The Clock is Ticking for Public Health Insurance Exchanges

The success of Obamacare relies entirely on every state having a health insurance exchange as mandated by the Affordable Care Act (ACA) up and running no later January 1, 2014.

By early 2013, the federal government (via Health and Human Services (HHS)) will make a determination as to each state’s readiness to bring their health insurance exchange online. Lack of readiness by the January 1, 2014 deadline means HHS will take over the implementation and operation of each exchange.

The clock is ticking…

We are following closely the progress that is being made by the states are convinced that only a handful will be ready by the deadline.   Moreover, we question whether HHS will be able to step in and offer their working version of an exchange either, or if that federal exchange will even be legally able to offer subsidized policies.

While we are not prepared to unilaterally conclude that ACA’s exchange deadline won’t be met by any state, a former HHS secretary is equally skeptical.

We want exchanges to succeed and believe they ultimately will (in some form).  Our reviews of the exchange initiatives have included studying the Early Innovator grants and interviewing state policy administrators and vendors selling into the exchange concept.  The amount of work that will need to be done in order to get the public exchanges stood up by 2014 is daunting.

TripleTree’s recent report on exchanges, HIX: An assessment of the complexities and opportunities emanating from the ACA’s public health insurance exchange concept introduces these challenges and some innovative solutions that could emerge as part of the solutions.  Since then however, the planning, procurement and testing are in the early innings; and operational integration is far from reality.   Unfortunately very few states have a demonstrated ability to pull off the kind of implementation prowess needed to come online, on time.

Putting politics and policy aside, there are at least three major challenges that each state will need to overcome (quickly) if the public exchanges have any chance of meeting the 2014 deadline:

1. States need more clarity on what they are building even though many states have RFPs out for technology and have drafted high level architectures.  There is universal uncertainty and lack of guidance from HHS on major issues such as to exactly how payments and subsidies will be processed  or how the carriers will integrate their workflow into the exchanges
2. States lack successful architectural models and commercially proven technical capabilities because there is no working model of an exchange. Those charged with building the models – the Early Innovator grantees – are far from ready, or have dropped out of the program and/or returned their remaining funds.  The often cited Massachusetts and Utah models fall short of the ACA requirements (as do the Medicare exchanges).   And no vendor has a turnkey solution.
3. States need more time – Given the massive scale and complexity of the exchanges and the integration that needs to be done with existing state and federal systems, it will be next to impossible to build an automated exchange as envisioned by the ACA in the next 16 months.

In our report, we also introduced the notion of private entities that may have the acumen and motivation to bring an insurance exchange online by the 2014 deadline.  We speculated that the private exchanges would start to roll-out in the second half of 2011 and even identified some of the likely players that would have compelling capabilities to drive the private exchange concept.

Our research asserted the real opportunities for the private sector to capitalize on the HIX mandate through a market-aligned solution that will have more impact to improve health insurance access than the federal mandates.  We are excited to see and will continue to watch the early launches of the private exchanges and believe the states and public HIX will benefit from modeling their efforts and approaches around the early successes from the private exchanges.

Let us know what you think.

Scott Donahue

Scott Donahue is a Vice President at TripleTree covering infrastructure and application technologies across numerous industries and specializes in assessing the “master brands” of IT and Healthcare. Follow Scott on Twitter or e-mail him at sdonahue@triple-tree.com

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Consumerism in Healthcare

The U.S. healthcare system is entering a new era for consumers.  Consumers have become engaged ‘healthcare stakeholders’ and are demanding greater understanding of their options around care and costs.  As a result, consumers (aka patients, employees, and health plan members), are starting to realize that their influence (which has been steadily building over the last decade) have meaningful clout in the healthcare economy.  Below are four relevant initiatives we assessing:

• Health programs, care reminders, and incentives.  Consumers want easy access to online tools and resources that enable care direction and lifestyle management including programs like:
  • Medication Therapy Management tools that connect patients with physicians and pharmacists.
  • Care reminders that can be securely pushed to consumers through electronic messaging mediums such as phone, email, and text message.
  • Incentives can be a strong driver towards encouraging healthy behavior with insurance discounts for health and wellness activities like joining a health club.
• Better options, access to care, and transparency
  • Allowing patients to take more control of their care options and reviewing the costs associated with those procedures is a major factor in healthcare consumerism.
  • By providing education, pricing data, and easily accessible online content, patients can make more informed decision about care, which drives patient awareness, improves adherence, and transparency.
• A ‘retail-like’ healthcare experience
  • Customer satisfaction surveys typically rank ‘shopping for health insurance’ at or near the bottom of most industries.
  •  Traditional consumer expansion about a ‘retail’ shopping experience has been lost in health insurance, and consumers need online tools such as portals, comparison engines and programs for population health management (PHM). Opening this business-to-consumer (B2C) channel will create more clarity around cost, treatment options, and alternatives.
• Flexible payment options and improved customer service.  Most consumers would agree that managing the payment process for healthcare related expenses can be a nightmare. 
  • Wouldn’t it be great if a single trip the hospital resulted in one bill that included all charges and a single explanation of benefits (EOB)?   The lack of quality and continuity in customer service and support creates additional consumer frustration. Traditional customer relationship management (CRM) software tools that provide a 360 degree view of the customer in other verticals such as retail and financial services are only beginning to penetrate the healthcare market. Consumers want tools that provide more flexible payment options, simplicity around billing and cost, and an improved experience with customer service.

As consumers become more engaged healthcare stakeholders, the demand will increase for greater understanding of their care options, access, transparency, and costs.  Until recently there was little incentive for insurance companies and provider groups to change the model, and holding healthcare organizations accountable for these changes now is engendering consumer choice via competition, not legislation.  For more, check out our recent Principals Forum interview on the drivers of consumerism in healthcare and let us know what you think.

Michael Boardman

Michael Boardman is an associate at TripleTree covering the healthcare and technology industries, specializing in clinical software solutions.  Follow Michael on Twitter or e-mail him at mboardman@triple-tree.com.

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Will Traditional Healthcare Providers Need to Become Consumer Friendly?

It is hard to believe that it has been more than seven years since the Medicare Prescription Drug, Improvement, and Modernization Act created health savings accounts (HSA).  In 2004, the pundits were espousing how consumer directed health plans (high deductible health plans tied to a HSA or health reimbursement account (HRA)) would put more healthcare spend into consumers’ hands and in-turn, consumers would demand more price transparency across the healthcare system.  Consumers were supposed to be able to use their new-found purchasing power to comparison shop and ultimately choose the healthcare services that provide the best value.

In a March 2005 report entitled Will Health Plans Profit from HSAs? Forrester Research projected that by 2010 there would be 15.9 million HSAs and HRAs holding $17.5 billion in assets.  Actual figures have trailed projections, but the move to HSAs and HRAs has continued to gain momentum.  Employee Benefit Research Institute® recently published that the number of HSAs and HRAs has grown from 1.2 million in 2006 to 5.7 million in 2010.  These accounts now hold $7.7 billion in assets, creating meaningful healthcare purchasing power for consumers.

Despite all of this growth however, comparison shopping for healthcare remains challenging.

• While employers have attempted to provide price transparency tools, they have struggled with getting detailed pricing information from providers that would enable informed employee (consumer) decision making.
• Health plans have been unable to provide their members with real-time adjudication capabilities that would allow them to understand in-network pricing for services.
• Services marketed directly to consumers (with features like convenience, affordable pricing for acute care, etc) tout health plan reimbursement as a secondary feature.

This last trend started with retail clinics, such as CVS Caremark’s MinuteClinic and Walgreens’ Take Care Clinic; that effectively promote the price of services prominently at their clinics and on their websites.  In a market like Minneapolis, two large healthcare organizations (UnitedHealth Group and Health Partners) are taking similar but distinct approaches via recently announced online clinic, prescriptions and doctor-patient medical consultation services.

• UnitedHealth Group’s OptumHealth has launched NowClinic, which offers 10 minute online visits with clinicians for $45.  The service is now offered in five states, and while OptumHealth is offering discounted prices to contracted employer groups, consumers must pay for all services directly as OptumHealth does not currently accept health insurance.
• HealthPartners, a regional healthcare provider and health plan has launched a competing online service called Virtuwell.  At Virtuwell, online consultations cost $40, and the service accepts insurance plans from HealthPartners and CIGNA.

Both announcements tout convenience as the key feature and could be an easy purchase decision for some consumers.  Even if not reimbursed by insurance, consumers may opt to spend $40-$45 out of pocket without having to leave their home, when comparing the alternative of driving to a doctor’s office, paying for parking, and waiting in the waiting room with other sick people.  This decision would be made even easier for consumers that do not reach their health plan deductible during the year and thus would not get reimbursed if they visit a traditional doctor.

With HealthPartners as an exception, traditional healthcare services providers have been slow to adopt both price transparency and convenience.  As healthcare delivery models change and new players enter the market, it will be interesting to watch how traditional healthcare providers evolve to accommodate increased expectations from consumers who are more informed and demand options for where, when, and how quickly they can interact with clinicians.

There is no question that as more payment responsibility is placed in consumer hands, providers will change, the question is how quickly this will occur and which firms will benefit most.

Let us know what you think.

Jason Grais

Jason Grais is a Director at TripleTree covering the healthcare industry specializing in healthcare IT, population health management and emerging services in the life sciences sector. You can email him at jgrais@triple-tree.com

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