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Towers Watson tries to smooth exchange enrollment

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Towers Watson & Company (NYSE:TW) has learned a lesson about running a health insurance exchange: Persuading some customers to enroll “off-cycle” makes life easier.

Executives at the company talked about their private exchange programs Tuesday during a conference call with analysts.

The Towers Watson private exchange programs focus mainly on serving employer-sponsored programs for retirees and active workers.

Extend Health — a company Towers Watson acquired in 2012 — has been running health insurance exchanges for retirees since 2006. Towers Watson started the year with about 560,000 retiree health exchange users.

Towers Watson also is developing private exchanges for employers that want to cover active employees. Those exchanges were serving about 127,000 people Jan. 1.

Towers Watson appears to be serving roughly as many people through its private exchanges as the U.S. Department of Health and Human Services (HHS) is serving in Texas through an HHS-run Patient Protection and Affordable Care Act (PPACA) public exchange.

Revenue at the “exchange solutions” division increased to $48 million in the first quarter, up from $31 million for the first quarter of 2013.

The HHS officials in charge of running the PPACA public exchanges have tried to reduce antiselection risk in the public exchange individual “qualified health plan” (QHP) market by offer access to individual QHP coverage on a true guaranteed-issue basis only during a limited “open enrollment period.” 

John Haley, the company’s president, said during the analyst call that, at the Towers Watson exchanges, exchange managers have been focusing on trying to smooth out the seasonality in the retiree health exchange enrollment process, rather encouraging retirees to enroll in November and December.

“This would help us to keep our top-performing agents throughout the year,” Haley said. “That will reduce our overall cost by helping us keep a more stable workforce.”

This year, Haley said, the retiree health exchange program completed 50,000 in off-cycle enrollments in the first quarter.

“This is almost three times the off-cycle enrollment we reported last year,” Haley said.

Company executives noted that seasonality can cause exchange cash management headaches.

If an exchange brings in most enrollments during one part of the year, then collects commissions or fees throughout the year, the exchange may have to recognize most of its enrollment expenses during or shortly after the enrollment period and have to wait until later in the year to recognize much of its revenue, executives said.

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