The first insurer to drop out of the Affordable Care Act exchange market after only a year is now trying to figure out where to go next.
On January 1, Paul Geiwitz took over the interim-reigns as CEO of PreferredOne, a Minnesota insurer owned by a group of providers. Longtime CEO Marcus Merz, who led PreferredOne since its inception in 1984, retired at the end of the year -- leaving the company dealing with the aftermath of dropping some 30,000 individuals on public exchange plans and exiting the exchange altogether.
With the lowest premiums on the exchange in most regions, PreferredOne sold some 60 percent of the 55,000 MNsure plans for the 2014 enrollment year. It was an Affordable Care Act success story, and looked like it was a strategy for growth at the mid-size insurance company.
But then, PreferredOne concluded that "continuing to provide this coverage through MNsure is not sustainable," as Merz said in September, announcing the decision not to sell 2015 plans.
The move also raised questions about the sustainability of MNsure, whose shoddy online enrollment experience for consumers led to the departure of the state-based exchange's executive director (along with an ill-timed Costa Rica vacation). Whether the exchange's technology and fees on insurers to fund its operations will work long-term remains to be seen. For now, consumers still have health choices among exchange plans.
PreferredOne said it would help its exchange members with the transition at the end of the year, and consumers this open enrollment still have options from the four insurers who sold last year -- Blue Cross and Blue Shield of Minnesota, Medica, Health Partners and Ucare -- plus multi-state Blue Plus plans. The southeast region of the state has more choices and more competitive rates, with two insurers expanding the service areas, MNsure noted.
Although the exchange plans represented less than 10 percent of PreferredOne's membership, the decision may have lingering ramifications for the company's public image, not least among the 30,000 people who had to leave a health plan after just a year.
And after a year of working with the relatively new-subsidized population on exchange plans, the company has to focus on the higher end of the individual market, small and large groups -- as well as a search for a long-term CEO.
PreferredOne was founded in 1984 -- the same year Minnesota's most famous health insurer became a publicly-traded company -- and is owned by the academic medical center Fairview Health Services, North Memorial Health Care and PreferredOne Physician Associates. Based in the Minneapolis suburb of Golden Valley it is one of the smaller insurer in the Twin Cities and state as a whole, with about 350,000 members.
Merz, the 67-year-old former CEO, helped grow the company from a PPO to a small but still established insurer serving 2,000 Minnesota employers with fully-insured plans and third party administration.
Interim CEO Paul Geiwitz joined the company in 1994, and has most recently served as executive vice president and chief marketing officer, focusing on the employer market.
PreferredOne may also be trying to concentrate on improving the clinical delivery and experience side of its health plans. The company has a new chief medical officer hired last fall, Howard Epstein, MD, the former chief health officer at the Institute for Clinical Systems Improvement, where he worked on hospital readmissions and the Choosing Wisely Minnesota Campaign aimed at reducing harm and overuse.