The Costs of Doing Business

Reducing Administrative Burdens in a State Health Exchange

The health insurance industry is loaded with back-office costs from marketing to plan and rate maintenance to enrollment paperwork. The introduction of exchanges will soon add administrative burdens of its own to both state governments and health insurance carriers.  Exchanges will not only need to be integrated into the operations of health plans but they will also need to be managed. 

Determining the best way to integrate the capabilities and processes of insurance providers within the operations of the exchanges will determine the most efficient way to fulfil customers' needs.

Carriers want to automate the transfer of information to and from the exchange.  They do not want to compile and send a spreadsheet to the exchange for plan and rate information. Carriers also do not want to manage their plans and rates on their own systems and then a second time on the state health insurance exchange.

Carriers already have systems that maintain products and rates, store membership information and handle financial services.  The more that state health insurance exchanges can interface directly with carrier systems, the less administrative functions and duplication of effort will need to occur.  States would also benefit from streamlining the communication process with carriers.

One of the key purposes behind the exchange is to centralize and lessen the administrative costs associated with distributing individual and small group health insurance.  Plan and rate maintenance, enrollment, and financial services are three areas where the state health insurance exchange runs the risks of adding to carriers’ administrative burden.  To streamline this process and reduce administrative costs for both the state and the carrier, states should make every effort to allow for the automated transfer of information to and from the exchange.

States should focus on providing a health insurance exchange solution that is sustainable and affordable over time.  In order to achieve sustainability, administration costs need to be minimized by eliminating duplication of efforts.    One critical way to minimize administration costs is by using technology to automate and streamline time-intensive processes.

Plan and Rate Administration Tools

Plan and rate administration tools allow carriers and / or the state administrator to maintain products, rates, and rating algorithms easily and directly on the web-based health insurance exchange site.  These tools provide two key benefits to states. 

First, the product and administration tool will allow carriers that may not have the ability to integrate directly with the exchange to maintain their products and rates on the web portal.  Having such a tool would simplify the process of maintaining products and rates for both the carrier and the state.

Secondly,  states need a way to review carrier products and rates prior to their release on the health insurance exchange.  In addition, states would be able to perform modeling, allowing them to better understand the impact of new rates.

Application Administration Tools

Another function that can further assist the states in building a sustainable and affordable health insurance exchange is to utilize an application administration tool.  The tool allows a state business user to modify the application rather than a technical developer.  Business users could make changes to the style, branding, and images used on the application.  In addition, the business user can add/remove fields, add business rules, and adjust error messages.  This functionality allows the health insurance exchange administrator to quickly create and modify any application that is a part of the exchange. 

It is likely that state health insurance exchanges will include separate enrollment applications for individuals, employers, and employees.  The exchange will also likely require a navigator to complete an application to become qualified to assist the consumer in the plan selection process.  By enabling a business user to make application changes directly in the web-based exchange versus involving a developer, states will incur less administrative costs related to maintaining the multiple applications.

eBilling and Premium Collection

Offering consumers and employers the convenience of online bill presentment and payment will improve customer satisfaction, while minimizing paperwork and processing time.  eBilling and premium collection functionality exists today and can be leveraged in state health insurance exchanges.  However, there are complexities unique to state exchanges that states need to consider during the planning process, including the coordination of premium subsidies in the individual benefit exchange and the multi-carrier list bill in the small group (SHOP) health insurance exchange.  Most likely, much of the financial services will fall on the exchange with the financial information being passed to the carrier once subsidies, individual, and group payment has been collected.

Technology can reduce administrative efforts and therefore reduce costs.  By integrating technology into every aspect of the exchange, insurance carriers can manage rates and plans in one solution and automatically push the updates to all channels.

Self-service tools and straight-through connectivity are key sales tools that aid in reducing administrative costs while engaging potential and current enrollees.  Giving more control to customers not only improves their satisfaction, but when paired with full integration to back-end systems, it also reduces a health plans’ administrative burden. Virtually instantaneous case installation, fewer errors, and reduced resource requirements are just some of the benefits that an integrated sales technology solution offers.