Friday, November 22, 2013

3 Reasons Health Insurance Exchanges Will Continue Floundering in 2014 (Part 1/3)

Last December I offered 3 reasons why I thought the deployment of health insurance exchanges (HIX) would flounder in October 2013. Now I’m going to share 3 more reasons why I believe health insurance exchanges will continue floundering into 2014 and likely beyond. Here’s reason #1:

Reason 1 –Enrollment Transaction Processing Generates Widespread Heartburn

By law, health insurance exchanges are the system of record for all enrollment transactions originated by a consumer to a qualified health plan (QHP.) The 834 Benefit Enrollment and Maintenance transaction is used by HIX’s to submit new enrollments, changes to enrollment and disenrollments to QHP’s. Unfortunately, there are not any clear operating rules defining how the 834 is to be used for the myriad of new enrollment, change enrollment and enrollment termination transactions that result from the life events a consumer will experience. Moreover, the 834 transaction was never widely adopted across the healthcare industry. Most QHP’s and 3rd parties use their own variation of the 834 transaction to process key enrollment events into their backend systems.

So far, 834’s have trickled out of the exchange and once the flood starts (assuming it ever does), the variability in how QHP’s have implemented their 834 handling will surface.

Note: Operating Rules for enrollment will not even be finalized until July of 2104 and not effective until January 2016.

Then Life Events Occur

After initial enrollment, all subsequent enrollment changes must be originated through the exchange, not the QHP. So when someone loses their job, gets a job, has a child, or has some other life event they need to go back to the HIX and make their required changes. And the 834 exchange process between the HIX and QHP starts over again.

Currently the business rules and edits associated with effecting these changes are largely performed by the QHP. Any incomplete or incorrect data must be caught by the QHP. Then the QHP has to work with the consumer and HIX to correct the issues. It’s not clear there are sufficient automated edits and controls in place to handle the wide range – but common – enrollment scenarios. 

So m belief is that these enrollment issues will create undue heartburn and lead to other issues as 2104 unfolds. I will describe these other issues in subsequent posts.

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