Lines are ‘blurry’ on private exchange definition

Many of the private health care exchanges on the market today are adopting hybrid models of benefits administration and benefits enrollment, says Scott Carver, president of PlanSource, a cloud-based benefits exchange provider. The company operates its own proprietary exchange and a white label solution that builds exchanges for third parties. EBA spoke with Carver about what makes exchanges unique and his predictions for exponential growth in the field.

What is the structure of your exchange? What makes it different?

There are probably three primary differences. First of all, we are a cloud-based benefits engagement and exchange provider. One of the things that makes us different is that we provide all of our services —both traditionalbenefits technology and exchange solutions — from the same platform. It is very modular, so you can add or delete certain features to provide what you are looking for in an exchange.

Second is that we really support two different models within the exchange environment. We own our own proprietary one, which is comprised of our own marketplace with our carrier partners. We’ve gone out and created a portfolio of plans and options and so forth so our broker customers and employer customers can select from a marketplace that we’ve preconfigured.

The other model is we become the technology supplier to any sponsoring organization of an exchange, whether it is a broker, a carrier or a consortium of employers who are building exchanges. We allow them to not only access the portfolio of benefits and carriers that we’ve put together, but also allow them to bring their own carriers, plans and marketplace options. We configure them in a more customized way.

Also see: Private exchanges to become ‘new normal’?

How do you recruit clients?

We are a leveraged distribution model; we sell exclusively through the broker community as well as through the sales organizations of our partner carriers. Carriers partner with us for delivering technology solutions to their brokers as well. We really have a two-pronged approach.Our folks are out with carrier reps talking to brokers. But, the primary channel through which our solutions get deployed is through the broker/consultant channel. 

What is your relationship with brokers?

We really try to become the underlying technology solution for their go-to market strategy. Brokers are really interested in creating a more comprehensive portfolio of services. Technology just has to be one of those, whether it is exchange technology, whether its traditional benefits administration, ACA compliance services, or payroll. We provide all of those services and we are able to do it through either a partnership, through a white label program, through co-sourced arrangements. Forty-percent of our employer base is installed through co-source relationships, which means the brokers white label our technology and do the customer installations themselves. We handle most of the data integration on the backend, but brokers are taking our technology and embedding it as part of their broader value proposition. Then they do the onboarding themselves.  

Also see: Private exchanges: a complex process

How did 2015 open enrollment compare to 2014?

We’ve seen exponential growth. Last year, we installed more than 2,500 customers and about 60% of those customers came to us in the fourth-quarter, during the open enrollment season. That’s more than double what we saw in 2013.Based on the business that we have contracted and what we foresee going into 2015, we see that more than doubling. We see an almost threefold increase and our actual staffing and forecasting on a threefold increase going into 2015. That’s all inclusive of all our business — both exchange and non-exchange— but we will see a much higher ratio this year of exchange-related enrollments versus traditional ben admin. 

Where do you see private HIX fitting in the health care game moving forward?

I think the exchange model or the marketplace model — leveraging defined contribution and a broad portfolio of carrier and plan options — will be the predominant model for providing benefits going forward. The trend is very analogous to the trend from pensions to defined contribution in the early 1980s. Technology is an accelerant that will increase the pace of adoption now versus back in the ’80s when those types of technologies didn’t exist.

But, I also think it is a hybridization of what we traditionally call an exchange. The lines are burry today.Can it be traditional benefits administration with more choices using decision support tools sponsored by a single employer, and could that conceivably be defined as exchange?

I like to use the term marketplace because I think you’ll see employers, first of all, adopting defined contribution. You’ll see more and more employers adopting and expecting a broader portfolio of choice for their employees to be able to shop in a retail-like setting and there is going to be a prevalence of decision support tools to help people make those decisions. More of that responsibility will be placed on the shoulder of the employee. Technologies will evolve and the funding models will evolve. That is the beginning definitions of an exchange. But is it a true exchange in context of what we see on Healthcare.gov? You could argue that it probably isn’t. That’s why I think the exchange model will be prevalent, but it could look very much like a hybrid when we look back and it’s all said and done.

Editor’s note: This story is part of an continuing series of one-on-one interviews with private exchange leaders and top decision-makers across the U.S. Know of an exchange expert who should be profiled? Email Brian.Kalish@sourcemedia.com.