Tag Archive: standard benefit plan designs

Top health care issue shifts from coverage in 2014 to provider access in 2015

For implementation of the Patient Protection and Affordable Care Act, 2014 was the year of increasing medical coverage. The rate of those lacking coverage in 2014 fell to its lowest level in seven years, driven in large part by states that have fully implemented the law, California Heathline reported this week. States that fully implemented the ACA saw their uninsured rates decline by almost twice the rate as states that did not do so, according to the story.

For 2015, the focus is shifting to how well expanded coverage ensures access to and payment for care. In California – a state that has fully implemented the Affordable Care Act by establishing its own state health benefit exchange and expanding Medicaid eligibility – these issues are coming into full play.

Underlying them are economic tensions in both commercial individual coverage and Medicaid. In the former, they arise from the tradeoff of narrow provider networks in commercial individual health plans in order to keep premium rates down, particularly in exchange qualified health plans that must offer standardized benefits. (Narrow networks have also increased patients’ risk of medical bankruptcy due to “balance billing” when they receive care and particularly emergency care from providers outside of their plan’s network as Kaiser Health News reports). Provider resistance to the high volume/lower reimbursement model of these networks is manifesting in complaints from those enrolled in exchange plans that their coverage is being declined when they seek care amid provider network volatility and churn. That has drawn attention in all three branches of government as California Healthline reported earlier this month:

California has addressed the issue on all fronts, from consumer groups launching suits against insurers over allegedly inadequate provider networks, lawmakers taking legislative action and state regulators implementing immediate policy changes.

In October 2014, Gov. Jerry Brown (D) signed a bill (SB 964) that increased oversight of insurers’ provider networks by authorizing the state Department of Managed Health Care to review insurers’ annual report on timeliness compliance. More recently, state Sen. Ed Hernandez (D-West Covina) has proposed a bill (SB 137) that would require insurers to update their provider directories on a weekly basis, among other requirements.

Meanwhile, Insurance Commissioner Dave Jones (D) released regulations on Jan. 5 that his office said were designed “to address the deficiencies in the market we have been seeing.”

Department of Insurance officials noted that they have received complaints from consumers about difficulty getting doctor appointments, traveling long distances to access in-network care and encountering erroneous provider directories. Relatedly, multiple suits have been launched against Anthem Blue Cross and Blue Shield of California over the issue.

In the Medicaid segment that covers about 1 in 3 California residents, burgeoning enrollments are outstripping available providers. As with commercial individual coverage, provider dissatisfaction with reimbursement rates is widely considered a key contributing factor. A California Healthcare Foundation study issued in August 2014 found the ratio of primary care physicians to Medi-Cal enrollees in 2011 and 2013 (35 to 49 per 100,000 enrollees) fell well short of the federal Health Services and Resource Administration’s guidelines of 60 to 80 per 100,000 enrollees. “Without a large increase in the number of primary care physicians participating in Medi-Cal or another means of increasing efficiency in primary care, such as greater use of nonphysician clinicians or phone and electronic visits, Medi-Cal beneficiaries are likely to have difficulty accessing primary care,” the study concludes.

While low Medi-Cal reimbursement rates are linked to the lack of access to PCPs, the study notes it did not find an association with unmet health care needs or preventative services. It also suggested a greater role for community health centers since they receive higher Medi-Cal reimbursement rates than private practice physicians.


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 mandating standard benefit designs for plans sold outside exchange marketplace conflicts with existing state law

Earlier this year, California’s health benefit exchange marketplace, Covered California, exercised an option under its enabling legislation to standardize benefit designs for health plans sold on the exchange, consistent with its active purchaser role.

Pending legislation, SB 639, would require individual market plans sold off the exchange marketplace to also employ standard benefit designs. SB 639 would do so by adding new law mandating standardized product designs for all individual plans at each of the metal tier actuarial value rating levels.  It does so with language barring the sale of any product at each of the metal tier levels “unless it is a standardized product” consistent with current law (Health & Safety Code Section 1366.6 and Insurance Code Section 10112.3).

But therein lay a conflict.  These statutes require plan issuers not participating in the exchange “offer at least one standardized product that has been designated by the Exchange in each of the four levels of coverage,” provided the Exchange exercises its authority to require standardized benefit designs. At least one obviously does not encompass all plans offered outside the exchange marketplace.  (Emphasis added)

SB 639 awaits a vote by the full California Senate.  Meanwhile, a Senate floor analysis of the bill shows opposition from health plans and their trade associations.  America’s Health Insurance Plans (AHIP) complains that “the standardization of health products is not only unnecessary but also impedes the ability of carriers to provide benefit packages aimed at meeting the preferences and needs of consumers,” and that benefit design flexibility “is an important element to assuring affordability and high-quality care.”

Update 5/30/13: The bill was approved by the California Senate on a 28-11 vote on May 29 and now goes to the Assembly.


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 appears headed toward bifurcated individual health insurance market in 2014

California’s individual health insurance marketplace is shaping as a bifurcated one for 2014 and beyond based on household income and whether coverage is purchased through the state’s health benefit exchange marketplace, Covered California, or outside of it.

California households earning 400 percent or less of federal poverty level will be eligible for advance tax credit subsidies that can be applied toward Covered California plan premiums.  While those with incomes above this level ($45,960 for singles; $92,200 for a family of four) can purchase unsubsidized coverage thorough state exchanges, health plans appear to be preparing to offer plans outside the exchange aimed at households earning above 400 percent of federal poverty.  Without directly referring to the Covered California plans, Charles Bacchi, executive VP of the California Association of Health Plans, said there may be more variation among these plan products than Covered California plans, which are based on standard benefit designs for each of the metal tier plan values (bronze, silver, gold and platinum).  Bacchi, who spoke on a panel of speakers at the annual State of Health Care Conference held earlier this week in Sacramento, added there may be “certain advantages” to plans purchased outside of Covered California but didn’t elaborate.

Bacchi’s comments came the same day Covered California Executive Director Peter V. Lee reported at the organization’s board meeting that plan issuers were invited to submit alternative benefit designs and those alternative plans differed significantly from the standard plan designs Covered California adopted in February, 2013.  Plan issuers and Covered California continue to negotiate to the terms of the contract that will govern qualified health plans sold in the Covered California marketplace for coverage effective in 2014.  The Covered California board has scheduled a special meeting in Sacramento for May 7 to discuss the contract.

A 2011 paper by The Commonwealth Fund warned of the possibility of higher cost individuals concentrating in the exchange market, noting that exchanges could face adverse selection if predominantly high-risk individuals and groups enroll in the exchange while younger, healthier people and groups purchase coverage in the individual or small-group markets outside of it:

This type of market-level adverse selection would primarily stem from the existence of different rules for health plans inside and outside of the exchange. If non-exchange plans are permitted greater flexibility around benefit design and rate setting, those plans could offer lower prices to attract lower-risk individuals.

While the Affordable Care Act consolidates individuals and small employers into a single state risk pool, thus barring plan issuers from segmenting their exchange population risk, adverse selection against the exchange marketplace could reduce plan issuers’ interest in exchange participation despite tax subsidies for individuals and potentially jeopardize the market’s long term viability.


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. 

Health plans concerned ACA’s age rating rule could spawn adverse selection

Health plans worry the limitation on using age as a basis for setting premiums in the individual health insurance market come January 2014 could jeopardize its financial viability and lead to adverse risk selection the Patient Protection and Affordable Care Act is intended to alleviate.

The ACA requires individual health insurers to deemphasize age as a rating factor by reducing the current five or six age rating bands currently used to a maximum of three, meaning the oldest plan members would pay premium rates not exceeding triple those of the youngest.  The goal under the ACA’s modified community-based rating scheme is to flatten out premiums to make them more affordable to middle aged people who over the past several years have seen them rise to a level rivaling the amount of a modest mortgage payment.

According to this Washington Post article, while older people would enjoy lower rates, younger people would consequently experience rate increases.  Particularly those under age 30 that modified community-based rating envisions balancing out state risk pools by bringing in a typically healthier population with lower medical utilization.

The Post article contains contrasting analyses on the how this so-called “young invincible” demographic will respond to higher premiums.  Consulting firm Oliver Wyman – which the article notes has been retained by the health plans’ dominant trade association – predicts the age rating limitation will result in 80 percent of those in their 20s paying more for tax subsidized coverage purchased through state health benefit exchanges than they now pay for even basic, low cost coverage.  But economist Jonathan Gruber – who consulted in the drafting of the ACA – expects plans sold on the exchanges notwithstanding higher premium rates will appeal to this cohort when income tax credits to offset premiums are taken into account. More so than going bare and paying a penalty — and even more than low cost, high deductible catastrophic plans available only to those under age 30.

Which prognostication ends up being more on target won’t be known until plan issuers release premium information this summer and the exchanges gear up for open enrollment in the fall for coverage effective in January 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. 

%d bloggers like this: