Covered California June 2016 Board Meeting

June 27, 2016

Covered California board members met on June 16, 2016. Executive Director Peter Lee updated board members on the Section 1332 State Innovation waiver and Covered California for Small Business enrollment numbers. Board members also approved a revised Covered California $320 million budget and approved modifications to the high deductible health plan standard benefit designs.

Finally, Covered California Board members, staff and stakeholders in attendance recognized Chief Deputy Director Yolanda Richardson, leaving to pursue new professional opportunities, for her leadership and critical contributions to Covered California from its inception. Yolanda’s last day with Covered California was the board meeting day. Covered California expects to hire two chief deputies to replace Ms. Richardson.

Section 1332 State Innovation Waiver Update

Peter Lee gave an update on the status of Senate Bill 10 (Lara), Chapter 22, Statutes of 2016. SB 10 requires Covered California to submit a Section 1332 State Innovation Waiver to the Centers for Medicare and Medicaid Services (CMS). The bill was approved by both houses and signed by the Governor on June 10, 2016. California’s proposed waiver will enable undocumented individuals to buy health care coverage on the Exchange although they will not be eligible for federal subsidies (i.e. premium assistance or cost-sharing reductions). Covered California intends to require qualified health plans (QHPs) to offer an exact copy of existing Exchange products, to be known as California QHPs, without requiring an enrollee to be a lawful citizen. If approved by CMS, the California QHPs would be available January 1, 2019.

Covered California has already performed some initial analysis on the process and resources needed to submit a §1332 waiver to CMS. Covered California issued a request for proposal (RFP) for assistance in drafting the waiver and posted a notice of intent to award the contract to Health Management Associates. States can submit waiver applications for program changes effective as early as January 1, 2017. CMS has up to 45 days to provide a preliminary determination that an application is complete and then 180 days from the preliminary determination to review the application and make a decision.

Covered California for Small Business

Covered California reported small business membership enrollment numbers exceeded expectations. As of May 31, 2016 there were 3,775 groups and 28,476 members, up from 3,663 groups and 27,467 members as of March 31, 2016 – an increase of 3.1% and 3.7%, respectively. Covered California noted that 99% of new group accounts are set up in three days and 100% of new group accounts are invoiced in three days. Peter Lee noted that Covered California expects additional growth in the small business market when many existing contracts will expire.

2016-17 Proposed Budget

May Revision

Covered California presented and board members approved the revised 2016-17 budget. The budget reflects an additional $48 million because participating health plans are now paying as billed, leading to increased revenues at the end of the 2015-16 fiscal year compared to earlier estimates. The additional $48 million is a one-time adjustment and beginning in 2017 there will be a one-time revenue reduction of $23 million due to the way in which carriers are billed. A summary of the operational budget changes are shown below (Image 1).

Image 1: Covered California Budget Changes from Proposed May Budget to June Adopted Budget

CC budget

Source: Covered California. June 16, 2016 Board Meeting.

Covered California outlined the adjustments to the proposed May budget, which are as follows:

  • Increase in Navigator Program funds from $2.25 million to $7.25 million
  • Increase in the Marketing budget from $36 million to $38 million
  • Increase in Technology budget with additional $6.5 million for CalHEERS cost sharing
  • Increase in Service Center funds to support the Appeals Case Management System, an additional $0.5 million
  • Slight increase in Administrative Services of $0.331 million that will support the Healthier U program, service center and reconciliation of overtime payment.

Covered California announced $12.9 million in changes related to the status of contracts with the Health Consumer Alliance (HCA) and Contra Costa call center. The contract with HCA will remain in place for the 2016-17 fiscal year in the amount of $750,000, a decrease of $250,000 from last year. In May, Covered California proposed discontinuing the HCA contract altogether, a proposal opposed by advocates. HCA provides consumer assistance to enrollees. The $4.0 million contract with the Contra Costa call center will continue until June 30, 2017, but there are no plans to maintain the contract after this date.

Enrollment Forecast

There were no changes to enrollment forecasts for the individual and small business market from 2015-16 to 2019-20, as presented at last meeting.

Assessment Fees

Covered California proposed and the board adopted a QHP assessment fee of 4% for the individual market and 5.2% for the small business market. Covered California originally proposed the change from a flat fee to a percentage of premiums back in November 2015. According to Covered California, although the percentage assessments will be higher than the flat fee amounts set in previous contracts ($13.25 individual plan QHP assessment fee and $18.25 small business plan QHP assessment fee), the assessment levels are necessary to ensure a solvent Exchange. The percentages were set based on enrollment forecasts and estimated premium totals. Based on a medium enrollment scenario Covered California will break even by 2017-18 once all federal funds are expended (Image 2).

Image 2: Plan Assessments and Expenditures as a Percent of Premium

plan assessments

Source: Covered California. June 16, 2016 Board Meeting.

High Deductible Health Plan Proposal

The board approved modifications to the high deductible health plan for Bronze and Silver tier plans to comply with the federal rules surrounding Health Savings Accounts. Under federal law, the Internal Revenue Service establishes annual maximum out-of-pocket (MOOP) limits for HSA coverage.

Certified Application Counselor Program Regulations for Discussion

Covered California is recommending changes to the Certified Application Counselor (CAC) program. The proposed changes are:

  • Counselors will refer enrollees to the proper channel for grievances, complaints or questions
  • Counselors will inform enrollees they are not a tax advisor or lawyer
  • Only nominal value gifts may be given to potential enrollees for purposes other than trying to get an individual to enroll.

These proposed changes will be considered for Board action vote at the next board meeting.

Covered California will not meet in July, but will meet again on August 18, 2016.

Please click here for additional meeting materials and a recording of the meeting.