Under HIX, Quality Ratings May Be 'Market Movers'

Health insurance exchanges will transform the way customers think about health insurance and the way they compare products. To respond to this challenge Health plans need to become more engaged with their existing and potential customers. That was the message delivered Wednesday during a session at the America's Health Insurance Plans conference in San Francisco.

"This book of business will act differently," explained Patrick Howard, a principal at Deloitte Consulting LLP. "We don't know if the HIX will have the same familiar ratios. Will 20% of the customers still consume 80% of the healthcare resources?

"Where will health plans find their customers for an exchange? They may need to develop new navigators to identify potential markets," said Howard. "Maybe the YMCA or fitness clubs will become a community partner and a source of customers."

The Affordable Care Act requires states to create health insurance exchanges by 2014. The HIX will be designed to allow individuals and small businesses with fewer than 100 employees to buy coverage at competitive rates from policies offered through the exchange, which may be run by either the state or a private company.

Howard, Dhan Shapurji, and Gregory Scott, a director and a principal, respectively, at Deloitte Consulting spoke during an AHIP session that addressed the key operational challenges and potential solutions posed by the HIX.

Gregory Scott said the HIX offers health plans the opportunity to really think at the individual level. "That's very different from how health plans work today."

He added that the HIX will also allow health plans to develop data for individuals that can be leveraged for other products. "Tracking, reporting, and capturing data for this market will be expensive, so health plans will need to look at how the data can be used elsewhere."

Scott told the gathered insurance professionals at the AHIP conference that health plans should expect HIX customers to be more engaged in the coverage and health plan they select. "Quality ratings haven't been very important for health plans because it's really the physician network and pharmacy benefits that drive health plan selection." But he cautioned that with the advent of health insurance exchanges "health plans need to consider that quality ratings could become market movers.

Shapurji recommended that health plans work with the states to make sure they have access to any information that the exchange collects on potential customers. "You'll want to know what customers looked at you plan and if they didn't select your plan then you'll want to know which of your competitors got the business."

Scott noted that for a number of reasons states aren't picking up as much of the cost of the HIX as health plans had hoped. "States having financial problems and setting on a health insurance exchange isn't among their core competencies."