Among the advantages to Highmark is administrative efficiency. Brown notes that in western Pennsylvania a lot of Highmark's small group business was paper-based and took some time to manage. The platform in place for defined contribution is entirely electronic for processes such as open enrollment and enrollment updates.
"Once we input the group information onto the platform we can provide the group administrators with enrollment and payroll reduction reports. An administrator can download a member census whenever they need one. To not have to worry about pushing paperwork saves a lot of time and effort," says Brown.
Highmark began exploring the market for defined contribution just as healthcare reform came onto the scene. Brown, who was in new product development at the time, says the team looked at new and expansion products that would be healthcare reform compliant.
Business retention, especially in terms of competing with the public HIX, was a driving factor.
Offering defined contribution through its own private, proprietary HIX filled the bill.
Highmark decided to pilot with small groups so insurance brokers could be part of the process. About 99% of Highmark's small group business is sold through brokers and the insurer wanted to maintain that buffer with clients as it worked through the operations side of the HIX. The pilot began with one broker and then added five.