As 2015 Exchange Open Enrollment comes to a close, it is safe to say that we, as a nation, have exceeded the 9.1 million enrollment goal. Or have we?
While over 11 million individuals have completed applications and selected health plans on healthcare.gov or state-based exchanges, their enrollment is not effectuated until the first month’s premium is paid. In 2014, there was a 15% attrition rate between plan selection and enrollment post-payment. Not to mention, once a member was in the plan, they needed to keep current with their monthly premiums, or risk falling into delinquency and ultimately, losing coverage.
- Exchange success is not solely based upon getting people to sign-up, it’s about keeping members enrolled in a plan, and ultimately engaged in their health and care.
- In the coming months, health plans will need to continue to inform and remind members about payment policies and deadlines to keep them enrolled.
Considering the 15% 2014 attrition rate noted above, in 2015 we reasonably can expect a similar attrition rate, between plan selection and the first month’s premium due date – and of those whose coverage is effectuated, we can expect anywhere from 6% to 10% of members to be delinquent in any given month, triggering the 90-day grace period. As a result, there will be lost revenue and profit potential. In addition, plans will be on the hook for medical costs incurred during the first 30 days of the grace period. After that, they may pend claims for days 31 to 90 — although some more generous plans may continue to pay pharmacy claims, which they will not be able to recoup. So on top of lost revenue and profit potential, there will be unreimbursed medical expenses to consider.
In addition, because members can go into a state of delinquency at any point during the year, it’s important for plans to engage this population throughout their enrollment, or face an array of consequences. As illustrated in the timeline below, a member can benefit from two months of coverage for the price of one, should they fail to pay their bill by the end of the 90-day grace period. The risk is not only to the health plan’s bottom line, but to the plan’s members, as well. For example, while the health plan is pending claims in April and May, the member is most likely paying out-of-pocket for services and medications, or worse, going without their services and medications. For those with chronic illnesses, the long-term costs for both member and plan are severe. With this member population, information and reminders are critical to ensure continuity of coverage and care.
Let’s take a look at a mid-size Qualified Health Plan with 30,000 “subsidized” enrollees (at or below 400% FPL) paying a premium of $268 a month, the average 2015 monthly Silver Premium.
- Immediately, the plan is at risk to lose 4,500 members based on the 15% attrition rate that was experienced in 2014. This results in a potential annual revenue loss in excess of $14 million (4,500 members multiplied by $268 a month for one year).
- 6% to 10% of members are delinquent in any given month, so in this model, we’ll use 8%. Of that 8%, if 25% fail to pay and are terminated, then the result is 5,490 members lost to nonpayment of premium throughout the year. This translates into another $1.47 million in potential revenue losses.
- Given that the plan is responsible for claims incurred during the first 30 days of the grace period, and assuming a 90% medical expense, the plan could be responsible for over $330,000 per year in medical costs that cannot be recouped.
- Grand total = 9,990 members potentially lost and $17 million in potential revenue throughout the year.
With all of this in mind, what can health plans do to ensure they address these challenges and build a plan for continual success in the ACA environment?
One option is Eliza’s Exchange Payment Reminder solution which includes proactive outreach to remind members that their payment is due along with information and instructions about ways to make payments. In past uses of Eliza’s Payment Reminder solution, Eliza delivered a 70% increase in performance compared to traditional direct mail outreach, and delivered in excess of a 20:1 return on investment.
There are critical dates and activities in the coming weeks and months that will impact care and coverage, as well as revenue and risk. For more information about the many ways that Eliza help with your Exchange member management and engagement initiatives, please firstname.lastname@example.org.
Jennifer Forster joined Eliza in the summer of 2014 as the Director of Medicaid Strategy. Before Eliza, Jennifer was at Network Health, a Medicaid Managed Care Organization, and division of Tufts Health Plan. She served as the key operational and product contact with state and federal agencies and managed staff to support contract management activities such as compliance, reporting, communications, and negotiations.
Jennifer attended Syracuse University where she earned a B.S. in Marketing from the Whitman School of Management and a Masters in Public Administration from the Maxwell School of Citizenship and Public Affairs.