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www.wbjournal.com Book Of Lists 2015 • Worcester Business Journal 21 S P O N S O R E D B Y Skilled nursing facilities ..........................................................22 Health insurers ........................................................................24 Physician groups .....................................................................25 Hospitals .................................................................................26 HEALTH CARE P rivate exchanges are gaining traction. A recent survey by Accenture shows that up to three million people are expected to be enrolled in a private exchange in 2015, and some 40 million by 2018 – eclipsing projected enrollment in public exchanges. Vin Capozzi, Harvard Pilgrim Health Care Senior Vice President, Sales and Marketing, provides perspective on choosing an exchange partner. So, what is a private exchange? Here's the tweet-size definition: Employers give employees a set amount of money so they can shop online and customize a benefits package, aided by decision-support tools. If you've begun to look at private exchanges, you can appreciate the adage that "when you've seen one private exchange, you've seen . . . one private exchange." Each is different in its approach. Employers who begin investigating may end up being confused to the point of paralysis. Here are some important questions to ask when evaluating a private exchange: • Does the exchange provide flexibility when it comes to funding arrangements? Is the exchange available only to fully insured employers, or to self-insured employers or to both? An exchange that's available to both provides employers the greatest flexibility as they adjust their strategic focus, approach to risk or budget. • How many medical plan choices do employees have? The more plans, the more likely you are to satisfy more employees. An option of at least eight medical plans, with at least a 35% spread between the lowest and highest premium offers maximum choice. • How many ancillary choices do employees have? The wider the range of ancillary categories, and the more carriers offered within each line, the more likely you are to meet your employees' needs. Ideally, you want at least two carrier choices for dental, vision, life, long- and short-term disability, and accident and hospital insurance, since each may offer different terms, and you increase the likelihood of retaining your current carrier. And, each dental carrier should offer at least two plans with different benefits and premiums. • How intrusive is the decision-support tool? The tool is important to help employees narrow down their options. A decision-support tool that takes a half-hour to complete will frustrate employees, and one that asks specific questions about medical conditions may raise an employee's concerns about privacy. An ideal tool takes 15 minutes or less and asks general ("How many prescriptions does your family take?") rather than specific ("What prescriptions does your family take?") questions. • How accurate is the decision-support tool? You should ask the exchange operator what percent of employees make major benefit changes in year two. These changes typically occur either because the employee experienced a major life event that altered his or her needs dramatically (such as marriage, birth of a first child or a diagnosis) or the employee didn't like the product portfolio the decision-support tool recommended the previous year. This figure shouldn't exceed about 15%. • How will the exchange sponsor and your medical carrier support you during implementation and during open enrollment? You need someone to work with you to choose the right insurance carriers, set the proper contribution level, teach employees how to use the exchange to make their benefit selections and answer your questions during the year. Be sure that the exchange partner has a local representative who works with you and your employees through open enrollment, as well as a dedicated employer support team to assist you throughout the year. • What's the cost to offer the exchange? This is obviously an important consideration. Remember, though, that a key benefit of a private exchange is to increase administrative efficiency. Don't look at a private exchange as an added cost. Rather, compare the cost to the savings that you gain from freeing your benefits staff from selecting and negotiating annually with medical and ancillary carriers, processing enrollment changes with multiple carriers, answering benefit questions from employees and spouses during open enrollment and throughout the year, and paying multiple premiums monthly. Employers typically find that the savings outweigh any costs. There's a lot to consider when determining if a private exchange is the right solution for your organization. To learn more, see the full opinion paper by Vin Capozzi at harvardpilgrim.org/ privateexchange. n Considering the private exchange solution for your health benefits program? Here are some important points to keep in mind when choosing an exchange partner. Vin Capozzi, Harvard Pilgrim Senior Vice President, Sales and Marketing