Navigating the ACA Exchange Environment: A Payer Perspective

February 28, 2011

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Agenda

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• Introduction — Why Dell?

• Health Insurance Exchanges (HIXs/Exchanges) in operation and in the Affordable Care Act (ACA)

• Working with Exchanges and “Lessons Learned”

• What’s Happening Now - And What To Do About It

• Moving Forward

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Introduction – Why Dell?

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Is there value in state-based Exchanges outside of ACA?

What should payers consider when looking at Exchange participation and/or support?

How can payers and states work together to build an Exchange that meets a wide range of goals and requirements?

Questions Worth Considering….

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Exchanges in Operation and in the ACA

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We Are Facing The Greatest Changes To Healthcare In More Than A Generation - And Exchanges Are At The Heart

New records in number of covered lives

New member demographics

New channel partners

New market mechanism

New product designs

New rules for managing members

New budget hit for states

Health Insurance Exchange

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In light of all the uncertainty, questions worth Considering:

Is there value in state-based Exchanges outside of ACA?

What should payers consider when looking at Exchange participation and/or support?

How can payers and states work together to build an Exchange that meets a wide range of goals and requirements?

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Goal of the Exchange Create a sustainable insurance marketplace for individuals, employers and employees

Create

Sustain

Insurance

Marketplace

Individuals

Employers/ Employees

• Launch a multi-channel (paper/phone/web) marketplace, with all necessary front and back-end infrastructure

• Develop an approach that is attractive to all stakeholders and is easy to use, meets federal and state requirements and generates sufficient revenue

• Certify plans as meeting Exchange coverage and access requirements

• Support (and even drive) competition among plans and provide a choice to consumers (individual and small group members) and employers

• Use competition to drive up choice and quality of plans and providers while driving down price

• Use competition to drive up choice and quality of plans and providers while driving down price

• Make it easy for employers to contribute to and support their employees’ health

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States will Use Flexibility from CMS to Tailor the Exchange that Best Meets Their Needs

Light Pragmatic Robust

• Lighter regulatory role • More “free market” by

promoting economic growth

• Satisfied with level of competition and quality

• More developed policy infrastructure

• Thinking beyond traditional (e.g., regional exchange)

• Highly developed policy and regulatory model

• Tradition of leadership and oversight

• Use to promote policy goals

• May receive waiver to create a simpler vision

• Primarily aggregates information

• Limited services to plans and members

• Some market management

• Commercial, off-the-shelf and low-risk solutions

• Remains flexible due to political shifts

• Active purchaser of insurance

• Standardized products • Robust functionality • Substantial support for

education and outreach

Sta

te

En

vir

on

me

nt

Exc

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Ch

ara

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rist

ics

Utah? Maryland? California

Massachusetts

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To be Successful, Exchanges Must Engage a Variety of Stakeholders

Health Insurance Exchange

State Gov’t

Federal Gov’t

Health Plans

Local Stakeholders

Exchange Vendor(s)

Brokers Members

Providers Employers

Role of the Plan:

• Create products that meet the requirements of the Exchange

• Market their products (and by definition, the Exchange)

• Enroll members via the Exchange

• Service member needs

• Report, as required, to the Exchange and regulators

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Exchange Development Maturity Model

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Every Exchange will Go Through Some Version of Four Primary Phases

• Pass legislation • Assess capabilities

and market • Create road map

to 2014

• Select vendors • Design

architecture • Create standards • Develop risk

adjustment

• Obtain federal readiness

• Certify plans and products

• Engage consumers

• Market Exchange • Serve members • Monitor/regulate

performance

Phase 1: Plan & Engage

(2010-2011)

Phase 2: Design & Build

(2011-2013)

Phase 3: Test, Certify & Launch

(2012 – 2014)

Phase 4: Operate & Sustain

(2013 – 2014+)

• Provide input • Assess impact to

membership • Assess market/

characteristics of newly insured

• Provide input to design and architecture

• Create internal process/system change roadmap

• Make participation decisions

• Begin marketing • Prepare for

operations

• Enroll and serve members

• Receive and reconcile payment

Cri

tical A

cti

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for

Exc

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riti

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cti

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for

Pla

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Biggest Challenges Churn Movement of members between eligibility categories/subsidy levels

Customer Service Continuity between call centers

Outreach Educating newly insured on how to use insurance

Risk Adjustment & Product Design Sustainable approved products

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Working with Exchanges and “Lessons Learned”

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Payers Should Explore Opportunities and Challenges from the Operational to the Strategic

People

• Understanding each other’s worlds

• Managing stakeholders

• New members that may be significantly different from current customers

Process

• Administrative simplification

• Plan certification

• Member enrollment

Technology

• New integration partners (e.g., federal government)

• New integration points

• New shopping portals

Strategy

• Rethink channel & distribution strategy

• Product portfolio

• Re-balance risk portfolio

• Re-define business model

This is a significant opportunity to collaborate and join with states eager to test new strategies and reduce risk — take control now, or take the chance of losing it for good

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Lessons Learned Working Effectively

• Plans tend to have lots of iterations – need to work from defined benefits while at the same time trying to innovate

• Don’t expect the Exchange to build around you

• Need to meet them halfway, and sometimes further

• Likely to be largely healthy, but not know how to use insurance

• Education and outreach, in partnership, will be critical

Overly Complex Plan Design

Unwillingness to Change

Siloed Customer Service Models

Misunderstanding the Newly Insured

• Understand what the Exchange governance model is trying to achieve

• Understand the challenges Exchange leadership/staff face

Undervaluing the Relationship

• There will be multiple challenges under the new model: they need to be solved together

• Leverage both call centers and web portals

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What’s happening now—and what to do about it

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What to Expect Over the Next 6 Months

Continued uncertainty

Unpredictable implementation

progress at federal and state level

State-specific agendas and hybrid

solutions are emerging

Heightened levels of engagements

and scrutiny

Helping small businesses and job

growth

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Planning for the “What If…”

Ways the law could be significantly “impeded”

• Defunded by GOP Congress

• Partially repealed – key provisions declared unconstitutional

• Fully repealed – entire law declared unconstitutional

The PPACA goes down sometime between now and 2014?

What still exists if the law is impeded

• Rising healthcare costs • Significant uninsured/

underinsured population

• Stagnant quality • Badly fragmented

subsidized care/ insurance

• Powerful hospital/ACO groups going direct to employers

Ways an Exchange can still help

States: – Provide easy way to apply

subsidies – Encourage innovation by

carriers – Provides a counterweight

to consolidating hospital groups/ACOs

Plans: – Capture potentially very

attractive risk pool – Attract employers with

defined contribution health plans

– Grow share to increase leverage with providers

– Manage churn with appropriate “gap” products

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What Plans Should Be Doing Now

Engage

Educate

Evaluate

Prepare

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How We Can Help

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Dell Services Bringing Innovation to a Changing Health Payer Market

• Administrative application and outsourcing services

• More than 40 million members supported

• Business process services

• Implement open source technology solutions to increase efficiencies

• Aid disease management

• Help commercial and BCBS customers transition to a consumer-centric model

• Facilitate web-based transactions among all constituents to strengthen relationships

We support more than 100 insurers - and the only operating Exchange in the industry - with standard and custom solutions.

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Next Steps • Contact the Dell Services Payer Team

with questions: LuAnn_Gohn@Dell.com

– Industry thought leadership: › Conference speakers

(www.dell.com/speakers-bureau)

› Future webinars

– Insight

– Strategy

– Execution

• Attend the AHIP Exchange Conferences – March 9-10, 2011

– June 15, 2011

– Nov. 16-17, 2011

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Key Takeaways

This is potentially the biggest change in healthcare since 1965

There are both opportunities and risks for health plans in this change

The impacts of change will be felt across the health plan

Key implementation decisions will have to be made before political uncertainty is resolved

Plans can participate in this change or have it thrust upon them

Thank You