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.