Exchange misconceptions set straight

June 4, 2013

A number of myths and misunderstandings have surfaced about HIXes.

Misconceptions about the IT requirements of health insurance exchanges (HIXes) are still prevalent. No matter the industry, much of the emphasis in product development is ease-of-use for consumers. These days, users expect everything they need to be right at their fingertips. That trend applies to the health insurance exchanges that states are required to implement by Jan. 1, 2014.

Unfortunately, making things convenient and intuitive for the end-user also requires a massive amount of work, creativity and ingenuity on the part of developers. Even under the best of circumstances, providing an understandable and easy-to-use portal that allows an entire state’s population of eligible individuals and small businesses to compare, select and pay for health insurance is a herculean task.

Also, given HIX’s rapidly approaching deadlines, substantial budgetary requirements and need to seamlessly connect to so many other public and private systems, the circumstances are anything but ideal. Further complicating the issue, some are pushing back on the reform law that calls for each state to set up a functional HIX.

Because healthcare reform has been so visible and controversial, a number of myths and misunderstandings have surfaced about HIXes. This article serves to set the record straight.

Myth: With some minor adjustments, current healthcare insurance systems are flexible enough to allow individuals to compare and purchase insurance coverage.

Fact: President Obama has specifically stated that his vision is for “a market where Americans can one-stop-shop for a healthcare plan, compare benefits and prices, and choose the plan that's best for them, in the same way that members of Congress and their families can.” Although reasonable, the technological flexibility and connectivity required to achieve that goal is stunningly complex.

Every aspect of healthcare-eligibility, enrollment, security and the ability to make comparisons of insurance options-is so interconnected that you couldn't possibly separate the individual components. Complicating matters is why many insurers have been “bolting on” capabilities to their legacy IT systems over the years, individually integrating each of them into their overall IT environment. Re-engineering all of those disparate systems so they are able to seamlessly exchange information with a state-level HIX will be a monumental task.

However, the rewards should make the effort worthwhile. The well-designed HIX will connect to and interact with health information exchanges (HIEs), which will match the member's individual health needs with the best possible insurance options. The result would be the right care, delivered at the right time, in the right place.

The better the HIX interacts with the HIE, the more money will be saved. Because the HIX cannot achieve that level of effectiveness by operating in isolation, systems integrators are in very high demand. In fact, there are concerns of a shortage of highly qualified IT professionals needed to manage a project of this magnitude.

Myth: HIXes will facilitate competition among health plans by enabling the smaller and regional players to compete with the dominant, national plans

Fact: Although technically true, it could take years for this to actually happen. The main reason is that health plan electronic data interchange (EDI) systems were designed primarily to process claims, not to compete for individual members in an open market. To be able to match the best insurance option to the individual's needs is going to require some retooling at the health plan level, which takes time, money and expertise.

The plans that have the most resources are the large national insurance providers. As a result, they will likely retool and refine their IT systems more quickly than smaller health plans will, giving them a distinct advantage in the early stages of HIX operations. Eventually, however, the more flexible technologies will become ubiquitous, and the playing field will truly be leveled.

Myth: Letting the federal government implement the HIX relieves the state of the need to overhaul its current IT environment

Fact: This is false. Regardless of whether states defer HIX implementation to the government, they still need to comply with the IT requirements of the Patient Protection and Affordable Care Act, meaning they must create interfaces to link individual eligibility and enrollment data between the federal HIX and the state's own Medicaid and comprehensive health insurance plans (CHIP).

Each state has specific priorities based on its population. Some may focus on obesity, while others might choose to focus on minority health issues. A national HIX is not going to be attuned to an individual state's population health needs, which will limit the ability of the HIX to provide the best care tailored to a state's residents.

Federal IT infrastructure has been geared toward caring for a national population (Medicare) consisting of a relatively homogeneous group-the elderly and disabled. Going forward, that system will need to accommodate the needs of a broader spectrum of individual buyers.

While some states began working on their exchanges soon after the legislation was announced, the vast majority haven’t. Much of the discussion surround the HIX mandate has been ideological in nature, but the time for results is approaching. Despite the lack of progress in most states, the federal Department of Health and Human Services has said it will keep to its stated deadlines of having the exchanges open for enrollment on Oct. 1, 2013, and fully operational on Jan. 1, 2014.

While it’s still unclear whether or not those deadlines are achievable at this stage in the game, one thing is for sure: states have no more time to waste, and very little margin for error.

Karl Strohmeyer is group vice president for Level 3, an international communications company that serves customers across the healthcare industry.