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Mid-market firms find private health exchange offerings lacking

Posted On: Jun. 8, 2014 12:00 AM CST

Mid-market firms find private health exchange offerings lacking

COLORADO SPRINGS, Colo. — Benefits brokers are enhancing the scope of technology and data analytics to help ease midsize employers' health care reform compliance burdens and better target health promotion efforts.

Many brokers catering to the middle market agree they need to “step up their game” as they meet with more finance executives in addition to benefits professionals.

Brokers are particularly interested in acquiring private health exchange technology because most of the software also can help employers meet the reporting requirements of the Patient Protection and Affordable Care Act, said Kenneth R. Olson, president of Horton Benefit Solutions, a division of the Horton Group Inc. in Orland Park, Illinois.

“Exchange systems do reporting, variable-hour tracking and other ACA compliance functions,” Mr. Olson said. Many products also offer robust decision support tools, he said, which can help employees determine which benefit plan offering best meets their individual needs.

While all of these platforms are being called exchanges, some are little more than “benefit administration systems on steroids,” said Robert J. Klonk, CEO of The Oswald Cos., a Cleveland-based insurance broker.

In fact, none of the private exchanges available to middle-market employers offer more than one health insurer's products, brokers said during interviews at the Council of Insurance Agents & Brokers' annual Employee Benefits Leadership Forum, held May 27-30 in Colorado Springs, Colorado.

In some instances, the exchanges may offer multiple voluntary benefits products, but never in competition, brokers said.

The primary reason only single-insurer private exchange platforms are being offered to midsize employers is that insurers do not want to risk potential adverse selection that might occur if too many of an employer's “bad risks” enroll in one plan, while most of the “good risks” enroll in another, said Michael Mascolo, insurance practice leader for Northeast region employee benefits at Wells Fargo Insurance Services USA Inc. in Madison, New Jersey.

“Carriers are being cautious with this, especially if they have provider networks with prominent providers that treat complex, high-cost medical conditions. If there's no risk adjustment for that, those networks are going to attract a disproportionate number of expensive medical cases, and underwriters are concerned they'll be selected against in a way that would disadvantage them,” Mr. Mascolo said.

In addition to private exchange platforms, predictive modeling capabilities that help identify potentially high-cost medical claimants are being offered by benefits brokers to more midsize employers.

For example, DataSmart Solutions L.L.C. of Helena, Montana, recently began working with the Leavitt Group of Cedar City, Utah, to help its employer clients predict which employees and dependents are most likely to become high-cost claimants by analyzing not only historical claims data, but also biometric screenings, a 12-question lifestyle questionnaire, clinical markers obtained from a vision exam, and publicly available consumer data such as credit scores and Google searches.

DataSmart Solutions President Paul Bogumill said the predictive modeling program, which has a high degree of accuracy, is the product of nearly 20 years of evaluating such diverse information in collaboration with the Montana Association of Healthcare Purchasers, a coalition of state and university system employers.

“We find commonalities, put pieces together to identify the people who are likely to generate the $100,000 claims,” Mr. Bogumill said.

To identify best-in-class wellness providers, Hub International Ltd. recently licensed an analytically driven wellness provider “matchmaking service” developed by the Chicago-based Wellness Research Institute, said Ron Agypt, Hub's Chicago-based chief sales officer of employee benefits.

The Wellness Navigator, which operates somewhat like the online dating service eHarmony, uses an employer's answers to a series of questions to search through a database of 160 providers to identify those that best meet the employer's needs, Mr. Agypt said. The database also includes provider reviews to help guide employers in making their selections, and can perform an automated request-for-proposal process.

Aside from pursuing better technology, benefits brokers also are honing their linguistic skills to better explain complex benefits issues to finance executives of companies, said Michael Turpin, New York-based executive vice president of USI Insurance Services Inc. This is because most chief financial officers view PPACA noncompliance as one of their company's biggest financial risks, he said.

“When their per capita spend on health care starts to eat into their per capita profit, the C-suite suddenly appears, and they stay in the meeting for more than five minutes,” he said. “Perhaps one day, (human resources) managers will actually get rewarded for achieving sustained low-digit trends” in health plan cost increases.