More than a year in advance of the health insurance exchange the state plans to set up in 2014, MVP Health Care is introducing the state’s first proprietary exchange offered by a health plan.
Schenectady-based MVP’s exchange product, called NuOptions, is run by Liazon Corp., a private, third-party benefits provider based in Buffalo with offices in New York City and Waltham, Mass.
Employers that sign up with NuOptions give workers a set sum to pay for insurance then send the employees to Liazon to shop. Like the state-run exchange is expected to do, Liazon offers a marketplace where individuals can choose from a menu of benefits and carriers.
The employers with a NuOptions account still would choose among one or more MVP health plans but could add ancillary benefits such as vision and dental care from other carriers, said
Augusta Martin, MVP corporate vice president and chief of marketing.
Employees who want benefits beyond those included in their employer’s plan could add ancillary benefits such as life, disability or even pet insurance from other carriers. The extra costs would be deducted from their paychecks.
The privately held Liazon operates nationally. It is one of several insurance and benefit industry players to anticipate the state and federally run exchanges scheduled to debut in 2014.
Others in the budding private exchange market include WellPoint Inc., which acquired a controlling interest in Minneapolis-based private exchange Bloom Health last year.
WellPoint, a publicly traded benefits administrator, has Blue Cross Blue Shield affiliates, including New York’s Empire Blue Cross and Blue Shield. It also has non-Blues carrier affiliates, putting covered lives under its aegis at some 33 million.
With the Bloom acquisition, WellPoint intended to offer large, multistate employers an exchange option that would give them an alternative with a consistent menu of choices to variously configured state exchanges, Kenneth Goulet, CEO of WellPoint’s commercial business unit, told an interviewer last year.
“We see this as a way of preserving the employer-based market by providing some predictability in health-care costs,” Goulet said to Bloomberg News.
As MVP does with its NuOptions offering, private exchanges tout a built-in defined-contribution model as a boon for employers looking to cap health care costs.
Employers providing traditional plans through single carriers steadily have moved to defined contributions well before the advent of private exchanges. Surveys of Rochester area employers conducted annually by the Rochester Business Alliance Inc. have shown an increasing number of local businesses shifting from paying a percentage of workers’ premiums to a set amount.
The private exchange option lets employers cap costs but also offer a wider range of benefits, MVP’s Martin said.
Whether private exchanges will compete with state exchanges or work in concert with them is uncertain. Full details of how state exchanges will work are not yet known, Martin said.
Billed as insurance marketplaces, the state exchanges are supposed to offer one-stop shopping sites where individuals not covered by employer-sponsored group plans and small businesses can choose among several carriers. MVP’s NuOptions and other private exchange offerings are aimed at group plans.
The Patient Protection and Affordable Care Act calls for states to have exchanges in place on Jan. 1, 2014. The exact shape of New York’s and other states’ exchanges is not known.
States planning to run their own exchanges were to have submitted plans this month. But at the request of several states’ governors, the Barack Obama administration extended the deadline to Dec. 15. States that jointly will run exchanges with the federal government now have until Feb. 15 to submit plans.
Also unknown is how MVP’s private exchange offering will play against Excellus Blue Cross and Blue Shield’s plans to enter the insurance exchange market. Excellus is the area’s largest commercial health insurer, controlling 70 percent or more of the local market. MVP, which acquired Excellus’ strongest local competitor, Preferred Care, in 2006, writes the largest share of remaining business.
Excellus eagerly looks forward to participating in the state exchange and believes it will make a strong showing there, outcompeting other carriers and boosting its bottom line, Excellus president Christopher Booth told the Rochester Business Journal in an interview last July.
James Redmond, Excellus regional vice president of communications, commented by email on the MVP private exchange initiative.
“Employers using a defined contribution strategy is not new. We have many employers who currently offer multiple products with a defined contribution to premium. The bottom line is that price drives a buyer's decision and our products are priced significantly lower than our competitor's products,” Redmond wrote Wednesday.
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