Market and Distribution Channels for MCOs.
Market and Distribution Channels for MCOs.
NOW FOR AN ORIGINAL PAPER ASSIGNMENT: Market and Distribution Channels for MCOs.
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
Chapter 6: Sales, Governance and Administration
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
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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
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© 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
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Typical Key Operational Committees
Quality Management Committee
Credentialing Committee
Utilization Review Committee
Pharmacy and Therapeutics Committee
Medical Grievance Review and Appeals Committee
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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.
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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
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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:
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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
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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
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© 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
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Distribution Channels by Market Segment
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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
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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
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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
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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