What Public Insurance Exchanges Will Look Like 5 Years From Now

When envisioning what public insurance exchanges of the future can and should look like when it comes to technology and structure, one only needs to look at the successful private exchanges that have paved the way over the past several years.

This experience has taught those who administer private exchanges that open enrollment—the phase that the federal government’s Health Insurance Marketplace is struggling through currently—is only the beginning. Public exchanges could benefit from lessons already mastered by private exchanges—starting with open enrollment but extending to even more complex technology-based transactions.
There are 10 scenarios that vendors must be able to handle.

1. Life Events. In today’s individual Health Insurance marketplace, consumers can generally add or drop coverage for themselves or their dependents anytime they want. In other words, it’s a relatively “rule-free world.” In January 2014, that world changes to look more like the current group health marketplace in which many rules are defined by the federal government’s existing tax code (e.g., Section 125) and HIPAA requirements, and consumers must select and “lock in” their coverage once a year for the following 12 months, unless they experience a qualified life event.

As a result, each qualified life event – e.g., marriage, divorce, birth of a child, loss of spouse’s coverage and many more – must be configurable within the Exchange technology to enforce the appropriate rules. For example, if a person gets married, is that person allowed to drop coverage or change plans and carriers? How about with the birth of a child? Or with a loss of spouse’s coverage? For a truly scalable Exchange technology, thousands of scenarios must be configured in advance to enable consumers to make enrollment choices online without administrator involvement.

2. Overlapping Enrollments. Every year, consumers will have the opportunity to make enrollment decisions and changes during the Annual Open Enrollment period, scheduled for October through December in the individual marketplace, and on a rolling employer-specific schedule for small employers. In the individual marketplace, those changes will be effective the first of the following year. But just because people are in the middle of an annual open enrollment period doesn’t mean that they are prohibited from getting married during that timeframe, or from having children, or from their job status or income changing – with an effective date in November or December.

Therefore, a high volume of overlapping enrollment transactions will need to be handled by the Exchange technology. Not only does the Exchange’s user experience need to be seamless for these consumers, but the electronic eligibility files to the carriers need to be intelligently developed and transmitted to enable the carriers to manage their membership accurately and efficiently.

3. Additional Special Enrollments. Numerous scenarios are described in the Affordable Care Act (ACA) legislation and in more detail in the regulations recently published by the Department of Health and Human Services (HHS) in which consumers will have the ability to change coverage throughout the year, including but not limited to:
a) a change in location triggering a plan/carrier change
b) a change in employment status (including losing a job)
c) a change in income which would affect eligibility for Medicaid and/or Premium Assistance.Again, each of these transactions needs to be handled seamlessly by the Exchange platform, including the transmission of eligibility updates to the carriers. 

4. Passive Annual Open Enrollment. Consumers will go into their annual open enrollment period each year with a choice: keep one’s current plan and coverage, or make changes. A user-friendly system ought to present that consumer with his or her current coverage and costs and compare this plan with next year’s rates to the many other plan options that may be available, with an option to continue the current selection. Given the emergence of tobacco-rated health rates and wellness credits in the Health marketplace, a user-friendly, “active” consumer process also needs to handle the annual tobacco use attestation process to validate the consumer’s updated tobacco status and adjust the rates accordingly. Administering a passive annual enrollment becomes even more complex when a carrier discontinues a product at renewal; robust plan mapping mechanisms need to facilitate massive migrations to the replacement plan, enabling carrier marketing strategies in a consumer-friendly manner.

5. Age Changes and Overage Dependent Cancellations (especially mid-year). In many states, premiums/rates are likely to be age-rated, and therefore, an age change may trigger a change in the premium. In addition, in all states, dependents at some age – usually age 26 but higher in certain states – will need to be dropped from coverage, and the tier and cost of that coverage needs to be adjusted. These age changes and their downstream impact on costs, billing and carrier membership need to be handled automatically by the Exchange system and to enable easy proactive communication (e.g., alerts or messages) to the affected parties, especially the members.

6. Rate and Plan Updates. In the increasingly competitive health plan marketplace, carriers will be regularly modifying and updating plan rates and details (and deciding whether to continue offering various plans). A scalable Exchange technology solution needs to be able to handle current year rates (e.g., October 2014) and next year rates (e.g., January 2015) at the same time within the system, and to present the correct information to the various stakeholders (consumers, administrators, billing/payroll systems) with accurate effective dating for any changes. This process of rate and plan updates requires a collaborative, scalable process with the carriers so that plan information can be imported and updated easily into the Exchange solution without causing substantial additional work on the part of the carriers or other administrators.

7. Retroactive Billing. Most transactions which happen outside of the annual open enrollment period (e.g., birth of a child) are likely to be retroactive transactions, meaning that the effective date for coverage (or cancellation of coverage) is before today’s date, and the bill for prior months must be retro-adjusted. As a result, accurate retro billing (and payroll deduction calculations) is an absolute must for any Exchange technology. As anyone with group benefits billing experience can attest, this is a complicated process fraught with many challenges.

8. Electronic Data Interchanges (EDI). This area continues to offer unexpected challenges for those players new to the space. Most health carriers in the large and mid-sized employer markets are accustomed to receiving EDI files from benefits technology vendors in the standard HIPAA 834 format, but even today, many small group and individual carriers are new to this process. Dealing with the many nuances of the different carriers – even in an era of “standard” HIPAA 834 formats – is a large challenge in itself.

Handling large volumes of carrier feeds in an efficient and configurable manner is the other large challenge. There are lots of technology vendors who claim to create an EDI feed and send it to a carrier. But the real questions are:

a) can they do this efficiently and cost-effectively?
b) can they easily adjust to the differences amongst carriers (and yes, while there may be standard HIPAA 834 formats, there will still be differences amongst carriers in terms of how to map and send data)?
c) can they maintain a high volume of files in a scalable manner year-over-year, when multiple files need to be handled during annual open enrollment?

9) Security and Permissions. Different stakeholders need to be able to access different information within the Exchange platform, and access to certain kinds of confidential information needs to be restricted. For example, carriers ought to be able to see their own membership on the Exchange platform, but not that of their competitors. Likewise, brokers and agents need to be able to access only their book of business.

10) Reports, Alerts and Dashboards. Given all this valuable Exchange enrollment and premium data, different stakeholders will demand to see different types of information presented in all kinds of different ways – from regularly scheduled reports (e.g., monthly billing reports) and strategic snapshots (e.g., dashboards showing market share by carrier) to ad hoc custom reports and alerts that can be transmitted out to members and/or administrators (e.g., dependent cancelled due to becoming age 26). Exchange technology ought to be able to deliver this information easily and efficiently to users.

Rich Gallun is the CEO of bswift.

1 reply »

  1. Rich,

    Thanks for shedding light on this subject. You would think that with all the experience the private sector has that the government could have done a better job learning from their experience. Anyways, your post has useful information to consider. I hope you update this article as new developments happen. Thanks for your time.