CMA Reform Essentials is a regular publication designed to provide readers with the latest developments of California's implementation of federal health care reform.
- SUBSCRIBE NOW: Sign up now for a free subscription to our email bulletin.
- SPREAD THE WORD: Please share this bulletin with your coworkers and colleagues.
- PRINT: Download a printable version of this newsletter.
In this issue:
- Covered California pushes forward with bridge plan, awaits federal approval
- CMA advocacy contributes to rating region amendments
- CMA publishes new contracting toolkit on health benefit exchange
- Feds issue ruling on essential health benefits
- Exchange plan affordability hinges on subsidies
- Covered California launches new consumer website
1. Covered California pushes forward with bridge plan, awaits federal approval
An attempt to establish a "bridge plan" within California’s exchange is moving forward through the Legislature, with the state’s Senate Health Committee signing off on the plan last week.
The inclusion of a bridge plan, called for in SB X1-3 (Hernandez), first surfaced through discussions among members of the state exchange’s Board of Directors late last year. The board approved the framework of the proposed bridge plan last month, which, if approved by the federal government, could allow Californians to remain in essentially the same health plan as their eligibility fluctuates between Medi-Cal and the exchange.
The proposal would allow Covered California to certify qualified Medi-Cal managed care plans to offer “bridge” coverage for those patients needing to transition between Medi-Cal and Covered California. As proposed, the bridge plan would offer very low out-of-pocket premiums for enrollees transitioning into Covered California.
As many as 840,000 Californians could receive coverage through the bridge plan in 2014, according to a UC-Berkeley analysis. This is nearly double the current total exchange enrollment estimate for January 2014, which ranges from 150,000 to 430,000.
As proposed for 2014, the bridge plan would be available during a special enrollment period and only available to consumers losing their Medi-Cal coverage on or after January 1, 2014, and the family members of current Medi-Cal enrollees. In subsequent open enrollment periods, bridge plan enrollment would be limited to those losing Medi-Cal eligibility due to income within the previous 180 days. Covered California is currently seeking federal approval for its bridge plan design.
The existence of a bridge plan could also create some considerable complications for the state’s fledgling exchange.
In an assessment of the bill performed by the state’s Legislative Analyst’s Office (LAO), it was determined that including a bridge plan in the state’s exchange could have several significant effects on the working poor population served by the plan, as well as the exchange as a whole.
For starters, the LAO assessment determined that including a bridge plan may reduce the federal subsidy available to families purchasing non-bridge plan coverage options. This is because the available subsidy is calculated using one of the least-expensive plans available through the exchange. Adding a bridge plan, which the LAO expects to be the least expensive option, would shift that benchmark down to a less expensive plan and, as a result, decrease the available subsidy.
The LAO also noted that, despite the potential positive effects of a bridge plan, there were still a variety of unknowns. These include whether Medi-Cal plans would need to make infrastructure changes to accommodate the existence of a bridge plan, whether the plan would have a unfair advantage when competing against non-bridge plans and, perhaps most importantly, whether it’s feasible to establish a bridge plan in the next year given the large amount of work and federal guidance still-outstanding on the issue.
The California Medical Association (CMA) has also raised several concerns about the inclusion of a bridge plan, specifically asking that the bill be amended to heighten network adequacy requirements for the state’s bridge plan, requesting that bridge plans undergo the same selective contracting process as non-bridge plans offered through the exchange, and suggesting that the bill be amended so that the resulting bridge plan rulemaking not be exempt from the Administrative Procedures Act.
CMA further believes that the current bill language may reduce the subsidies to bridge plan levels for some individuals who are ineligible to enroll in the bridge plan.
Network adequacy is especially concerning to CMA, considering that Medi-Cal managed care plans may be committed to serving up to 840,000 bridge plan enrollees on the heels of adding up to 1.4 million new Medi-Cal enrollees to the rolls. Furthermore, capacity issues due to other Medi-Cal programs, such as the transition of Healthy Families enrollees to Medi-Cal and the rural Medi-Cal managed care expansion, may pose additional challenges for networks in a number of areas in the state.
CMA’s concerns and suggested amendments, as well as a host of others put forward by various stakeholders, were overlooked, as the Senate Health Committee voted 8-0 to move the bill to the Senate floor.
2. CMA advocacy contributes to rating region amendments
Due in part to aggressive advocacy by the California Medical Association (CMA), both houses of the state Legislature have introduced amendments to a pair of bills establishing geographical rating regions for large-market insurers in California.
Following the implementation of the Patient Protection and Affordable Care Act’s (ACA) rigorous standards on age banding and ban on pre-existing condition exclusions, geographic regions will be one of the few remaining ways that insurers can adjust premiums for customers across the state.
Once established, rating regions will change premiums for most Californians, either up or down depending on the relative costs associated with the area. Should people in lower-cost areas be re-classified into higher-cost areas, premium rates will rise. The inverse would be true for those reclassified from higher-cost areas to a lower-cost region.
The amendments, which were recently put forward, call for the re-adoption of the 19 geographic rating regions originally signed into law last year, and put the two pieces of legislation, SBX1-2 and ABX1-2, in line with the geographical divisions favored by Covered California, the state’s health benefit exchange.
The move to back the 19-region proposal was significant given multiple other proposals put forward in recent weeks. Before those amendments, SBX1-2 and ABX1-2 were calling for a six-region plan that would eventually shift to a 13-region plan in 2016. This proposal, which CMA opposed, was also competing with an 18-region proposal put forward by the state’s Department of Insurance.
Critics of both the six-region and 18-region model noted that implementation planning done to-date by Covered California has been based upon the 19-region model. Adopting an alternative would have major consequences on the state’s ability to launch its health benefit exchange by the October 2013 deadline for pre-enrollment.
Each of these proposals, including the now-favored 19-region model, was also put together with the knowledge that the U.S. Department of Health and Human Services (HHS) had issued guidance to the states capping the number of rating regions allow in each state at seven, unless the state applied for and received a federal waiver. Stakeholders across California were almost unanimous in noting that a seven-region limit was unrealistic in a state as populous and diverse as California. On February 25, 2013, federal HHS relented and issued guidance adjusting the allowable number of rating regions, increasing California’s cap to a more reasonable 27 rating regions.
CMA staff will continue to be engaged in the ongoing discussions regarding rating regions, as well as other aspects of the state’s health benefit exchange, as they move forward.
3. CMA publishes new contracting toolkit on health benefit exchange
As readers of CMA Reform Essentials are likely aware, roughly two-thirds of California’s uninsured are expected to receive coverage through Covered California, the state’s health benefit exchange. The exchange’s goal is to start pre-enrollment in October 2013 with the open enrollment period remaining open through February 28, 2014.
CMA has developed a new toolkit titled, CMA’s Got You Covered: A physician’s guide to Covered California, the state’s health benefit exchange, to educate physicians on the exchange and ensure that they are aware of important issues related to exchange plan contracting.
The toolkit is available free to members only at www.cmanet.org/exchange.
Contact: CMA's reimbursement help line, (888) 401-5911 or economicservices@cmanet.org.
4. Feds issue ruling on essential health benefits
The picture of what health insurance coverage will look like under federal health reform has gotten a little clearer.
In February, the U.S. Department of Health and Human Services released a final rule detailing "essential health benefits" (EHB) that plans must offer in 2014 under the Patient Protection and Affordable Care Act (ACA). While the news comes as a major step in ACA implementation, the final rule itself held few surprises when compared to the proposed rule that had been issued in November of last year.
Both the proposed and final rule would require insurance plans to cover 10 broad categories, including ambulatory patient care, emergency and hospital services, prescription drugs and several others. The majority of these benefit categories are commonly covered by plans, however the final rule did expand coverage in the areas of habilitative care, pediatric dental and pediatric vision coverage. The rule also calls for a major expansion of mental health coverage.
The rule also clarified the required cost sharing structure that will be present under the so-called "metal tier" structure called for under the ACA. Four metal tiers of health plans – platinum, gold, silver and bronze – will be offered to consumers, with the percentage of coverage varying across the tiers. It further clarified that the out-of-pocket limits, $6,400 for an individual and $12,800 for a family in 2014, will apply to all group plans and not just individual and small group coverage.
Following the release of the final rule, Covered California, the state’s health benefit exchange, posted its finalized cost-sharing standards that said metal tier plans would offer 90 percent, 80 percent, 70 percent and 60 percent cost coverage across the respective metal tiers. However, questions about the affordability of these plans’ premiums remain.
As was expected, the feds did not set a national standard for the level of coverage that must be offered in each benefit category, instead opting to allow states to set their own "benchmarks" using model plans offered by employers. Last session, members of the California Legislature approved a bill that set the Kaiser Small Group HMO plan as the state’s EHB benchmark plan
5. Exchange plan affordability hinges on subsidies
A great deal of debate has taken place in recent months over the affordability of exchange products for potential enrollees.
In late March, the Society of Actuaries released its report on estimated premium increases in the individual market in 2014, garnering national press attention. The report projected a staggering 61.6 percent increase in the average individual market premium in California. This, however, is prior to the application of any federal subsidies for those below 400 percent of the federal poverty level (FPL).
In what was unlikely a coincidence, Covered California released much rosier premium and cost projections from Milliman only days after the Society of Actuaries report.
The Milliman analysis projects average individual premium increases of 30.1 percent for those above 400 percent FPL, who are ineligible for federal subsidies. For those receiving federal subsidies, Milliman estimated that the subsidies would result in individual out-of-pocket premiums 46.6 to 83.8 percent lower than they would have been in the absence of subsidies.
Though the analyses vary significantly on the extent of increases in unsubsidized premiums, both make it clear how critical federal subsidies will be in making coverage affordable.
Individuals are currently able to get a rough estimate of their out-of-pocket costs for exchange products on the Covered California website (www.coveredca.com) using its "cost-estimate calculator."
Below are some cost and coverage examples developed using the calculator:
6. Covered California launches new consumer website
California’s new insurance marketplace finally has a home.
Covered California, the state’s health benefit exchange, recently launched its new consumer website, www.coveredca.com, which will eventually serve as the portal for millions of Californians to purchase the subsidized health coverage promised in the Patient Protection and Affordable Care Act (ACA).
As of now, the website is not yet completely functional, as exchange staff and board members are still working through the process of selecting the insurance providers who will be eligible to offer products through Covered California’s new online health insurance marketplace. The site, however, does feature a variety of fact sheets, printed in both English and Spanish, as well as a “cost-estimate calculator” that helps residents determine their expected premium costs, as well as what amount of federal subsidy they can expect once the marketplace goes live on Jan. 1, 2014.
For more information...
For more information on any of the issues discussed in this issue, or to suggest topics to be discussed in later editions, please contact Brett Johnson at (916) 551-2552 or bjohnson@cmanet.org.