What About the Private Exchange?

Jessica Cherian, PharmD, RPh
Jessica Cherian, PharmD, RPh

Nowadays, every turn of a newspaper page, click of a media page on the Internet, or flip to a news channel brings us to an update, or more likely a criticism, of the public exchanges. With all of the attention on this side of the exchanges, we might be forgetting about the private exchange.   The private exchange serves as a channel for individuals and employers to purchase health insurance that is separate from the newly opened public exchanges developed under the Patient Protection and Affordable Care Act.

 The biggest difference between the two stems from the fact that government subsidies aren’t available to those choosing to purchase health insurance from the private exchange. This explains why much of the news regarding private exchanges focuses on the group market, as employers that choose to participate in a private exchange provide employees with an subsidy to be used toward the purchase of health insurance, a method also known as defined contribution.

Not long ago, IBM and Time Warner announced the shift of retirees into the private exchange. Walgreens, too, and a number of other companies announced that they were moving employees to private exchanges. More recently, Towers Watson acquired Liazon Corp. to strength its well established private exchange platform. These large moves on the private exchange side may reinforce a number of predictions that estimate up to 40% of employers will move employees to the private exchange over the next 5 years.

While the private exchange may benefit the employer through decreased administrative burden and the ability to better predict costs, I also believe the exchanges will create better-informed consumers.  The private exchanges had been operating successfully as online marketplaces and call centers well before the opening of the public exchange, and employees have already learned how to shop for health insurance.  

Private exchanges and employers have begun to take note of trends in consumer plan selection and some have even reported customers realizing the true cost of health insurance and, as a result, thanking their employers for their contributions. Hopes are that these well informed customers will reduce medical expenditure by more effectively managing their health care. It remains to be seen whether customers will remain satisfied in the long run, especially if employers do not increase contributions to match rising health care costs.

Jessica Cherian, PharmD, RPh, is on the clinical adjunct faculty of Temple University and is a community pharmacist.

Managed Care’s Top Ten Articles of 2016

There’s a lot more going on in health care than mergers (Aetna-Humana, Anthem-Cigna) creating huge players. Hundreds of insurers operate in 50 different states. Self-insured employers, ACA public exchanges, Medicare Advantage, and Medicaid managed care plans crowd an increasingly complex market.

Major health care players are determined to make health information exchanges (HIEs) work. The push toward value-based payment alone almost guarantees that HIEs will be tweaked, poked, prodded, and overhauled until they deliver on their promise. The goal: straight talk from and among tech systems.

They bring a different mindset. They’re willing to work in teams and focus on the sort of evidence-based medicine that can guide health care’s transformation into a system based on value. One question: How well will this new generation of data-driven MDs deal with patients?

The surge of new MS treatments have been for the relapsing-remitting form of the disease. There’s hope for sufferers of a different form of MS. By homing in on CD20-positive B cells, ocrelizumab is able to knock them out and other aberrant B cells circulating in the bloodstream.

A flood of tests have insurers ramping up prior authorization and utilization review. Information overload is a problem. As doctors struggle to keep up, health plans need to get ahead of the development of the technology in order to successfully manage genetic testing appropriately.

Having the data is one thing. Knowing how to use it is another. Applying its computational power to the data, a company called RowdMap puts providers into high-, medium-, and low-value buckets compared with peers in their markets, using specific benchmarks to show why outliers differ from the norm.
Competition among manufacturers, industry consolidation, and capitalization on me-too drugs are cranking up generic and branded drug prices. This increase has compelled PBMs, health plan sponsors, and retail pharmacies to find novel ways to turn a profit, often at the expense of the consumer.
The development of recombinant DNA and other technologies has added a new dimension to care. These medications have revolutionized the treatment of rheumatoid arthritis and many of the other 80 or so autoimmune diseases. But they can be budget busters and have a tricky side effect profile.

Shelley Slade
Vogel, Slade & Goldstein

Hub programs have emerged as a profitable new line of business in the sales and distribution side of the pharmaceutical industry that has got more than its fair share of wheeling and dealing. But they spell trouble if they spark collusion, threaten patients, or waste federal dollars.

More companies are self-insuring—and it’s not just large employers that are striking out on their own. The percentage of employers who fully self-insure increased by 44% in 1999 to 63% in 2015. Self-insurance may give employers more control over benefit packages, and stop-loss protects them against uncapped liability.