Market segments and distribution channels for the MCOs essay
Market segments and distribution channels for the MCOs essay
This week’s chapter discusses the various market segments and distribution channels for the MCOs. Outline the market segments and identify the most successful distribution channels for those markets. Use some outside research to support your statements. Why do you believe each distribution channel successfully reaches the targeted market?
Discussion Board Requirements: 250 word count One original post and two reply posts, APA Format, please include references
BUY A PLAGIARISM-FREE PAPER HERE
Learning Objectives
Understand the basic structure of governance and management in payer organizations
Understand the basic elements of the internal operations of payer organizations, including:
Information technology (IT)
Marketing and sales, including insurance exchanges
Underwriting and premium rate development
Eligibility, enrollment and billing
Claims and benefits administration
Member services, including appeal rights
Statutory accounting and statutory net worth
Financial management
2
2
Board of Directors
May be specific to a plan, may be pro-forma for a subsidiary of a larger company, etc.
Responsibilities:
Final approval of corporate bylaws
General oversight of the profitability or reserve status
Oversight and approval of significant fiscal events
Review of reports and document signing
Setting and approving policy
Oversight of the quality management program
In for-profit plans, responsibility to protect shareholders’ interests
In free-standing plans, hiring the CEO and reviewing CEO’s performance
3
© P. R. Kongstvedt
Typical Key Management Positions
Chief Executive Officer/Executive Director
Chief Operating Officer/Operations Director
May be a separate position from CEO in large companies
If separate from CEO, the COO may also be the President
Chief Medical Officer/Medical Director
Vice President (or SVP or EVP) of Network Management
Chief Financial Officer/Finance Director
Treasurer
Chief Marketing Officer/Marketing Director
Chief Underwriting Officer
Chief Information Officer/Director of Information Systems
Corporate Compliance Officer
4
Typical Key Operational Committees
Quality Management Committee
Credentialing Committee
Utilization Review Committee
Pharmacy and Therapeutics Committee
Medical Grievance Review and Appeals Committee
5
Foundational Information Technology (IT) Systems
Key software functionality includes:
Benefit configuration
Employer group and member enrollment
Premium management
Provider enrollment, contracting and credentialing
Claims payment
Document Imaging and Workflow
Customer Servicing
Medical Management
Ability for two-way EDI with insurance exchanges, employers, state and federal government, members, providers, etc.
6
HIPAA Mandated Electronic Transaction Standards
HIPAA requires covered entities that conduct certain electronic transactions to use only ANSI X12N 5010 defined standards
ACA is creating new standards and requiring more standardization of implementation
7 Market segments and distribution channels for the MCOs essay
| Transaction | Standard |
| Provider Claims submission | ANSI X12 – 837 (different versions exist for institutional, professional, and dental) |
| Pharmacy claims | NCPDP |
| Eligibility | ANSI X12 – 270 (inquiry) ANSI X12 – 271 (response) |
| Claim status | ANSI X12 – 276 (inquiry) ANSI X12 – 277 (response) |
| Provider Referral certification and authorization | ANSI X12 – 278 |
| Health care payment to provider, with remittance advice | ANSI X12 – 835 |
| Enrollment and Disenrollment in health plan* | ANSI X12 – 834 |
| Claims attachment (additional clinical information from provider to health plan, used for claims adjudication) | ANSI X12 – 275 (not finalized at the time of publication), and HL7 CDA |
| Premium payment to health plan* | ANSI X12 – 820 |
| First report of injury | ANSI X12 – 148 (not yet issued) |
| * These are for voluntarily but not mandatory use by employers, unions, or associations that pay premiums to the health plan on behalf of members. |
Source: Compiled by author based on 45 CFR §160.920 and other sources at the Center for Medicare and Medicaid Services (CMS);
Accessible at http://www.cms.gov
HIPAA Mandated Privacy and Security Requirements
HIPAA requires high levels of privacy and security for electronic information, to:
ensure the confidentiality, integrity, and availability of electronic PHI;
protect against any reasonably anticipated threats or hazards to the security and integrity of electronic PHI;
protect against any reasonably anticipated uses or disclosures of electronic PHI not permitted by the HIPAA privacy rules; and
ensure compliance with the above by its workforce (Source: Federal Register, 45 CFR § 164.308)
There are eighteen standards for HIPAA security rules:
8
| Security Management Process | Assigned Security Responsibility | Workforce Security |
| Information Access Management | Security Awareness and Training | Security Incident Procedures |
| Contingency Plan | Evaluation | Business Associate Contracts |
| Facility Access Controls | Workstation Use | Workstation Security |
| Device and Media Controls | Access Control | Audit Controls |
| Integrity | Person or Identity Authentication | Transmission Security |
| Source: Federal Register, 45 CFR § 164.308(a & b), 45 CFR § 164.310(a-d); 45 CFR § 164.312(a-e) |
Standardized SBC/SOC
ACA requires all health plans, including self-funded, must provide a standardized Summary of Benefits and Coverage (SBC), also called a Summary of Coverage (SOC) to all current and prospective enrollees
The SBC/SOC to be done in a uniform and common format that defines the number of pages, the exact information that must be provided, and even the size of the font
The SBC does not replace the far more detailed Evidence of Coverage (EOC), sometimes called a Certificate of Coverage or Certificate of Insurance
9
Marketing vs. Sales
Marketing and sales are related but distinct activities
Marketing
Focus is on overall growth goals, strategies and tactics, management of the process
Compensation combination of salary and overall growth goals
Role in Insurance Exchange as well as outside exchange
Sales
The actual process of selling the plan’s offerings in the marketplace through any distribution channel
Compensation usually heavily weighted towards achievement of sales goals
No real role in the insurance exchange
10
© P.R. Kongstvedt
Fundamental Elements of Marketing
Brand Management
External Communications and Public Relations
Advertising
Employer versus consumer advertising
Collateral texts: outdoor, direct
Market Research
Lead Generation
Sales Campaign Support
Heavily regulated for individual and small group market through the Exchange
11
Distribution Channels by Market Segment
12
Health Insurance Exchanges…
ACA created state-based American Health Benefit Exchanges and Small Business Health Options Program (SHOP) Exchanges, administered by a governmental agency or non-profit organization, through which small businesses with up to 100 employees can purchase qualified coverage
Separate exchanges for individuals to access coverage
Permit states to allow businesses with more than 100 employees to purchase coverage in the SHOP Exchange beginning in 2017
States may form regional Exchanges or allow more than one Exchange to operate in a state
Feds operate exchanges in states that refused to build them
Office of Personnel Management to contract with insurers to offer at least two multi-state plans in each Exchange. At least one plan must be offered by a non-profit entity
Creation of plan rating systems similar to that used in Medicare Advantage
13
Health Insurance Exchanges (cont.)
Brokers still allowed to operate in this market segment for health
Exchanges do not prohibit a non-Exchange market for individual and group coverage, but rates must be the same if sold both in and outside of the Exchange
Require the Office of Personnel Management to contract with insurers to offer at least two multi-state plans in each Exchange. At least one plan must be offered by a non-profit entity
Each multi-state plan must be licensed in each state and must meet the qualifications of a qualified health plan
Members of Congress and congressional staff may only enroll in either plans created under ACA (e.g., CO-OPs) or in plans offered in Exchange – but this also required a “fix” because ACA as written did not allow of an employer contribution to coverage purchased through the individual exchanges
Two-way data exchange requirements are huge
© P.R. Kongstvedt
14
Actuarial Services
Actuaries analyze the data and predict costs, adjusted for
Trend
Utilization
Costs
Benefits design
Behavioral shift
Distribution amongst different providers with different cost profiles
Actuaries generally do not create the rates, but only model costs
Large payers have their own, smaller and mid-sized plans use actuarial consulting firms
15
Rating and Underwriting
Underwriting has had two distinct but related meanings:
Medical underwriting referred to using an individual’s or small group’s medical history to determine whether to offer coverage at all
General underwriting includes gathering of information to assist in the development of premium rates
Underwriters use the actuarial data and other factors to calculate rates
Three types of premium rating:
Community rating
Experience rating
Premium equivalent or imputed premium rates
Type of rating only affects the calculation of the base rate, not the mechanics of creating actual premium rates
Community rating requires the same base rate for all, though may be different for all individuals vs. all small groups
Experience rating uses base rate from actual costs of the group
Premium equivalent is calculated just like experience rating for the base rate
16 Market segments and distribution channels for the MCOs essay
Rating and Underwriting in the Individual and Small Group Markets under the ACA
Extension of dependent coverage to age 26
Prohibition on rescissions except in cases of outright fraud
Prohibition of preexisting condition exclusions and coverage rescissions
Lifetime and annual policy coverage limits prohibited
Require first-dollar coverage for preventive services
Minimum medical loss ratio (MLR) of 85% for large group and 80% for individuals and small groups – applies only to insured business, not self-funded (no premiums)
Insurers required to guarantee availability and renewability to individuals and groups.
Insurers not allowed to use health status as a rating variable
Only the following will be allowed:
Age related pricing variations are limited to a maximum of 3 to 1.
The number of people covered under the policy (e.g., “single” vs. “family” coverage).
Tobacco use (except rates may not vary by more than a ratio of 1.5 to 1)
Other provisions such as out-of-pocket cost limitations based on income, etc.
Requirement to include Essential Health Benefits at one of four different coverage levels
Premium risk-adjustment mechanism for individual and small group markets
Beginning in 2018, impose an excise tax of plans with premiums that exceed a certain level
17
© P.R. Kongstvedt
The ACA’s Four Coverage Tiers What’s in Your Wallet?
Allows for 40% swing in cost sharing between Platinum and Bronze plan designs
Coverage levels based on in-network costs for all but emergency care (defined via “prudent layperson), not billed charges
Coverage based on actuarial equivalency, so may be spread around benefits, except cannot have different cost-sharing for MH/BH than for Med/Surg.
Room to futz with benefits as long as cost sharing ends up where it’s supposed to
18
High deductible plan with preventive services and limited office visit coverage for the under-30s
18
Eligibility in the Commercial Market
Eligibility in the commercial (non-Medicare/Medicaid) market may be thought of in four categories:
Eligibility in Employer Sponsored Group Benefits Plans
Eligibility changes based on life events
Individual eligibility
Eligibility for subsidized coverage
Employer sponsored coverage
Must be full time
Dependent coverage through employee
Must first enroll during defined periods such as upon employment following a defined number of days after they start working
19
Life Events and Eligibility Options
[Put Table 6 – 2 here]
20
© P.R. Kongstvedt
Life Events and Eligibility Options (cont’d)
[Put Table 6 – 2 here]
21
Elements of Claims Complexity
Multiple Lines of Business
Provider Payment Rules
Sophiscated Px & Dx Coding
Unbundled Claims
Referral/Authorization Rules
Government Mandates
Medicare/Medicaid Standards
Other Party Liability
Cost Sharing Features
Benefit Plan Variations
Multiple Lines of Business
Rules and Regulations of Exchange
Tracking MLR for Groups and Individuals
Value Based Benefits
New Payment Models
22
Claims Operational Functions
The modern claims capability is the set of operational functions within the payer organization that together process claims from receipt to issuance of payment and/or Explanation of Benefits (EOB).
23
© PR Kongstvedt
Determination of Eligibility & Liability
Benefit plan in force on the date of service
Provider network and/or PCP on date of service
Coordination of Benefits (COB), Other Party Liability (OPL), and Subrogation
Benefits Administration
Applying the applicable schedule of benefits in force on the date of service
Requires CPT codes, Hospital Revenue Codes, HCPCS codes, ICD-10
Computation of cost sharing amounts
Application of appropriate medical policies
Application of appropriate provider payment schedules based on specific network at time of service, in vs. out of network, etc.
Management of pended claims, resubmissions, and duplicate claims
Adjustments and appeals
Detection of fraud and abuse
24
Core Claims Determinations in the Adjudication Process
Role of Member Services and Consumer Affairs
Help members understand how to use the plan
Help resolve members’ problems or questions
Measure and monitor member satisfaction, administer surveys
Monitor and track the nature of member contacts
Allow members to express dissatisfaction with their care
Help members seek review of claims that have been denied or covered at a lower than expected level of benefits
Manage member problems with payments
Help address routine business issues
State health insurance exchanges may play a similar function, but unclear at this point
25
Formal Internal Appeals Process Requirements
[Put Table 6 – 3 here]
26
Formal External Appeals Process Requirements
[Put Table 6 – 4 here]
27
© P.R. Kongstvedt
Financial Management
Four primary responsibilities
Operational finance
Budgeting
Treasury function (managing cash and investments)
Reporting
Key concepts
Accrual accounting
Statutory Accounting Principles (SAP) vs. Generally Accepted Accounting Principles (GAAP)
Only cash and cash equivalents can be counted as assets, not things like IT systems, buildings, long-term investments, etc.
Statutory Net Worth requirements, using SAP
Calculation and management of claims reserves, including Incurred But Not Reported (IBNR)
28
Market segments and distribution channels for the MCOs essay
