Covered California March 2017 Board Meeting

April 14, 2017

On March 14, 2017, the Covered California Board convened its monthly Board meeting. The Board Meeting Agenda included Closed Session, an Executive Director’s Report, and Covered California Policy and Action Items.

Click here for the Covered California Board Meeting Agenda for March 14, 2017.

Click here for the Meeting Materials for March 14, 2017.

Click here to watch the Board Meeting for March 14, 2017.

Closed Session

  1. Consideration of Contract Matters per Government Code Section 100500(j)
  2. Consideration of Personnel Matters per Government Code Sections 11126(a) and 100500(j)
  3. Consideration of Pending Litigation Matters per Government Code Sections 100500(j), 11126(e)(1), and 11126.3(d)

Executive Director’s Report

Peter V. Lee, Executive Director of Covered California, shared the following topics with the Board and public: Announcements of Closed Session, Summary of Open Enrollment for 2017, Marketing and Member Communications, Federal Update, and the American Health Care Act.

Announcements of Closed Session

Executive Director Lee reviewed Closed Session materials. Executive Director Lee commended the Board’s action on appointing James DeBendetti as the Director of Health Plan Management. The Covered California Board welcomed him to the management team.

Summary of Open Enrollment for 2017

Executive Director Lee enthusiastically reported Open Enrollment 2017 data to the Board and public for the fourth Covered California Open Enrollment.

Executive Director Lee reminded the Board and public of Covered California’s five strategic pillars:

  1. Providing affordable coverage to make sure consumers can afford their premium and are not deterred from getting care because of high costs
  2. Conducting effective outreach and education to market, promote and enroll as many eligible individuals as possible
  3. Assuring that once covered, consumers get needed care
  4. Promoting a positive consumer experience
  5. Operating as a nimble and responsive enterprise that reflects organizational excellence

According to Executive Director Lee, the Open Enrollment data revealed that the 2017 enrollment period finished strong and remained consistent with the five strategic pillars.

Data for Open Enrollment 2017:

  • More than 412,000 new consumers
  • Strong participation from young enrollees
  • 3 million individuals through the renewal process
  • Small business exchange growth by 26 percent

Covered California:

  • Executed 296 advertisements for TV, radio, print billboards and digital media
  • Answered nearly 1 million calls from consumers
  • Engaged in more than 200 interviews with newspapers, radio, television and online news sources
  • Held more than 2,700 Open Enrollment events
  • Created a new Help On-Demand referral program that resulted in more than 3,500 consumers enrolling in a plan

Marketing and Member Communications Update

Executive Director Lee applauded Covered California staff and partners for an enrollment that surpassed all predictions. Open Enrollment has ended but Covered California’s efforts are ongoing. New enrollees or current enrollees experiencing a life change affecting coverage (loss of job-based coverage, marriage, divorce, etc.) can seek coverage as part of Special Enrollment. Currently, Covered California is carrying out an advertising campaign with adjusted campaign timing, leveraged digital radio, adjusted messaging based on previous performance, digital banner ads and adjusted investment levels within the digital channels. Executive Director Lee stressed the importance of ongoing communication and outreach to Californian consumers.

Federal Update

Executive Director Lee updated the Board and public on how federal policies will affect Californian consumers. The U.S. Department of Health and Human Services (HHS) proposed market stabilization regulations on February 17, 2017. Covered California reviewed these proposed federal regulations and sent their comments to HHS. Executive Director Lee thanked the organizations and partners that contributed to the market stabilization regulation research to determine potential impact on California consumers.

Covered California critiqued three elements in the proposed HHS regulation. First, HHS proposed to shorten the Open Enrollment period to 45 days (November 1 – December 15) beginning plan year 2018. In its comments, Covered California requested state flexibility to keep the existing Open Enrollment period at least for plan year 2018. Second, HHS proposed to make several changes to the Special Enrollment process. Again, Covered California requested state flexibility. Furthermore, Covered California informed HHS of existing Simplified Employee Pension Plan (SEP) pre-enrollment verification efforts to leverage electronic verifications. Third, HHS proposed to make changes to the actuarial “de minimus” value range, (allowable deviation in benefits within each coverage tier (bronze, silver, gold, platinum)). HHS proposed a range of +2/- 4 percentage points instead of the current range of +/- 2 percent. California is unique among states because it adopted a patient-centered policy of promoting consistency across plans benefit designs and requires requiring health plans to sell standardized products in each coverage tier.  In addition, California law sets the allowable deviation at +/- 2 percentage points for both on and off Exchange plans. Without a change in state law, the proposed change to the allowable actuarial value ranges would not impact Covered California consumers.

American Health Care Act

Executive Director Lee explained the importance of assessing and evaluating the proposed and pending American Health Care Act (AHCA) and what it could mean to California consumers. Executive Director Lee clarified the Affordable Care Act (ACA) elements to be repealed and ACA elements not addressed in the bill.

Elements from ACA Proposed for Repeal:

  • Means-tested advanced premium tax credit (effective 2020)
  • Cost-sharing reduction subsidies (effective 2020)
  • Individual and employer penalty set to $0 (retroactive to Dec. 31, 2015)
  • Actuarial value and metal tier standards (effective 2020)
  • Taxes/pay-for provisions (e.g.: Medical Device Tax, Prescription Drug Tax, Insurers Tax, effective 2018)

ACA Elements Not Addressed in AHCA:

  • Pre-existing condition protections
  • Guaranteed availability and renewability of coverage
  • Coverage of adult children up to age 26
  • Cap out-of-pocket expenditures
  • Prohibition on health status underwriting
  • Prohibition on lifetime and annual limits

The AHCA eliminates the coverage mandate so that consumers who can afford health care coverage and do not purchase it will avoid penalties. If AHCA passed, health plans would have to impose a premium surcharge of up to 30 percent for as long as one year for consumers who do not maintain continuous coverage (no break in coverage greater than 63 days). Actuaries are concerned that the surcharge would discourage healthy consumers from purchasing health care coverage while unhealthy consumers would still be motivated to purchase coverage, creating an unstable market. Covered California will continue to research the effects on the California consumer from the AHCA.

Executive Director Lee reviewed the new tax credit system under the AHCA. The new tax credit system would be age based, advanceable and refundable, and partially means-tested. Furthermore, the AHCA would phase out ACA subsidies within two years and expand Health Savings Accounts (HSA). The AHCA would create a new federal fund for state innovation, allocating $100 billion by formula to states through 2026.

Executive Director Lee summarized the Congressional Budget Office (CBO) Score and Findings for the AHCA in the following slide:

CC ahca cbo findings

Bringing Health Care Coverage Within Reach

Covered California released a review of the 2016 Enrollment on March 13, 2017. Highlights of the publication include an assessment of advance premium tax credits to reduce the cost of coverage and cost sharing reductions that reduce out-of-pocket expenses.

In reviewing the report, Executive Director Lee stressed that tax subsidies make health care affordable. One in ten households in California receive $10,000 in tax credits. Without this tax credit, health care would be unaffordable. Executive Director Lee warned against focusing on averages. Averages do not share the whole story of California consumers. Instead, potential impacts on Californians should consider multiple factors, including income level, zip code and age. Preliminary analysis of the AHCA suggested that the proposed tax credits would provide lower overall assistance to Covered California current enrollees. Executive Director Lee stated that, “evaluating the full impact to consumers for cost of coverage and care will require more in-depth analysis, including assessments of how the proposed legislation could alter take-up and risk mix, which in turn could drive up the costs of premiums and affordability.”

Covered California’s preliminary analysis revealed that the AHCA would have a major impact on consumers depending on the consumer’s income, age, and where they live. The two key determinants in health plan premium rates are the consumer’s age and zip code.

The following chart reveals the preliminary assessment of financial assistance under the AHCA compared to the ACA in San Francisco. Notice, the AHCA tax credit remains consistent for each age group, while the ACA tax credit changes based on income and age:

CC ahca tax credits

In comparison, the following slide is comparing ACA and AHCA tax credits in Los Angeles. Notice, the difference in tax credits with the ACA and the same tax credits with the AHCA.

CC ahca tax credits 2

Health care is and has historically been more expensive in San Francisco than Los Angeles. The ACA tax credits adjust based on cost differences associated with geographic markets. In comparison, the AHCA does not adjust tax credits based on zip code. The result would be thousands of Californians pushed out of the individual market because of the lack of sufficient financial assistance through tax credits.

Covered California Policy and Action Items

2018 Proposed Standard Benefit Design

James DeBendetti, Director of Health Plan Management, reviewed a summary of Covered California standard benefit designs and highlighted minor changes to the benefit designs presented in January. Covered California needed to slightly increase some cost-sharing to bring plans within the ACA actuarial value requirements. For the Silver and Silver 73, Covered California increased specialist visit and x-ray copays from $5 to $10 and adjusted proposed the pharmacy deductible from $100 to $130. In Covered California for Small Business (CCSB) Silver, Covered California increased maximum out-of-pocket (MOOP) costs and adjusted proposed the pharmacy deductible from $100 to $125. In addition, staff corrected the urgent care cost share in the Gold plan from $30 to $25.

Director DeBendetti announced a few changes for the proposed 2018 dental benefit design introduced in 2016. Some diagnostic and preventive procedure codes changed from “Not Covered” to “No Charge” to allow coverage of these services if dental plans choose to include them.

Director DeBendetti discussed the employer-sponsored dental benefit design introduced last year. The benefit design had no waiting period for any service categories. The benefit design had a minimum 50 percent employer contribution and 70 percent employee eligibility requirement. In addition, employees had a choice of plans. Covered California had a problem finding carriers who would participate because of the plan choice requirement. Carriers were hesitant because of the lack of risk adjustment in dental plans and nervous that healthy consumers would choose HMOs and unhealthy consumers would select PPOs. Consequently, this action would destabilize certain plans and the market. Director DeBendetti proposed that employers choose one dental carrier and multiple plans from that one carrier, which would address the risk selection issue.

2018 Qualified Health Plan Certification Policy Recommendation

Director DeBendetti highlighted 2018 Qualified Health Plan (QHP)/Quality Dental Plan (QDP) certification and application revisions. For currently contracted applicants, Covered California updated the 2017 application responses accepted for Customer Service and Financial Requirements. In addition, Covered California moved the deadline of July 10, 2017 for Quality and Quality Improvement Strategy (QIS). For the CCSB Application, Covered California allowed carriers to refer to original application responses.

Director DeBendetti introduced Alternate Benefit Designs (ABD) for CCSB with the hope of making the market more competitive and offering more options to potential customers. Options included two ABDs per metal tier in each health plan’s geographic licensed service area. In addition, the ABD proposals are voluntary and not required.

Covered California for Small Business (CCSB) Eligibility and Enrollment Emergency Regulations Readoption

Gabriela Ventura Gonzales, Legal, quickly reviewed the Eligibility and Enrollment Emergency Regulations Readoption discussed at the January Covered California Board Meeting.

Plan Based Enrollment Permanent Regulations Amendment

Drew Kyler, Deputy Director, Outreach and Sales Division, lead a discussion on four regulations proposed for readoption. For the Plan Based Enrollment Permanent Regulations Amendment, the Outreach and Sales Division proposed streamlining the Entity Application for alignment with new Program Portal efficiencies. In addition, the regulations propose prohibiting Plan Based Enrollment Entities and affiliated Plan Based Enrollers from affiliating with certified Agent, Navigator Grantee, or a Certified Application Entity or Counselor. Furthermore, the proposed regulations clarify that a Plan Based Enroller can refer consumers to a Certified Enroller if the individual desires to enroll in another affordable health insurance plan.

Certified Application Counselor Program Emergency Regulations Readoption

Deputy Director Kyler described proposed amendments to the Certified Application Counselor Program, which included streamlining the Entity Application for alignment with new Program Portal efficiencies. In addition, regulations would define the value of gifts provided to applicants and potential enrollees.

Enrollment Assistance Permanent Regulations

Deputy Director Kyler described a proposed amendment for the Enrollment Assistance Program, which included streamlining the Entity Application for alignment with new Program Portal efficiencies.

Medi-Cal Managed Care Enrollment Assistance Program Emergency Regulations Readoption

The proposed regulations would modify the Medi-Cal Managed Care Plan Program to streamline the Entity Application for alignment with new Program Portal efficiencies.

Updated Board Calendar

April 13, 2017 (possibly no meeting this month)

May 18, 2017

June 15, 2017

July 20, 2015 (possibly no meeting this month)

August 17, 2017

September, 2017 (no meeting this month)

October 5, 2017

November 16, 2017

December 21, 2017 (possibly no meeting this month)