Private HIX payment models not well-understood

Employers are becoming more familiar with the players in the private exchange marketplace but still feel they lack sufficient information about fees and how the exchanges are paid.

Employers “are open to considering a private exchange but they want to have sufficient transparency from the private exchange operator in terms of how they get paid,” says Greg Mansur, principal, with PricewaterhouseCoopers’ HR services consulting practice.

Payment models vary from private exchange to private exchange because of the type of organization that is behind it. Some involve per employee per month costs, while others have commissions built in that flow back to the exchange operator.

“Not every organization is providing a full accounting of how the different revenue streams look in aggregate to help a client really understand effectively what the total cost of a private exchange is,” says Mansur. “How those revenue streams flow back to the [exchange] operator can vary significantly from one exchange to another. … that’s where the trickiness comes in.”

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But fee transparency does not appear to have dampened employer enthusiasm for private exchanges. One out of five respondents (20%) to a recent survey from the Private Exchange Evaluation Collaborative indicate they are considering private exchanges as an option for 2016, while 41% are considering private exchanges for active employees by 2018.

“I think the private exchange operators are still learning how to provide the right level of transparency,” says Mansur.

There were sizeable increases in the second annual PEEC survey on the importance employers place on the shopping experience, with 85% saying “tools that aid plan selection” were “very important” (compared to 70% in 2013) and 35% rated “mobile device compatibility” as “very important” (compared to 26% in 2013.)

Also see: Going beyond Amazon: Making consumerism work on private exchanges

PEEC is a collaborative of four nonprofit employer health coalitions – Employers Health Coalition, Inc., Midwest Business Group on Health, Northeast Business Group on Health, and the Pacific Business Group on Health – and PwC.

The online survey of employers’ views on health insurance exchanges was conducted in November. There were 446 respondents from a variety of industries representing self-insured and fully insured employers.

Also see: Vendor management, broker education challenges in HIX implementation