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Harvard Pilgrim bullish on exchange business despite high-profile UnitedHealthcare exit

Population health partnership key as New England insurer logs more and more enrollees.

Susan Morse, Senior Editor

While losses in the Obamacare exchange markets is chasing insurance giant UnitedHealthcare away, New England insurer Harvard Pilgrim Health Care says the exchange business is a moneymaker..

"We've seen tremendous growth," said Beth Roberts, senior vice president of enterprise sales and marketing, who heads up the regional markets.

The nonprofit Harvard Pilgrim is in the exchange business in New Hampshire, Maine and Massachusetts, though the latter market is a different animal due to the Massachusetts Health Connector, an Affordable Care Act-type program in that state.

Because of the Connector program, New Hampshire and Maine had a higher percentage of the population that was uninsured than Massachusetts when Harvard Pilgrim entered those markets.

"We planned on having heavy healthcare needs right out of the gate. If it's planned for, you can make sure the premium is paying for that," Roberts said. "Over time, they behave like more insured population. In the early years, we see this blip. The idea is over time, that will flatten out."

[Also: UnitedHealthcare to exit all but 'handful' of Obamacare markets in 2017]

As Harvard Pilgrim just entered the Connecticut market for other products in 2014, it has no plan to get into the exchange business there.

Harvard Pilgrim said the success is due to many factors. Most notably in New Hampshire, it's been aided by a provider partnership for population health.

Harvard Pilgrim has 31,700 consumers in the exchanges in New Hampshire and Maine. There's also competition in both states, including from Anthem.

"In New Hampshire, more people came into the exchange than anticipated," Roberts said.

UnitedHealthcare's decision this month to exit the Obamacare exchange market in most of the states where it does business, along with the closing of an estimated half of the 24 co-ops set up to offer affordable choice in the marketplace, has some wondering how insurers can survive and thrive with the product.

UnitedHealth's decision was based on profit slides of $650 million this year and $475 million last year due to slow enrollment growth and an unhealthy population. The Obamacare-insured population tends to have high turnover and a larger-than-average, and some would say larger-than-predicted, demand for healthcare services.

This can make it difficult for insurers to predict costs and result in higher-than-competitive premium pricing, according to Duane Harrington, a consultant with AArete.

"When you have uncertainty in a risk pool, insurers will account for uncertainty with higher premiums, but this must be balanced against making sure they're competitively priced," Harrington said.

Humana, too, has suffered losses in the market, the insurer said earlier this year, amid questions of whether it would curtail those operations.

"We are in 15 states in 2016, the same number as 2015. We aim to provide stable, affordable and quality coverage," Humana said in a statement released Monday. "Our decisions for 2017 will be informed by our ability to continue to meet these objectives."

[Also: New Hampshire hospitals, Harvard Pilgrim to create analytics company Benevera Health]

Cigna, Aetna and Anthem are not leaving the exchanges, they have said, though some analysts have suggested the price of premiums will have to rise to ensure profitability.

Insurers that recognized exchange enrollees are likely going to be more similar in need to Medicaid networks versus those supporting commercial plans seem to be performing better, according to Harrington.

This includes more competitive rates overall, but in some cases, a narrower network to help negotiate those rates with the providers, he said. When considering the unknowns of utilization, he said, having more competitive rates has helped those insurers remain profitable.

"The health plans using Medicaid rates as a starting point when negotiating their networks seem to be performing better than those who are more aligned to commercial rates," Harrington said. 

Harvard Pilgrim Health Care appears to have found the model that's the right fit in the markets it serves.

In Maine, the 2016 average premium for members on the federal exchange is $383, according to Harvard Pilgrim. In New Hampshire, where it operates a partner program with the state, the average premium price is $397.

[Also: More exchange plans offer patients easier access to some expensive drugs, report says]

This compares to a national average for premiums of $386, according to figures from the Centers for Medicare and Medicaid Services.

The markets in New Hampshire and Maine are still relatively new.

"We want to be able to hold our own, right now pleased with the direction it's going," Roberts said.

The prices of premiums for 2017 are due to be filed between May and June.

But Harvard Pilgrim's success isn't just based on its premium rates, according to Roberts.

"One thing we did is look at what networks will service the broad population," she said. "And also we manage care closely. We did not come out in every state in covering everybody."

Consumers have options, including one called the select network, which is more competitively priced.

"Because the population is a price-driven population," Roberts said. "With us success is in more select offerings, keeping the costs lower."

In New Hampshire, Harvard Pilgrim partnered with three providers, including Dartmouth-Hitchcock Medical Center, to create a population health company, Benevera.

"We're identifying the sickest 5 percent of the population," Roberts said, "to have a comprehensive care management program."

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In this model, both the provider and insurer are reaching out to the population on such issues as getting care in less expensive facilities than the emergency room.

Patients are on board with it, according to Roberts.

"It's a way to talk to patients, from the provider," she said. "It applies to all exchange members in New Hampshire."

In Maine, there's Maine Choice offering a tiered network product.

"We're careful to introduce products in a way that's sustainable," Roberts said.

Twitter: @SusanJMorse

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