The Covered California Board of Directors met on April 7, 2016 in Sacramento. The agenda included Covered California’s analysis and recommendations for a Section 1332 Affordable Care Act (ACA) waiver in California, proposed revisions to Covered California’s qualified health plan (QHP) contracts, changes to the standard benefit designs for 2017, revised policies related to special enrollment, and changes to the Certified Application Counselor Program regulations.
PR News Diversity Heroes 2016 Award
Covered California announced its selection as one of 19 awardees to receive the PR News Diversity Hero award. The award recognizes agencies that engage in public relations agendas promoting diversity within the field aimed at reaching diverse audiences.
Section 1332 State Innovation Waiver
Covered California presented to the board its report to the Legislature and analysis of California’s options for submitting a §1332 State Innovation Waiver under the federal ACA. In preparing its analysis, Covered California received stakeholder input over several months and conducted a webinar on the federal requirements and guidelines for §1332 waivers.
Covered California analyzed some of the more detailed proposals stakeholders provided with sufficient detail for analysis. Taking into account federal guidelines and “guardrails,” Covered California recommended that the state should consider the following factors in making a decision to submit a §1332 waiver:
- Proposals should be directly related to Covered California’s mission.
- Proposals should achieve cost savings or administrative simplification for Covered California’s enrollees and potential enrollees, for Covered California and for the providers and health plans participating in Covered California.
- Given Covered California’s existing strategic priorities, the primary focus of a waiver should be to improve processes rather than completely redesign them.
In addition, Covered California recommended that the state not consider any proposal that violates the federal budget neutrality requirement or creates liability for California’s general fund.
Covered California recommended a phased approach with highly focused, limited proposals for 2017, but noted the state could consider different proposals in future years, which may also reflect updated federal guidance.
Covered California expressed support for a proposal that would allow undocumented individuals to purchase coverage through Covered California, although they are not eligible for federal tax credits. Attendees at the meeting applauded this recommendation while recognizing that the proposal is largely symbolic. Undocumented individuals and families can currently purchase the same coverage without subsidies in the market outside the Exchange. Advocates emphasized that the proposal would allow mixed-status families to more easily navigate getting coverage for the whole family through the Exchange, and would offer more consistent provider networks among family members. For other proposal ideas submitted to Covered California, please review the full Covered California report.
Covered California outlined next steps for the waiver. First, federal rules require state legislation and support from the Administration. Peter Lee, Executive Director of Covered California, stated that legislation to pursue a §1332 waiver would have to occur in the current year in order for the state to submit a waiver in 2017. He also pointed out if the state submits a waiver there is a 180-day turn-around time for federal approval or denial. Covered California will develop an ongoing process for consideration of proposal ideas for future waivers.
ITUP’s report titled, Opportunities for California Under §1332 of the Affordable Care Act, provides additional information on the §1332 waiver and a summary of potential policy options.
2017 Qualified Health Plan Contract and Standard Benefit Design Modifications
The Board approved the revised 2017 Qualified Health Plan (QHP) Contracts and Standard Benefit design changes. Consistent with previous contracts, QHPs must offer consumers the standard benefit designs which may only vary based on price, provider networks, and drug formularies. Some important changes in the contracts (individual market, dental and small business) are highlighted in table 1.
Table 1: Covered California QHP Contract Provisions for 2017-19
Covered California is working with its contracted health plans to reduce costs while implementing quality and delivery system improvements. Covered California presented five core building blocks for improving quality and lowering costs (see graphic 1).
Benefit Design Plan
Covered California presented changes to consumer cost sharing in its standard benefit designs with an emphasis on improving access to needed services and promoting primary and urgent care settings rather than expensive emergency care settings. The changes in cost sharing from 2016 to 2017 are shown below. In general, medical annual deductibles and maximum out-of-pocket spending increased across all bronze and silver plans, while primary care and urgent care co-pays decreased.
Table 2: Dollar Changes in Cost Sharing for Individuals enrolled in Bronze and Enhanced Silver Plans
* Dark blue indicates cost sharing increases and light blue indicates decreases from 2016 benefit design.
Timeline for 2017 Certification
Health plan applications for the 2017 coverage year in the individual market are due May 2, 2016 and applications for Qualified Dental Plans (QDPs) and Covered California for Small Business (CCSB) are due June 1, 2016. The amended health plan certification timeline from the February Board meeting is below (see graphic 2).
Covered California Quality, Network Management and Delivery System
Covered California made changes to the 2017 Qualified Health Plan Model contract under the Quality, Network Management and Delivery System Standards sections in QHP contracts – Attachment 7. Attachment 7 now has three additional articles that address health disparities and equity, promote the practice of innovative care models, and focus on hospital quality (see table 3).
Table 3: Comparison of Quality, Network Management and Delivery System Standards Sections in QHP Contracts
In general, the Exchange’s strategy for quality improvement is aligned with the Centers for Medicare and Medicaid (CMS) Quality Improvement Strategy, which includes:
- Improved health outcomes
- Prevention of hospital readmission
- Improvement in patient safety and reduction in errors
- Reduction in health disparities
- Promotion of health and wellness
The most notable changes for Attachment 7 are the following:
- Health plans must exclude poor performing hospitals – The revised 2017-19 Attachment 7 requires health plans to identify poor performing providers in the network (“outliers”) and exclude them by 2019 or provide an explanation of why they need to retain the providers. At this time, Covered California has not set the specific performance metrics.
- Health plans must reimburse hospitals based on performance – Attachment 7 requires health plans to develop a payment methodology that pays hospitals based on their performance on quality performance metrics. The contract changes require two percent of reimbursements to be calculated based on performance by 2019 and six percent by 2023. The hospital performance quality metric applies specifically to Covered California business.
- Health plans must collect quality measures by racial and ethnic indicators – The revised contract requires health plans to track quality measures by racial or ethnic group and gender, reaching eighty percent self-identification by 2019. California is assessing the feasibility of collecting other indicators of health disparities such as income, disability status, sexual orientation, gender identity, and Limited English Proficiency (LEP).
Covered California took the next steps in improving quality by including in the revised QHP contract additional reporting requirements under Quality, Network Management and Delivery System Standards. Ideally, once the initial data is reported, and baselines for defined metrics are set, Covered California will be able to hold plans accountable to demonstrate true progress towards improving health care quality.
Special Enrollment Policies
Eligibility. Covered California updated the requirements for individuals to demonstrate their eligibility to enroll during special enrollment (SE) periods. Covered California’s stated goal is to ensure the integrity of the risk mix in the individual market, the affordability of coverage to consumers, and the sustainability of the market. The updated Covered California policy states that in 2016 an individual’s attestation of eligibility will continue to be allowed, but Covered California may conduct a random sampling of individuals requiring them to provide documentation of qualifying life events within 60 days. Examples of a qualifying life event include pregnancy, divorce, or loss of employment. If Covered California is unable to verify documentation, the person will be ineligible to enroll and be notified. Covered California stated it does not want to overly burden consumers with documentation requirements and will maximize electronic verification.
Advocates expressed concern that not all potential enrollees will have documentation of a qualified life event. An example given by advocates includes low-wage workers that may not be provided with a termination letter. Advocates also took issue with the 60-day turn-around for documents to be received from prospective enrollees. Advocates stated birth certificates can take eight weeks to be issued, and during this window without effectuated coverage a newborn can receive a number of medical services.
Health plans supported the change as an important protection for the integrity of the risk mix ensuring that special enrollees are eligible. Health plans stated they are committed to working with advocates and Covered California to find a process that works. Peter Lee stated they would continue to work on this issue and bring back policy changes to the Board for action. Health plans are already preparing 2017 rates making the action timely.
Agent commissions. Health plans pay certified insurance agents by commission when a coverage product is sold. The new Covered California contract requires QHPs to pay brokers and agents the same commission for both open and SE. The contract also requires health plans to pay agents the same commission across metal tier products. Agents supported the changes aimed at ensuring that health plans do not use commissions as a way to discourage individuals who are eligible from gaining coverage during SE. Individuals are eligible for coverage outside of the open enrollment timeframe in the case of changes in life circumstances such as marriage, divorce or loss of job-based coverage. State insurance regulators around the country found that some health plans were paying or attempting to pay agents lower commissions during SE. Some health plans also pay agents different amounts based on metal tier, potentially creating an incentive for agents to promote specific products to consumers based on the applicant’s health status.
Certified Application Counselor Program Regulations
At the May Board meeting, Covered California will vote on an amendment to the Certified Application Counselor (CAC) Program regulations. Under current regulations, Covered California would no longer pay for the costs of background checks for individuals seeking counselor certification after June 30, 2016. The proposed amendment to the regulations would allow Covered California to continue to cover the costs of background checks for prospective counselors.
Small business Health Options Program
The Board also approved minor changes to the Small Business Health Options Program appeals regulations.
Next Board Meeting
The next Covered California Board meeting will take place on May 12, 2016. All materials and a recording of the April 7, 2016 meeting can be found here.