What Will Health Benefit Exchanges Look Like?

The Department of Health and Human Services has established the minimum set of benefits health benefit exchanges can offer prospective members, as well as a baseline of functionality that must be provided. But does anyone believe that exchanges will stick to only the prescribed structure?  I’m not talking about future generations of exchanges, but the very first that will hit the market.

The configuration of the first-generation HBEs is also going to be influenced by the model of competition adopted by the states (one or multiple exchanges with open competition) and the states’ scope of involvement in the exchange(s) beyond simple monitoring exercises. If a state adopts a multi-exchange model, rest assured that the amount of functionality offered will be much larger than in the case where a state offers up a single, tightly-controlled exchange.

Let’s explore potential health benefit exchange functions.  I break out the functionality in two generations. I could have done it in three or more, but I strongly believe that once the exchanges take root (which I’m pretty sure of, not simply because they’re part of the reform bill but also because of my faith in continuing movement toward the individual market), the speed of innovation will rapidly increase and majority of these functions could become de facto standards very quickly.

First-Generation HBEs:

In addition to covering the baseline functionality mandated by HHS (such as the ability to locate available plans in the community, information about the core mandate, calculate respective subsidies etc.), the first-gen HBEs could provide value-add services such as:

• Real-time enrollment – working with participating payers, a portal could be devised to connect directly to the payer’s site in order to process real-time enrollments for the prospective members. Even for the payers that do not provide real-time services, the portal could collect all the required data in real time and push the enrollment request in the background.
• Extended reporting – feature-rich reporting will be an integral part not only from the member and regulatory perspective but also from the payer perspective. Members would want to know about changes to the benefits, their claims and corresponding payments from the payers (payers may have to provide this data to the exchange), and their premium payments. The regulators would want to know about the efficiency and the reach of the overall exchange operations. The payers may want to know the enrollment numbers as well as some competitive analytics.

Second-Generation HBEs:

And then the dam will break. The second-gen exchanges should be hitting the market a year or so after the first-gen exchanges have taken hold. By this time exchange operators would realize that value-adds will play an equally, if not more, important part in adoption of their respective exchanges. This realization will be much more acute in states where HBEs are operating in a true competitive mode, i.e., multiple competing exchanges, each vying for membership volume. I can see some of the following value-add services being offered by exchanges:

• Clinical Decision Support-based plan recommendations – CDS will play a significant role in reducing adverse selection through recommendation of appropriate plans to a prospective member based on a prospect’s health conditions.
• Management of tax-deferred accounts – if the exchanges are going to have wide adoption (which I don’t doubt for  a second), they will have to become true one-stop shops and provide tools to manage tax-deferred accounts such as FSAs, HSAs, HRAs,  etc. This will add to the complexity of reporting requirements such as integrated dashboards for members that depict the birth-to-death path of a medical service, from service to claim to payment to copay and tax-deferred account remittance.
• Small employer tools –a mechanism to share information between the small employer groups that are in the same boat in terms of geographic location, size, appetite for bearing premium costs, etc. I don’t even dismiss the notion of a sub-exchange exclusively for small employers where they could collaborate for bargaining leverage with payers.

The crystal ball is still a bit foggy, but rest assured that once HBEs come into being and operators realize their power in terms of enrolled members, it won’t be long before newer and newer value-adds start getting used as the tools to attract more members to enroll through a given exchange.

Rajiv Sabharwal is the chief solution architect in the Healthcare and Life Sciences unit at Infosys Technologies LTD. He can be reached at Rajiv_Sabharwal01@infosys.com.