How Health Benefit Exchanges Fit in Your Health and Welfare Strategy

Transcription

1 How Health Benefit Exchanges Fit in Your Health and Welfare Strategy December 10, :00 3:00 pm ET The audio for this webcast will play using your computer s speakers. If you experience audio problems on your computer, please dial in to hear the audio: U.S. Toll free: ; Passcode: # International: ; Passcode: # 2013 Towers Watson. All rights reserved.

2 Today s discussion Why employers need to understand health benefit exchanges Attributes of private exchanges Are exchanges the right delivery channel? Key considerations Critical questions to consider Responding to your questions towerswatson.com 2013 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 2

3 Today s speakers Randall Abbott Practice Leader Health and Group Benefits Jane Jensen, FSA Senior Consulting Actuary Health and Group Benefits Mark Maselli Managing Director Health and Group Benefits towerswatson.com 2013 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 3

4 The Towers Watson perspective For employers, the imperative is a high performance health plan Our goals are to help our clients achieve optimal health benefit plan performance and maintain or achieve an affordable, sustainable health plan We view exchanges public and private as additional new benefit delivery channels that every employer will want to understand and use to advantage As a firm, we are agnostic as to whether an employer maintains a self-managed plan or utilizes an exchange, and can support high performance through either approach Employers will want to use the channel(s) that add the greatest value for each population cohort towerswatson.com 2013 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 4

5 Creating a high performance glide path Employer Objectives Total Rewards positioning Employee Value Proposition Financial commitments Build/Buy/Exit Affordability and Excise Tax Risk Components that drive high performance External Influences PPACA compliance Competitive needs Delivery alternatives Benefit delivery channel optimization Benefit restructuring Network optimization and contracting Population health and care/condition management Accountability and engagement Pathway Development Financial Impact Readiness Multi-Year Plan towerswatson.com 2013 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 5

6 New delivery channels create new decisions 1. Build Manage performance on own: leverage plan design, network optimization, aggressive care/condition management and health improvement Employer Managed 2. Buy Private exchange path: when the exchange offers a high performance, sustainable alternative Exchange Managed 3. Exit Exit with subsidy or pure exit: pay $2,000 penalty Employee Managed towerswatson.com 2013 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 6

7 Health benefit exchanges in brief: New opportunities new decisions Public Exchanges (Marketplaces) Private Medicare Exchanges Federally facilitated or state operated Guaranteed issue individual insurance multiple options available Federal subsidies available to lower wage workers Useful for COBRA continuees, pre-medicare retirees, part-timers (<30 hours) or potentially low wage populations Use of a private exchange navigator can ease transitions to the federal or state Marketplace as well as Medicaid Privately operated, proven solution for Medicare-eligible retirees Connect Medicare retirees to insured individual Medicare market (Medigap, Medicare Advantage and Part D prescription drug plans) Broader risk pool and federal subsidies with expanded choices that benefit employers and retirees Employer subsidy monetized and administration reduced Private Active Exchanges Privately operated alternative to traditional self-managed employer plan Typically offers more choice and outsources plan management, vendor management, communications and administration Continues employer sponsored group plan that may be self-funded, or insured based on group s experience Provides a new alternative for those seeking to buy rather than build towerswatson.com 2013 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 7

8 Key attributes of private exchanges: A closer look Navigator/concierge to public exchanges marketplace Facilitated navigation to public exchanges Individual insurance Multiple plans and multiple carriers Carrier and Marketplace connectivity Personalized assistance for carrier and plan reviews Support to optimize available federal subsidies Health advocacy Medicare retiree exchange Connects Medicare retirees to individual Medicare products in their locale Single or multi-carrier Specialized benefit advisors trained in insurance and Medicare issues Complete retiree support Any employer subsidy monetized often via HRA Billing and administration assumed by private Medicare exchange or carrier Active exchange Group model with employer-specific pricing Single or multi-carrier Multiple benefit plan options Plan and vendor management, as well as administration assumed by exchange Communication and engagement support Pre-defined plan designs; geographic rating of plans Employer subsidy directly reduces employee premium and may be a defined contribution approach towerswatson.com 2013 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 8

9 When does integrating exchanges into an employer s strategy make sense? Medicare Retirees Now, wherever a traditional group approach is in use for retirees COBRA, Seasonal, Part-time and Early Retirees Now or as public exchanges stabilize Full-time Actives When self-management is no longer a desired use of time, money and resources If greater economic value is available in a private exchange solution Desire to change the health care deal Many employers will embrace a hybrid solution towerswatson.com 2013 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 9

10 Financial benefits of a high-performing active exchange Cost per Employee Excise Tax Threshold Longer-term Savings Immediate Savings Typical Employer Plan with Median Efficiency High Performing Exchange An active exchange can bring immediate savings through factors such as best-in-market pricing and employee selection A high-performing active exchange adds even greater longer-term health care trend reductions through initiatives like network optimization, health management and member engagement towerswatson.com 2013 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 10

11 Financing an active private exchange: Insured vs. self-funded Assertion Buying insurance shifts the risk from the employer to the insurance company The insurer has more motivation to innovate and generate savings Market competition will reduce costs as insurers compete Insurance is needed for a defined contribution employer subsidy strategy Towers Watson Comment No. Insured rates are based on a single employer s own claim experience Premiums are fixed for one year and adjusted annually Over time, the employer will pay whatever claims their employees generate plus administrative and insurance charges Historically, self-funded employers have led the way in innovation as insurers have been hesitant to test initiatives that may not have broad appeal. Moving forward, insurer motivation on cost reduction may focus on expediency without the same level of emphasis on long-term health improvement as the self-funded employer who remains intent on maximizing the value of their human capital investment Whenever plans are offered side-by-side, competition will affect cost regardless of how the plans are funded There aren t significant discretionary costs that an insured plan can forgo to keep costs lower over time At its core, a Defined Contribution approach suggests a fixed employer subsidy coupled with plan choice where the employee is asked to pay the full difference to participate in higher cost options This employer subsidy strategy is possible regardless of how the plans are funded? Why do 94% of employers Over time, a self-funded employer with over 5,000 employees sponsored plan is always less expensive self-insure? than insured towerswatson.com 2013 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 11

12 The incremental cost of insurance ACA Fees Marketing/Selling Risk Margins Incremental costs from traditional insurance Impact Optional? Program Costs Medical and Rx Claims State Insurance Mandates State Premium Taxes Medical and Rx Claims ACA Fees 1% 1.5% No Marketing/Selling/Commission 2% 3% Yes Risk Margins 0.5% 3% Yes State Insurance Mandates 1% 2% No State Premium Taxes 2% No Total 6.5% 11.5% Self-funded Fully-insured Managed competition" may lead an insurer to be more aggressive in the level of optional internal charges built into the insured rate but won t affect external payments to providers for enhanced benefit mandates or government agencies for premium tax and the new PPACA health insurance fee Insured approaches can result in innovation (or increased use of established techniques) to reduce claims, but no more so than employers can and already do in a self-funded environment towerswatson.com 2013 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 12

13 The defined contribution question What is a defined contribution (DC) approach? A DC approach suggests a fixed employer subsidy coupled with plan choice where the employee is asked to pay the full difference to participate in higher cost options The issue of defined contribution is independent from whether an employer uses an exchange, self-funds or insures Often, employers erroneously believe that under a DC approach they can separate any increases in subsidy to the health plan from the actual increase in health care costs Defining the employer subsidy as DC doesn t remove the risk of cost increase, it just transfers the risk to employees Examine closely Consider your prospective Employee Value Proposition Consider the broader Total Rewards context Related employer considerations Should you provide a single DC subsidy regardless of family status? Should the subsidy vary by geography? Should the subsidy be used to steer employees toward a certain type of plan option? towerswatson.com 2013 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 13

14 Exchanges are one part of a broader strategic context that an employer should consider Optimal use of all new delivery channels for delivering health benefits to various segments of the workforce especially the cohorts of retirees, part timers, subsidy-eligible workers or COBRA continuees A careful examination should include understanding: Organizational ability to create and sustain a highperforming health plan especially for actives Overall Total Rewards strategy, health care objective, desired employer role and implications for the Employee Value Proposition Excise tax risk in 2018 Readiness for change towerswatson.com 2013 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 14

15 Designing a high performance active private exchange Employer Objectives Total Rewards Employee Value Proposition Financial commitments Exit barometer Affordability and Excise Tax Risk Components that drive high performance External Influences PPACA Competitive needs Delivery alternatives Benefit delivery channel optimization Benefit restructuring Network optimization and contracting Population health and care/condition management Accountability and engagement Towers Watson based its OneExchange Active solution on these elements towerswatson.com 2013 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 15

16 Towers Watson s OneExchange solution: Connecting people to value We provide value and long-term sustainability for all populations Why we re different Proven OneExchange operates the nation s largest private Medicare exchange Towers Watson has decades of experience supporting large employers in the development and administration of high performing benefit plans End-to-End Full spectrum of support from initial financial analysis for employers, to plan comparison, enrollment, and postenrollment support and advocacy for individuals Integrated exchange offerings for all cohorts of a population provide for a consistent benefits experience throughout the employment lifecycle Health Focus Advanced analytics and reporting tools support strategic decision making for employers and health coverage management for individuals towerswatson.com 2013 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 16

17 What makes OneExchange Active different? OneExchange Active has been crafted on the four pillars High Performance Sustainability Value Consumer-grade Experience High performance means that we have built plan designs, care and condition management, health improvement, incentives, underlying programs and networks to reduce health care claim costs and/or cost trend using our decades of experience and the best practices of our top-performing clients Sustainability means we are focused on the long view. The design of OneExchange Active is to solve the problem improving population health and controlling costs. It s intended for those who want to stay in the game but also can be deployed as a transitional vehicle if an employer wishes to pursue that path Value means we are striving for improved results per dollar spent optimal unit costs in every market, better outcomes and improvements in population health as well as higher levels of member engagement A consumer-grade experience means OneExchange enables and supports the member from pre-enrollment through an episode of care with tools, resources, web capabilities, telephonic support and chat capabilities to create an end-to-end positive experience towerswatson.com 2013 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 17

18 Service delivery model: A changing mindset Roles and responsibilities Carriers and Vendor Partners Carriers work with TW as their client Manage networks Pay claims Host website Manage complex care Resolve participant claim issues Provide tools and other services Provide transparency, nurse line and other tools Build relationship and loyalty with consumers of exchange clients OneExchange Active The exchange manages the vendor and employer relationships Own sales and marketing process Determine plan design Provide consolidated reporting Evaluate carrier performance Ongoing vendor management Audit carriers and partners Evolve exchange road map Manage contracting and renewals with carriers Evaluate carve in/out decisions Determine rating regions Implementation of carriers Solicit client and carrier input Provide enrollment support and ongoing event processing, manage eligibility files Underwriting, pricing, compliance, etc. OneExchange Active Employers Company manages the OneExchange active relationship Provide input and ideas for the exchange Provide feedback on carrier performance Make decisions on funding plans Add wrap around solutions and services as needed Provide a supportive health culture Define eligibility rules Fund claims and vendor fees towerswatson.com 2013 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 18

19 The immediate and longer-term financial opportunity with OneExchange Savings Opportunity Description Immediate Cost Reduction* Longer Term Best-in-Market Pricing High Performance Health Management Rx Pricing and Management Administrative Support Employee Plan Selection Multiple health plans reflecting their provider deal in each geographic location Employer subsidy set at best-in-market cost effectiveness Account-based plan design to drive consumerism Enhanced care management and wellness models Incentives for health behaviors and outcomes Best-in-market deal terms Price transparency to drive consumerism Scale purchasing of ASO fees Redeployment of Benefits staff to high-leverage roles Optimized broker commissions Many employees will buy-down if given choice and full price impact Increases efficiency of using health services 2% to 4% 1% to 2% 1% to 2% 0.5% to 1% 4% to 9%+ before employee selection Trend reduction of 1% 3% per year Total Immediate Cost Reduction Longer Term 6.5% to 12% 5% to 15% over 5 years * These figures are illustrative. Actual savings depend on factors including efficiency of current plan, population health status and plan selection. towerswatson.com 2013 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 19

20 What should you do now? Understand the issues that will matter most to you, and develop a strategy to address your issues 1 What is the ownership, philosophy and value proposition of the arrangement? Does it fit for you? 2 Will plan options provide meaningful choice for employees? Strategic Questions for Employers 3 4 Do plan options provide value for both the employer and the employee? What is the approach to care delivery? Is there an emphasis on efficiency, quality and outcomes? 5 Is the exchange model sustainable over the long term? towerswatson.com 2013 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 20

21 Key considerations for an active private exchange Is the exchange single carrier or multi-carrier? What financial options are available? Self-funded? Insured? If insured, how is renewal rating handled? What carriers participate? What plan choices are available? How are plans priced and rated? Geographic? Other? Which networks are offered and how broad or narrow are they? What value added services are embedded (i.e., pharmacy management, care and condition management, health improvement and wellness)? towerswatson.com 2013 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 21

22 Your turn Press *1 to ask a question over the phone Submit a Chat with Randy Abbott to ask a question online towerswatson.com 2013 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 22

23 Coming soon from Towers Watson Articles: How Health Benefit Exchanges Fit in Your Health and Welfare Strategy December 12, 2013 Health Insurance Exchange: Is it Right for Your Active Employee Population? Late January 2014 Executive Guide to Health Insurance Exchanges Available Now (Released October 2013) Webcast: Questions You Must Answer Before Considering a Private Health Exchange March 2014 To obtain a complimentary copy of the articles, please contact your Towers Watson consultant Contact us Randy Abbott randall.abbott@towerswatson.com Jane Jensen jane.jensen@towerswatson.com Mark Maselli mark.maselli@towerswatson.com towerswatson.com 2013 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 23