Tag Archive: Covered California

Policy tension over restricted exchange open enrollment emerges in California

A primary element of the Patient Protection and Affordable Care Act’s reforms of the individual health insurance market is the elimination of medical underwriting and requiring health insurers to accept all applicants for coverage regardless of their medical history and condition, including pregnancy.

For plans sold on the state health benefit exchange marketplace, Section 1311(c)(6) of the law requires the federal government to determine limited to annual open enrollment periods such as those used in large employer group health plans. In addition, Section 2702(b) of the Public Health Safety Act allows health plan issuers selling plans outside the exchange marketplace to restrict enrollment to open or special enrollment periods. Individuals and families can enroll outside these periods only if, for example, they move to another state, lose employer-sponsored coverage or change their family status. Changes in health status are not excepted.

A request this week by California’s U.S. senators, Dianne Feinstein and Barbara Boxer urging their state’s health benefit exchange, Covered California, to add pregnancy to the list of exceptions to the open enrollment timeframe reflects an emerging policy tension point in the implementation of the Affordable Care Act’s individual market reforms.

Nicole Evans of the California Association of Health Plans cautioned “[i]f we start to provide exceptions for people to wait to get coverage until they have a need, you could be undermining the goals of the Affordable Care Act.”

The rationale for restricting enrollment to specified periods of the year is to deter opportunistic enrollment by those who might purchase coverage only when they have a health crisis requiring costly medical treatment and allowing it to lapse once their course of care is completed. Supporters of this policy might argue that allowing enrollment at any time (such as permitted for small group insurance and Medicaid) would convert an insurance product sold in the private market into something more like a government mandated (and subsidized for those who qualify) benefit.

A contrary view is expressed by Anthony Wright, executive director of the consumer nonprofit Health Access California. Wright suggests ending specified open enrollment periods would bring more generally healthy people into coverage offsetting any potential adverse selection, noting those in poor health have the greatest motivation to obtain coverage and are likely already in the risk pool. Wright’s position is reinforced by analysis of 2014 plan year enrollment indicating that those with costly, chronic medical conditions and who might have been denied coverage in the past were among the first to sign up for coverage.


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. 

Underinsured ACA enrollees strain community health centers | Modern Healthcare

When the ACA was enacted, leaders of community health centers were excited about the prospect of their previously uninsured patients getting coverage and having their levels of uncompensated care drop. But they were surprised when many of their lower-income patients bought bronze plans with high cost-sharing and started coming in seeking treatment on a sliding-scale fee basis. Previously, sliding-scale fees were used mostly by uninsured people who had to pay their own bills.

The centers say this has had a negative impact of their finances. “The use of the sliding fee scale due to the inability to pay required co-pays impacts the community health centers’ uncompensated-care costs, which are not declining as rapidly as contemplated by some policymakers,” said Mary Leath, CEO of Community Health Centers of Arkansas.

The squeeze is being felt even in states that have expanded Medicaid to adults with incomes up to 138% of poverty, which has provided community health centers in those states with more paying patients. Deb Polun, director of government affairs at the Community Health Center Association of Connecticut, said the lowest deductibles for bronze plans in her state are about $4,000, which is not affordable for lower-income patients.

via Underinsured ACA enrollees strain community health centers | Modern Healthcare.

This is an interesting development that points to some potential implications:

1. Lower income households are mistakenly choosing high deductible bronze metal tier plans that are ill suited to their economic resources and health statuses — particularly among people who are frequent users of primary care services — because they don’t understand how out of pocket cost sharing works and believe health plans are all inclusive.

2. These households should be but are not being directed toward silver metal tier plans that feature cost sharing subsidies for households earning up to 250 percent of federal poverty. If so, this suggests state health benefit exchanges and those who help people choose individual plans such as insurance agents need to do a better job ensuring consumers are getting adequate information in order to choose the best metal tier plan for their circumstances.

3. Lower income households are deliberately selecting bronze plans in order to benefit from their lower premiums, knowing they can get low cost primary care on a sliding scale fee basis from community health centers.

4. Lower income households are overestimating their incomes and should be enrolled in Medicaid programs if eligible instead of exchange plans. California’s state-operated exchange, Covered California, has switched some plan year 2014 enrollees from exchange plans to Medicaid when income redeterminations for plan year 2015 found some households earning too little to qualify for an exchange plan.

The item reports bronze health plan issuers are denying claims submitted by CHCs, which are then written off as uncompensated care. This raises the question of the type of care for which reimbursement is requested since preventative services are not subject to cost sharing and are included in plans at all metal tiers of coverage.


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. 

Covered California official concerned over provider network volatility, enrollee access

As California’s health benefit exchange marketplace, Covered California, prepares for Plan Year 2015 enrollment in November, at least one of its board members is openly concerned whether plan enrollees will have predictable access to in-network health care providers.

At a Covered California board meeting this week, Board Member Kim Belshé observed there has been a “steady drumbeat” of media accounts of Plan Year 2014 enrollees having difficulty finding physicians willing to accept Covered California plans. Belshé pointed to an aggravating factor of what she described as nearly real time changes to plan network provider rosters. California Executive Director Peter Lee noted some plan issuers are updating their network provider lists as frequently as weekly.

That introduces a degree of uncertainty that devalues the plans by robbing enrollees of the peace of mind that they will be able to see a network provider without running the risk of being turned away or having to pay more for care from a non-network provider. With the use of smaller networks in order to hold down premium rates, the likelihood that a provider isn’t in a given plan’s network increases.

It appears to come down to money and specifically provider reimbursement rates. Media accounts such as this one point to provider dissatisfaction over reimbursement rates for Covered California plans. This San Jose Mercury News item explains:

Many doctors are upset about the discounted reimbursement rates that insurers have imposed on them to keep premiums low on the Covered California exchange. The new rates — as much as 30 percent lower than those paid by nonexchange plans — took effect Jan. 1, when the new health care plans of hundreds of thousands of Californians kicked in.

The Patient Protection and Affordable Care Act and California law require health plan issuers that offer plans both on and off the California exchange to offer off exchange plans at the same price as exchange plans. But there is no requirement that provider networks be the same among the plans. California law effective June 16, 2014 allows plan issuers to factor provider networks into setting premium rates. Narrower networks can decrease rates but with the tradeoff of access to a wider pool of providers that affords enrollees a greater level of certainty a given provider may be in their plan network.


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. 

N.Y. limits average health insurance increases to 5.7%

ALBANY – The state on Thursday approved an average 5.7 percent rate increase for health insurers in 2015, spurning their request for a 13 percent hike.

Insurers in July cited growing costs in their rate requests. But the state Department of Financial Services set the rate and said it would be an average of 5.7 percent for individual plans, saying it will save customers about $1 billion next year.

Overall, the agency contended that rates will remain 50 percent lower than they were prior to state’s health care exchange that started Jan. 1. Nearly 1 million New Yorkers enrolled in the health exchange. The next enrollment period starts Nov. 15 for coverage starting on Jan. 1.

For small-group insurance, insurers wanted a 13.9 percent increase. The state reduced it to 6.7 percent.

via N.Y. limits average health insurance increases to 5.7%.

This development could have implications for California which like New York operates a state-based health benefit exchange that actively negotiates premium rates with health plan issuers.

A measure on California’s General Election ballot in November, Prop. 45, would bring the Golden State in line with New York and a majority of states that require health plan issuers obtain prior regulatory approval before using rates.

Prop. 45 has raised concerns among opponents as well as the state’s health benefit exchange, Covered California, of potential disruption of the individual and small group health insurance market if plan issuers decide they can’t live with approved premium rates lower than those filed. That could possibly lead to plans being withdrawn from regions or all of the state as threatened by the New York state Health Plan Association in this story.


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. 

3 predictions on California’s Proposition 45

In November, California voters will decide whether to subject individual and small group health insurance premium rates to prior regulatory approval. California requires property/casualty insurance rates to be approved by the state’s elected insurance commissioner under a ballot initiative approved in 1988, Proposition 103. If voters approve the initiative statute, titled the Insurance Rate Public Justification and Accountability Act (Proposition 45), California would join the majority of states that require prior regulatory approval of health insurance rates before they can be used. Although the November General Election seems a long way off in the middle of summer, it will arrive quickly enough. Accordingly, here are some predictions on what’s likely to happen with Proposition 45:

1) Proposition 45 will be approved by at least a 55 percent yes vote margin. Like rising auto insurance rates in the 1980s that provided impetus to Proposition 103, rapidly rising health insurance rates since the early 2000s have set the stage for voter approval. This time around, the voters are in a far crankier and distrustful mindset following the 2008 economic downturn than they were in 1988, which is likely to result in a larger margin of yes votes than for Proposition 103 that squeaked by with a tiny margin of approval. Demographics will also play a role. Members of the boomer generation who rebelled against rising auto insurance rates in the 1980s are now in their 50s and 60s and pay the highest rates for health coverage under Affordable Care Act provisions that permit health plan issuers to base premium rates on age. Many boomers are also what I’ve dubbed “401 percenters” who earn above the 400 percent federal poverty level eligibility cutoff for income tax credits to defray premiums for plans purchased through the state’s health benefit exchange, Covered California. They must bear the full brunt of higher premiums on their own.

2)  Proposition 45 will serve as a de facto 6.9 percent cap on premium increases. Increases of 7 percent or greater would entitle the public to petition the California Department of Insurance to hold a hearing proposed increases to determine if they would result in charges that are excessive, inadequate or unfairly discriminatory. There are a host of consumer groups waiting in the wings that would likely petition for a hearing, particularly since they stand to be compensated if the insurance commissioner determines they have made a substantial contribution to the proceeding including but not limited to Health Access California, the Western Center on Law and Poverty, Consumers Union, the Greenlining Institute and Proposition 45’s proponent, Consumer Watchdog. As long as the underlying health care utilization cost trend stays around 7 percent, health plan issuers will be able to pass along higher costs in premium rates and cost sharing. If the trend exceeds that amount, plan issuers will likely argue that they need higher rates in order to remain solvent and to continue to do business in the state.

3) Because of the uncertainly of intervenor challenges of premium rate increases at or exceeding 7 percent, health plan issuers that want to sell Covered California Qualified Health Plans (QHPs) will negotiate premium increases below that amount. They will do so with two negotiating partners, each with the power to make or break the deal: the exchange as well as the insurance commissioner. Since both Covered California and the elected regulator share an interest in holding down premiums and cost sharing, health plan issuers could find themselves double teamed in a tough negotiating dance. As with now, the dance will begin in early summer once plan issuers have a reasonable amount of data on the prior year’s claim experience and the expected cost trend for the upcoming plan year. The negotiations will culminate in late summer. If they are successful, health plan issuers will make formal 60-day advance filing of rates as required by current California law. If they are not, health plan issuers will have to decide whether they can go without the increase or forgo offering a given plan or plans through the exchange marketplace. That could result in some plan issuers opting to instead offer the proposed plans in the off-exchange market but with the downside of sacrificing access to individuals eligible for advance income tax premium tax credits.


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 undertakes review of November ballot measure calling for prior approval of individual and small group health plan premium rates, cost sharing

California’s health benefit exchange marketplace, Covered California, is undertaking an analysis of the potential impact of a November 2014 ballot measure that would institute prior regulatory approval of individual and small group health insurance rates. The initiative statute, titled the Insurance Rate Public Justification and Accountability Act, would subject these rates to an initiative statute ratified by voters in 1988 that placed most types of property/casualty insurance under prior rate approval regulation.

An outline of the analysis raises various questions as to how prior approval will jibe with Covered California’s annual schedule to select and finalize qualified health plans (QHPs) to be sold through the exchange and on what terms and conditions within Covered California’s standardized benefit framework. Under the schedule, health plan regulators review QHPs and their coverage terms and conditions in a two month window in the late summer and early fall for QHPs effective January 1 of the following year. But the scope of that review does not give regulators the final word on what plans can charge for premiums and out of pocket costs.

The ballot measure would afford California’s elected insurance commissioner that oversight authority as well as the authority to hold hearings to obtain public testimony. The Act would overlay federal regulations issued under the Patient Protection and Affordable Care Act at 45 Code of Federal Regulations (CFR) 154 authorizing federal and state regulators to jointly review (or the federal Department of Health and Human Services alone if a state opts out) small group and individual rates and require health plan issuers justify rate increases of 10 percent or more per year.

Both Covered California as an active purchaser exchange and regulators negotiate final QHP rates, which also affect plans sold outside the exchange since plans must offer the same plans both inside and outside the exchange marketplace. If approved by voters, the November ballot measure would increase the negotiating leverage of the insurance commissioner, who could opt to hold up rate approval pending a public hearing. That could potentially complicate Covered California’s annual QHP negotiation and approval process (and by extension its marketing and enrollment functions) and result in some plans being withdrawn before they take effect the following January if their premium rates and cost sharing are deemed excessive by the commissioner and disapproved.

In addition, since the underlying cost trend of annual health insurance rate increases has generally exceeded 7 percent in recent years, most if not all proposed plan rates would trigger a provision of the proposed law that allows the public and consumer groups to request the commissioner to hold a public hearing to determine if rate increases at or above 7 percent would result in rates that are unfair, discriminatory or excessive, introducing the prospect of further delay before the rates could be used. Further complications could come under a provision in the ballot initiative creating a transition period where plan issuers could hit the reset button and issue new plans that the commissioner could opt to exempt from prior rate approval provided they use rates in effect on or before January 1, 2014.

Proponents of the measure — including the current insurance commissioner — are likely to downplay the issues raised in the Covered California operational analysis. They will likely argue that premium rates are a matter between the plans and consumers (and not the exchange) and plans are responsible for ensuring they are using only approved rates and refunding any excess rates. However, if premium rates and cost sharing for the next to lowest cost silver actuarial value plan are involved in a lengthy challenge and hearing process, it could seriously affect the exchange marketplace since advance premium tax credits are keyed to that plan.

While a majority of states require prior approval of rates in the individual health insurance market (California is in a minority that employ a “file and use” scheme) according to this Kaiser Family Foundation chart, a half dozen states including California have state-based health benefit exchange marketplaces that actively select QHPs and negotiate with health plan issuers according to this Kaiser Family foundation compilation. Of those six states, all are prior approval states except California. Covered California’s analysis should undoubtedly examine how those state-based exchanges navigated their states’ prior approval regulatory schemes for plan year 2014.


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. 

High out of pocket costs for major medical care warrant policy scrutiny

The cruel paradox of those with health insurance seeking bankruptcy protection from high medical bills could grow despite the policy intent of the Patient Protection and Affordable Care Act to expand the safety net of individual health insurance.

It’s most likely to occur in the case of hospitalizations where multiple health care practitioners attend to an insured patient and only some of them are in the patient’s health plan provider network. The patient is then placed in the situation where his or her insurance plan isn’t subject to the calendar year out of pocket maximums ($6,350 for individuals; $12,700 for family coverage) that apply only for care rendered by providers in the plan’s provider network, potentially exposing patients to significantly higher bills. Emily Bazar of the California HealthCare Foundation (CHCF) details one such instance involving a plan purchased through California’s health benefit exchange marketplace, Covered California, in her Sacramento Bee column.

This circumstance warrants study by the CHCF and other policy research organizations since it could occur nationwide. If such incidents increase, it could lead to calls for policy changes that make available all inclusive major medical coverage for hospital stays and other types of high cost care. Limited provider networks may be able to work fine for routine care like physician visits and exams, but can potentially leave major gaps for catastrophic care.


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 bill would bar higher out-of-network cost sharing when timely in-network care unavailable

Pending California legislation would bar health plans and insurers from imposing higher out of pocket costs for out of network services in instances where a plan or insurer is unable to ensure timely access to a medically necessary, covered service by a contracted provider.

Under existing law, California managed health care service plans are required to provide members timely access to providers. AB 2533 would require the California Department of Insurance to develop similar rules for insurance plans it regulates including waiting time for doctor appointments.

The proposed legislation comes amid reports of individuals in plans purchased through the state’s health benefit exchange marketplace, Covered California, being turned away by providers they believed were included in their plans. (Additional background here)

The measure passed its first policy committee this week in the state Assembly. Click here for the text of AB 2533 as amended April 22, 2014.


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. 

Achieving single, integrated marketplace for individual, Medicaid health plans faces initial difficulties

Section 1413(c)(1) of the Patient Protection and Affordable Care Act requires each state to “develop for all applicable State health subsidy programs a secure, electronic interface allowing an exchange of data …that allows a determination of eligibility for all such programs based on a single application.” That means state health benefit exchanges must operate as integrated marketplaces offering both commercial insurance plans (referred to as Qualified Health Plans or QHPs) as well as Medicaid coverage for those whose household incomes meet their state’s Medicaid eligibility guidelines. The policy rationale – known as “no wrong door” and “one touch and you’re done” – is to reduce the ranks of the medically uninsured by simplifying the process of getting health coverage and removing roadblocks to enrollment.

Implementing that Affordable Care Act mandate, however, has been challenging from IT integration standpoint given the variety of legacy state computer systems that manage their Medicaid programs and state rules governing them, including those of the three dozen states using the federal marketplace, healthcare.gov.

That’s also been the case in California, where enrollment elegance has proven elusive. “I think we’ve oversold simplicity,” said Frank J. Mecca, executive director of the County Welfare Directors Association of California. Mecca made that observation today at a California Healthcare Foundation (CHCF) briefing in Sacramento on early consumer experiences with enrollment in the Golden State’s exchange, Covered California.

Mecca described the IT interface between the California Healthcare Eligibility, Enrollment and Retention System (CALHEERS) and the IT system that manages Medicaid eligibility and enrollment, the Statewide Automated Welfare System (SAWS) as a “clogged highway.” Consequently, Mecca noted, a large backlog of potential Medicaid enrollees remain stuck in the system. Mecca credited Covered California and the California Department of Health Care Services (DHCS), the state’s Medicaid administrator, for their efforts to remedy the backlog and improve the interface between the two IT systems. “It’s not an easy thing to fix,” Mecca added. “Things have improved tremendously, but we still have a long way to go.”

Both Mecca and another panelist at the briefing, Sonya Vasquez, policy director of the community-based health advocacy and policy organization, Community Health, said greater emphasis should be placed on marketing both Covered California QHPs as well as Medi-Cal, the state’s Medicaid program, particularly given Medi-Cal does not have set enrollment periods. They also said more effort should be made to make consumers aware in-person assistance is available for those seeking to enroll in coverage, including welfare department staff who can sign up applicants for either Covered California QHPs or Medi-Cal. (California is among those states have expanded Medicaid eligibility to 138 percent of federal poverty guidelines).

Consumers participating in focus groups conducted in early 2014 by PerryUndem Research/Communication were mostly uninsured and had substantial knowledge gaps for both Medi-Cal and QHP coverage and advance tax credit subsidies for the latter for households with incomes between 138 and 400 percent of federal poverty. (Click here for the full report on the findings presented at today’s CHCF briefing.)


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. 

Analysis: First year enrollment churn could be nearly half of QHP enrollees, quarter of Medicaid beneficiaries

In health insurance, “churn” refers to people moving between various forms of coverage as their life and economic circumstances change. Those in employer-sponsored plans who are dismissed or leave their jobs move into the individual market, COBRA, Medicaid or go uninsured. Those on Medicaid can earn off eligibility if their household income rises above their state’s cut off point. People move back to employer-sponsored coverage when they or their partners are employed by an entity that offers health coverage either on its own or as required starting next year in the case of large employers.

As well as these forms of coverage, the Patient Protection and Affordable Care Act adds a new category this year: those eligible for advance tax credit-subsidized coverage in the state health benefit exchange marketplace. Like Medicaid, eligibility for this form of coverage is means tested and can change as household income rises above 400 percent or falls below 138 percent of federal poverty.

An analysis of the nation’s largest state health benefit exchange marketplace, Covered California, finds churn over a 12 month period could amount to nearly half of those enrolled in subsidized qualified health plans (QHPs) and a quarter of those enrolled in Med-Cal, California’s Medicaid program. Click here for the report by the UC Berkeley Center for Labor Research and Education.

The churn among QHPs has implications for the exchange marketplace insofar as exchanges are financially reliant on health plan issuer participation fees assessed on QHP premiums starting in 2015 when federal establishment grant funding will no longer be available. In that vein, the report concludes Covered California (and by implication other state-based exchanges) must devote ongoing attention to enrollment throughout the year outside of open enrollment periods including outreach, web portal, in-person and call-center assistance.


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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