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Monday, Apr 22, 2024

Insurer Peddles New Online Policy

Hixme Insurance Solutions Inc. has a vision for the future of health insurance and it has found a few wealthy investors who share it. Last month, the Agoura Hills company landed $10.5 million of venture capital in a Series A funding led by Kleiner Perkins Caufield & Byers, a prominent Silicon Valley venture firm. Past Kleiner Perkins investment targets include Google Inc., Amazon.com Inc., Genentech Inc. and Twitter Inc. The Hixme vision involves the way companies provide health insurance for employees. Traditionally, employers select a few group insurance plans and offer them to workers. In the Hixme version of the future, companies will offer to pay a set amount for each employee’s insurance, but the worker will choose his or her plan online from a network of carriers. Hixme’s offices have the vibe of a Silicon Valley startup rather than an insurance company. Floor-to-ceiling whiteboards are covered with fresh ideas, while employees play musical instruments at their desks and executives engage in a game of foosball. But executives say they are serious about insurance market reform. “The company operates in a very unusual gap between consumer health plans and employer health benefits,” said Denny Weinberg, Hixme’s chief executive, who co-founded insurer WellPoint Inc. earlier in his career. “This is one of the more obscure side effects of the Affordable Care Act, and in reality, because of it, employers and employees have an opportunity to do something of great value to both of them that never existed before.” Weinberg is no stranger to health care reform. He served a 20-year tenure as WellPoint’s vice president and left the company in the mid-2000s after it merged with Anthem Inc. He is also accredited as one of the creators of the preferred provider organization, or PPO, structure. Viable model Co-founded in February 2013 by Dan Peate and Karen Albanese, Hixme provides technology to help employers transition from the traditional group benefits model into a private exchange system. The model became viable after January of last year, when public health care exchanges such as Covered California went into effect. The public exchanges, including the federal Health Insurance Marketplace and others run by states, prompted competing private exchanges to enter the market. Hixme believes it can use online private exchanges to help employees tailor benefits to their needs while saving employers money. The company’s technology looks to guide employers and employees alike through the process. It begins with Hixme’s ScoreMe and PlanMe platforms, which allow employers to check out parts of the Hixme system and decide if they want to switch to employee-selected insurance. Next, a tool called ModelMe is used to process an extensive amount of information on an employer’s staff to project what would happen if those employees were given access to the consumer health benefits market. Once those steps have been taken, EnrollMe will filter through sometimes hundreds of plans to match three options to every employee, while HixPay streamlines the payment process among insurance companies, employers and employees. “There is no question in my mind that this is the future of benefits for employers and for their employees,” said Hixme’s Peate. “It’s just a question of how fast will this be adopted.” Kleiner Perkins liked the business model so much it put up $10 million of the round, with the remaining half-million coming from early seed investors. Hixme said the money will build out the company’s team, grow its technology and broaden its target marketing base. As part of the deal, Dr. Beth Seidenberg, general partner and life science investor at Kleiner Perkins, joined the Hixme board. “As a physician and investor, I strongly believe in what we are doing and empowering people so they choose the right benefits,” said Seidenberg. “Hixme will provide a big opportunity to lower health care costs in this country.” Employer benefits Hixme believes that by customizing each plan to fit individual employees, funds are better utilized and employee morale goes up, which in turn decreases waste and increases efficiency in the workplace. “Hixme becomes more and more aware about what you are concerned about at work that makes you less productive at work,” said Hixme Chief Executive Weinberg. “If a little bit of money can help you solve that problem, you’re a better employee. It helps you get something that you want, it reduces some worry and the employer gets a benefit in terms of more focus, better attention and more satisfaction at work.” Private exchanges provide employers with what is known as a defined contribution health plan, where employees are provided a set amount of money to purchase health benefits. With a defined plan, employers fix their costs as opposed to group plans, where employers pay a percentage of typically rising premiums on behalf of their employees. Thus, the private exchanges could lower employer costs. However, some insurance professionals are wary about private exchanges and their perceived benefits. “Exchanges have been around for two years now and I still don’t see a great penetration in companies with fewer than 500 employees,” said Jason Sandler, partner at Northridge concierge brokerage OHM Benefit and Insurance Solutions. “We do see it with some of the larger employers, but again, it is very limited in terms of scope.” Exchanges typically do not offer the same comprehensive options as traditional employer benefit plans, Sandler explained, because the costs associated with handling individual plans run higher than group plans. That causes pressure to reduce reimbursement rates to doctors and hospitals. In response, some insurers shrink their provider networks to lower administrative costs and focus on doctors at low reimbursement rates. In addition, some hospitals opt out of exchanges to avoid lower reimbursement rates altogether. Cindy Ehnes, executive vice president of Cope Health Solutions in Los Angeles and former director of managed care for the state of California, agrees that a private exchange could have a positive effect on an employer’s bottom line, but she is concerned that analytics and automation might not benefit people in the complex decision of choosing health coverage. “No tech tool can tell the employee if their kid will be born with a disability, if they will develop invasive cancer or if they will develop a chronic disease requiring expensive drugs,” Ehnes said. “Their choice of health plans today may not meet their needs tomorrow.” Despite concerns about the sector, Hixme has competitors looking to streamline the switch to private insurance exchanges. Rivals include Aon Hewitt, Towers Watson, Mercer and Buck Consultants. Those companies have seen some success in the consumer market but have experienced a slow adoption rate. According to the Society for Human Resource Management in Alexandria, Va., the slow adoption rate could be attributed to the unfamiliarity and confusion surrounding private exchanges. Many employers, especially smaller companies, are not aware of what a private exchange is and does. Another factor impacting private exchanges could be the rocky Affordable Care Act rollout, which may have deterred some employers from even considering a private exchange. Finally, there is political risk that public exchanges, reimbursement rates or other regulatory issues could affect private exchanges. “The ACA threw a monkey wrench in the way things were done,” said OHM broker Sandler. “Even now, the political climate is still very tenuous in terms of what is going to happen with the 2016 elections and whether or not that will make any changes to ACA. It is really too fluid a situation to predict what everything is going to look like two to three years from now.” For now, even if the future of private exchanges remains murky, Hixme is determined to pursue its vision. “My ultimate dream is that every employee designs their own benefit plan to look exactly the way they like it and each one will be different,” said Peate. “We will have facilitated that.”

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