To what extent does it matter whether a disease management program is delivered in a private exchange through the fully insured or self-insured model?
Eric Grossman, active exchange leader for Mercer Marketplace, believes private exchange operators have more flexibility with self-insurance “because the employer is still responsible for their own claims, and therefore, exerts more influence over programs like disease management.” He says the Mercer Health Advantage program was developed a few years ago with the help of several insurance carriers to advance the opportunities of clinical management, not just DM. Many self-funded companies on the Mercer Marketplace private exchange have since adopted it.
“You definitely have more control as the employer, or as the exchange sponsor, in a self-funded environment,” he says. “This continues to be, whether it’s fully insured or self-funded, a very ripe area for further development, not only in the tools and resources that are made available to people to help manage their conditions. But even more on the kind of behavioral science of how do you identify the right people and make them interested in participating in the support that can be provided to them.”
Mike Christie, market leader for Aon’s exchange solutions business, sees a lot more DM program innovation and constructive consumer engagement on the part of multiple insurance carriers that participate in a fully insured competitive exchange. Driving this movement is the fact that carriers bear the risk and must compete for membership every year, which leads to the development of a comprehensive or fully integrated solution.
Sharing claims data increasingly allows carriers to immediately intervene at a point of need and improve the employee engagement experience, which Christie considers a paramount part of the operation. This is why Aon prefers a bundled vs. carve-out model for DM in its exchange on both the fully insured and self-insured sides.
While the self-insured approach, which Aon’s exchange adopted over time as the exchange market evolved, also competes for membership and enrollment, he believes “they don’t necessarily have the same economic incentive.”
You definitely have more control as the employer, or as the exchange sponsor, in a self-funded environment.
Standard DM capabilities are always part of the bundle of services that are provided by insurance companies in a fully insured model, Grossman says. “What a private exchange will do is still drive engagement, especially as members are choosing plan options,” he explains. “And that, in turn, will drive greater effectiveness of those carrier disease management programs.”
The trade-off, however, is less direct control for employers. “If you’re fully insured and the experience is bad, your rates are going up,” says Rick Strater, division VP and national exchange practice leader for Arthur J. Gallagher & Co., whose Gallagher Marketplace is powered by Liazon Corp. “It’s not like you get to walk away from it.”
He expects most large or more sophisticated accounts to be self-insured in order to do justice to the claims-analysis piece of a private exchange. Much is at stake considering that 85% of medical plan pricing is claims exposure, Strater notes. Those costs can be controlled through an exchange’s defined contribution budget, as well as specific and aggregate stop loss coverage.
“When I’m setting up my budget for this client, I want to make sure that we’ve done all of the right migration analysis on those plans, and that we have those plans priced as closely as possible to what we’re going to see from an experience standpoint,” he says.
