCARE PRACTICE » J.D. POWER
T
he J.D. Power Healthcare Practice released the findings from its 2015 Health Insurance Marketplace Exchange Shopper and Re-enrollment StudySM (HIX) on April 23 and found that satisfaction with the health exchange marketplace enrollment and health plans obtained through the marketplace have performed well in terms of overall plan satisfaction.
a possible 1000 for new enrollees and 731 for re-enrollees compared to 615 in 2014). Satisfaction among those who automatically re-enrolled is higher than those re-enrollees who did not auto reenroll. More than one in three re-enrollees were not sure if they could auto re-enroll (18 percent) or stated that their exchange/ plan did not allow auto-reenrollment (19 percent).
Now in its second year, the HIX study measures satisfaction with the health insurance shopping experience of new marketplace enrollees and re-enrollees from 2014, including oversamples in 11 key states. In addition, the study measures satisfaction with the health plans obtained last year by examining six attributes (in order of importance): cost; provider selection; coverage and benefits; communications; customer service; and claims processing.
Those shopping on or enrolled through an exchange tend to be more pricesensitive than those who get their health insurance off-exchange, as cost is the most impactful of the six factors in our model on overall satisfaction with onexchange health plans. Unfortunately, only 35 percent of re-enrollees noted they received information about subsidy qualification, and 13 percent of new enrollees stated they did not know if they qualified for a tax credit or subsidy.
One challenge we saw last year was that many shoppers were not very familiar with how insurance worked, and those Overall Marketplace Health Plan Satisfaction that registered did not by Marketplace Type fully understand their (Based on a 1,000-point scale) benefits. Consequently, providing easy-tounderstand information Partnership Marketplaces 716 about how insurance works and around the benefits of the products they purchased or Federally Facilitated Marketplace 699 are trying to purchase would have a significant impact on Marketplace Type Average 696 user satisfaction. Enrollment satisfaction in 2015 increased significantly from last year (670 out of
State-Based Marketplaces 600
683 650
700
750
800
Source: J.D. Power 2015 Health Insurance Marketplace Exchange Shopper and Re-Enrollment (HIX) Study ™
Unfortunately, only 54 percent of those new to a heath plan and 42 percent of re-enrollees received welcome kits from their plans. In addition, only 50
percent of re-enrollees who stayed with their health plan and 63 percent of those who were new enrollees or switched plans stated they received any kind of follow-up from their health plans. The lack of followup information has a dramatic impact on satisfaction, as those that received follow-up information or a welcome kit had satisfaction scores that are roughly 100 points higher than those that did not receive that information. In conclusion, here are six things that can be done to increase satisfaction with obtaining insurance through public exchanges and with the on-exchange plans themselves: t Improve the hand-off. Many members are not clear that they have insurance after they have finished the exchange transaction and are not clear on how to use their benefits. t Help make sure members know what their benefits are and how to use them, including improving onboarding. t Improve notice of what tax credits or subsidies are available to potential members to help minimize the cost of insurance. t Make sure those renewing know they have the option of auto-renewing their policy. t Increase information available on plans and how insurance works. Some plans cut back on plan information in an attempt not to overwhelm potential members. More plain language, jargonfree information is needed — not less. Just make sure its easy to find and laid out well. t Keep in mind that overall satisfaction with health plans — both obtained on or off exchange — is below that of most other industries. We have a ways to go to match consumer expectations and should look to other industries when it comes to ways to enhance the consumer experience.
HealthCare Exchange Solutions™ I www.TheIHCC.com I Second Quarter 2015
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TAKING
PRIVATE EXCHANGES BACK TO THE FUTURE Health management strategies key to future sustainability
I
BY HEATHER LOVERIDGE » SENIOR EDITOR » THE INSTITUTE FOR HEALTHCARE CONSUMERISM
t’s been billed as the solution to rising costs. But many in the private exchange world — solution providers and employers alike — have been so focused on the here and now that they’ve neglected to look a few years down the road. A private exchange in and of itself will only succeed for a while. But, take a private exchange,
combine it with a health management strategy and, according to many, the result is a recipe for
success. “A health management strategy in conjunction with a private exchange is critical to the employer,” said Scott Brown, private exchange offering lead at Accenture. “In terms of the evolution of private exchanges, I think much has focused on the shopping experience and purchasing benefits. In the long run it’s crucial that private exchanges, wellness strategies and incentive tools come together.” HealthCare Exchange Solutions™ I www.TheIHCC.com I Second Quarter 2015
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that,” said Rob Harkins, practice leader, private exchanges for Willis. “It’s not a bad thing, but it means there needs to be a long-term strategic directive by an employer to control costs in the long run. If they can’t do that — maybe they’re not in a position based on their population or the size of their group — then they need to go in with eyes wide open. They can’t go in thinking it’s one thing and it’s going to fix their problems; otherwise they’re going to be really unhappy in two years when they have a whole new set of problems to deal with. “The beauty of an exchange is that it engages consumers in ways the industry hasn’t seen before; it involves them in the process and the decisions. It provides a natural segue into health management.” But what if you don’t currently have a wellness plan in place? Do you look for a private exchange that offers one within the exchange? Or do you find a vendor to partner with an exchange to provide the health management? “I think it’s difficult in multi-plan exchanges to leave health management solely in the hands of the carrier or health plan,” said Young. “I believe it’s because of this: most people in multi-plan environments are going to be given the opportunity to change year over year. Because of that, some are going to stay and some are not going to stay. If people are able to make changes to the insurer they might not be with the insurer long enough to effectively impact health and productivity. Or even wellness. “In single carrier exchanges, I think it’s easier for the carrier to step up and be that resource. Good carriers, of course, have strong health management programs within. Much is going to depend on the exchange and the strategy. “My opinion is employers are not off the hook on this; that what they do around health management does matter to the productivity within their workforce, direct impact on earnings per share, etc. If they want to do this, it’s a good business decision to be involved and trying to improve the John Young, CEO, Consumerdriven, LLC: health of their employees.” • How strong is your own culture of health initiatives? For those employers who haven’t fully bought into health • How does the exchange try to manage those health management, implementing a private exchange may be the initiatives to your total population? push they need to focus on the future health and wellness of • How do the health plan options within the exchange further manage their employees. those initiatives? On the flip side, employers with a robust wellness/health management system in place are prime for a private exchange. Rob Harkins, Practice Leader, Private Exchanges, Willis: “Wellness can be a fabulous enabler of a transition to a • What is it about this private exchange model that will private exchange,” Kenworthy said. “The whole idea of more control or impact long-term cost (and how do you complexity in the choices that employees are able to enjoy can prove that)? be significantly empowered by a great wellness program, where • How is that different from what has been done in the people have an understanding of what their actual health looks past to control long-term cost? like. Therefore they become a far more effective consumer of Employers need to look at their short-term strategy and their long-term strategy those choices. and then approach those actuarial companies and have them model long term “There’s a lot of interesting and innovative capabilities what happens if their trend continues to go up at the rate of double digits while that are emerging and obviously the secret is to pick through their contribution level is only going up in single digits. In that case, what what the culture and priorities of the organization are.” happens in two-to-three years to their employees? As the data rolls in and more discussion swirls around this • What is your decision-support technology able to do? topic, the general consensus is the same: the marriage of private The exchange needs to have a decision-support tool that can help the employee exchanges and health management is always a good union. make intelligent, appropriate decisions as opposed to just pushing them toward “We believe that as consumers start to shop for their the lower-cost product, which is what we see many of the decision supports do. benefits they will continue to be more engaged in their health and welfare and part of that engagement includes wellness Employers need to look at things much deeper, with much more intelligence programs/health management and managing their risks, not and sophistication around capabilities and functionality. Some things can be just shopping their health,” Brown said. “We think exchanges spreadsheeted, but realistically that’s not where we’re at right now. It’s still an will provide another mechanism for future improvement upon emerging market with many nuances, and employers need someone who really a lot of what exists today in the market of health management works the private exchange concept to understand how these things can and strategies.” should differ and be able to help them make the right choice. Less than a year out of the first open enrollment for many private exchanges, it’s still uncharted territory to some extent. Employers are still understanding what private exchanges are and how — or if — they will benefit them and their employees. But one thing is becoming clear to those in the industry; health management — though crucial — is often overlooked. “One of the myths that employers sometimes have about private exchanges is this idea that if employees go to a private exchange it’s kind of off their plate — they don’t have the burden anymore,” said Cathy Kenworthy, CEO of Interactive Health. “But the reality is that the group of employees sent into an exchange continues to be risk rated as an individual group. They are not actually pooled with any other participants so the health status and burden of health costs associated with that population is distinct and attributable back to that employer group.” As John Young, CEO of Consumerdriven relates, the Buck Consultants exchange known as RightOpt uses three words to help outline their value proposition: choose, use and improve. “Exchanges, I think, are doing a phenomenal job helping employees choose/self-select their medical plans, and some are taking steps to really help individuals understand how to use the plan they select,” Young said. “But not all exchanges are equal in their attention to helping improve the health of its population.” Reportedly one of the first exchanges to offer an integrated health management program, Willis North America sees a need to change employers’ perception of exchanges. “A private exchange does nothing to control cost in the long run. It’s an elegant cost-shifting mechanism. And we need to be upfront about
Six questions you need to ask when considering a private exchange:
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