With 19 states, plus Washington, D.C, approved to fully or partially run health insurance exchanges, insurers must prepare for the new consumer population entering the marketplace.
To find out what it takes to successfully sell plans on exchanges, FierceHealthPayer spoke with Deborah Gordon, vice president and chief marketing officer of Network Health, about her experience working with Health Connector, the Massachusetts exchange, and how the new marketplaces can help rein in healthcare costs.
FierceHealthPayer: What makes a successful health insurance exchange?
Deborah Gordon: Going back in time to when the exchange was established, there were a few key things that made the exchanges particularly successful.
First, there was tremendous collaboration and cooperation. From the government sector to private sector, from the providers to the community, there was great sense of "we're all in this together," that we have common goals--to increase access to insurance and healthcare services for our citizens. And by focusing on that common goal, it was quite easy to work together and put our common interests at the forefront.
Second, we have a massive opportunity and challenge to raise public awareness. Everyone had their own messages, but we did it in a collaborative way. We all knew that for the exchange to be successful we all had to contribute to increasing the public's awareness about the exchange itself and new products.
Third, I would advise having a strong stomach. At the beginning, things are going to move fast. What states experience at the beginning will not necessarily be the steady state.
For example, in Massachusetts, in the early days, we did experience pent-up demand for services. We had thousands of people who had not been covered previously, suddenly with access to insurance and healthcare, and they did seek care. And that's the point--for people to get the care they need, but over time. That pent-up demand and increased utilization regressed to the median.
Know that this is a start-up enterprise, and it's going to take a lot of work, collaboration, energy, effort, patience, determinate. On the other side of it, you have a system where more people have access to the care they need, which ultimately leads to a better system of care.
FHP: What role do providers play in exchange efforts?
DG: The formal, official relationship in the exchange is between state authority and health insurance plan, but you can't have that equation without providers. While healthcare providers may or may not play a formal role, their interests are very important.
More hospitals entering the insurance market, and specifically intending to operate health plans on the exchange. Certainly this is true with the ACO trend, but the line between insurance company and provider system are graying, and I think we'll see more of these hybrid entities operating on the exchanges.
FHP: When implementing exchanges, what works and what doesn't work?
DG: One thing our exchange, the Health Connector, did extremely well was they remained very open and transparent. They have a board of directors that meets publicly, for example, so that all stakeholders have insight into what's happening and how they're making decisions.
Transparency and collaboration are key, so we have a very positive, constructive working relationship with the Connector at Network Health. Of course, they're our regulator, but we see them in a true partnership capacity. They have set that tone and lived up to that model. What that does, from an implementation standpoint, is it puts all parts of the system on the same page.
We all want this to work; we all want our exchange to be effective. If we're having open dialogue and channels of communication, we're able to address concerns, work through challenges and give and receive feedback.
FHP: How have regulatory guidelines affected competition?
The exchange in Massachusetts has encouraged innovation and enable competition through the rules and guidelines they set. Each year, we bid to participate on the exchange in the subsidized market. We just recently went through a seal of approval process to enter the commercial exchange market. Through the bidding, they'll set an actuarial target range. There are rewards for plans that come in at the low end. That fosters a sense of innovation--how can we get to that low price point.
A couple of years ago, Network Health lowered our premiums by 15 percent and saved the government significant amounts of money, offered a lowest price to the consumer and actually had phenomenal membership growth. So it's really thanks to the Connector that we were able to create such a win-win-win situation.
FHP: What challenges did Network Health face when implementing the exchange, and how long did it take?
DG: When Massachusetts launched the exchange, the timeline was incredibly compressed. Our legislation passed in April. And within a few months, the entire infrastructure was established, and the rules were being developed, as we were trying to implement them. It was like drinking from the fire hydrant; it was a whirlwind. The way we overcame that was through that open collaboration and communication with the Connector.
FHP: The landmark legislation affected hundreds of thousands of people. How did you spread the word about the exchange?
DG: For the exchanges to work, you need to focus on public awareness; that was certainly a challenge. We needed to get the word out really quickly.
The Connector facilitated workgroups on communication and public awareness and developed key messages together. Every entity (my company, a competing company, the hospitals, the Connector) took those messages and developed their own approach to getting the word out, but the point was we were starting from the same page. And within a very short time, we had raised public awareness, got tremendous response from the market, and more people signed up faster than we all expected.
FHP: How did you deal with the significant increases in covered Americans?
DG: The health plans experienced explosive growth. At Network Health, we doubled our membership in just over a year, following healthcare reform implementation.
And we rose to that challenge: We adapted our systems, our policies and our staffing patterns. We did that with a lot of internal collaboration. In the early days, the phones were ringing off the hook in our call center, and we put out the word to any of our staff who had previously worked in customer service to come back and help out on the phones.
FHP: From what Network Health has seen in Massachusetts, how will exchanges help reduce healthcare costs?
DG: There are two main levers; one is simply competition. The health insurance exchange concept creates a marketplace for insurance, which creates visibility into pricing and benefit design. It puts health insurance plans, side by side, on the shelf in way that really has not been done before.
And when you put products on a shelf with price tags, you, no doubt, bring down prices or, at least, encourage competition.
The insurance exchanges as marketplaces encourage competition and, therefore, if you believe in markets, which I do, you will see price competition--and that's good for us all.
The second lever is that the exchanges themselves will have some potions to create regulations, guidelines, bidding rules, policies that can encourage that competition and help drive down prices. The Massachusetts Health Connector used their annual bidding process to create incentives for plans to bid low and reduce their prices.
For example, in Massachusetts, if you're a completely subsidized individual, you can only choose among the lowest-cost plans. That creates an incentive for the plans to come in low. It creates a way for the exchange to ensure that they will pay the minimum premium for the same quality coverage.
And it has worked. In Massachusetts, the estimate is that some of these approaches have reduced costs by $91 million.
FHP: What advice can Network Health offer to other states looking to implement their own exchanges?
DG: Raise public awareness; get the public to understand what their new options are. Through awareness comes support, education, consumer empowerment. The exchanges are a very positive step that creates a market where that hasn't been one, a vehicle for competition, for innovation and improvements in cost and quality.
In some ways, the exchange is almost the first real foray into a true consumer market for insurance.
Two, prepare for the pent-up demand. There are millions of people in the United States who don't have health insurance who will now be able to access it, and they need services. Embrace that. The whole point of healthcare reform is to make sure people can get the healthcare they need. While that demand will be high upfront, it will over time regress to the mean, so be patient.
And third, don't underestimate that power of and the need to respect diversity. The population that you're going to serve is very heterogeneous; there will be a wide range of segments. The exchange population is not going to be cookie cutter and to best serve the needs of that diverse, broad population, you need cultural competence and linguistic capabilities.
You also need to understand the consumers' insights--talk to the consumer and find out what they need and what they expect. There are people who haven't had insurance as adults and don't know what this is all about and don't necessarily know how to use the system to their advantage and for the good of the whole.
FHP: How did Network Health come to understand the diverse exchange population?
DG: We held focus groups with individuals who were uninsured, and we met people from all walks of life--a comic book store owner, a recent graduate who was looking for work, a contractor, part-time workers, unemployed workers. So the first step was engage with the consumer and ask them what do they understand, what do they expect, what do they hope for.
Then we developed over the years a range of programs. For example, we have a clinical community outreach team that goes out in the community to find our members who we're trying to reach, and they engage those members with the healthcare system and our care management resources.
We also do a significant amount of translation--all of our materials go out in multiple languages. Our whole member and perspective member website is translated into Spanish. We know that between 10 percent and 30 percent of our population is Spanish-speaking, so how could we not provide our information in their own language.
We take a range of approaches. Recently, Network Health became the first New England plan to receive NCQA's multicultural distinction award, which is recognition of Network Health's systematic policies and procedures for ensuring cultural competence in our materials, our communications, our clinical approaches. We take it very seriously, and we think it's part of what has made us successful.
Editor's note: This interview has been condensed and edited for clarity.