Marketing experts usually advise clients to “segment the market” and find a way to appeal to the preferred market segments by setting themselves apart from the competition.
For health insurers, the Patient Protection and Affordable Care Act of 2010 (PPACA) could make standing apart from the competition complicated.
Joseph Berardo Jr., the president of MagnaCare, a company that develops provider networks for health plans, believes that he has the answer: provider networks.
Some insurers could set themselves apart with broad networks, he said, and others could set themselves apart with “micro networks,” or “pods.”
“It’s all going to center more and more around integrating care management,” Berardo said. “The whole goal is just to manage care better.”
A lawsuit, a House Republican repeal bill or a House Republican budget bill could still kill PPACA dead before Oct. 1, when PPACA exchanges are supposed to start selling individual and small group coverage that will begin to take effect Jan. 1, 2014.
Right now, however, the big health insurers, benefits brokers and benefits consulting firms seem to be proceeding on the assumption that the exchanges are coming, along with the PPACA employer health coverage mandate; the PPACA tax penalty to be imposed on individuals who fail to own “minimum essential coverage”; a requirement that all health plans offer a basic, state-created “essential health benefits” (EHB) package; a requirement that plans issue coverage without taking personal health information into account; tight restrictions on use of personal health information in coverage pricing; and a full ban on annual and lifetime benefits caps.
PPACA already requires carriers to spend 80 percent of individual and small group premiums on health care and quality improvement efforts, and it already requires carriers to jump through disclosure hoops when they increase rates more than 10 percent.
Top executives at UnitedHealth Group Inc. (NYSE:UNH) and WellPoint Inc. (NYSE:WLP) have said that all of the PPACA-related change and uncertainty will lead their companies to be relatively conservative about how they price new business over the next year or two.
If health insurers and agents are afraid of underpricing coverage and getting stuck with big, PPACA-related losses, and they can’t tinker very much with the list of benefits offered, how do they set themselves apart?
PPACA does still give insurers some flexibility when it comes to deciding which doctors and hospitals to include in their networks.
PPACA and state laws and regulations do impose minimum provider access requirements.
PPACA Section 1311 requires that a health plan qualified to sell coverage through the new PPACA exchange system “ensure a sufficient choice of providers” to comply with the network adequacy provisions in Section 2702(c) of the Public Health Service Act.”
A qualified plan also must “include within health insurance plan networks those essential community providers, where available, that serve predominately low-income, medically-underserved individuals,” and the plan must meet a plan accreditor’s “network adequacy and access” standards along with other accreditation standards.