How insurers can help lessen financial blow of coverage churn
Churning remains a challenge for consumers who move between subsidized private marketplace plans and Medicaid coverage, but research by the Commonwealth Fund suggested that insurers can help offset the inevitable complication by offering complementary health plans while using a common provider network for both marketplace and Medicaid plans.
The Commonwealth Fund researched and interviewed nine different issuers in three specific models: large Medicaid managed care companies moving into the commercial market, community-based Medicaid managed care plans hoping to move into the commercial market and commercial insurers that acquired a Medicaid subsidiary. Here's what the research found:
Medicaid and marketplace churn is the main reason to develop a business model that can travel across markets. Insurers can maintain continuity of coverage by creating models that follow members to a new form of subsidized coverage.
Companies moving from Medicaid into the marketplace focused on low-income consumers rather than the middle- and upper-income customer base. Pricing became an issue, as insurers knew they had to maintain low premiums as well as deductibles and other forms of cost sharing. However, trying to maintain low levels of cost sharing increased premiums, which made those firms noncompetitive.
Provider networks presented the biggest challenge to companies. Moving from Medicaid to the marketplace raised capacity issues. What's more, providers expected certain commercial rates, and not discounted rates, which ultimately would ensure lower premiums. Not being able to negotiate rates caused several companies a delay in cross-market moves.
The research concluded that, among other approaches, multimarket participation could mitigate the impact of Medicaid and marketplace churning.
However, the success of that approach depends on several factors, including a focus on customer assistance, "upward adjustment" to Medicaid managed care rates and federal guidance on "approaches that encourage multimarket plan growth through adoption of payment, certification, regulatory, and outreach strategies that maximize the potential for this solution to spread."
Additionally, states also can reduce churning by allowing wraparound subsidies, which would lower out-of-pocket costs for low-income consumers in exchange plans, FierceHealthPayer previously reported.
- here's the research