Exchange rule leaves payer requirements vague

Although it seems the Department of Health & Human Services' (HHS) proposed rule on health insurance exchanges is stacked in healthcare payers' favor as HHS granted many of the big insurers' wishes, including sitting on exchange boards, the rule also fails to resolve some questions, such as what health benefits insurers will be required to cover.

But maybe the most interesting thing about the proposed exchange rule isn't found in the rule itself, but in a new PriceWaterhouseCoopers report--private insurers could gain up to $200 billion in revenue by 2019 from health insurance exchanges. That amount of money should get payers' attention and perhaps compel them to negotiate even harder for any unresolved issues HHS left on the table.

Even though HHS gave insurers a lot of what they were asking for in the new rule, they still "have a lot to think about," Rick Judy, principal with PwC's health industries advisory practice, told me. Chief among their new concerns is deciding in which state's exchanges to participate. "Insurers must decide whether state models and/or populations fit with their own strategy," he said.

Judy thinks there will be winners and losers as a result of the exchange rule, depending on how well insurers can manage the new consumers entering the market. He recommended that payers take proactive steps to educate consumers on what options and benefits are available within exchanges through, for example, retail establishments, marketing campaigns, or even social welfare programs. Such education likely will go a long way to determining whether the exchanges are successful because it will help direct consumers, particularly ones with chronic diseases, to the right care management programs, Judy added.

"There's still a lot of questions," says Alissa Fox, a senior vice president at Blue Cross and Blue Shield Association. For example, the rule suggests that the exchanges may review insurers' rate increases. "We're looking at that as something that might be duplicative of what a state insurance commissioner already does," Fox said. 

HHS also addressed, but didn't finalize, the issue of how to ensure payers comply with state marketing regulations and don't engage in marketing practices that would discourage enrollment of individuals with significant health needs. HHS questions whether further rules are needed to discourage unfair or deceptive marketing practices and to assure that vulnerable consumers aren't enrolled in duplicative coverage. 

The proposed rule failed to resolve another big debate on whether exchanges should certify health plans or if they should establish an "any willing insurer" model that allows all licensed insurers to participate. HHS says in the rule's preamble that exchanges can make a blanket determination that all plans that meet the other certification requirements are qualified, thereby effectively endorsing the "any willing insurer" model as a permissible option. But, HHS also says exchanges can be active purchasers, engaging in selective contracting, competitive bidding, or negotiation with plans.

It seems payers might have to wait for the final rule before this issue gets fully worked out. - Dina