Exchanges must direct consumers to right products

Consumers will have a greater influence on healthcare than ever before once the insurance exchanges roll out. However, experts say health plans must proceed with caution when designing their exchange strategies.

According to Dan Mendelson, CEO and founder of Avalere Health, during a recent Web conference, major changes are converging in the healthcare market:

• The payer landscape is evolving, and plans must find new ways to engage and sell their products;

• The provider environment is consolidating and payment is transitioning from volume to value; and

• There is an increase in consumer accountability with higher cost sharing and more responsibility for making choices.

Mendelson says he’s confident all 50 states will have exchanges up and running but there will also be glitches along the way. In 2014, the country initially will be a patchwork of state-run and federal exchanges.

“Some of the states that are most committed to the concepts of autonomy from the federal government are actually having their exchanges run by the federal government,” he says. “And all the states that were dragging their feet are going to have to rely on the federal government to run the exchanges, and that disadvantages them to some degree.”

Over time, Mendelson says, the law will become more clear through its practical implementation, and eventually, more states will begin operating their own exchanges.

As of last month, 17 states and Washington, D.C., had announced their intent to run their own, according to Deloitte. Another seven states are opting for a partnership model, the remaining states are looking at a federally run model. Ohio and Virginia have indicated they will use a federal exchange but with state management of qualified health plans, according to Avalere.

In addition, enrollees will switch back and forth between commercial coverage and Medicaid coverage through the exchanges. The marketplaces are expected to have enrollment mechanisms for both types of coverage with a “no wrong door” interface for consumers of varying income levels.

“You will see some more consumer engagement in Medicaid, too, because the states are starting to think about what kinds of incentives to give consumers in the Medicaid market,” Mendelson says. “That message is not lost on the health plans.”

Anna D. Sinaiko, research fellow for the Department of Health Policy & Management of the Harvard School of Public Health, studied the Massachusetts exchange. According to research, 42% of nearly 400 members surveyed said the information about the health plans included in the shopping experience in the exchange was too hard to understand. Additionally 57% said they were unsatisfied with affordability. One-fifth said they wished they had help to narrow down their choices.

Not having the help they need to understand their choices makes consumers “feel stupid, and they don’t like that,” says Steve Zaleznick, executive director of HealthPocket, a health exchange interface.

He says exchange operators have to put consumers at ease not just because the shopping experience will be new to them but also because the public doesn’t trust the health insurance industry. The exchange must direct them to the right products for their needs, he advises.

“The internet is going to do wonders for transforming how insurance is purchased,” Zaleznick says.

Often the best choice for a particular consumer is unknown, so recommendations must be personalized for each person who shops on the exchange. Plans must also recognize shoppers’ priorities such as whether they want to verify if their preferred physician is in the network.

Annual enrollment will also allow plans time to adjust their plan offerings to better respond to the market and to build loyalty, he says.

States operating their own exchanges

California

Colorado

Connecticut

D.C.

Hawaii

Idaho

Kentucky

Maryland

Massachusetts

Minnesota

Nevada

New Mexico

New York

Oregon

Rhode Island

Vermont

Washington

Source: Deloitte, March 12, 2013