Health insurance exchanges: The big unknowns

Physicians navigating the world after health system reform are headed toward a large, uncharted area over the horizon in the form of health insurance exchanges. The coverage marketplaces will serve millions of people, but with few predecessor models to serve as guides, doctors wondering what the exchanges will be like for them are, for the most part, sailing blind.

Health insurance exchanges are scheduled to emerge by 2014, at which point individuals and small businesses will be able to shop for a variety of plan options, including coverage that might come with federal subsidies. Forming competitive marketplaces is a major way in which Affordable Care Act architects intended not only to expand coverage to tens of millions of people, but also to restrain cost growth in the system.

The move from plan to implementation, however, so far has not produced many hard details. In an attempt to have exchanges up and running by October 2013, when open enrollment would begin for the 2014 coverage year, the Dept. of Health and Human Services set a deadline of Nov. 16, 2012, for states to submit exchange blueprint proposals. The leaders of some states opposed to the reform law that created the marketplaces have said they have no intention of submitting proposals, and others might need to rely at least in part on the federal government to get their exchanges up and running.

States are very independent, and health care in particular is very local, said Kevin Counihan, chief executive officer of the health insurance exchange being developed in Connecticut. He expects that 13 to 15 states will end up crafting their own exchanges, about 10 may pursue joint federal-state partnership exchanges and 25 others may default entirely to a federal exchange.

Republican governors have expressed their hopes that a change in White House and Senate control after the November elections will enable a repeal of the ACA before such a federal marketplace is set up for residents of their states. Any deadline delay or other major change to the exchange rollout would need to come out of Congress and be approved by the president.

Will doctors help call the shots?

Some states, such as California and Maryland, have moved relatively quickly on the state exchange option, said Jenna Stento, manager in the health reform practice at Washington consultant group Avalere Health LLC. “They’ve adopted legislation, have boards set up, and are already making key policy and operational decisions to get their exchanges operational by the deadline.”

Some have called for physicians to be on the boards determining how the marketplaces are set up and maintained, saying doctors can offer relevant input on how health insurance should operate. State-based exchanges are the only ones that might have boards to oversee their operations, said Timothy Jost, a professor at Virginia’s Washington and Lee University School of Law. Federal exchanges “will have some form of stakeholder consultation, but I don’t think it’s clear yet on how this will happen,” he said.

For states that do decide to establish governing boards, certain conflict-of-interest requirements may prevent certain doctors and other health care professionals from serving on them.

Federal exchange regulations issued in March “neither require nor preclude physician representation,” Jost said. What they specify is that “you have to have a majority of board members who are not conflicted, and you have to have at least one consumer representative.”

For example, an accountable care organization or another physician group that markets services that will be offered through an exchange could pose a conflict of interest if someone from that organization were to serve on the exchange board, Jost said. In interpreting these federal rules, some states expressly have excluded practicing doctors from participation, Stento said. Others, however, “have either allowed for or explicitly include a role for providers on the board, and that’s in a voting role.”

How involved do physicians want to be?

The American Medical Association has advocated strongly for the inclusion of practicing physicians and patients on the governing structures of health insurance exchanges. But to avoid a conflict of interest, some states will allow only nonpracticing doctors to serve on the boards.

One such nonpracticing physician is Robert Scalettar, MD, MPH, former chief medical officer of Anthem Blue Cross Blue Shield, who serves on Connecticut’s 14-member exchange board along with consumer advocates, an economist, experts with insurance industry and social services backgrounds, and representatives of unions and small businesses. Although there was no allowance for a practicing physician, there was a designated seat for someone with health system delivery expertise, Dr. Scalettar said.

“I was selected for that position as a former practicing primary care physician with experience in various practice settings, including community health center, hospital-based practice and multispecialty group practice, each serving diverse populations and associated with multiple payer arrangements,” he said.

The Connecticut State Medical Society believes the board would have benefited from enlisting a physician who is practicing medicine, someone “with a knowledge of the health care delivery system and dealings with the insurance industry from a physician’s point of view,” said Ken Ferrucci, the society’s senior vice president of government affairs.

It wouldn’t necessarily be a mistake to have more physicians represented on exchange boards, said Jon Kingsdale, PhD, managing director of the Boston office of Wakely Consulting Group, a health care strategy and actuarial consulting group. Still, he questioned whether there was much of an intersection between medical practice and a board that essentially will govern an insurance entity.

“I know that doctors are experts on many different things related to health care, but I’m not sure that most states are seeing a physician’s role [or] clinical knowledge as particularly relevant to insurance regulation and financial oversight,” Kingsdale said.

Massachusetts is a health system reform pioneer that already has an operational insurance marketplace. Although they were pleased that the exchange has helped boost the coverage rate, physicians in the state haven’t been all that involved in its insurance operations, said Richard Aghababian, MD, president of the Massachusetts Medical Society.

Some states have tried to engage physicians by creating advisory committees that don’t have voting authority but that present recommendations for the board to consider. Physicians and other health professionals in Colorado, Maryland and Nevada, among others, are represented on such advisory panels, Avalere’s Stento said. Several practicing physicians serving on Connecticut’s advisory councils played a significant role in helping to select the essential health benefits that all plans on the exchange will be required to offer, Counihan said.

Lawrence Downs, the Medical Society of New Jersey’s CEO and general counsel, said the society has been very vocal with the sponsors of exchange legislation in the state about the need for its governing board to have physician and clinical representation. “If that’s not possible, there needs to be a specific clinical advisory group to the board so that information can be present during deliberations,” he said.

How will exchanges affect practices?

Whether or not practicing physicians are involved in the formation and maintenance of health insurance exchanges, they soon will discover how well the marketplaces work for their practices as well as for their patients who are receiving care through exchanges.

The Connecticut State Medical Society’s Ferrucci said physicians in the state are hoping for a seamless transition to the exchanges. Connecticut typically has had very few insurance carriers. The hope is that new offerings on the exchange will loosen the concentrated market and encourage competition, giving consumers in the state more options, he said.

“It would be nice if there was no intrusion into the physician-patient relationship. By and large I don’t think there will be,” Ferrucci said. The more consistent plans in the exchanges will be, “the easier it will be for physicians to provide services to those patients.”

Some states, such as California, may end up with an “active negotiating exchange” that issues competitive bids and puts significant downward pricing pressure on plans, Stento said. Such a model could pose some risk that physician payment rates will become “more constricted and may look a little bit more like Medicaid,” she said.

A state exchange board also might adopt a more passive approach that allows all plans to enter the marketplace, Stento said. The concern to physicians under this scenario is that “there could be some significant beneficiary confusion in terms of picking a plan and getting enrolled and navigating their benefit design, if there’s too much variation,” she said. In conversations with health professionals, she said most seem to prefer an exchange model that allows for some managed competition but doesn’t impose overly stringent regulations that push down pay rates.

The hope and belief of reform law architects is that these exchanges are going to move the system away from situations in which one insurer is controlling the vast majority of the market, Jost said. “And we’ll get to a situation where insurers are more actively competing with one another.”

But he said one of the ways insurers will cope with this change is to establish very narrow insurance networks that offer less costly coverage options. Doctors may find that they aren’t a part of popular networks, and some patients will find that they can’t stay with their current doctors if they want those services covered.

The low-cost, narrow network possibility “is something we’re starting to hear rumblings about in the exchanges,” Stento said. “I think it’s going to be a cost-conscious market, and so plans are going to be designing benefit offerings that can capture maximum enrollment.”

That’s one route insurance plans already have taken in Massachusetts, where insurers chose a select number of physicians and offered a lower-cost plan. That product ended up being a sought-after option in the state, Stento said.

Doctors aligning themselves with those top payers and being in a good position to be preferred members of the network “could be important in navigating the plan dynamic in these new marketplaces,” she said.