Tag Archive: California

California exchange mulls flexing market power to enforce hospital care quality

California’s insurance exchange is threatening to cut hospitals from its networks for poor performance or high costs, a novel proposal that is drawing heavy fire from medical providers and insurers.The goal is to boost the overall quality of patient care and make coverage more affordable, said Peter Lee, executive director of the Covered California exchange.“The first few years were about getting people in the door for coverage,” said Lee, a key figure in the rollout of the federal health law. “We are now shifting our attention to changing the underlying delivery system to make it more cost effective and higher quality. We don’t want to throw anyone out, but we don’t want to pay for bad quality care either.”

“California is definitely ahead of the pack when it comes to taking an active purchasing role, and exclusion is a pretty big threat,” said Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms. “There may be a dominant hospital system that’s charging through the nose, but without them you don’t have an adequate network. It will be interesting to see how Covered California threads that needle.”

Source: California Insurance Marketplace Wants To Kick Out Poor-Performing Hospitals | Kaiser Health News

State health benefit exchanges aggregate individual and small group health plans and purchasers in order to facilitate a more functional market and make health coverage more accessible and affordable. When they actively negotiate with health plan issuers on terms and conditions for exchange participation as Covered California does, they in effect become super payers relative to providers since they can leverage their market power to establish quality standards for medical care covered by participating plan issuers. Covered California now wants to exercise that power relative to hospitals. That dynamic disrupts the traditional contractual relationship between plan issuers and providers and both are initially reacting to the proposal by telling Covered California to butt out.

Hospitals operate in a market that tends to be oligopolistic in metro areas and monopolistic in less populous areas. In California’s expansive geography, it has a mix of both. Georgetown University’s Sabrina Corlette points up the tension between enforcing quality standards on hospitals and the realities of the hospital market relative to ensuring an adequate number of hospitals exist in exchange plan provider networks. The California exchange has a large degree of purchasing power. But in a market with few sellers and many buyers (plan members in a given rating region), sellers have a natural advantage relative to determining price and quality.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Head Of California Exchange Scolds UnitedHealth For Blaming Woes On Obamacare | California Healthline

Amid growing questions over the future of insurance exchanges, the head of California’s marketplace said the nation’s largest health insurer should take responsibility for nearly $1 billion in losses and stop blaming the federal health law.In a blistering critique, Covered California’s executive director, Peter Lee, said UnitedHealth Group Inc. made a series of blunders on rates and networks that led to a $475 million loss last year on individual policies across the country. The company estimates a similar exchange-related loss of $500 million for this year.

Source: Head Of California Exchange Scolds UnitedHealth For Blaming Woes On Obamacare | California Healthline

This story reflects the natural tension that exists in the state health benefit exchange marketplace. Health plan issuers are subject to competitive market forces as well as pressure from active purchaser exchanges like Covered California to keep premium rates down while offering provider networks that adequately serve the needs of plan members. But if they set premiums too low or create provider networks that are too large, plan issuers can suffer losses.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

San Francisco offers additional subsidization for exchange plans

Covered California premiums are relatively affordable. The cheapest one for single San Franciscans earning $58,850 — the cutoff for the new city subsidy — would cost roughly $202 a month. But the cheapest plans have the highest deductibles, out-of-pocket expenses for doctor visits, hospital stays and drug prescriptions, potentially totaling thousands of dollars per year. And the subsidies for these expenses that are available in states with market exchanges, like California, come only with plans on the costlier “silver” tier. As a result, many residents choose to remain uninsured, said Colleen Chawla, deputy director of health at the San Francisco Public Health Department. This means people eligible for Covered California are turning to clinics intended for people who can’t get insurance at all or who have Medi-Cal, the state’s version of free medical insurance for very low-income residents.

Source: San Francisco to Expand Health Insurance Support – New America Media

In high cost areas like the San Francisco Bay Area, the Affordable Care Act’s advance premium tax credits and subsidies for out of pocket costs for silver tier qualified health plans aren’t enough of a positive incentive to encourage people to sign up for coverage.

The implication is in these very expensive localities, the cost of housing and other necessities of life simply leave no room to pay for health care and insurance. Since going without coverage subjects medically uninsured San Franciscans to the ACA’s federal income tax penalties, the city’s Bridge To Coverage rolling out this year provides an additional local government subsidy to defray the cost of plans purchased on the Golden State’s health benefit exchange, Covered California, for households below 500 percent of federal poverty level — a multiple higher than the ACA’s 400 percent cutoff for advance premium tax credit subsidies.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

California fines top health insurers for overstating Obamacare networks – LA Times

California regulators fined two insurance giants for overstating their Obamacare doctor networks, and said the companies will pay out millions of dollars in refunds to patients.The errors by Blue Shield of California and Anthem Blue Cross caused major frustration for consumers statewide during the rollout of the Affordable Care Act in 2014.The inaccuracies in their provider networks led to big unforeseen medical bills for some patients who unwittingly went out of network for care. The California Department of Managed Health Care said Tuesday that it has levied fines of $350,000 against Blue Shield and $250,000 for Anthem.

Source: California fines top health insurers for overstating Obamacare networks – LA Times

Among the moving parts of the Patient Protection and Affordable Care Act’s health insurance market reforms there are bound to be friction points. One such problematic interface exists between payers and providers participating in California’s health benefit exchange, Covered California, as this report illustrates.

In non-integrated, narrow network health plans like these where payers and providers function as separate entities (unlike integrated care systems like Kaiser Permanente), it’s critical that interface function properly lest it threaten to bring the entire reform mechanism to a grinding halt. Continuing the mechanical metaphor, the narrowness of the provider networks has little tolerance space — and room for error– between the working components. One area where the gears frequently grind in narrow networks is hospital care where the hospitals and physicians are contracted with disparate plans and not necessarily participating in the same plan covering a patient as this Modern Healthcare article explains in detail.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

The paradox of Affordable Care Act individual health coverage affordability

The Patient Protection and Affordable Care Act at Section 1401(b)(3)(a) provides advance individual health plan premium tax credit subsidies within six household adjusted gross income tranches between 100 and 400 percent of the current year federal household poverty levels. At the low end, the subsidies are calculated so that households with incomes between 100 and 133 percent of federal poverty pay no more than two percent of their incomes for a health plan. At the upper end, tax credits are applied so that households earning between 300 and 400 percent of federal poverty levels would pay no more than 9.5 percent of income. The subsidies are only available for health plans sold on state health benefit exchanges.

While designed to make individual health coverage more affordable to low and moderate income households, the subsidies employ a one size fits all approach that doesn’t easily achieve that goal in some parts of the nation such as those with high housing costs. Particularly for those over age 50, given the law allows health plan issuers to base premiums in part on age, and who earn close to or slightly above the 400 percent household income subsidy cutoff. And when their individual plan premiums rival or equal a significant portion of their monthly mortgage or rent payment. When that happens, the house payment is going to win out over the health insurance premium every time.

Case in point is San Jose, California resident Miguel Delgadillo, as reported by the San Jose Mercury News:

Until the price of health insurance comes way down, he said, don’t bother him.

“What little income there is after taxes goes to my house payment — that’s my top priority,” said the 55-year-old part-time teacher.

He said he likes the idea of a national health care law, but not the $451 he would have to pay each month for health insurance. That’s the cost of the lowest price plan available to him.

Delgadillo, who has been uninsured for seven years, shares a dilemma with tens of thousands of other Californians: He’s a middle-class person who narrowly misses the income threshold that would qualify him for a subsidized health plan.

That leaves Delgadillo potentially subject to the Affordable Care Act’s individual shared responsibility penalty for not having some form of minimum essential health coverage, which for 2016 is the higher of 2.5 percent of adjusted gross income or $695 per adult and $347.50 for children under 18, up to a household maximum of $2,085. Similarly situated individuals might do the math and figure it would cost less to pay the penalty than purchase coverage. Delgadillo and other similarly situated households may be able to avoid paying the penalty when filing their income tax returns if they can show that the lowest cost plan available to them would exceed 8 percent of actual household income.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Obamacare rates to rise 4% in California for 2016 – LA Times

Defying dire predictions about health insurance rate shock across the country, California’s Obamacare exchange negotiated a 4% average rate increase for the second year in a row.The modest increase for 2016, announced Monday, may be welcome news for many of the 1.3 million Californians who buy individual policies through the state marketplace, known as Covered California.California’s rates are a key barometer of how the Affordable Care Act is working nationwide, and the state’s performance is sure to be hotly debated among supporters and foes of the healthcare law, including the current crop of presidential candidates.

Source: Obamacare rates to rise 4% in California for 2016 – LA Times

What’s notable about this figure is it is lower than the closely watched barometer of CalPERS health plan cost trends for large group health plans that have traditionally had less rate volatility and lower increases than individual plans such as those sold through Covered California.

By comparison to the four percent increase for 2016 Covered California plans, HMO plans for California state and local government employees and their dependents are set to increase on average by 7.2 percent next year and 10.8 percent for PPO plans.

However in Northern California, Covered California plans will on average track the CalPERS statewide average. According to Covered California, premiums in that half of the state will rise by an average of seven percent for plan year 2016.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Sacramento region hit hard by CalPERS health plan rate hikes – Sacramento Business Journal

This set up a dynamic where next year, single public agency workers in Los Angeles will pay a monthly premium of $611 for traditional Anthem HMO coverage, while their counterparts in Sacramento will pay $1,113. Family coverage for the same plan is $1,588 in Los Angeles, $2,893 in Sacramento. Employers pay part of the tab, but workers pick up the rest. The breakdown varies by employer.“Ouch,” said Phil Wright, administrative services manager for the city of West Sacramento, said of the public agency rate hikes next year. “When your monthly health insurance premium is more than your mortgage payment, there’s a problem.”

Source: Sacramento region hit hard by CalPERS health plan rate hikes – Sacramento Business Journal

Wright’s comment reflects the unsustainable structural costs that are at the heart of the health insurance crisis. Wright is essentially putting the cost of health coverage on a par with housing costs. What’s noteworthy here is these are premiums negotiated with the purchasing power of many combined local government agencies in the nation’s largest state: California. Because of the state’s size and the purchasing power of the California Public Employees Retirement System (CalPERS), health plan cost trends in the Golden State are seen as an indicator of where rates are headed nationally.

“Frankly, these costs are unacceptable,” Doug McKeever, chief of the CalPERS health policy research division, told the Sacramento Business Journal. “It’s a really tricky dynamic for us as the cost is born by employers and members,” he added. “We need to look at alternative strategies to bring down costs.”

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Growing Medicaid enrollment poses potential fiscal threat to state health benefit exchanges

The biggest threat to the future financial sustainability of the state health benefit exchange marketplace may be declining economic prosperity and the resulting polarization of household income strata, particularly in the states that have elected to expand Medicaid eligibility to households earning up to 138 percent of federal poverty and to single adults.

The reason? Low income households that qualify for Medicaid generally cannot purchase qualified health plans (QHPs) offered on state health benefit exchanges. If the growing Medicaid eligible population isn’t able to purchase QHPs, the exchanges don’t derive fees assessed on health plan issuers – their main source of revenue as federal establishment grant funds dwindle — that are based on a percentage of premium or set amount for each “effectuated” enrollee. (In states that have opted not to expand Medicaid eligibility, households earning at least 100 percent of federal poverty are eligible to purchase exchange QHPs.)

A Rand Corporation analysis of 2013-15 health coverage enrollment trends issued in June 2015 reported 6.5 million newly enrolled in Medicaid as of February 2015, outpacing by 58 percent the 4.1 million that enrolled in exchange QHPs. According to federal data, 71.1 million Americans were enrolled in Medicaid and the Children’s Health Insurance Program as of April 2015, 12.3 million more than the average for July to September 2013.

While exchanges realize no revenue from Medicaid enrollments, they do incur expense in handling them. Under the Patient Protection and Affordable Care Act’s “no wrong door” policy, exchanges are required to process eligibility and enrollment for both state insurance programs like Medicaid as well as QHPs. It’s also easier to enroll in Medicaid coverage. Unlike exchange QHPs that limit enrollment to part of the year during open enrollment periods, those eligible for Medicaid can enroll at any time of the year.

In California, an expansion state with the nation’s largest Medicaid program serving 12.2 million or about 1 in 3 Californians, enrollment grew by 41.4 percent between December 2013 and January 2015, according to the state’s Medicaid administrator, the Department of Health Care Services. Before that, a severe economic downturn added about 1 million new eligibles to the Golden State’s Medicaid rolls between 2007 and 2010.

Enrollment in California’s Medicaid program – known as Medi-Cal – far outstrips that of QHPs sold through the state’s health benefit exchange, Covered California. According to the federal Department of Health and Human Services, there were 1.4 million enrolled in Covered California plans as of February 2015 — about the same number for plan year 2014. To put that in perspective, there are roughly 61 Medi-Cal enrollees for every 7 enrolled in a Covered California QHP.

Colorado, a Medicaid expansion state that operates a state-based exchange, has seen burgeoning Medicaid enrollment tax the finances of its exchange. The state enrolled 1.2 million in Medicaid — an increase of 433,172 or 55 percent — between late 2013 and February 2015. For 2015, the state’s exchange, Connect for Health, enrolled 27,465 people in Medicaid or CHIP. That’s nearly twice the 15,566 enrolled in commercial plans, blowing a $7 million hole in its budget for increased call center costs handling complex Medicaid enrollments and prompting the exchange to seek reimbursement from the federal government, according to The Denver Post.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

CalPERS 7.2% HMO plan premium rate increase in line with historical utilization cost trend

Citing higher drug prices, the California Public Employees’ Retirement System said its HMO premiums are rising by 7.2% next year. Rates for PPO, or preferred provider organization, plans are going up even more at 10.8%, on average, for 2016.This marks a departure from two years of more modest increases of about 3% at the giant pension fund. The agency’s rate hikes are a key barometer since it’s one of the largest healthcare buyers nationwide after the federal government.

Source: CalPERS approves 7.2% increase in HMO rates as drug costs climb – LA Times

The 7.2 percent average premium rate increase for 2016 HMO plans — which cover two out of three CalPERS members — aligns with the underlying medical utilization cost growth trend of recent years of about seven percent. As the story notes, CalPERS health plan rates are viewed as a harbinger of the cost of health coverage in the coming calendar year given the large size of its pool of 1.4 million active and retired state and local government workers.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

California exchange enrollees healthier than expected

SACRAMENTO, Calif. — A new study in the journal Health Services Research found that analyzing state data on health care usage by Covered California enrollees helped demonstrate that many were healthier and presented less risk to insurance companies than anticipated, helping drive down the cost of health premiums offered through the exchange in 2015.The study, “Sorting Out the Health Risk in California’s State-Based Marketplace,” which was published online June 9, 2015, found that giving health insurance companies the data needed to estimate the amount they would pay or receive from a special risk-adjustment pool helped them know they could reduce their rates in many cases. “After receiving these findings as part of their negotiations with Covered California, health plans covering the majority of enrollees decreased their proposed 2015 rates, saving consumers tens of millions of dollars in potential premiums,” the study stated.

Source: Covered California Daily News: Covered California Saved Consumers Tens of Millions of Dollars in Premiums in 2015 Through Innovative Data Analysis

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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