November/December 2014
Exchange
About Innovative Health and Benefit Marketplaces
The Other Pieces Examining How Private Exchange Adoption Will Affect Other Areas of Health and Benefits Survey: What do employees think about private exchanges? Exchange Profile: GoHealth The Official Magazine of
www.theihcc.com
Projections from organizations like Accenture and Oliver Wyman suggest that 35 to 75 million Americans will receive their employee benefits via a private exchange within the next few years. Are you ready to make the transition? With PrivateHealthCareEXCHANGES.com, The Institute for HealthCare Consumerism has aggregated 160+ private exchange solutions to create the industry’s premier guide to help you — employers, health plans, brokers, advisors and consumers — to navigate this sea of change in employee benefits.
The Only Online Guide Where Employers, Health Plans, Brokers and Consultants Can Navigate Private Exchange and Defined Contribution Markets Solutions and Models
Access the Complete Database for $99!
Submit your FREE Listing. Enhanced Listing and Premium Profile Opportunities Available.
www.PrivateHealthCareExchanges.com
INSIDE
FEATURE 12 The Other Pieces: Examining How Private Exchange Adoption Will Affect Other Areas of Health and Benefits Private exchange adoption is growing and will inevitably play a major role in realigning some other aspects of employersponsored health and benefits. Furthermore, the integration of other tools and services – such as transparency, telehealth, disease management – may actually be crucial for employers to maximize cost savings in private exchanges and for the exchanges themselves to deliver on promised results. By Jonathan Field, Managing Editor, The Institute for HealthCare Consumerism
7 Exchange Profile Building a Better Shopping Experience In 2014, more than 7.3 million consumers enrolled in public exchange health plans. The Congressional Budget Office estimates that the number of Americans without health insurance will decline by another seven percent this year. And by 2018, Accenture projects that private exchange enrollments will reach 40 million. It’s clear that consumers want health insurance, and more than that, they want an enrollment process that’s efficient and customized. By Scott Sullivan, Senior Vice President of Sales & Business Development, GoHealth
9 Stats & Data What Do Employers and Employees Really Think About Private Exchanges? Periodically, we reach out to the employers and employees using our
DEPARTMENTS
Bright Choices® and other Liazonpowered private exchanges to find out what they think about the experience. We do this not only so that we can continue to provide best-in-class products and service for our clients, but also so we can help the industry learn more about what’s really going on in the private exchange space. Here are some of the exclusive insights we’ve uncovered in our 2014 Employer and Employee Survey. By Alan Cohen, Co-Founder and Chief Strategy Officer, Liazon
“private exchange” label. So, how do employers properly evaluate all these exchanges? And what is the importance of looking at the different options available? By Michael A. Martocci & Jennifer E. Jones, KTP Advisors
4
Publisher’s Letter CEO and Publisher Doug Field covers the latest trends in private exchanges and shares what’s happening at The Institute for HealthCare Consumerism around exchanges.
11 Private Exchange Evaluation Private Exchanges: Do You Really Know All the Questions to Ask? The private health insurance exchange market is very complex, and each exchange or marketplace is different. In fact, many employers remain largely unaware of the variety of solutions available today under the
5
Briefs & Innovations Keeping you up-to-date with the latest news, research and innovation in health insurance exchanges (both public and private) and defined contribution.
HealthCare Exchange Solutions™ I www.TheIHCC.com I November/December 2014
3
PUBLISHER
Exchange www.theihcc.com VOLUME 10 NO. 6 | NOVEMBER/DECEMBER 2014
Private Exchanges: A Year in Review
Published by FieldMedia LLC 292 South Main Street, Suite 400 Alpharetta, GA 30009 Tel: 404.671.9551 • Fax: 770.663.4409 CEO
With all of the speculation, doubt and, ultimately, success, it has been an exciting year to follow the emerging private health insurance exchange market. And with the landmark acquisitions, significant capital investments and accelerating enrollment numbers, private exchanges are set for
Doug Field 404.671.9551 ext. 101 · dfield@ theihcc.com MANAGING DIRECTOR
Brent Macy 404.671.9551 ext. 103 · bmacy@theihcc.com CHIEF MARKETING OFFICER
strong growth once again in 2015. Yet, like a pendulum, various industry experts have gone back
Andrew Dietz adietz@theihcc.com
and forth with projections that private exchanges won’t live up to the hype or that they are the future
MANAGING EDITOR
of employee benefits.
Jonathan Field 404.671.9551 • jfield@theihcc.com SENIOR EDITOR
However, there has been one significant, unarguable change in the past year: employers have shifted from asking “what is a private exchange?” to asking the specific questions to evaluate which private exchange will fit their organizations’ strategies. And by asking the tough questions about the capabilities of each private exchange model, employers are once again driving the innovation. Private exchanges that cannot deliver on the promises will fall by the wayside while exchanges that listen to employers’ needs will prosper. To further help employers and other stakeholders in employer-sponsored health insurance better understand this emerging model, The Institute for HealthCare Consumerism will continue its leading coverage of this space into the new year. In addition to the research, blog posts and in-depth articles provided by PrivateHealthCareEXCHANGES.com and HealthCare Exchange Solutions magazine, we will be launching our inaugural private exchange conference, Private Exchange FORUM & Expo, this March in Dallas.
Heather Loveridge hloveridge@theihcc.com ART DIRECTOR
Kellie Frissell 404.671.9551 ext. 107 · kfrissell@fieldmedia.com ASSOCIATE DIRECTOR OF EDUCATION SERVICES AND PROGRAMS
Dusty Rhodes CHAIRMAN OF IHC ADVISORY BOARD
Ronald E. Bachman, CEO, Healthcare Visions EDITORIAL ADVISORY BOARD
Kim Adler, Allstate; Diana Andersen, Zions Bancorporation; Bill Bennett; Doug Bulleit, DCS Health; Jon Comola, Wye River Group; John Hickman, Alston+Bird LLP; Tony Holmes, Mercer Health & Benefits; Marc Kutter, Aflac; Sanders McConnell, TSYS Healthcare; Roy Ramthun, HSA Consulting Services LLC; John Young, Consumerdriven LLC WEBMASTER
Tim Hemendinger timh@fieldmedia.com DIRECTOR OF CONFERENCE SPONSORSHIP/ CORPORATE MEMBERSHIP/REPRINTS
Rogers Beasley 404.671.9551 ext 109 · rbeasley@fieldmedia.com
With this new conference, we will be providing attendees with a complete overview of private
ACCOUNT MANAGERS
exchanges, including the different models, how voluntary benefits and health accounts fit, health
Michelle Gatehouse 404.405.3007 • mgatehouse@theihcc.com
plans’ and brokerage firms’ strategies, perspectives from employers that have implemented a
Ted Arvan 678.296.1906 • tarvan@theihcc.com
private exchange and much more. With rates starting at just $99 through the end of January, we hope to see you there. For more information, visit PrivateExchangeFORUM.com.
PARTNERS/ALLIANCES
Joni Lipson 800.546.3750 · jlipson@fieldmedia.com BUSINESS MANAGER
Sincerely,
Karen Raudabaugh 404.671.9551 ext. 108 · kraudabaugh@fieldmedia.com HealthCare Exchange Solutions™ Volume 10 Issue 6 Copyright ©2014 by FieldMedia LLC. All rights reserved. HealthCare Exchange Solutions™ is a trademark of FieldMedia LLC. HealthCare Consumerism Solutions™ is published eight times yearly by FieldMedia LLC., 292 South Main Street, Suite 400, Alpharetta, GA 30009. Periodical postage paid at Alpharetta, GA and additional mailing offices.
Doug Field CEO/Publisher dfield@fieldmedia.com
TO SUBSCRIBE: Make checks and money orders payable to HealthCare Exchange Solutions ™ magazine 292 S. Main Street, Suite 400, Alpharetta, GA 30009 or visit www.theihcc.com. Non-qualified persons may subscribe at the following rates: single copy $7.50; $75.00/yr in the U.S., $105/yr in Canada and $170/yr international. Please contact FieldMedia at 404.671.9551 or subscriberservice@fieldmedia.com for name/address changes. PRINTED IN THE U.S.A. HealthCare Exchange Solutions™ is designed to provide both accurate and authoritative information with regard to the understanding that the publisher is not engaged in rendering legal, financial or other professional service. If legal advice is required, the services of a professional adviser should be sought. The magazine is not responsible for unsolicited manuscripts or photographs. Send letters to the editor and editorial inquiries to the above address or to jfield@fieldmedia.com. Permission to reuse content should be sent to, jfield@ fieldmedia.com.
4
November/December 2014 I www.TheIHCC.com I HealthCare Exchange Solutions™
NEWS BRIEFS & INNOVATIONS
NEWS BRIEFS Benaissance and Array Health Partner for New Private Exchange Solution Benaissance and Array Health have announced a partnership to integrate their insurance exchange solutions. Through this partnership, the Array Spectrum™ private exchange solution will include the Benaissance ExchangePoint platform for billing, payment collection and premium remittance processing. The combined solution will give consumers the streamlined and intuitive shopping and enrollment experience they want, while offering employers and insurers the advanced billing functionality they need. The Array Spectrum™ solution enables health plans to deliver their own branded online exchange.
KTP Advisors Establishes Performance Standards to Evaluate Private Exchanges There are at least 170 private exchanges today, and almost every private exchange is different, leaving many employers unaware of the solutions available to them. KTP Advisors — a specialty advisory firm on retiree health benefits, private exchanges and pharmacy benefit management for active employees — believes it has a solution to that problem. The firm has launched the first unbiased, completely independent evaluation and comparative data service of private exchanges for employers, trade associations and insurance brokers who don’t have the time to shop through different private exchange solutions. The firm has assembled nearly 75 key performance characteristics on financial information, product offerings, technology and data security, consumer support, customer service and more.
Maestro Appoints Two Health Care Leaders to Its Board of Directors Maestro, an emerging industry leader in health exchange technology and service, recently announced the appointment of Robert Natt and Peter Hudson to the Board of Directors. With over 50 years of executive leadership experience in health care, Natt and Dr. Hudson have led prominent health care organizations in successfully bringing innovative technology and service solutions to employers and consumers. Over the past 20 years, Natt has successfully led the growth and sale of several leading health care companies. Currently serving as executive chairman of Alegeus, Natt also served as CEO of PayFlex until presiding over its successful sale to Aetna in 2011.
PlanSource Powers Tremendous Growth of Digital Benefits Marketplace PlanSource recently announced it is powering Digital Benefits Marketplace, a private exchange from Digital Benefits Advisors. DBA introduced Digital Benefits Marketplace in 2013 to help businesses address the rising costs of health benefits. Digital Benefits Marketplace enables employers to fix costs through defined contributions and offers more choices for their employees. Employees can choose their own benefits based on their personal needs. Digital Benefits Marketplace began its national rollout last October, starting in North Carolina, Virginia, Georgia, Tennessee, Florida and California. The marketplace has received an overwhelmingly positive response from participating employers and employees for its variety of options and ease of use.
Access Health CT Launches First Online Avatar to Help Consumers Enroll Access Health CT (AHCT) is the first state-based health exchange to launch an online avatar to help consumers through the process of comparing plans and shopping for quality, affordable health care coverage. Named “Tina,” this virtual assistant offers guidance and answers to consumer questions on the AHCT website. AHCT worked with CodeBaby, a global customer engagement and leading intelligent virtual assistant technology provider, to develop and launch Tina. Her guidance is available in 120 different places on the AHCT website in both English and Spanish.
Aetna to Acquire Insurance Exchange Technology Provider bswift Aetna announced that it has entered into an agreement to acquire privately held bswift, which provides a technology platform that offers a retail shopping experience for health insurance exchanges and employers nationwide. Additionally, bswift offers benefits administration technology and services to employers. The purchase price is approximately $400 million, which Aetna expects to finance with available resources. The transaction is subject to customary closing conditions, including HartScott-Rodino antitrust regulatory approval. The acquisition is expected to close before the end of the year. As financed, the transaction is expected to be neutral to 2014 and 2015 operating earnings per share.
BCBS of Michigan: Private Exchanges Lowering Employer Costs, Changing Employee Enrollment Behavior According to an analysis of GlidePath, Blue Cross Blue Shield of Michigan’s private exchange, employers and employees are benefiting from use of the private exchange by empowering employees as informed consumers of health care. The analysis showed GlidePath increased employee cost awareness, encouraged employees to make effective cost choices to meet their needs and strengthened knowledge and adoption of HSAs. Employers using GlidePath set a defined contribution amount and their employees use those funds to actively shop online to select a health plan using the exchange.
NFP Marketplace Expands Health Insurance Options NFP, a leading insurance broker and consultant that provides employee benefits, property & casualty, retirement and individual insurance and wealth management solutions, recently announced the expansion of NFP Marketplace, a private exchange designed to manage costs for employers and offer competitive benefit options for employees. Through new partnerships with GetInsured and HealthPlanOne, NFP Marketplace now enables employers to offer affordable health insurance options to retirees, COBRA-eligible individuals and employees who do not qualify for sponsored plans.
PlanSource Announces the Launch of the True Choice Private Marketplace PlanSource announced the launch of the True Choice Private Marketplace, an advanced private exchange for California employers formed through a partnership with leading brokers The Centennial, Bolton & Company and Sequoia. As the adoption of private exchanges continues to gain momentum, far-sighted brokers are designing their own marketplace offerings to address the needs of small and midsized employers. HealthCare Exchange Solutions™ I www.TheIHCC.com I November/December 2014
5
H E A LT H
CONNECTING
W ITH
WELLNESS A Mobile Option for Private Exchanges Onlife Health’s configurable AlwaysOn™ mobile platform allows members to easily improve their health and stay inspired anytime, anywhere.
On-the-go features such as:
• Integration with 70+ fitness trackers and apps • Mobile health coaching • Goal setting and tracking • Incentive program tracking
Find out how we power wellness solutions for exchanges www.OnlifeHealth.com
PRIVATE EXCHANGE PROFILE
Building a Better Shopping Experience BY SCOTT SULLIVAN » SENIOR VICE PRESIDENT OF SALES & BUSINESS DEVELOPMENT » GOHEALTH
In 2014, more than 7.3 million consumers enrolled in public exchange health plans. The Congressional Budget Office estimates that the number of Americans without health insurance will decline by another seven percent this year. And by 2018, Accenture projects that private exchange enrollments will reach 40 million. It’s clear that consumers want health insurance, and more than that, they want an enrollment process that’s efficient and customized. According to a recent Gallup poll, half of uninsured Americans would prefer to get health insurance through an exchange. With so many options available to them, how will they choose where to go for coverage? It’s simple: They will look for a seamless experience, one that allows them to obtain the coverage they need quickly and easily. As a private exchange with features unique to the industry, GoHealth enrolls consumers in a proficient manner. Taking the experience one step further, GoHealth puts the power of choice in the hands of consumers.
A Customized Experience Finding the right health insurance plan can be confusing, especially for those who have never had coverage. But with GoHealth, consumers can enroll either online without going anywhere else, or over the phone with the help of a licensed insurance advisor. GoHealth’s licensed insurance advisors are standing by to recommend specific health plans based on consumers’ budgets and needs, as well as to answer any health insurance-related questions. These licensed insurance advisors bring clarity to an often confusing enrollment process. GoHealth’s enrollment platform can also estimate consumers’ tax subsidy eligibility. In fact, GoHealth became the first private exchange to connect with the Federally Facilitated Marketplace (FFM), enabling the company to sell subsidized health insurance plans under the Affordable Care Act. This integration is key because most people who shop for individual or family health insurance during open enrollment are eligible for tax subsidies that make health insurance more affordable. With subsidies, the average monthly premium payment during the last open enrollment period was only $69 per month, according to the Department of Health and Human Services. In addition to offering subsidized health insurance, GoHealth offers all of the same health plans as the FFM — plus off-exchange and ancillary plans — all on one platform. GoHealth’s private exchange offers plan options from more than 300 health insurance carriers from across the country. GoHealth is focused on giving consumers options to ensure that they find the plan that’s right for them.
Adapting to Consumer Expectations GoHealth is always looking to improve the overall experience for consumers. For 2015 coverage, the private exchange focused on improving the enrollment process. GoHealth selected enrollment questions that were most important in finding consumers the right coverage, and the private exchange was able to reduce its application from 30 pages to less than five. Additionally, GoHealth’s updated software now automatically recommends the best health plan choices, rather than relying on agents to sort through as many as 100 plans to make suggestions. An option that’s becoming more popular for employers and their employees is the defined contribution model. Defined contribution allows employers to provide a predetermined amount of pre-tax dollars to their employees for health insurance spending. This model is shifting the power of decision making to the consumer, and with more and more employers choosing this option, employees need somewhere to go to enroll in coverage. Individuals can take their employers’ defined contribution and enroll in coverage through GoHealth. This allows these individuals to make thoughtful health insurance decisions based on their specific needs and situations with the assistance of a licensed insurance advisor.
The Future of GoHealth As a result of the Affordable Care Act, the health insurance industry — and more specifically, private exchanges — will continue to evolve for years to come. GoHealth realizes the importance of adjusting and updating its enrollment experience as consumers’ expectations shift. It will continue to simplify an otherwise complicated process, thanks to its technology, licensed insurance advisors and the customized experience that these individuals can provide to consumers. Purchasing health insurance is an important and necessary commitment, and GoHealth will ensure that it remains a top exchange choice for its current customers and for the 13 percent of Americans who remain uninsured.
HealthCare Exchange Solutions™ I www.TheIHCC.com I November/December 2014
7
STATS & DATA BY ALAN COHEN CO-FOUNDER AND CHIEF STRATEGY OFFICER LIAZON
P
What Do Employers and Employees Really Think About Private Exchanges?
eriodically, we reach out to the employers and employees using our Bright Choices® and other Liazon-powered private exchanges to find out what they think about the experience. We do this not only so that we can continue to provide best-in-class products and service for our clients, but also so we can help the industry learn more about what’s really going on in the private exchange space. Here are some of the exclusive insights we’ve uncovered in our 2014 Employer and Employee Survey.
Employees Value Choice When it comes to employees choosing benefits for themselves, not only has our research found that they are willing and able to make these decisions, but they also prefer to do so. Only two percent of the employees we surveyed indicated they’d prefer to let their employer choose for them, what we like to call, “the status quo.” Clearly, consumers are ready for private exchanges; they want to be in the driver’s seat when it comes to making the big decisions that affect their lives. But that’s only part of the story. Consumers need education to help guide them to make the right choices for themselves and their family. Conventional wisdom may suggest that given the opportunity, employees will simply go with the cheapest plans available. But our research found that there are several reasons employees choose the benefits they do on our exchanges. t More than half say they select what provides the right coverage for them (52 percent in our survey). t Some choose products that were similar to what they had in the past (24 percent in our survey). t According to our survey, only 18 percent choose their benefits because they had the lowest costs. There were also many other interesting findings from both the employers, as well as the employees, we surveyed who are using a Liazon-powered exchange:
t t
t
83 percent of employers reported that their exchange has helped them control benefits costs. 90 percent of employees were satisfied with the number of choices available on their exchange or wanted even more; in fact, 24 percent said there can never be too many choices. 79 percent of employees expressed satisfaction with the shopping and enrollment experience overall.
Our survey also looked at how employee engagement with private exchanges changes over time. Is there a learning curve when it comes to private exchanges? Anything new takes a bit of adjustment on the part of its users. Heck, remember your first smartphone? So we decided to look specifically at how second-year employees feel about choosing their benefits through our exchanges, compared to first-year employees. Employees are more comfortable with using a private exchange in their second year and beyond. Second-year employees are more likely to understand how much their employers care about their wellbeing (26 percent in our survey were more likely to indicate that they appreciate their company’s contribution to their benefits). They are becoming more engaged in their health care decisions overall and better understand what their benefits cover. Private exchange adoption is still relatively new, but we’re confident that with early findings like these, more and more employees will react favorably to their employer’s decision to offer benefits through a private exchange. Employees are ready, paving the way for more employers to respond. Founded in 2007, Liazon Corporation operates the industry-leading private benefits exchange for businesses. Its flagship product, the Bright Choices® Exchange, helps employers manage their health care costs by setting predictable budgets through a defined contribution funding strategy while guiding employees to purchase better coverage of health, dental, vision, life, disability and other benefits. Liazon was acquired by Towers Watson, a leading global professional services company, in November 2013. Read more articles by Alan Cohen and other industry experts at the Liazon blog.
HealthCare Exchange Solutions™ I www.TheIHCC.com I November/December 2014
9
PRIVATE EXCHANGE EVALUATION BY MICHAEL A. MARTOCCI & JENNIFER E. JONES KTP ADVISORS
Private Exchanges:
T
Do You Really Know All the Questions to Ask?
he private health insurance exchange market is very complex, and each exchange or marketplace is different. In fact, many employers remain largely unaware of the variety of solutions available today under the “private exchange” label. So, how do employers properly evaluate all these exchanges? And what is the importance of looking at the different options available? Brokers, carriers, technology vendors, associations and employer groups will all approach the private exchange marketplace with a wide variety of objectives and goals. In order to properly evaluate which exchange or marketplace is best for them, there are a number of questions that need to be addressed as private exchanges vary from the most basic level to differences that are more complex. Basic questions about an exchange may include: 1. Does the exchange target Medicare retirees, non-Medicare retirees or active employees? 2. Is the exchange single-carrier or multi-carrier? 3. What carriers and products are available? 4. What decision-support tools are available to help consumers make the right decisions? While the above characteristics are important and worth evaluating, there are even more complex considerations that need to be addressed before choosing an exchange to deliver employee benefits. Those considering utilizing an exchange or marketplace should also ask: 1. Who owns the exchange technology platform? 2. How is the exchange compensated for benefit delivery and technology solutions? 3. Who chooses the carriers and products placed on the exchange, and how do they negotiate product pricing and underwriting? 4. Is the exchange designed to increase competitiveness among its insurance carrier partners for the benefit of the consumer? 5. Is there a limited number of carriers on the exchange, or can any carrier be offered on the exchange? The goal of private exchanges is to provide consumers access to quality care at a lower cost and to help individuals better understand their health care options. It is of great importance to supply the consumer with a wide variety of choice while providing guidance in the form of easy-to-use decision-support tools. One feature that makes a private exchange successful is allowing a health care consumer to shop from a wide variety of major medical health insurance and specialty products with varying plan designs. However, some exchanges are “single-carrier” driven or limited carrier models. Is that enough choice to drive down cost to the consumer? Time will tell. Another factor to consider is who owns the exchange technology platform. Every day there seems to be an announcement for another
new private exchange. Brokerage firms, consulting practices, health plans, associations and other organizations are creating and launching private exchange solutions for their members and clients. As of November 2014, there are at least 175 private exchanges announced or launched in the U.S. market. While most private exchanges are relatively new, a trend of carriers and brokers buying exchange technology companies can already be seen. Others are simply whitelabeling another technology company’s product. So the question remains: is the exchange you are considering a technology company or a marketplace offered by a broker, consultant, association or health plan? The business relationships that exchanges will have with their constituents/customers in the open market (carriers, brokers, employers, associations, etc.) may very well be successful for all. However, when choosing an exchange solution, this is something employers may want to consider. With the increased popularity of health care exchange utilization — both private and government run — it is important to address the issue of security and compliance to protect sensitive data, as the opportunities for error or threat continue to grow. While individuals browse the exchange platforms, personal information such as names, Social Security numbers and dates of birth could be compromised. A “one-stop shopping experience” — including the interaction and intertwined relationships between providers, payers, employees, patients and partners that many private exchanges boast — requires additional security measures. Other questions employers should consider when evaluating private exchanges include: 1. What technology platform does the exchange operate on, and is that platform susceptible to hackers? 2. Does the exchange have programmers and IT engineers on staff to manage security, or is it outsourced to a software technology vendor? 3. Do the exchange’s security measures comply with — and exceed — current federal and state guidelines for protecting protected health information (as defined by HIPAA)? 4. What are the exchange’s security procedures if there is a security breach? When vetting and evaluating private exchanges, everyone needs to cover all of the bases. To properly evaluate all the players in the private health insurance exchange market, it is important to get an independent perspective and know the right questions to ask. At KTP, our goal is to provide a completely unbiased, objective and far-reaching evaluation as clients (employer groups, brokers, consultants, insurance carriers, associations, health plans and others) consider private exchanges. HealthCare Exchange Solutions™ I www.TheIHCC.com I November/December 2014
11
THE OTHER PIECES Examining How Private Exchange Adoption Will Affect Other Areas of Health and Benefits BY JONATHAN FIELD » MANAGING EDITOR » THE INSTITUTE FOR HEALTHCARE CONSUMERISM
The second annual study by the Private Exchange Evaluation Collaborative (PEEC), published in December 2014, found that employers are committed to providing health benefits to employees and that private exchanges will be a likely mechanism to do so in the coming years. According to the report, over 40 percent of all employers may implement a private exchange for active employees by 2018. HealthCare Exchange Solutions™ I www.TheIHCC.com I November/December 2014
13
The Other Pieces: Examining How Private Exchange Adoption Will Affect Other Areas of Health and Benefits
D
espite reports on the lack of new “blue chip” clients during 2014’s open enrollment season and outlying studies that conflated implementing a private exchange with no longer sponsoring employees’ health insurance, as a whole, employers have become considerably more interested in the private exchange model in the past year. This can be seen quite clearly in the evolution of the due diligence questions that HR and benefits leaders have been asking regarding private exchanges. Going back even as recently to 2013, many industry leaders did not yet understand the basics of private exchanges. The question for many was “what is a private exchange?” However, over the past year, HR and benefits professionals have become demonstrably more knowledgeable on the variety of private exchange solutions. Employers are now asking questions focusing on the components and models of private exchanges and how these different models can help them meet varying organizational goals. This is a positive sign for the private exchange market, and ultimately, it will push exchange technology providers to continue innovating. Thinking holistically, many HR and benefits leaders have also begun asking how existing products and services can integrate with a private exchange platform. Simply moving to a private exchange may not be enough to result in significant cost savings for an employer, and the integration of other tools and services — such as transparency, telehealth and population health management — may be crucial for exchanges to deliver on promises of cost savings.
Private exchanges can be much more than just an enrollment platform with a few more options than a company’s previous benefits offerings. This can already be seen through the multitude of unique partnerships announced over the past year between exchange technology providers and other forwardthinking solutions. Right now, the private exchange industry is in its early stages. Over time, these platforms will continue to expand their capabilities to better meet the needs of health care consumers. In this article, we’ll explore some possible areas of integration into private exchange platforms and look at areas that are already being bolstered by early private exchange adoption.
Mobile Health Platforms Mobile devices are now the focal point of consumers’ lives, where they manage finances, connect with friends and colleagues, make dinner reservations and book travel. This is especially the case in the increasingly important Millennial demographic that will be so crucial for private exchange adoption. In health care, mobile technologies are growing quickly. By the end of decade, the global mHealth market is expected to hit almost $50 billion, according to research published by San Francisco-based market analysis and consulting firm Grand View Research. Private exchanges that wish to encourage year-round engagement 14
November/December 2014 I www.TheIHCC.com I HealthCare Exchange Solutions™
from users will need to provide users with a seamless mobile experience. Technology companies, such as Benefitfocus, bswift (now a subsidiary of Aetna) and Maxwell Health, have made the mobile user experience crucial to their private exchange offerings. Whether a private exchange solution provides users a quality app should be top question for employers when conducting due diligence of private exchange vendors, particularly in workforces that skew younger. By offering employees an engaging mobile experience, HR and benefits leaders can change the dynamic between employees and benefits enrollment. Employees can make their selections on their own time without the trepidation and rushed decisions often associated with benefits enrollment, and this relatively simple technology offering will go a long way toward increasing employee engagement in health care.
Voluntary Benefits The prognosis looks good so far for voluntary benefits in the private exchange arena. Private exchanges have opened a new channel for the sales of voluntary benefits with an entirely new set of rules, and insurers and brokers are already seeing increased sales as a result. Some industry experts have gone so far as saying that the term “voluntary benefits” takes on a whole new meaning in an exchange environment. In a private exchange with sufficient product offerings and robust decision-support tools, consumers are seeing an unprecedented level of choice. Seeing the opportunities created by voluntary benefits in these cloudbased marketplaces, Aon Hewitt, Bloom Health and other key exchange operators have added full suites of voluntary products to their exchanges within the past year. In August 2014, Aon Hewitt announced that critical illness, accident and hospital indemnity insurance — as well as life insurance and long-term disability coverage — would be available in the Aon Hewitt Active Health Exchange. In June 2014, Bloom Health added a full array of “specialty offerings” — e.g. dental, life, long-term disability, short-term disability, critical illness, accident and hospital indemnity insurance solutions — to its Private Exchange Platform®. The addition of a full slate of voluntary benefits offerings in an exchange platform creates benefits that are two-fold. Exchange operators (and/or brokers) will increase revenues while user satisfaction will generally go up. Many employees will be pleased to be offered unique voluntary benefits — such as, pet insurance or identity theft services – at a small cost each paycheck (or no cost, depending on the level of defined contribution funding). Provided with sufficient decision-support tools that help them “rightsize” their major medical plan, many employees will find that they have additional funds to purchase these products that can improve their overall well-being. Employers that previously did not offer dental or vision plans, for example, may find that many employees can now obtain this coverage at no cost after selecting a lower premium plan in a defined contribution arrangement. In some cases, employers will be able to increase the array of benefits offered at no additional costs to them.
Price and Quality Transparency While private exchanges may be able to reduce employer health costs by providing a fixed defined contribution (aligned with CPI and not medical inflation) or through employees naturally selecting lower premium, higher deductible coverage, there may be a significant opportunity for price and
quality transparency tools to be embedded within private exchanges. In November 2014, Buck Consultants at Xerox announced that they had established a partnership with Castlight Health to incorporate the San Francisco-based company’s transparency and engagement tools into the RightOpt private exchange. And it’s likely that more mature private exchanges will move to incorporate similar tools that improve the postenrollment experience. As more and more consumers selecting high deductible health plans within private exchanges, price and quality transparency tools — such as FAIR Health, Wiser Together, ConsumerMedical or the aforementioned Castlight — would be very beneficial to employees and could potentially eliminate them incurring a considerable amount of out-of-pocket costs. By incorporating tools that help consumers find the highest quality care and the best price, private exchanges could potentially go a long way toward reducing health costs for employer clients while improving the user experience post-enrollment.
Telehealth Platforms Telehealth is set for huge growth in 2015 and beyond. Once seen, perhaps, as a technology that wouldn’t endear itself to the average consumer, telehealth is now entering the mainstream. Like many new technologies, it has taken time and word-of-mouth recommendations to work itself in with the average consumer. Now, the technology is poised to go beyond the early adopters and into the lives of the average American. A smart next step would be the integration of a telehealth portal into a private exchange platform. Maxwell Health, a visionary in the integration of other key technology solutions into its private exchange platform, announced a partnership in 2014 with Doctor on Demand. This revolutionary partnership allows employees to purchase insurance and receive care in the same technology platform and should be a model for other cutting-edge exchanges to follow. With the integration that we’re seeing at this point between private exchanges and telehealth solutions, there maybe future opportunities with private exchanges and other health access alternatives. Earlier this year, Aetna’s new $400M acquisition bswift announced integration with a wellness vacation company. As stress management becomes an increasingly important topic of discussion for corporate leaders, members of bswift’s Springboard Marketplace can now book wellness vacations that include guidance from physicians, nutritionists, life management experts and exercise physiologists. In this line of thinking, there may be future opportunities for more advanced private exchanges to integrate with medical travel companies, allowing exchange users to arrange lower cost operations at domestically or internationally renowned medical centers. Regardless, as private exchanges mature, there will be more and more opportunities for the cloud-based platforms to incorporate health care access alternatives.
A New Retail Environment Provides Plentiful Opportunities Private exchanges can be much more than just an enrollment platform with a few more options than a company’s previous benefits offerings. This can already be seen through the multitude of unique partnerships announced over the past year between exchange technology providers and other forward-thinking solutions. Today, it’s important to remember that we’re only in the very beginning of the evolution of private exchanges. As private exchanges mature to meet the needs of employers and employees, they will continue to expand, adding more avenues to save employers money while increasing benefits satisfaction among the employee population.
FOLLOW THE MONEY:
A Timeline of Investments, IPOs and Acquisitions in the Private Exchange Market
2010
JANUARY Minneapolis-based Bloom Health receives $2 million in funding DECEMBER Bloom Health lands an additional $5 million from BCBS Ventures
2011
APRIL Liazon secures almost $13 million from Bain Capital Ventures and others SEPTEMBER Bloom Health sells majority stake to major health insurers
2012
FEBRUARY PlanSource receives a $12 million Series A investment led by Lemhi Ventures APRIL Liazon receives additional $18.2 million from two firms MAY Towers Watson acquires Extend Health to create Exchange Solutions segment JUNE Chicago’s GoHealth takes on $50 million equity investment from Norwest Equity Partners
2013
APRIL Alegeus Technologies acquires Workable Solutions for undisclosed amount AUGUST Boston and New York’s Maxwell Health gets initial $2 million funding SEPTEMBER Benefitfocus raises $70.6 million from IPO NOVEMBER Towers Watson acquires Liazon for $215 million DECEMBER Maxwell Health nets $6 million in Series A1 financing
2014
JANUARY Lehmi Ventures invests an additional $12 million in PlanSource APRIL Great Hill Partners acquires minority stake in bswift for $51 million APRIL hCentive raises $35 million from undisclosed strategic investor SEPTEMBER Seattle’s Array Health closes $13 million round SEPTEMBER Maestro Health acquires Florida-based Workable Solutions from Alegeus OCTOBER Connecture plans IPO and expects to raise roughly $80 million NOVEMBER Aetna announces $400 million agreement to purchase bswift DECEMBER Maxwell Health secures $26.4 million in Series B
HealthCare Exchange Solutions™ I www.TheIHCC.com I November/December 2014
15
A smart way to grow MAKE DENTAQUEST YOUR STRATEGIC PARTNER FOR SMART, SUCCESSFUL GROWTH. We have over 40 years of experience managing dental benefits in the commercial and government sectors. Our full-service suite of dental services can help you expand your portfolio, increase profitability, lower costs and retain membership. Whether you are looking to improve your existing dental program or to grow your book of business through private-label dental and vision benefits, find out how DentaQuest can help.
Contact Mike Enright today to start growing your business with DentaQuest. Michael.Enright@DentaQuest.com • (262) 834-3544 • www.SmartGrowthDentaQuest.com