Big insurers, watch out: The little guy is entering the exchange market


With health insurance exchanges opening for enrollment in only a few months, insurers are prepping their businesses to compete in a new business-to-consumer market. But it's not only the big insurers that hope to carve out a competitive edge as they bid for millions of new members through the online marketplaces.

Smaller insurers, like Network Health in Massachusetts, will be selling health plans on exchanges, competing right alongside the likes of UnitedHealth, Aetna, Cigna and WellPoint.

Founded as a Medicaid managed care organization, Network Health is expanding its offerings in the commercial, non-subsidized market. And it just might surprise you how well it can compete and vie for consumers, despite--or perhaps because of--its smaller size. To learn more about Network Health's jump to the commercial market, FierceHealthPayer spoke with Network Health President Christina Severin (pictured right).

FierceHealthPayer: Why did Network Health decide to enter the commercial market?

Christina Severin: There were two important reasons for Network Health to enter the commercial health insurance market. First, we have had great success delivering high-quality, affordable health insurance to individuals in Commonwealth Care, Massachusetts' subsidized exchange program. We felt we had an opportunity to bring this same approach to the commercial market.

Second, without a basic health plan, the subsidized program for individuals who earn between 134 percent and 200 percent of the federal poverty level originally part of the Affordable Care Act, people who are eligible for subsidies will buy their health insurance on the exchange alongside people without subsidies. The population who will be eligible for subsidies has been our core customer, around whom we have designed our whole organization. Therefore, it is vital that we operate in the commercial segment of the exchange where the subsidized segment will now purchase.

FHP: How has Network Health had to adapt to the new market? What is it doing differently to accommodate the change in the market, largely due to reform?

Severin: Network Health was founded as a Medicaid health plan and has deep expertise in the government health insurance space. Moving from those public program roots into the commercial world has required us to comply with commercial regulations, adapt to greater health plan discretion over benefit design and update our systems to operationalize new plan designs.

These adaptations are critical because as we look ahead to 2014, we anticipate a significant portion of our current subsidized members will enter the commercial exchange as their only means of accessing subsidies. We need to be ready to serve them via the exchange, so, we are gearing up our commercial compliance efforts, as well as working to meet the new regulations put forth by ACA.

We are also dedicated to and focused on working with individuals and providers to ensure seamless transition in this new healthcare world. It is our priority to team up with the health are community at large and work together to disseminate an education campaign for our members, as well as the general population on the changes that lie ahead.  

FHP: As a newcomer to the commercial market, how does Network Health intend to stand out and successfully compete with the long-time market forces?

Severin: At Network Health we provide high-quality coverage at an affordable price--so our members don't have to sacrifice one for the other. Given our experience in the subsidized market, we have found that we can create a winning balance between a favorable price point and a focused high-value network.

To stand out in a crowded commercial market, we aim to bring this value proposition, honed in the public programs, to the commercial exchange under ACA. As a smaller health plan, we are unencumbered in bringing and effecting change. Our business is to provide insurance to individuals and so there are elements of cost structure that the bigger insurers face, that we don't. This gives us room to innovate. We don't intend to compete with the big name insurers but rather appeal and serve the subsidized populations.

Secondly, being a nonprofit health plan, we think people find solace in that we are in their neighborhood, we know their market and their situation and we are in the very fabric of their community. That sense of familiarity distinguishes us from the rest of the big name insurers. Our members can trust and understand that we are not exploring any surplus to share holders; rather, we are reinvesting in the services we provide to them.

Additionally, our focus on holistic care distinguishes us in our current market, and we intend to extend that approach to the commercial exchange. We are the only Medicaid managed health plan in Massachusetts that does not carve out behavioral health management to a subcontractor. We believe this unique approach is a key ingredient to our success in improving quality outcomes for members and allows us to seamlessly address all members' needs in a coordinated, person-centered way.

We also believe this approach works well for our providers, who are increasingly integrating care delivery and shifting away from fee-for-service reimbursement. It is this philosophical and programmatic alignment around whole-person care that works so well.

FHP: Can you elaborate on the type of holistic care that Network Health offers? And do you think holistic care will be a key driver of future healthcare?

Severin: Network Health's holistic approach is predicated on tight integration--we staff a team of in-house medical, mental health, social care and pharmacy professionals who work together to coordinate member care.

To achieve our objective, our integrated care management team:

  • Holds monthly case conferences designed to emphasize challenging issues and evaluate services for members with complex needs.
  • Uses shared electronic member records that provide easy access to appropriate clinical information and other details about services rendered and/or planned. These records are used internally by Network Health to co-manage members' needs.
  • Holds regular meetings with providers and members to foster ongoing communication as members' needs evolve and change.
  • Provides field-based social care management and clinical community outreach services to members who can benefit from non-medical support.

Engaging people in a holistic, patient-centered way supports the goal of decreasing overall admissions, medical readmissions, overall emergency department utilization and, more importantly, the model will help fill some of the existing gaps in the healthcare system, particularly as it relates to behavioral health. In our experience, integrating mental health, substance abuse and primary care services produces the best outcomes for patients, and it has proven to produce better outcomes for people with multiple healthcare-related needs.

FHP: Network Health has long been recognized as providing culturally and linguistically appropriate services. How can this quality help you vie for consumers in the commercial market?

Severin: We believe that we must continue to embrace differences and find ways to serve diverse populations to successfully extend our model to the commercial exchange. In order to successfully serve a diverse population, we must be culturally equipped and aware to meet our members' needs.

Despite substantial improvement in quality, many people in linguistic, racial and ethnic minority groups continue to have poorer health and lower quality healthcare. That's why we believe cultural competency is a necessary component to serving these and all populations successfully--and the same applies to the commercial market. It is our goal to provide health insurance choices to Americans and provide premium assistance to make it affordable, in order to continually reduce disparities in accessing high-quality healthcare.

FHP: What are the next steps for Network Health? For example, will it continue to push into the commercial market, perhaps with new choices?

Severin: Yes! Looking ahead to 2014 and beyond, we are looking forward to serving the state- and federally subsided markets. The exchange will be the environment where we can really meet the needs for our key population: lower-income people who qualify for subsidies--and enable new plans and options to help serve them better.

- Dina (@HealthPayer)

Editor's Note: This interview has been edited and condensed for clarity.