As we draw closer to 2014 and full implementation of the Patient Protection and Affordable Care Act (ACA), many healthcare companies are evaluating how their existing capabilities translate into a post-reform environment. Some find that implementation of an exchange product would be a simple addition to a product portfolio, while others are building operational infrastructure specifically to support the exchange. Two previous posts described critical factors for success and common gaps. In this article, we focus on the qualified health plan (QHP) application itself.
Applications to join healthcare exchanges vary by market and type of exchange in a state. While there is a large volume of application activity taking place now for pioneers in the exchange market, other players will likely take part in later application opportunities in the years to come.
States were given a choice to either develop their own programs or elect to participate in a federally sponsored program. State programs are administered many different ways. Approaches range from conducting a standard product filing approach where all licensed health plans are accepted, to administering a competitive proposal process where only a subset of applicants are accepted.
Regardless of the approach in your market, these top five application response principles and project management practices can be applied.
1. Understand requirements. In order to obtain QHP status, proposed plan designs must include essential health benefits (EHBs) prescribed by the federal government. Additionally, depending on market location, some plans can operate their exchange business under existing licensure, while others must file for licensure specific to the exchange. It is critical to first understand market-specific requirements and then understand what is required in the application response. The response may be data- and price-driven, or may include more detailed requests for information about operational, technical, product, network, and price factors. Technical response format requirements can also vary.
2. Develop a work group. Gather a team of subject matter experts (SMEs) that can both provide support to the application response process and stay engaged through implementation of the exchange product. SMEs may include consultants who are well versed in implementing business in new market segments.
3. Determine accountability by requirement. Assign ownership early in the process so that team members are best positioned to support a quality response. One good way for managing work assignments is to develop a work assignment matrix that captures all requirements and assignments. The matrix can also serve as a checklist for application completeness.
4. Set rigorous draft response timelines. The subject matter and content contained in a QHP solicitation or application will be new territory for even the most experienced health plan. Giving SMEs an aggressive timeline to provide draft responses provides stakeholders more time to react to the ideas of the team as well as more time to refine and perfect responses.
5. Provide guidelines for response content. It is a fair assumption that many content writers who are providing input to an exchange application have not participated in a similar work effort in the past. In that case, it is a good idea to provide guidance regarding critical areas contributing to the completeness and quality of content. Examples of response content guidelines include:
• Accuracy: The question was answered and the response is free of ambiguity.
• Completeness: If the question is yes/no, the answer has gone beyond a yes/no response. If there are multiple questions, all points have been addressed.
• Audience focus: The answer does not contain internal jargon or acronyms.
• Solution focus: The customer’s needs have been considered in the response.
• Verifiability: If the response requires attestation, evidence is demonstrated to support it.
A previous post described five critical factors for health insurers to implement in order to successfully sell qualified health plans (QHPs) on new exchanges created by the Patient Protection and Affordable Care Act (PPACA) starting in 2014. As that piece described, departments across the organization will need to support the new program. This post describes five organizational gaps commonly standing between a QHP issuer and exchange readiness.
1. Licensure and accreditation. Regardless of the type of exchange (state-based, federal/state partnership, or federally facilitated), QHP issuers must be appropriately licensed by their states. This requirement will not only affect new health plans. Depending on their present business mix, even established health plans may not possess the proper license from the relevant state authority in order to sell on the exchange. Issuers must also meet stringent accreditation requirements, which may include National Committee for Quality Assurance (NCQA) or URAC accreditation; this process should be started immediately if not already underway.
2. Marketing and distribution. As with any new product, health plans must decide what their target markets will be and assess their abilities to reach them. Keep in mind that the exchange is not the only distribution channel for QHPs; organizations selling on the exchange may also be required to make these plans available outside of the exchange. A unique aspect to marketing in this environment is the navigator program. As described in the “Five critical success factors” post, there is significant variation among navigator programs in different states. Understanding and complementing their roles within plan distribution models will be important. In addition, when preparing for sales outside of the exchange, a successful plan must evaluate, augment, and educate its existing broker network appropriately.
3. Systems and reporting. Although many issuers will rely on their existing information systems for activities such as claims processing or call center operations, some information technology requirements will be new. Most significant is the ability to transfer data between the health plan and the exchange, as well as to reconcile enrollment records between the two. Financial systems will also be impacted. While individual customers will remit payment directly to insurers, Small Business Health Options Program (SHOP) customers may be billed by the exchange. A further layer of complexity is added by federal premium subsidies paid in advance directly to issuers, meaning that issuers must have systems in place to receive and process accounts receivable from at least three different sources. Finally, the health plan must possess the tools and capacity for developing a robust reporting and analytics package that will aid in understanding and monitoring business trends as new membership is acquired.
4. Network and medical management. QHP issuers should evaluate the mix of their provider networks to ensure they meet the needs and expectations of the target population and comply with regulatory requirements. In particular, networks must include a sufficient number of essential community providers (ECPs) and meet access criteria by geographic region. Many organizations are exploring narrow network strategies to keep their premiums competitive. Narrow network design requires sophisticated analytics to identify the optimal mix of providers needed. Network reimbursement strategies and new risk arrangements with providers should also be considered for those health plans for which the exchange market represents a significantly different risk environment. In addition to network, medical management may require additional resources to effectively manage plan costs and support and manage the needs of the new membership, which will include newly insured beneficiaries who may drive higher utilization for a period of time.
5. Operational execution. Of course, filling the gaps described above and others will require additional training and, in many cases, additional staff too. Successful QHP issuers will be prepared to invest resources and time across departments to support membership growth as well as new systems and processes associated with exchange participation.
Beginning in October 2013, open enrollment will commence for individual and small group health insurance plans being sold on public exchanges, new marketplaces created by the Patient Protection and Affordable Care Act (PPACA). Because there are still many unknowns regarding how the new market will function, plans must be prepared to work aggressively to position their strategies and resources for initial launch and ongoing operations. The following five tactics are recommended for organizations that plan to offer qualified health plans (QHPs) on public exchanges.
1. Strategy alignment. As with any new line of business, an important first step is to ensure that the strategy of the exchange program serves that of the organization as a whole. For example, will the product compete primarily on price, quality, or access to best enhance the company’s overall marketing and network strategies? The leadership team must be clear about the reasons for entering the exchange and the potential effects it will have on the company’s marketing, finances, and operational performance.
2. Having a champion. Successful QHP issuers will formally identify a senior program lead within their organizations to advocate for exchange participation among internal and external stakeholders. From operational planning through public positioning, this person will clearly communicate the program’s goals and progress, how exchange participation contributes to the overall strategy and mission of the organization, as well as the needs of the stakeholders it serves.
3. Cross-functional team engagement. Adding exchange business to a company’s program portfolio will require input and implementation efforts from employees across the organization. For instance:
• IT resources must be invested to establish infrastructure for transferring and reconciling enrollment data between the exchange and the health plan
• Member services must be staffed and trained to serve a newly insured population likely to have questions about the unfamiliar products, cost sharing, and premium subsidies
• Sales and marketing, product development, medical management, network management, finance, accounting, compliance, and human resources will all be affected as well
Successful exchange participants will devote resources to performing operational gap assessments and develop gap closure strategies, as well as appoint a multidisciplinary core management team to coordinate activities across functional areas.
4. Defining success. A key responsibility of the core management team is to create clearly defined performance metrics for the exchange program. These goals must be specific yet flexible to adapt to continuously evolving regulatory requirements and market factors that will remain uncertain until exchanges reach a mature operational status. For instance, financial and enrollment projections may need to adjust quickly if more small employers than previously predicted decide to seek coverage through the Small Business Health Options Program (SHOP) market rather than through traditional channels.
5. Public policy involvement. At both the state and federal levels, policy surrounding exchanges is constantly being created and refined. While the federal Department of Health and Human Services (HHS) publishes guidance that affects exchanges and issuers nationwide, many details regarding how the exchanges will function, how plans can be designed and marketed, and more are defined at the state level. For example, in Maine, exchange navigators are required to be licensed brokers, while California is considering allowing nonprofits, trade organizations, and schools to help fill the navigator role. The government relations department can help shape emerging policy decisions and stay close to the discussions at all levels so that the rest of the organization can respond quickly to new developments.
A.M. Best recently interviewed Bob Cosway about the challenges of defining essential health benefits (EHB) in each state. Under the Patient Protection and Affordable Care Act, insurers must provide plans that include these EHBs when marketing to the state health exchanges.
The U.S. Department of Health and Human Services (HHS) released three proposed rules with comment periods related to the Patient Protection and Affordable Care Act (PPACA) this week. The proposed rules can be accessed at the Federal Register.
• Standards related to essential health benefits, actuarial value, and accreditation: 30-day comment period
• Health insurance market rules; rate review: 30-day comment period
• Wellness programs in group health plans: 60-day comment period
For additional information on proposed state essential health benefits benchmark plans, click here.
The Centers for Medicare and Medicaid Services (CMS) recently submitted the final rules on essential health benefits for plans that will be offered through health insurance exchanges for final review.
With that in mind, we offer a review of our perspective on these impending health exchanges.
- Exchanges: The nexus of health reform
- Structuring health exchanges
- Health exchanges and plan designs
- Benefits Perspectives: Health insurance exchanges and early retiree health coverage
- Designing health exchanges state by state
- Health exchanges: Impact of health plan benefit changes on cost and utilization
The Centers for Medicare and Medicaid Services (CMS) recently submitted their final rules on essential health benefits for health insurance exchanges. The rules specify insurance plan requirements including the exchanges’ actuarial value, quality, and accreditation standards.
Here is an excerpt from Modern Healthcare:
Policy experts variously expect federal rules to provide states with more guidance about the minimum coverage that plans in state-run exchanges will need to offer their residents; offer approval or tweaks to minimum coverage requirements that some states have submitted to the CMS; and set minimum coverage levels of private plans included in federal exchanges.
The law established 10 essential benefit categories in which exchange plans will have to provide coverage, including preventive care, emergency services, maternity care and prescription drugs. But states can decide what benefits are included under those categories, and about half of the states submitted an essential health benefits plan to the CMS by a Sept. 30 deadline. The coming rules may provide federal approval of those states’ benefit packages or provide another chance to change them, according to policy experts.
The health benefits purchasing dynamic that has existed for decades in the United States, involving providers, payors, employers, and members, is likely to change dramatically with the emergence of health insurance exchanges, mandated by the Patient Protection and Affordable Care Act (PPACA). As a result, the American healthcare system will see a significant expansion of the power of individuals (rather than employers) to make health plan purchase decisions, in both state and federal exchanges. This approach promises to have a far-reaching impact on the way coverage is marketed and administered, as well as an effect on healthcare analytics as administrative challenges are confronted.
The exchange concept, which figures prominently into PPACA, was originally envisioned decades earlier. Thus, while final determination of the landscape and details are still changing, events currently unfolding are the result of long-established ideas.
Health insurance exchanges are designed to allow individuals within participating employer groups to select coverage from among participating payors, with coordinated billing and administration provided to the employer by the exchange. Even though these individuals will still be employees, the exchange concept will enable them to select the product of their choice. In theory, this process promises to provide increased choice to individuals and families, in a uniform competitive environment, while distributing risk between participating payors among a larger membership base.
Milliman today identified a series of considerations for states, health plans, and employers as they look toward the 2014 state exchange implementation deadline set forward in the Patient Protection and Affordable Care Act (PPACA) and reiterated in regulations issued by the U.S. Department of Health and Human Services (HHS) on July 11.
“The exchange regulations provide clarification on some points while leaving many questions open,” said Cathy Murphy-Barron, Milliman principal and consulting actuary.
“The possibility that exchanges could serve a larger role in the rate review process introduces questions about interaction between state insurance departments and exchanges. Perhaps most importantly from an actuarial perspective, we are still awaiting regulations on essential benefits and other key aspects of pricing, which will be pivotal in dictating the design of plans in the exchange. So while we know more today than we did last week, there are still many unknowns and various questions for states, plans, and employers to consider as they plan for the exchange paradigm.”