Pioneers in health exchanges

Things are a bit hectic these days at Certifi, a small health care technology company in Hopkins. On Sept. 15, the company will flip the "go-live" switch on the most significant contract in its six-year history -- handling the backroom accounting functions for the state of Utah's health insurance exchange.

The deal makes Certifi something of a trailblazer in the changing health care landscape, as Utah is one of two states (along with Massachusetts) to have a functioning health insurance exchange, a key element of the federal health law.

"It's like a piece of history to have the opportunity to get in there and help them re-engineer the exchange so it's ready for prime time," said Jay Belschner, Certifi's co-founder and managing partner.

About 7,000 people are now using the Utah exchange, including about 300 small businesses. After launching the exchange as a pilot in 2009 and relaunching in 2011, most of the growth has come from word-of-mouth, said Patty Conner, Utah Health Exchange director.

But the state is gearing up for a rush of new participants when it launches its first marketing campaign in October, with Certifi handling the complex accounting, billing and payment for the small businesses on the exchange, the three insurance carriers and the brokers.

"It's not your grandfather's billing and payment system anymore," Belschner said. "When people building exchanges get to this point, they go, 'Oh, my God. This is bigger than a breadbox. It's got a million moving pieces.'"

State-run exchanges are scheduled to be operating nationwide by 2014, as part of the Affordable Care Act. These virtual marketplaces often are compared to travel sites or online shopping malls, where individuals and small businesses can comparison shop among a suite of health insurance offerings and prices.

Despite the presidential election year politics, Certifi believes changes are already underway and that its product is well-suited for the health care marketplace of the future.

"Exchanges are here to stay," Belschner said. "It's a sensible way to begin to offer benefits in a way you can have more efficiencies. All the pipes are built. The market is very transparent and there's a high degree of competition."

Belschner describes the technology behind the exchanges as a three-legged stool. One leg is the Web-based shopping experience. On another, software tools that handle eligibility and enrollment in a plan. The third leg is the treasury function, which is Certifi's expertise.

On the Utah exchange, the three carriers offer more than 100 different plans. Certifi's software gives the small business owner a single bill for employees, each of whom may have selected different benefit plans.

That state's exchange also uses an elaborate procedure to retroactively balance out risk among all the insurance players so that no one company takes the brunt of covering expensive medical bills. Certifi reconciles those amounts and provides a consolidated payment for the insurance carriers as well as brokers commissions. It also provides access to financial analysts and a call center based in Superior, Wis.

"Other companies in the marketplace don't put near as much focus on billing as Certifi does," Conner said. "You're usually going to find that as a side business. Because of that, we feel very strongly about their security and their compliance with banking functionality to ensure we're keeping that type of information very safe."

Belschner and partner Michael Whittington incorporated Certifi in Minnesota 2006. Their relationship goes back to 1993 when they worked for eBenX, a health care start-up that was one of the largest stock market launches in state history in 1999, but sold for a fraction of that in 2002.

Certifi also sells software and services to health plans, wellness companies, third-party administrators and employers, and handles 8 million financial health care transactions each month. Sales are between $1 million and $3 million, Belschner said.

The software it developed specifically for the Utah exchange, which it markets as "William," can be used for public or private health insurance exchanges, which is why Certifi believes it can lead to significant growth.

"Exchanges are going to come in all shapes and sizes," Belschner said. "They're going to be public, they're going to be private. They're going to be profit, they're going to be not for profit. They're going to be owned by banks and they're going to be owned by health plans.