Sg2 Strategic Countdown: Health Insurance Exchanges
Although 2014 contracts for health insurance exchange (HIX) products are signed and enrollment has closed, 2014 is shaping up to be a “soft launch” for this market as employers, payers and individuals sort through a new, confusing set of options. The real expansion will be in 2015 and 2016, when the exchanges reach critical mass. Therefore, now’s the time to build an exchange market strategy or reevaluate existing strategy and adjust for next year. Sg2 recommends the following steps to firm up your HIX strategy for 2015 and beyond.
- Size and Characterize the Exchange Market. First determine how big your organization’s exchange patient population will be. Depending on the market’s political, demographic and economic characteristics, the HIX population may constitute a substantial—or a negligible—segment of the organization’s discharges.
- Model Payer Mix Redistribution. Analyze where HIX patients are being drawn from—what proportion were previously commercially insured and what proportion were self-pay (uninsured). This balance will have a major effect on the bottom line. Based on income patterns in your market, estimate what level of subsidy they are likely receiving. The subsidy mix will drive payer mix and revenues.
- Estimate Revenue and Margin Impact. Evaluate how changes in volumes (eg, increased demand), revenue (eg, discounted rates, commercial crowd-out) and costs (eg, investments needed to manage the new population) play into exchange market margins.
- Define a Strategic Approach to the Exchange Market. Take a hard look at the stakes (market size), upside potential and downside risk. Then consider your strategy: will the organization go on offense or defense?
- Set a HIX Contracting Strategy. For 2015 and future years, provider systems will need to negotiate smart contracts with payers and also make their organization attractive to individuals shopping on the exchanges. Some organizations have decided to trade discount for steerage, but beware of setting a new price floor.
- Conduct Scenario Planning; Update Strategy Annually. Scenario planning to test assumptions about contracting approach, payment rates and narrow networks can help to build confidence in your HIX strategy. In fact, the exchange market is poised to change so much over the first few years, assessing your strategic approach to HIX and renegotiating payer contracts will need to be an annual exercise.
- Educate Staff and Assist Potential Enrollees. Make sure frontline staff in the ED and in primary care clinics are well versed in how to guide the newly insured through your System of CARE. Before 2015 open enrollment (October 15 to December 7), reach out to high utilizers to ensure they maintain or obtain coverage. Create processes to manage the transition of patients in and out of plans due to changes in life circumstances.
- Integrate Appropriate Access Channels. As the HIX population enters the health system, prepare for increased demand. Consider expanding access in areas with high concentrations of the newly insured, by opening new care sites, extending hours at existing sites and/or integrating community resources such as Federally Qualified Health Centers into your System of CARE.
- Plan to Meet the New Population’s Clinical Needs. The ED, primary care offices and behavioral health providers are likely to see high demand from the HIX population. Focus on high-volume, high-cost conditions to ensure clinical resources are in place. Build care coordination and chronic disease management strategies to improve outcomes, lower costs and keep patients in the system.
- Manage New Collection Processes. For many exchange patients, having a new insurance card will bring their first experience with health system billing.Make it straightforward, simple and transparent, and offer assistance when possible.