Key Best Practices for Success on the Health Insurance Exchanges

January 26, 2017 - Which healthcare insurers are succeeding in the health insurance exchanges? What best practices can be taken from these payers? The weekly newsletter Washington Health Policy Week in Review published an editorial answering these questions by looking at which payers have performed well on the health insurance exchanges.

The results have shown that smaller healthcare payers such as Molina Healthcare and the Centene Corporation are performing better than national insurers on the health insurance exchanges. The business model of Molina Healthcare and Centene Corp. incorporate Medicaid-like healthcare coverage and Medicare Advantage plans.

These type of health plans make an impact on consumers. First, Medicaid-like plans often have low premium costs on the health insurance exchanges, but have received criticism in terms of their limit on provider networks and physician access. Providers have also found that these type of health plans have lower reimbursement rates.

Nonetheless, Molina and Centene have outperformed other health payers on the health insurance exchanges including UnitedHealth, which, by 2016, dropped out of more than 75 percent of the state exchanges it had been participating in.

The entire health insurance industry had seen losses in the figures of $5 billion in 2015 due to the health insurance exchanges, according to the Washington Health Policy Week in Review. However, the companies Centene and Molina had profited on the health insurance exchanges in 2015 and are looking to expand their offerings on state exchanges.

READ MORE: State Health Insurance Exchanges Face Many Challenges

Other healthcare payers will need to align their business practices with that of Molina and  Centene in order to succeed on the health insurance exchanges as well. Ceci Connolly, president of the Alliance of Community Health Plans, told the news source that many health insurers had originally thought that consumers on the exchanges would behave like workers subsidized by employers, but the results now show that these consumers are more similar to Medicaid beneficiaries.

“Plans that have experience in Medicaid and understood [that market] faster are now doing better taking care of this population,” said Connolly. “Part of the reason why we see those departures by some of the big national for-profits is that it took them too long to appreciate the unique challenges of these customers.”

In 2016, as many as 650 counties had only one healthcare payer participating in the health insurance exchanges since many other insurers had struggled financially on the public marketplace.

The way Medicaid managed care organizations work is by focusing their efforts on coordinating patient care and improving chronic disease management. As many as 55.3 million Americans are currently treated through managed care organizations, which look to lower costs by limiting provider networks and supporting preventive care.

Narrow provider networks would allow payers to keep their costs low while operating on the health insurance exchanges. While this may cause concern among consumers, many patients with coordinated care and low-priced premiums may not have as much opposition to a narrow network.

READ MORE: 2016 Premiums on Health Insurance Exchanges Expected to Soar

However, Katherine Hempstead, Senior Adviser at the Robert Wood Johnson Foundation, criticized the idea of narrow provider networks because sicker patients may lose access to needed care and would see higher out-of-pocket costs.

“This is a population that when they need care, they go to the emergency room. You're going to have to change that behavior [to keep spending low],” Ed Haislmaier, a Senior Fellow at the Heritage Foundation, told the source. “And [Medicaid plans] understand that population.”

“If nothing changed and this thing just worked itself to an equilibrium...you’re probably left with one or two insurers in both states that look like Molina or Centene; maybe three or four in a big state,” Haislmaier said. “It’s a very different program than what the proponents thought they were designing and what people have expected. It is a niche market.”

Molina and Centene have also limited their participation in the health insurance exchanges to states where they have already offered Medicaid coverage, which means many of their customers are already familiar with their brand.

“It’s an extension of our Medicaid business,” J. Mario Molina, president of Molina Healthcare, said about the exchanges. “We’re focused on customers who had been on Medicaid, who may have been our patients. We want to give them the opportunity to stay here.”

READ MORE: Consumer Engagement Vital in Health Insurance Exchanges

Another strategy that managed care organizations have learned for keeping costs low is the ability to negotiate reduced reimbursement rates with their provider networks. This has given Molina Healthcare and smaller payers the capability to better negotiate payments on the health insurance exchanges.

By following the business practices of managed care organizations like Molina Healthcare, private payers could gain greater success and higher profits when operating on the health insurance exchanges.