Wall Street Journal
February 28, 2014
Health Plans Rush to Size Up New Clients
Gathering Data on Medical Conditions, Prescriptions Is Crucial Step in Projecting Costs
By Anna Wilde Mathews
Insurers are rushing to gather health information from the new customers they won on public marketplaces in a high-stakes outreach effort crucial to their hopes of profiting from the health-care law.
Health plans need to know the health status of those signing up for coverage so they can project whether the costs are likely to outrun the premiums coming in. That information will be critical in figuring out prices for next year, among other things. But, under the law's new rules, enrollees don't have to disclose pre-existing conditions to buy insurance.
Insurers still generally have only early signals, including age and gender, on the four million people who federal regulators say have signed up so far for marketplace coverage. Those details don't paint a full picture of the insurers' potential risk and may even be misleading. That's partly because the young people who sign up for health coverage may be those more likely to have serious medical needs, insurance-industry officials say.
To fill in the blanks, insurers are calling, emailing and writing letters to new enrollees, urging them to divulge information about their conditions, prescriptions and even personal habits, often through online forms called health-risk assessments that have long been used in employer-sponsored wellness programs.
"Day one, we're starting to take a look at these individuals," said Betsy LaForge, an executive at Blue Cross & Blue Shield of North Carolina, which is offering $50 gift cards good at various retailers to enrollees who fill out the assessments. "Every place we can start to quickly assess, does this membership look like our typical membership, or is it different, we're doing that." The North Carolina insurer isn't disclosing how many marketplace plans it has sold.
The goal is to quickly identify people like Cindy Honickman, who bought a marketplace plan in December from the North Carolina insurer. Ms. Honickman, a 28-year-old who owns a business that sets up recreational sports leagues, suffers from a type of nonmalignant tumor that grows in the pituitary gland. Though it is managed by medication, she said she was still rejected for commercial insurance before the health law took effect.
Soon after she signed up for coverage under the law, Ms. Honickman filled out the health-risk assessment she found on the insurer's website, answering detailed questions about her medical conditions, personal facts such as her height and weight, and lifestyle factors like smoking and drinking.
Ms. Honickman said she hoped to get some useful information or resources, and she figured the insurer couldn't penalize her. Plus, "they're going to know eventually because they pay my claims," she said.
Part of the urgency to gather such data stems from the health law's calendar. Insurers need to figure out soon how much to charge next year—and, in some cases, whether they want to continue offering health-law plans.
If they do want to sell coverage on the marketplaces next year, they must submit their 2015 rates and other plan details to regulators this spring. Yet, consumers can sign up for 2014 plans as late as March 31.
That gives insurers little time to assess the cost of their enrollees based on insurance claims alone, especially since there is typically a lag of a month or more before claims are processed.
The outreach efforts also are central to a drastic change in the insurers' business model for consumer plans. Before the law, they generally could reject people with pre-existing conditions. Now, they have to take all comers and can't charge more to those with health problems. That means that to make money they will have to push down the cost of covering the less-healthy customers they attract.
"In the past, the whole game was about risk selection," said Tom Snook, an actuary with Milliman Inc. who works with insurers offering plans on public exchanges. "Now the game's all about risk management."
Cigna Corp., which said earlier this month it had won around 20,000 marketplace customers, is calling enrollees to ask about health conditions, medications and other medical needs.
The insurer said it also will try to steer patients toward lower-cost options, such as generic drugs or independent imaging centers for scans. One new member who said he was planning prostate surgery was immediately connected to a Cigna service that manages such cases, a company spokesman said.
North Shore-LIJ CareConnect Insurance Co., which is affiliated with a big New York hospital system, plans to go further: It will call every new enrollee and, for those without a regular doctor, will try to set up an appointment with one.
"For us, the key is to get that first primary-care appointment," said Alan J. Murray, chief executive of the health plan, which has enrolled around 4,000 people through the state's marketplace.
The health law also encourages insurers to glean information about their enrollees by offering financial help to insurers that sign up less-healthy people. To maximize their revenue, insurers need to document patients' diagnoses.
"The payer has to have an accurate assessment of the member, or the payer won't get paid properly," said Keith Dunleavy, chief executive of Inovalon Inc., a company that analyzes troves of data to help insurers identify patients with chronic ailments and manage their care.
At Florida Blue, a major insurer, the outreach calls will encourage enrollees to get tests, such as those for cholesterol and blood sugar, as well as to fill out health-risk assessments. "What it gives us upfront is an early look into chronic conditions that are out there," said Jon Urbanek, a senior vice president at the Florida plan.
When the insurer, which isn't disclosing its marketplace enrollment, identifies people with diseases such as diabetes that require long-term treatment, it said it will urge them to get a regular doctor and sign up for programs that offer extras like discounts on diet plans. The programs also track them, so if the insurer sees they aren't getting key prescriptions and tests, it might call the patient.