A new survey finds when it comes to complying with health care reform, meeting medical loss ratio requirements, acquiring and retaining the best risk, establishing cost-effective distribution channels and working with exchanges are U.S. payers' top priorities.
HealthPlan Services, which provides outsourcing solutions to insurers in the individual, small business, association and union trust markets, did an online survey of operational executives representing 26 health plans with a commercial product line and at least 50,000 members enrolled in individual/small group products.
The survey found unanimous agreement about what the top three priorities are for U.S. payers, but sponsors of the survey say they were surprised at how these priorities ranked: Ninety-two percent of all respondents identified compliant risk acquisition and retention as being among their top three priorities, while 58 percent identified both the MLR mandate and cost effective distribution. Another 54 percent gave one of their top three spots to working with exchanges.
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"Managing the MLR is a top carrier priority due to the heavy focus that has been placed on reigning in administrative costs. It is an especially complex task because a significant portion of administrative expenses are difficult to scale back due to the nature of what is defined as non-claims expenses," said Dennis Prysner, chief project officer, HPS. "Thus it was surprising to see it rank second, although one possible explanation is the indirect tie between managing loss ratios and retaining risk. When the best risk is acquired, the claims experience is more positive, which can impact the MLR."
Also unexpected was the low ranking for premium rebates, which less than 1 percent of respondents identified as their top priority and just 15 percent placed among the top three.
"This is surprising considering that the rebate mandate is one that will be particularly challenging from a compliance perspective," said HPS CEO Jeff Bak in a statement. "When coupled with MLR, rebates become a double-edged sword and evoke processes that few carrier systems are equipped to manage."
Respondents identified their top three pain points as 1) uncertainty/ambiguity, 2) the complexities and profit impact of meeting compliance requirements, and 3) the need to assess the viability of existing products and potential new products.
Further, 58 percent of respondents were still considering the impact reform will have on agent commissions. However, 27 percent had already decided to reduce commissions to meet the MLR floor.
In terms of introducing new non-medical products to shore up revenues, 62 percent were undecided. Just 4 percent considered sales, distribution, cross-selling and administrative aggregation to be critical priorities. These findings appear to run counter to prevailing wisdom, which holds that expanding portfolios to include voluntary and ancillary products and implementing processes and systems to aggregate multiple product administration will be the most effective means by which carriers can offset profit losses and reduce the chances that they will be required to issue rebates.
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