Featured Health Business Daily Story, May 20, 2015

Carriers Give Low-Income Members Option to Pay Premiums in Cash

Reprinted from INSIDE HEALTH INSURANCE EXCHANGES, a hard-hitting newsletter with news and strategic insights on the development and operation of public and private exchanges. Sign up for a $62 two-month trial subscription today.

By ,
May 2015Volume 5Issue 5

In April, Los Angeles-based L.A. Care Health Plan said it had contracted with PayNearMe to give its insurance exchange enrollees the option of paying premiums with cash (HEX E-Alert, 4/22/15). A few months earlier, Humana Inc. unveiled a similar arrangement through its partnership with CVS Health’s retail division and InComm, an electronic payment network. Other health plans are eyeing such strategies that give members more ways to pay their premiums.

Prior to the launch of public insurance exchanges in 2013, an estimated 41 million individuals lacked health coverage — about half of them either didn’t have a bank account, or had one but relied on alternative financial services, such as payday loans.

Prior to the enactment of the Affordable Care Act (ACA), health plans generally weren’t equipped to accept any form of payment outside of payroll deduction, notes David Vielehr, senior vice president and general manager of InComm Healthcare & Affinity.

While hospitals and physician offices have long been able to process credit cards at the point of service, “health plans see credit card payments as being too costly due to interchange and transaction fees,” he adds.

InComm was formed in 1992 to allow people to purchase prepaid long distance telephone minutes with cash. The company is now one of the world’s largest issuers of prepaid Visa and MasterCard debit cards. It moved into the health care space in 2011. Including CVS stores, InComm’s cash bill pay retail footprint includes about 20,000 retail locations nationally. Vielehr anticipates adding more health plan clients this summer.

Since the beginning of last fall’s open-enrollment period, people who select exchange-based plans from Humana can pay premiums at any participating CVS/pharmacy location. A barcode printed at the bottom of its statements can be scanned at the checkout where the member can use cash, credit or debit to pay all or part of the premium.

Using the same barcode, a member could break up a monthly premium into four weekly payments. Humana sells coverage through exchanges in a dozen states, while CVS/pharmacy is the retail division of CVS Health, which operates more than 7,600 drugstores nationally. About 2% of Humana’s exchange members pay in cash through InComm. Humana partnered with CVS in 2013 to educate individuals and their families about their health care coverage options under the ACA.

Want a Slurpee With That?

As an insurance carrier that caters to low-income populations, offering a cash option was a priority to L.A. Care’s board of governors. In a case of serendipity, Laura Jaramillo, L.A. Care’s director of commercial and group plan operations, was seated at a conference next to Trish Burgess-Curran, vice president of business development at PayNearMe. The two struck up a conversation. Jaramillo tells HEX she was intrigued by PayNearMe’s technology because no personal health information is involved in the transactions.

Members receive a unique barcode via email or text, which is tied to their L.A. Care Covered account (L.A. Care’s exchange product). Members can then print the barcode or take their smartphone to the cashier at a participating retail location, such as a 7-Eleven, along with their cash payment, as if they were making any other purchase. The cashier scans the barcode and accepts the payment, which is credited to the member’s account within 24 hours, she explains. The program is being promoted through letters and postcards mailed to members. PayNearMe is relatively new to the health care space. The company’s technology initially was aimed at utility payments, child support and rent.

The vast majority of L.A. Care’s 1.7 million members are enrolled in a Medicaid managed care plan. About 21,000 people have enrolled in L.A. Care’s exchange-based product, and approximately 19,000 have paid their premium. The carrier has just a handful of individual enrollees outside of Covered California, the state’s insurance exchange.

PayNearMe has 17,000 retail payment locations nationally, including nearly 2,000 in California.

The recent partnership with L.A. Care has prompted some new connections with insurance carriers and accelerated existing conversations, Burgess-Curran tells HEX.

When the member is at a 7-Eleven or other retailer, the carrier or provider can tell the system to accept the payment and provide a confirmation receipt, or reject it and provide an explanatory receipt. “This is particularly important as insurers work to manage member payments around the 90-day grace period to reduce exposure to claims, retro-cancellations and reinstatements,” says Burgess-Curran.

Both PayNearMe and InComm charge carriers a small fee per transaction, but allow the consumer to submit payment at no charge. The cost is 30% to 60% less than a typical credit card fee, according to Vielehr.

Covered Calif. Considered Cash Rule

In fall 2013, the Center for Consumer Information and Insurance Oversight (CCIIO) clarified that all qualified health plan (QHP) issuers must accept several types of payment such as checks, cashier’s checks, money orders, direct bank transfers and debit cards. It didn’t require that they accept cash payment, but that was clearly something they could allow if they chose, says Jenny Sullivan, director of Enroll America’s Best Practices Institute.

In the months before launching in 2013, Covered California’s board discussed requiring participating carriers to include a cash option for paying premiums. The exchange’s leaders, however, opted against such a requirement after some pushback. “Some carriers felt that it would be too complicated to pursue a cash option.…Others didn’t think the exchange should be setting specific premium payment policy,” Jaramillo says.

Children’s Health Insurance Plans (CHIPs) in California, Florida and several other states traditionally have accepted cash for premiums in select locations. Many CHIP enrollees have family members who have coverage through a public exchange, Sullivan notes. But such payments often must be made via prepaid credit card or with a money order through Western Union, which can be costly for consumers.

“Supporting unbanked and underbanked members has been a necessary focus for all health plans offering products through the federal and state marketplaces,” says Mark Waterstraat, chief strategy officer and co-founder of Benaissance, a SaaS technology and premium payment processing company that works with exchanges. “All of our [health plan] customers have accepted pre-paid debit cards and money orders as forms of payment from the beginning. Many also accept cash for payment in their offices.”

© 2015 by Atlantic Information Services, Inc. All Rights Reserved.

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