Buying an Exchange Health Plan: No Need to Rush

A lot of emphasis has been put on the October 1st date as the day the federally-mandated health insurance exchanges go live, and there's starting to be a lot of noise made about whether the exchanges will be ready. The recent decision by the Feds to delay their final agreements with insurers is just one indication of the technical glitches that we are likely to see once the exchanges are open for business.

But, the real key date is January, the date exchange-purchased insurance will go into effect. For any consumer planing to shop through an exchange to take advantage of Federal premium subsidies, there's no more need to rush out to your state's exchange on October 1st than there is to rush out and buy your Halloween costume the first day that pop-up Halloween shop opens down the block (which, in my town, was sometime in July).

When I used to manage web systems overseeing open enrollment for large employers, we would see the two biggest spikes in traffic when open enrollment first began and right before it ended--usually for the first 3 to 5 days, as all the early birds piled in to select their benefits for the next year, and then for the last 3 or so days as all the procrastinators finally responded to the repeated reminders from the HR department and logged in to select their plans.

Based on what we know so far, consumers would be well advised to wait a few weeks after the exchanges open in October to check them out. Sometime around Thanksgiving might even be ideal. But, don't wait until after Christmas. The end of the year laggards may well bog the systems and make the experience downright painful.

Exchange Pre-Go-Live: A Few Technical Glitches, But We Shouldn't Be Surprised

Reuters is reporting that the Department of Health & Human Services will not sign its final agreements with health insurance carriers selling on the federal exchange next week as was planned but are instead delaying until mid-September.

Reuters' sources attributed the delay to "it to technology problems involving the display of insurance products within the federal information technology system." This echoes what I've heard from some of the insurers I work with, who have reported that the plan displays are, to use one client's words, "a total mess."

Have built and deployed numerous health insurance shopping and enrollment systems in the past, I can pretty much guess precisely what they are dealing with. When you're building a system and working with test data, you try to plan in advance for everything you are going to see. But, when the full set of real data comes in all sorts of glitches--some minor, some dreadful--can crop up.

For example, carriers put longer pieces of text than you expected in a product description and suddenly the text starts wrapping bizarrely or gets cut off. The job that loads the data from the files submitted by the carriers mangles some data or puts it in the wrong place. Non-alphanumeric characters play havoc with your HTML.

All of these things are normal and to be expected. It's something you have to deal with when launching any new system into production. The only problem here is that the systems are going live with one big bang with a lot of public scrutiny and media attention trained upon them.

Expect a lot of this over the upcoming months as the exchanges work through all the normal kinks. The joys of v.1.0 software . . .  

Misunderstanding Microsoft

I've been a little surprised by news stories like this one from the New York Times that have used the occasion of Steve Ballmer's announcing his retirement to crack on Microsoft's track record as an innovative software company.

In particular, there seems to be a commonly accepted notion that Microsoft has been a one-trick pony, unable to adapt to the changing tech landscape over the decades. Prime example: this quote from the above NY Times piece:

The rare tech company manages to thrive from one generation of technology to the next. Only a few of the big ones — I.B.M., Intel and Apple — have done it. And it is not yet clear if Microsoft has a clear path to joining that list of multigeneration kingpins.

Huh? I'm not sure what the author, Quentin Hardy, is thinking. Microsoft was founded a year earlier than Apple, and you can say what you want about Microsoft's struggle to adapt to and stay relevant in today's tech market--smart phones, mobile devices, the Web, cloud computing. But, the notion that Microsoft has been a single generation company is laughable.

Generation 1 and 2: the operating system for personal computers (DOS, then evolving to the second generation, Windows).

Generation 3: the Office suite, which squashed earlier competing products (remember WordStar, WordPerfect, and Lotus Notes?) and made Microsoft an almost monopolistic fixture on desktops in the corporate IT environment.

Generation 4: foundational enterprise technology--Windows NT Server, Exchange, Active Directory, SQL Server, SharePoint, etc.--which made Microsoft one of the leading vendors of enterprise software.

Microsoft's may be struggling to get out in the market with mobile and cloud technology and figure out what it's going to be in the future, but how can you make the case that they aren't a "multigenerational kingpin"?

One common thread in the Microsoft history is this: year in and year out people have tended to underestimate them. SQL Server was a joke of a database compared to Oracle until, suddenly, with version 7.0 it wasn't--especially at the price. Exchange was far inferior to Lotus Notes until suddenly every company in the United States was running their email through it.

This doesn't mean that Microsoft will figure out mobile or smart phones or cloud computing. But, it would be foolish to dismiss them out of hand. And, considering the number of businesses in the United States that still have Microsoft Office on their desktops (which is to say, almost all of them), perhaps the fact that they aren't winning all the B2C battles these days may not really mean that much.

Managing Public Exchange Operations: Learning from Medicare Advantage

October 1st is fast approaching. And, it's probably safe to say that most health insurance payers are simply cobbling it together the best they can to do business with the new public health insurance exchanges this fall. The sheer volume of operational changes and the ever-shifting, late-arriving rules and guidelines from the states and the Feds have left them little choice.

And that means it's not too soon to start thinking about 2014. If the mission for 2013 was simply to get ready to sell on the Exchanges, the mission for 2014 will be to operationalize the public exchange business so payers can manage it efficiently and effectively.

Lessons from Medicare Advantage

Perhaps the best way to predict how payer/Exchange operations will evolve over time is to look at the experience of Medicaid Advantage. The rules and operational requirements have evolved since the first Part C program was instituted in 1997, but there's a visible trend in how payers have implemented the operational and technology capabilities necessary to management Medicare Advantage plans, with a particular focus on the complex data exchange, reconciliation, and reporting interactions with CMS:

1. Payers cobbled things together the best they could, performing many tasks manually with spreadsheets, Access database, and homegrown IT solutions.
2. Point vendors emerged who began to offer commercial solutions for various parts of the operational processes. such as submitting encounter data to CMS's Risk Adjustment Processing Systems (RAPS) and executing the Batch Eligibility Query (BEQ) to look up a member's eligibility status with CMS.
3. The market began to consolidate, with a few players emerging that offered a full suite of software to manage the full Medicare Advantage lifecycle. Trizetto, with its Trizetto Medicare Solutions, and ikaSystems with its ikaMedicareGateway are notable examples.

Emerging Exchange Solutions

Already, technology firms are bringing commercial solutions to market to assist payers in their interactions with the Exchanges. Connecture, for example, recently announced that their direct enrollment and synchronization solutions have just passed the first phase of CMS testing for integrating with the Federally Facilitated Marketplace (FFM). This direct enrollment solution will become a foundational component of Connecture's private exchange solution for payers.

We can expect to see similar announcements from Connecture's competitors in the near future along with the launch of new products to manage other aspects of the payer-Exchange interaction, such as Qualified Health Plan (QHP) submissions and Advance Premium Tax Credit (APTC) and Cost Sharing Reduction (CSR) payment reconciliation.

What's different this time around is that payers have gotten a lot smarter about embracing commercial off-the-shelf software rather than trying to build everything themselves. Exchange management solutions are prime candidates for buy instead of build, since everyone has to integrate with the same FFM API and submit their product and rate data in the exact same CMS-defined formats.

It seems likely that such commercial solutions will take hold pretty quickly in the market and will evolve and improve rapidly as the public Exchange--and the carrier operations that support them--mature. Payers may by necessity be forced to wing it for the 2014 open enrollment, but once that's behind them they should start looking outside their four walls to find effective, scalable solutions for the long term.

Direct Enrollment & the Federally-Facilitated Exchange: Marketing Strategy Questions

We looked at the options facing payers when it comes to Direct Enrollment with the FFM in a previous post as well as the risks involved in the most technically complex of the options, the Fully-Integrated Model. Is that full model worth the risk for your organization?

On the one hand, there is a lot of technical heavy lifting and a lot of risks inherent in the direct enrollment implementation. What is gained from that work is your ability to control the shopping experience and guarantee that your potential customers won't be tempted into selecting a plan from another issuer. 

To determine whether it is worth the cost, effort, and risk depends very much upon your go-to market strategy and anticipated sales volumes. Here are a few questions that can help determine the answer:

1. On-Exchange vs. Off-Exchange Volumes: How many new customers do you forecast will purchase your plans through the FFM's site and how many will come directly to your site to shop

2. Subsidy Volume: How many customers do you anticipate will qualify for APTCs/CSRs, and how do you think they will find out their eligibility? It would be some very expensive development if only a few dozen customers who start at your site qualify for a subsidy but a different picture if thousands of customers do. 

3. Lead Generation Strategy: What is the marketing strategy for driving potential customers to the your website, such as traditional media advertising, online advertising, email leads, broker referrals, referrals from other organizations and associations?

4. Brand Affinity: Is it reasonable to assume that shoppers who begin on your website rather than the FFM's will already have an affinity for your brand and therefore be unlikely to choose another issuer's plan if offered them side by side

5. Competitive Differentiators: How do you plan to compete against the other issuers in the market? Are you targeting cost-conscious consumers likely to select whatever plan is lowest in price, or are you competing on other factors like brand, service, and benefits'

6. Broker Channel Strategy: How important are brokers in your go-to-market strategy: do you anticipate they will be guiding consumers as they purchase (and therefore may help guide consumers away from your competitors' products) or will consumers be shopping on their own?

These are just a few factors to take into consideration when deciding how best to interact with the FFM in your markets.