CFO Studio Magazine with David Huber

4th QUARTER 2012 WWW.CFOSTUDIO.COM 9 some will likely continue this pattern. A survey by the National Business Group on Health, released in August, found that large U.S. employ- ers consider consumer-directed health plans and wellness initiatives more effective in controlling costs than shifting costs to employees. That being the trend, an unprecedented amount of plan cost and information must be available to support individual consumer decision making, whether through web, mobile, or social media channels — a step financial executives in every sector will be increasingly expected to take as reforms continue to roll out. Not to lose sight of another group of the insured and about-to-be-insured population, there is expected to be continued growth of the Medicaid market segment. Horizon BCBSNJ’s enrollment saw its largest numeric increase for 2011 among its Medicaid members, which grew by 66,000 (a 13.9 percent jump), along with an additional 7,000 newMedicare Advantage customers, according to the company’s annual report. This part of the company’s business has the potential to achieve explosive growth—but there are questions about how that will happen, too. The Supreme Court’s decision to allow states to decide whether they would accept billions of dollars to expand Medicaid to cover anyone earn- ing less than 133 percent of the Federal Poverty Level, rather than requiring states to do so, leaves open the possibility that New Jersey may have the full cost of covering new enrollees paid from 2014 to 2016, or that New Jersey Governor Chris Christie might reject the grant, maintaining the state’s current Medicaid levels. About 1 million New Jersey residents are now enrolled in Medic- aid, and that number is expected to rise by more than 400,000 by 2016, but the chief justice’s pronouncement that “states must have a genuine choice” leaves Huber and Horizon BCBSNJ with another very big question mark above their plans. A Focus on Flexibility As key Horizon BCBSNJ staff members take steps to ensure they are well-prepared for the shifting insurance landscape, the massive changes are also giving the company the op- portunity to rethink some of the presumptions on which the industry has operated for de- cades. For example, while health-care reform has already expanded access to care, it has hardly stemmed rising costs, with an average rise of 9 percent on health insurance premiums in 2011, according to Robert Marino, CEO of Horizon BCBSNJ. “The average family of four paid more than $19,000 a year for its health insurance,” stated Marino in the company’s annual report. “In a weak economy, where many consumers face significant challenges in meeting basic needs, rising health-care costs only exacerbate an already difficult situation.” For this reason, the insurer’s Horizon Health- care Innovations (HHI) team has engaged in aggressive outreach to physicians and other health-care professionals to offer increasingly flexible, collaborative approaches to providing care. These models include the Patient-Cen- tered Medical Home (PCMH), which coordi- nates care across all aspects of the health-care system— hospitals, nursing homes, pharma- cies, and the patients themselves — in promot- ing the prevention of disease and management of chronic illness. In 2011, HHI reported that PCMH members experienced an 8 percent improvement in managing their diabetes, a 10 percent lower cost of care for all members, and 26 percent fewer visits to emergency rooms. Another model is the Accountable Care Organization (ACO), which ties provider reimbursements directly to performance met- rics. Horizon BCBSNJ has also rolled out the Episodes of Care programs in which one entity receives a fixed reimbursement to cover all costs from preadmission care to surgery to post- discharge care. “The care philosophy underlying each of these models is that by improving the coordina- tion of our members’ health-care needs, it is possible to provide them better overall care and - 2012 - • Medicare Advantage Benchmark begins phase-down • Insurers must provide summaries of benefits and coverage - 2013 - • Flexible spending account contributions limited to $2,500 • Eligibility verification and claims status operating rules adopted - 2014 - • State insurance exchanges take effect • Insurance market reforms (ban on pre-existing conditions restrictions, etc.) implemented • Subsidies for individuals and small businesses • $8 billion tax on health insurers - 2016 - • Small employer market (up to 100 employees) allowed in state insurance exchanges - 2017 - • Large employers allowed in state insurance exchanges - 2018 - • Tax on high-value plans *Adapted from Horizon BCBSNJ Health Care Reform Timeline, www.horizonblue.com/ HealthCareReform Health Care Timeline* “ WE NEED TO PRIORITIZE BASED ON THE MOST PRESSING NEEDS AND WHERE WE EXPECT TO GET THE ROI. ”