Health Insurance Marketplaces: New Challenges and Opportunities

Health Insurance Marketplaces New Challenges and Opportuni4es Sage Growth Partners

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Topics for Today

State and Federal Insurance Exchanges – what to expect

Impact of Exchanges on the marketplace

Impacts of Exchanges to providers

AcDons to consider to survive/flourish in an Exchange-‐driven market

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The Big QuesDons…Here They Come

Can you sa'sfy their pent up demand for healthcare services? Do you understand how they will impact your business? Who are they and what will they need?

Will Consumers Ever Understand Exchanges?

CBO Exchange Enrollment EsDmates 2013 & 2014

February 2014 Baseline

Health Insurance Exchange – Enrollment

Enrollment StaDsDcs

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2021 ProjecDon -‐ What Will Exchange PaDents Look Like?

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2021 Exchange Pa'ent Profile

Race The majority are white.

Health status The majority are in relaDvely good health.

Marital status Most are not married.

Language One in five speak a language other than English at home.

Educa4onal a6ainment Three-‐fourths do not hold a college degree.

Employment status More than half are employed full-‐Dme.

White Excellent/ Very good/ Good

Married Non-‐English No college degree Employed full-‐Dme

Median Age Median income 33 238% FPL Individual exchange members

Sources: PwC HRI analysis for year 2021, Current PopulaDon Survey, Medical Expenditure Panel Survey and CBO

78% 92%

38% 19%

76% 56%

Average DeducDbles

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Bronze & Silver Plans Cost-‐Sharing Category Average for a Bronze Plan

DeducDble for an Individual/Family $5,081/$10,386

Doctor Visit 30% of visit charged as coinsurance (54% of plans have coinsurance fees)

Specialist Visit 30% of visit charged as coinsurance

Annual cap on out-‐of-‐pocket costs for individual/family

$6,267/$12,569

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Cost-‐Sharing Category Average for a Silver Plan


Doctor Visit $32

Specialist Visit $56


$5,730/$11,495

Gold and PlaDnum Plans Cost-‐Sharing Category Average for a Gold Plan


Doctor Visit $24



$4,081/$8,649

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Cost-‐Sharing Category Average for a Pla'num Plan

DeducDble for an Individual/Family $347/$698

Doctor Visit $16



$1,855/$3,710

Minimum EssenDal Coverage aka Individual Mandate

•  Coverage is required in 2014 unless you have an exempDon •  States without Medicaid expansion have the big GAP •  Federal premium subsidy up to 400% of the FPL

•  $45,960 for an individual •  $94,200 for a family of four

•  Subsidy eligible – may chose to have the exchange send the money directly to the insurer every month OR may receive a tax credit when they file taxes the following year

•  Penalty for no coverage in 2014 = $95 or 1% of your income in 2014 whichever is greater unless you quality for an excepDon

Delays

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CompeDDon’s Impact on “The Math”

Premium = Administra've Costs + Medical Costs ACA caps administra4ve costs at a fixed percentage – exceeding the cap generates member rebates

FACT – Individuals will shop based on price (premium) especially those with lower incomes

FACT -‐ Benefit Plan Designs are VERY largely dictated only very fine variaDons are allowed

CompeDDon’s Impact on “The Math”

Medical Costs = Units Used (uDlizaDon) X Price Paid Price Paid = YOUR REIMBURSEMENT Units used is affected by:

•  PaDent demand •  PaDent health •  EffecDve healthcare management

Which is the easiest to “Dnker with” to keep premiums low?

Current Exchange Examples

Success: Kentucky •  48,611 people have selected a marketplace plan •  In 2012, Obama lost 116 of the state's 120 counDes

•  TesDng well before October 1; began in June •  Simplicity: “doesn’t have all the bells and whistles that other states tried

to incorporate,” •  “It’s very straighvorward in allowing consumers to browse plans without first creaDng an account.”

•  Technology staff had recent experience sewng up other complex systems, such as a prescripDon-‐drug monitoring database.

•  Pre-‐exisDng systems, including one for document management, that could be folded into the health exchange.

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Failure: Maryland

•  State officials had esDmated that 150,000 to 180,000 Marylanders would sign up for private health plans

•  As of February 7, the tally was at 29,059. •  Maryland’s main contractor — Noridian — has a contract worth $193

million

•  The system has “serious IT defects” that have made it difficult for Marylanders to enroll

•  That has resulted in “substanDal manual work,” and heavy reliance on call centers with more than 400 employees.

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Federal Exchange Problems

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VerificaDon Issues

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ConfirmaDon Issues

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Billing and Payment Issues

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What can you do?

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Review Clinic Workflows, Make Hard Decisions

Eligibility verifica'on – real 'me valida'on of coverage and benefit levels Develop process and view on how to handle the uninsured

-‐ Refer them to the Exchange Navigator and/or report them? -‐ Require full payment up front if no insurance?

Accurate determina'on of pa'ent liability and collec'on at the point of care

-‐ Collec4on before or aMer treatment? Manage referrals, manage complex cases, track pa'ent compliance, manage u'liza'on

Do you understand your payer mix and reimbursement versus cost mix by payer to add in negoDaDons? What level is required to assure costs are covered and you achieve desired margins? Do you leverage predicDve analyDcs to straDfy paDents and idenDfy those requiring specific intervenDon? How do you esDmate paDent collecDons PRIOR to claims adjudicaDon? What compensaDon programs do you offer staff to incent desired clinical behaviors? 24

Manage Risk to Insure Financial Stability

Contract Review

Capita'on Rates

Bad Debt

Pa'ent Risk Stra'fica'on

Programs

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Conclusions

Change is here and along with it uncertainty

PaDent volumes and expectaDons will increase Financial pressure on reimbursements will grow – you must manage your risk

PopulaDon management and the delivery of proven, quanDfiable quality will enable success

Measurement is becoming a requirement

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Don’t get caught unprepared!

Healthcare

Health Insurance Marketplaces: New Challenges and Opportunities