Health Plan Payment and Reimbursement

How One ACA Insurer Had Its Best Year in 2018

March 7, 2018 8:47 am

The enrollment increases were not echoed in the insurer’s plans sold on the off-exchange individual insurance market, where federal subsidies are not available.

March 6—In a year when individual-market insurance enrollment dipped nationally, the dominant insurer in Florida had its largest enrollment yet.

Florida Blue unexpectedly increased its enrollment during 2018 open enrollment from just under 1 million policyholders in Affordable Care Act (ACA) individual-market plans in 2017 to more than 1 million, according to Pat Geraghty, CEO of Florida Blue. That enrollment jump came even as ACA marketplace plan selections nationally dropped by 3 percent from 2017.

And the improved enrollment at the Florida insurer came during the shortest open enrollment—45 days—since the ACA marketplaces began accepting sign-ups in late 2013.

Geraghty credited the insurer’s success to its years-long effort to shift to a consumer—as opposed to a business—focus and to take control of some aspects of healthcare delivery.

“If you’re going to be in retail, you cannot put your toe in the water, you’ve got to go all out to be that kind of an organization,” Geraghty said. “We think we have positioned ourselves for success in a retail marketplace. We think the marketplace is going to become more and more retail as we go forward, and we are prepared for that.”

The insurer’s 2018 enrollment efforts included participating in more than 1,000 events across the state—going to county fairs, churches, and community events, for example—and hosting educational sessions at their 20 health centers. Additionally, the insurer hosted education sessions for insurance agents and sent letters and postcards to educate potential customers about their 2018 coverage options.

Florida Blue also launched 12 new off-marketplace plans to increase options for enrollees who do not qualify for ACA subsidies. Unfortunately, enrollments in those off-marketplace plans were “just over 100,000, which is slightly down from last year,” said a spokesman.

The insurer’s movement into care delivery included buying physician practices, partnering with providers to create joint ventures, opening 11 clinics, and launching emergency medical facilities.  Sometimes those facilities were situated “across the street from hospitals—hospitals that were using their emergency rooms as the front door to the hospital,” Geraghty said. 

The sign-up surge was not expected. A Florida Blue spokesman told HFMA News before the start of open enrollment that the company expected enrollment to drop in 2018 “primarily because this is the fourth year of enrollment, but we do not anticipate the decrease to be significant.”

Not only has Florida Blue, the largest ACA marketplace plan in Florida, continuously remained in the ACA marketplaces since their launch in 2014, but its ACA plans have remained profitable—in sharp contrast to the experience of many other insurers. For instance, a McKinsey & Co. analysis found that the number of ACA marketplace carriers declined from a 2015 peak of 333 companies to just 194 in 2018—frequently following steep financial losses.

Florida Blue’s financial success was partially credited to the opening in recent years of 20 retail centers, where customers can enroll in plans and receive health risk assessments that have “changed our understanding of the population we were enrolling.”

“That’s key because data, knowledge, information absolutely drives your ability to respond” to market forces, Geraghty said.

The profitable performance came despite the decision of the Trump administration in the fall of 2017 to discontinue cost-sharing reduction (CSR) payments after a ruling by a federal judge that they were illegal without a congressional appropriation. That decision ended up costing Florida Blue $200 million, Geraghty said.

“That’s a disruption and I think unfair,” Geraghty said about the CSR decision.

Lower-Cost Options

Although Florida Blue did not have experience in Medicaid, the insurer’s performance in the individual-insurance marketplace mirrored the success of some former Medicaid managed care companies, insurance researchers noted.

Sabrina Corlette, JD, research professor at the Center on Health Insurance Reforms at Georgetown University, said insurance companies with a history of selling Medicaid plans generally performed better in the marketplaces because they convinced providers to accept lower “Medicaid plus” rates and remained “laser focused” on the most heavily subsidized enrollees.

Among Florida Blue’s plans, narrow-network plans have become increasingly popular because they are lower-cost than other plans, Geraghty said.

Fixes Needed

Geraghty was concerned that some planned and proposed marketplace changes could hurt the finances of his plans. For instance, the Trump administration’s proposed rule to roll back 2016 Obama administration rules that limit the duration of short-term health insurance plans to three months could siphon off healthy enrollees who qualify for such plans.

“Pretty soon, if you fracture it off, you have a mess in the marketplace,” Geraghty said.

Needed steps to stabilize and improve the ACA marketplaces include greater state flexibility over marketplace rules, a replacement for the individual mandate that ends in 2019, a transition to a wider age band than 1-to-3, state-based high-risk pools, and tort reform, Geraghty said. 

Others have urged passage of the Senate’s so-called Collins-Nelson bill, which would provide $4.5 billion in federal reinsurance funding over two years.

“In the short term what I think we need is to build on the ACA and shore it up, as opposed to radically change it,” Corlette said. “That is going to require some injection of federal money through reinsurance or some other subsidization of the market.”

Health insurance industry observers are divided over the continued need for the so-called Alexander-Murray bipartisan bill, which would provide CSR subsidies and allow more state marketplace flexibility. That disagreement stems from the fact that the discontinuation of CSRs counterintuitively resulted in lower costs for many enrollees who bought Bronze and Gold plans because premium subsidies automatically increased.

For instance, the share of subsidy-eligible enrollees with access to a Bronze-level plan who had a net monthly premium of $10 or less increased from 25 percent in 2017 to 50 percent in 2018, according to the McKinsey analysis.

James C. Capretta, healthcare policy fellow at the American Enterprise Institute, noted that the Bipartisan Policy Center is developing both short-term and long-term stabilization options that are designed to garner support across party lines. Those include adding federal funding to stabilize the marketplaces as well as allowing expanded use of health savings accounts and more state rule-setting flexibility.

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare.


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