Reprinted from INSIDE HEALTH INSURANCE EXCHANGES, a hard-hitting newsletter with news and strategic insights on the development and operation of federal, state and private exchanges.
By Steve Davis, Managing Editor
July 4, 2013 Volume 3 Issue 11
Commercial coverage is unchartered territory for most Medicaid managed care firms, but those carriers could have some huge advantages over their more mainstream competitors on state insurance exchanges.
Case in point: Massachusetts-based Neighborhood Health Plan (NHP) saw its enrollment nearly double to about 230,000 — due in part to the state’s 2006 reform law (HEX 10/11, p. 3). The company offers Medicaid and subsidized and individual products through the Connector as well as commercial group and individual products outside of it.
However, launching a commercial product could be challenging for pure-play Medicaid managed care plans, which typically lack experience in managing risk the way they would need to do with a commercial population. Moreover, their contracted provider networks might not align with those of the commercial carriers, which could make them less attractive to higher-income consumers. FamilyCare Health Plans, a Medicaid managed care firm that applied to offer coverage through Oregon’s exchange, recently withdrew its filing, says spokesperson Vicki Guinn. In May, FamilyCare’s proposed rates for individual coverage landed on the high end of the price spectrum among carriers that submitted rates (HEX 5/16/13, p. 1).
Medicaid companies contacted by HEX say they intend to focus on the low-income uninsured and the low-income parents of children they already cover. “They’re already tapped into those family units, so this is a way to bring the whole family together. [Medicaid carriers] really do see exchanges as an opportunity,” says Jeremy Palmer, a principal and consulting actuary in Milliman’s Indianapolis office. They’ll also be able to capture some of the “churn” as income fluctuations push and pull low-income enrollees between Medicaid and subsidized commercial coverage, he adds.
Molina Eyes Nine Exchanges
Molina Healthcare, Inc. is targeting low-income people who transition in and out of Medicaid as income changes, parents of children who receive coverage through state Children’s Health Insurance Programs (CHIP) and low-income uninsured who earn too much to qualify for Medicaid. The company intends to offer individual coverage through exchanges in nine of the 10 states where it has existing Medicaid operations.
People with annual incomes of between 134% and 250% of the Federal Poverty Level (FPL) “are the ones who will be eligible for the largest subsidies and are the most in sync with the [Medicaid] population we have today,” says Lisa Rubino, president of Molina Healthcare of California. “There has never been a better time to be a Medicaid health plan with the opportunities in front of us,…the exchanges and the expansion of Medicaid.”
Although Molina will offer coverage statewide on some exchanges, coverage in other states will be limited to targeted counties where most of its Medicaid lives are concentrated. Seven of the state exchanges where Molina participates will be operated by the federal government, so carriers won’t know if they’ll be participating until final certification after Labor Day.
Molina, along with several national and regional Medicaid managed firms, expects to participate in Texas’ federally facilitated insurance exchange. About 2.8 million uninsured Texans have annual incomes between 100% and 400% of the FPL and will be eligible for federal premium subsidies.
CHC to Offer Bronze, Silver, Gold
Community Health Choice (CHC), a Medicaid managed care firm that serves the Houston market, proposed bronze, silver and gold plans for the exchange. Different cost-sharing plan designs could mean four variations of the silver plan. While the premiums will be the same, the copayments and annual deductibles will be lower for applicants with the lowest incomes, says CHC President and CEO Ken Janda. CHC will target the uninsured on the lower end of the income scale and people who already have some connection to the company, such as through a child enrolled in the CHIP program, he tells HEX.
In Texas, Medicaid covers pregnant women with incomes up to 185% of the FPL and children from families with incomes up to 200%, but there is no Medicaid coverage for childless adults. And because Texas opted not to expand Medicaid eligibility, as called for by the reform law, childless adults who earn less than 100% of the FPL won’t qualify for either Medicaid or federal premium subsidies.
The company has about 245,000 enrollees, and Janda projects the exchange could bring in anywhere from 2,500 to 30,000 new members. “We just don’t know how fast the take-up rate will be in the first year. And we don’t know if we will have one or four or six or 12 QHPs plans…and we don’t know how our premiums will compare, but we hope it will be competitive,” he tells HEX. “If we have the lowest-cost silver plan, we may get more members than we anticipate, but if we are $100 more than others, it will be very difficult to get people to choose us.”
Some states required or urged their Medicaid carriers to submit bids to participate on their exchanges. Nevada, for example, required its Medicaid managed care firms to offer at least one silver and one gold qualified health plan (QHP) in its exchange. One silver QHP from each Medicaid company will be designated as a “Transition QHP,” explains Jon Hager, executive director of the Silver State Health Insurance Exchange. “If you are enrolled in a [Medicaid managed care plan] and become ineligible for Medicaid, you will [have] the opportunity to enroll in the appropriate Transition QHP.” An online information release form, which enrollees can choose to sign, will allow information — such as pre-authorizations and transition of care information — to be transmitted from the Medicaid managed care carrier to the commercial Transition QHP. The commercial carrier can then manage the enrollee’s care, potentially without needing to ask for additional information from the enrollee’s providers, he explains.
Medicaid managed care plans that do participate in state insurance exchanges must offer the same commercial products as other carriers. Washington state, for example, requires carriers to offer only silver and bronze options, while California’s exchange requires products from all four metal tiers.
Five Advantages for Medicaid Firms
Small Medicaid managed care firms could find it tough to compete with well-financed commercial carriers that have brand recognition, deep pockets and big advertising budgets. And some people will be reluctant to enroll in a health plan offered by a Medicaid company. But Medicaid firms will have some important advantages. Here’s a look at five of them:
(1) A sicker population: It’s expected that many people who apply for federally subsidized coverage through exchanges will have been uninsured for several years, and could have multiple chronic conditions. From an actuarial standpoint, those enrollees will be more similar to dual-eligibles (i.e., people who qualify for both Medicare and Medicaid) than to members of the commercially insured individual market, said John Gorman during a June 13 panel discussion at the Gorman Health Group’s annual forum outside of Washington, D.C. “Between 80% and 90% of people coming into the exchange are going to be people who will be bouncing on and off of Medicaid rolls and other sources of insurance at some point during the year,” he told attendees. “So if you’re participating in the exchange, but don’t have a Medicaid product on the other side of the poverty limit, then you are looking at losing one-third to one-half of your membership in churn every year.”
(2) Lower-cost provider networks: For the subsidized population, Medicaid managed care companies are in the enviable position of being able to offer network providers higher rates than they receive for Medicaid patients. Commercial carriers, however, will be asking providers to accept lower rates to help keep premiums competitive. Rubino agrees that negotiating higher rates with providers will be an important advantage when enhancing Molina’s existing provider networks. Janda admits that hospitals typically want commercial rates, but with such a high uninsured population, CHC is trying to convince hospitals that joining its network will help them reduce uncompensated care. “We’re not shifting people out of existing insurance,” he explains. “Some hospitals agree with us and some don’t.”
(3) Brand recognition among low-income: While large commercial carriers tend to have better brand recognition overall, that isn’t necessarily the case when it comes to the lower-income population. Neighborhood Health Plan of Rhode Island (NHPRI), for example, submitted a bid to participate in the individual and small-group markets in Rhode Island’s exchange. “They feel like their brand among the lower-income population is very strong,” says Palmer. NHPRI and Blue Cross & Blue Shield of Rhode Island are the only carriers in that state to have submitted bids for the individual market.
(4) Lean administrative margins: Medicaid health plans also are accustomed to operating with lean administrative margins. Nationally, Medicaid managed care firms had a profit margin of less than 1% in 2012, according to Palmer’s recent research. And these firms have been using risk adjustment for many years, which could give them a leg up when dealing with the risk-adjustment provision of the reform law. Rubino agrees, adding, “we are very frugal in how we spend the government’s money.”
(5) Existing relationships with essential community providers: Health plans that offer QHPs on an exchange are required to include in their network “a sufficient number and geographic distribution of providers that serve predominately low-income, medically underserved individuals,” CMS explained May 13 in a list of frequently asked questions. As a Medicaid company, Molina also already has relationships with essential community health providers, as required by the reform law. “We didn’t have to go out and forge new relationships like many commercial carriers,” Rubino adds. She says her company also employs a culturally sensitive staff, and offers services such as free transportation and onsite child care to help remove barriers that keep people from seeking care.
http://aishealth.com/archive/nhex070413-02
No comments:
Post a Comment