Presentation on theme: "Update on Process Recommendations to the Executive Committee, Governor, and Exchange Board Next two sessions: options for analysis Goals/criteria Options."— Presentation transcript:
Update on Process Recommendations to the Executive Committee, Governor, and Exchange Board Next two sessions: options for analysis Goals/criteria Options for individuals Options for small businesses
Questions for the Group Should the Exchange purchase based on… …quality and payment reforms? (CommChoice, RIte Care, FEHBP) …price (premiums)? (CommCare, RIte Care, FEHBP)
Options for Discussion 1.The Exchange should certify all plans that meet minimum federal requirements, and only decertify plans for flagrant misconduct. (Utah) 2.The Exchange should set additional quality/payment reform standards only, and certify all plans that meet the standards. 3.The Exchange should negotiate based on quality/payment reform only. (CommChoice) 4.The Exchange should have discretion to negotiate based on both quality/payment reform and price, providing the optimal combination of choice and value. (FEHBP, California Exchange) 5.The Exchange should negotiate based on quality/payment reform; and also purchase based on price by setting a ceiling for premiums, and soliciting bids below the ceiling. (CommCare, RIte Care)
More Options for Discussion The Exchange should use incentives to promote value and quality. The Exchange should provide enrollment incentives to the lowest-cost plan. (CommCare) The Exchange should provide financial incentives for plan performance (RIte Care), and/or provide financial incentives to enrollees who choose high-quality plans. The Exchange should award a special designation (Gold Star) to plans that are the lowest cost, have the highest MLR, or implement payment reforms. The Exchange should design its website so that plans with a special designation appear first when consumers conduct a search. The Exchange should work to recruit new insurers. The Exchange should provide technical assistance to potential insurers or Medicaid managed care plans. The Exchange should issue Requests for Proposals to out-of-state insurers. The Exchange should work to align purchasing strategies with Medicaid, a Basic Health Plan (if established), and the state health plan.
Today’s Issue Is more choice always better? How much choice is too much? Should the Exchange manage the number and type of products on its store shelves?
The Affordable Care Act – Statutory Requirements Requires coverage of essential health benefits Limits actuarial value to the precious metals (Bronze, Silver, Gold, Platinum) and a catastrophic plan Sources of variation Allows coverage of additional benefits Does not prescribe cost-sharing designs
Potential Benefits of Standardization Make comparisons easier Improve consumer decision-making Enhance competition improve quality and reduce price Limit insurers’ ability to use benefit design to select risk Medicare Advantage: some plans imposed higher copayments for costly treatments like chemotherapy Increase participation in the Exchange
Improving Decision-Making The chocolate experiment Participants who had limited choice were significantly more satisfied with their chocolate Medicare Part D Consumers frequently choose plans that provide less risk protection at higher cost Medicare Advantage CMS: “The large number of MA plan options…has made it difficult and confusing for beneficiaries to distinguish between these plans and to choose the best option to meet their needs.” Plans must be “meaningfully different”
Enhancing Competition Swiss health insurance: “inertia due to numbers” People offered more choices were less likely to switch plans Nonpartisan Congressional Budget Office: Exchanges can enhance competition and reduce premiums by allowing consumers to compare standardized products
Increasing Participation in the Exchange 401(k) retirement savings plans As the number of fund options increases, employee participation falls Proctor & Gamble Reduction in the number of shampoo products increased sales
Potential Risks of Standardization Products that are not in line with consumer preferences Exchange could conduct market research, and review options annually Could stifle innovation that promotes value “Value-based insurance design” – lower cost-sharing for cost-effective services “Provider tiering” – vary cost-sharing for providers based on their performance
Question for Discussion Should the Exchange have authority to standardize plan designs? CA legislation: “The board shall have the authority to standardize products to be offered through the Exchange.”