Tag Archive: Covered California

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. 

California exchange models managed competition in individual, small group health insurance markets

At the other end of the policy spectrum, the exchange serves as an “active purchaser” of health insurance on behalf of its clients, the individual consumers. In effect, the exchange seeks to move insurance from a let-the-buyer-beware retail market to a two-stage wholesale and retail market. The first (wholesale) stage uses supply chain management tools developed by corporate buyers of other services, while the second (retail) stage encourages consumers to select from a more narrow range of pre-contracted offerings.

Source: Whither Health Insurance Exchanges Under The Affordable Care Act? Active Purchasing Versus Passive Marketplaces

This article co authored by UC Berkeley School of Public Health economist James C. Robinson, the executive director of California’s health benefit exchange, Peter Lee, and exchange policy staffer Zachary Goldman effectively argues California exchange’s active purchaser role vis health plan issuers embodies the concept of managed competition in health insurance described in this January 1993 Health Affairs article by Alain C. Enthoven:

A sponsor (either an employer, a governmental entity, or a purchasing cooperative), acting on behalf of a large group of subscribers, structures and adjusts the market to overcome attempts by insurers to avoid price competition. The sponsor establishes rules of equity, selects participating plans, manages the enrollment process, creates price-elastic demand, and manages risk selection.

As the authors note, the Patient Protection and Affordable Care Act creates basic standards for health plans in terms of defining required covered services, actuarial value and annual out of pocket maximums. But to realize the full benefit of managed competition, they appear to assert that health benefit exchanges must function as demanding and exacting wholesale purchasers of health plans in order to achieve maximum comparable selection and value for their retail customers. By aggregating purchasing power for insurance buyers, the exchanges help balance out market power between buyers and health plan issuers in a market that due to high entry and operating costs tends to be oligopolistic.

 


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. 

Consolidation among health plan issuers can benefit consumers, California exchange chief, economist argue

The rise of proposed mergers in the health insurance industry in 2015 has stoked the usual antitrust concerns that arise over consolidation in an oligopolistic market such as recently witnessed in telecommunications with the unconsummated marriage of Comcast and Time Warner Cable.

However, the executive director of California’s health benefit exchange and a health economist write in The Wall Street Journal that consolidation in the health insurance market helps offset consolidation that’s also taking place among health care providers. A balance of market power between payers and providers will benefit buyers of health insurance, explain Peter V. Lee, executive director of Covered California and Victor R. Fuchs, emeritus professor of health economics at Stanford University. (Disclosure: I served on the policy staff of Covered California in its startup phase). That’s because the payers write the checks to providers and can use their leverage to demand better value for their dollars through value-based reimbursement schemes like accountable care organizations, according to Lee and Fuchs:

Anthem’s proposed merger with Cigna following Aetna ’s acquisition of Humana has set off alarms about lack of competition in the health-insurance industry. But policy makers should consider the potential benefits of industry consolidation. The greater efficiency and market power of larger insurance plans could lower prices for consumers by offsetting the bargaining power of health-care providers.

Lee and Fuchs argue that the economic benefit of higher value care will be passed through to health insurance buyers because the Patient Protection and Affordable Care Act by statutorily defining minimum loss ratios (80 percent individual and small group segments, 85 percent for large group coverage) acts to limit the amount of any savings generated for boosting administrative overhead and profits. They note the average annual profit margin for health plans offered by Covered California is currently a skinny 1.1 percent.

 


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. 

Medicaid managed care plans could be sold on state health benefit exchanges

With Medicaid enrollments strongly outpacing commercial individual plan enrollments in state health benefit exchanges, a number of factors are aligning to set the stage for policymakers to allow Medicaid managed care plans be offered on the exchanges alongside individual Qualified Health Plans (QHPs). They include:

  • A rulemaking issued in June by the federal Center for Medicare & Medicaid Services that would apply requirements similar to those for commercial individual and Medicare Advantage plans to Medicaid managed care plans, including allowing plan issuers to advertise products offered across the Medicaid and exchange markets (Click here for a summary of the proposed regulations posted at the Health Affairs blog);
  • The need to assure operational sustainability among state health benefit exchanges, particularly in states that have expanded Medicaid eligibility standards to households earning up to 138 percent of federal poverty levels and single childless adults. Beginning in 2015, federal establishment grant funding began drying up, leaving exchanges reliant on generating fees from participating plan issuers. Adding Medicaid managed care plans to commercial QHPs assessed exchange participation fees would bolster exchange revenues and reduce fiscal uncertainty;
  • The success of the Arkansas “private option” in expanding coverage under a federal Section 1115 waiver permitting adults that would have otherwise been eligible for expanded Medicaid coverage under the Affordable Care Act to purchase exchange QHPs;
  • Substantial and ongoing difficulties fully integrating exchange eligibility and enrollment IT platforms with legacy state Medicaid eligibility and enrollment systems to meet the Affordable Care Act’s mandate of a single application process for QHP and Medicaid eligibility determinations and enrollment;
  • Financial considerations in the distribution channel: insurance producers are wary of enrolling households eligible for Medicaid since they earn commissions only on commercial individual plans sold on and off the exchanges. The role of brokers and agents relative to Medicaid enrollments is currently under evaluation by California’s exchange, Covered California.

Sections 1301(a) and 1311(c) of the Patient Protection and Affordable Care Act defining a QHP eligible for sale on the exchanges would appear to allow Medicaid managed care plans be deemed QHPs in the exchanges provided the plan issuer also offers individual plans on the exchange that also meet state requirements (The Affordable Care Act requires a minimum of one silver and one gold level plan be offered). Indeed, the QHP requirements set forth in Section 1311(c) have some overlap with those proposed for Medicaid managed care plans in the June CMS proposed rulemaking, including provisions requiring provider network adequacy standards, plan quality improvement programs and clinical care quality management.

 


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. 

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. 

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. 

California health benefit exchange rebrands SHOP, possibly setting stage for merger of individual and small group exchanges

California could be setting the stage to merge its individual and small business health benefit exchanges by moving to rebrand its Small Business Health Options Program (SHOP) under the brand name of its individual exchange, Covered California. It will be dubbed Covered California for Small Business, according to this report by the Sacramento Business Journal.

State health benefit exchange SHOPs serve small employers — currently those employing 50 or fewer employees and those with 100 or less starting for plan years beginning in 2016.

Section 1311(b)(2) of the Patient Protection and Affordable Care Act gives states the option to merge their individual and SHOP exchanges. States may also merge their individual and small group markets under Section 1312(c)(3) of the law “if the State determines appropriate.” California law establishing the state’s exchange mandates it report to the Legislature by December 1, 2018, on whether to exercise that option taking into account the potential impact on premium rates paid by individuals and small employers in a merged market as compared to keeping the markets separate.

 


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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