The term “private insurance exchange” is used differently by different people, and the way one exchange works may bear little resemblance to that of the next one.
“We continue to evolve extremely rapidly in order to meet the emerging need,” says Dard Hunter, senior partner at Mercer and carrier relations leader for its Mercer Marketplace exchange. “I bet if we had this conversation five years from now, neither of us would recognize these primitive days that we’re describing today.”
At the moment, three types of organizations offer private insurance exchanges, according to Scott Brown, managing director at Accenture:
• Benefit consultants. Mercer Marketplace, Aon Active Health Exchange, Towers Watson’s OneExchange and Buck Consultants’ RightOpt are among the biggest exchanges.
• Insurers. Aetna, UnitedHealthcare and other national insurers are offering or preparing to offer private exchanges, but regional payers — including Medica, serving Minnesota and two adjacent states — were some of the first in the nation to do so.
• Exchange technology vendors. Bloom Health, for example, provides the exchange platform used by some insurers and also operates its own private exchange.
Insurers only offer their own products on an exchange; benefit consultants and technology vendors offer options from a single insurer or multiple insurers, depending on what their employer clients want to make available to their employees.
“For the benefit consultants, this is at the very, very top of their growth agenda, and in many cases the No. 1 item,” Brown says. “I think that they will continue to lead the charge in many regards, but we will continue to see a larger mix from the carriers, as well as from solution vendors directly.”
While most private exchanges are for medical insurance only, some are multiline. Mercer Marketplace, for example, includes life, accident and disability insurance options, as well as other health and voluntary benefits. Each employee decides how to allocate the benefit dollars provided by the employer. In other words, an employee might decide to buy the least costly medical insurance option to have more money available for life insurance.
“Each family is going to have different needs and different insurance protection issues,” Hunter says. “We have the flexibility."
What’s in it for health systems?
A private exchange offered by an insurance company is simply a way for individuals to shop for and purchase coverage. For health systems, it provides the opportunity to work with insurers in new ways to thrive as health insurance becomes a retail industry. So says John Naylor, senior vice president for commercial markets at Medica, a Minneapolis-based insurer and private exchange pioneer.
Medica, the first insurer to offer a private exchange, has partnered with four provider networks from which individuals can choose when they enroll using the My Plan by Medica exchange. Each network includes hospitals and physicians who contract with Medica as an accountable care organization. Medica’s definition of an ACO is a jointly owned profit-and-loss arrangement between payer and provider. Providers are paid using the fee-for-service system, and they share any profit or loss associated with the care of the ACO enrollees over the course of a year.
The details of each contract — premium rates, risk-sharing details, payment modifers related to quality measures — are negotiated between Medica and the ACO. And the two parties determine which will provide enrollee outreach, care management and other services needed to effectively manage the patient population.
For example, integrated call centers that allow a plan member to phone a single number to ask about benefit design, schedule an appointment, discuss a claim or talk to a nurse are a standard feature for exchange enrollees. “In some cases, the [health] system takes the calls, and in some, we do,” Naylor says. “It depends on each system’s capability and interest level. So, we partner with each of these care providers as if we’re all in this together, which we are.”
Naylor lists five benefits to health systems:
1. Increased market share. Two major health systems in the Twin Cities are not participating in the exchange, so private exchange enrollees are funneled into a subset of health care competitors.
2. Increased “keepage,” the percentage of a consumer’s total health care spend that stays in the network. In the highly competitive Minnesota market, less than half of a given individual’s total spend typically stays in a single network, but the ACO concept changes that. “We have consistently shown through our ACOs that they are getting 95 percent of the spend, so they are doubling their revenue from a single patient,” Naylor says.
Equally important, the ACO has almost all of a patient’s care documented in its electronic health record system, which allows for more proactive care management. For example:
3. More targeted marketing. The ACO can use the information it has about enrollees — such as addresses or chronic conditions — to fine-tune marketing messages.
4. Consumer-level branding. To succeed as an ACO, providers use a high-touch approach to patient engagement to nurture a cradle-to-grave relationship. “Whether the individuals stay with Medica or go to another health plan or to Medicare or Medicaid, that consumer is now branded to a given care system,” Naylor says.
That branding opportunity extends to healthy patients who may not seek care. “Every person who proactively chooses an ACO is a potential patient,” Naylor says. “So, the health system can market now and brand to an audience that is committed to using them when they need care and not just at the time they seek care.”
5. When some consumers never seek care. Through the jointly owned P&L arrangement, Medica and an ACO receive the insurance premiums for every consumer who enrolls. If an individual does not seek care, they share the profits.