In the wake of reforms under the Affordable Care Act (ACA), all lines of business – including Exchange plans – are bearing an increased regulatory burden as the healthcare landscape transitions to quality and value-based reimbursement. In some ways, the plans in the commercial world may be in for the biggest regulatory shock. Payers who used to participate just in state commercial lines of business and self-insured ERISA and who now have launched Marketplace Exchange products should brace themselves for a slate of new mandates addressing core compliance, cost and quality issues.
After a rough launch of Obamacare, the Centers for Medicare and Medicaid Services (CMS) is back on track in 2015 with construction of an aggressive regulatory and quality platform for Exchange-based business lines that mimics the model that ultimately turned around quality in Medicare Advantage (MA) program.
While less stringent than in MA, already in place are mandatory turnaround times on authorizations and appeals, as well as the establishment of external reviews and rigor on formulary management including exceptions requirements. Other actions that will eventually rise to the levels of performance required of Medicare Advantage plans include scrutiny of network adequacy and rollout of a quality improvement program that will mature over the next several years. The latter is likely to result in clinical care management mandates unfamiliar to payers outside the Medicare market.
The biggest effort is being focused on quality outcomes. CMS’ Exchange quality program is in Beta for 2015, with 19 core clinical and 10 survey measures tied to HEDIS and Pharmacy Quality Alliance (PQA). Included are a combination of adult and child measures, as well as measures focused on disease states, wellness, prevention, behavioral health and readmissions.
By 2017, the program will be in full force, including publication of quality scores on plan comparison websites in time for 2017 enrollment. An additional 12 core clinical measures will be added in 2016-17, along with two additional survey measures. This again mirrors the Medicare Advantage ratings programs including HEDIS/PQA, Consumer Assessment of Healthcare Providers and Systems (CAHPS) and Health Outcomes Survey (HOS).
Given the Medicare Advantage Star model already out there and what is already being demanded of Exchange plans, it is only a matter of time before CMS begins tying portions of plan revenue to quality outcomes. As we have predicted already for MA, it will be nearly impossible shortly for MA plans with less than 4 Stars to compete. Not too many years from now, the same likely will be said of Exchange plans.
Along with the regulatory burden and quality mandates is the intense pressure to reduce administrative costs and unnecessary utilization, the likes of which commercial plans have never before been subjected. These include the minimum medical loss ratio (MLR) mandate-an implicit regulation of administration and profit-as well as the competitive rates payers must file annually to continue participation in State-Based Exchanges (SBEs) and the Federal Facilitated Marketplace (FFM) which forces a near bottoming-out of premiums.
As we know, commercial plans have historically been subject to very little regulation on the clinical front as state insurance agencies focused primarily on solvency. However, the latest from CMS suggests times are changing and focus will shift to value and outcomes. Because of the ACA, the commercial insurance world is no longer immune to the increasingly stringent quality requirements and there will be a shock to the system for even major players.