Featured Health Business Daily Story, Nov. 21, 2012
Reprinted from THE AIS REPORT ON BLUE CROSS AND BLUE SHIELD PLANS, a hard-hitting independent monthly newsletter on new products, market share, strategies, conversions, financing, profitability and strategic alliances of BC/BS plans. (Not affiliated with the Blue Cross and Blue Shield Association or its member companies.)
Private exchange development among Blues plans continues to gain momentum as Blue Cross and Blue Shield of Kansas City last month said it would build an exchange specifically for its large-group clients, while Health Care Service Corp. (HCSC) told The AIS Report it is preparing to offer a private exchange to its mid-market and national account clients in 2013 as contracts come up for renewal. And Highmark Inc. will offer a private exchange platform to small businesses and retirees.
The Kansas City Blues plan’s decision to launch a large-group exchange was driven in large part by the success of its current private exchange for small-group clients, Danette Wilson, the plan’s group executive for external operations and chief marketing executive, tells The AIS Report. The Blue KC Exchange has been so successful since it was launched in November 2011 (The AIS Report 12/11, p. 1) that one-third of its small-group business has migrated to it, she says. Wilson adds that other factors influencing the move include feedback from brokers and large-group clients, who say that affordability of insurance coverage is a growing concern.
Like its current exchange, the new exchange for large-group customers will feature a menu of 10 different coverage options for employees to choose from. The new exchange will roll out in April 2013.
In concert with the new exchange, the Kansas City Blues plan has partnered with Benefitfocus, the largest benefits technology company in the U.S., to build an exchange platform that will support defined contribution and other plan financing mechanisms. Benefitfocus already provides benefit enrollment systems for Blues plans in other states, including Florida, Massachusetts and North Carolina, though not in an exchange setting.
Wilson says she expects migration to the new exchange to mirror that of the Blue KC Exchange, especially for mid-sized companies, given that the entity helps employers control health insurance expenses. Under a private exchange, an employer gives their employees a set amount of money to purchase health coverage from a variety of options offered by a given insurer in an online marketplace.
Private exchanges have “addressed employers’ concerns about affordability and continuing to have an employer-sponsored plan,” Wilson says. “It gives employees more choice than they have today…and more decision support that they ever had, which is critically important to satisfaction.”
That decision support will be expanded in the large-group exchange, according to Wilson, as the platform will allow a customer to have its prior-year claims data uploaded into a benefit selection tool, which will then select the best plan based on that information.
HCSC also is gearing up to offer a private exchange next year. “I’ve gone out and personally have met with 55 of our national accounts,…and it became abundantly clear from [those meetings] that the path we needed to move toward was a group exchange model,” Jeff Welch, HCSC’s divisional vice president of consumer and emerging markets, tells The AIS Report.
In October 2011, HCSC, along with WellPoint, Inc. and Blue Cross and Blue Shield of Michigan, bought a majority interest in Bloom Health, which has developed a private exchange platform that it offers to employers (The AIS Report 10/11, p. 1).
HCSC says that for mid-market clients, who tend to be fully insured, the insurer likely will offer “product packs” for employers to choose from that would each contain around six plan options. National-account customers, which tend to be larger, self-insured employers, can tailor offerings to their employees.
Highmark also is offering a private exchange. In January, the carrier began a six-month pilot private exchange program with 20 small-employer clients. Highmark spokesperson Kristin Ash tells The AIS Report that having a large-group private exchange is under consideration. And based on its experience with the pilot, she says the insurer will talk to between 300 and 400 small groups over the next few months about using its private exchange.
The Pittsburgh-based insurer on Oct. 24 said it would offer its exchange platform to small businesses and Medicare-eligible retirees.
Small-business customers that participate in myBenefits would have up to 20 plan options, while the myRetireeBenefits program offers a choice of Medicare Advantage and Medicare Supplement plan options. Both use a defined-contribution platform.
© 2012 by Atlantic Information Services, Inc. All Rights Reserved.
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