Author: Kiwon Yoo

The Governor’s May Revise was released earlier today, which showed an additional $4.5 billion in tax revenue, a $1.1 billion reserve, proposed “an affordable and sustainable path for a state-based expansion” of the Medi-Cal program with a “commensurate shift in some responsibilities to counties,” and maintained that “preserving a strong public safety net remains a priority.”

Medi-Cal Expansion

The Administration outlined a state-based expansion of Medi-Cal:

• Newly eligible beneficiaries will receive current Medi-Cal benefits, including county-administered specialty mental health services and county-supported substance use disorder (SUD) services
• Long-term care will be covered, pending federal approval to retain an asset test for such services
• Existing and new beneficiaries may receive an enhanced SUD benefit, but at county option

The budget includes $1.5 billion ($21 million General Funds, $1.5 billion federal funds) for optional Medi-Cal expansion in 2013-14, and proposes the following changes:

• Services for pregnant women: decrease of $26.4 million by shifting eligible pregnant women with incomes between 100-200% of FPL into Covered California plans; also proposes to cover all cost sharing not covered by federal tax credits
• Services for newly qualified immigrants (under 5 years): decrease of $5.4 million by enrolling Medi-Cal eligible newly qualified immigrants into Covered California plans; also proposes to cover all cost sharing not covered by federal tax credits

Despite greater-than-anticipated tax revenues, the updated budget does not propose restoring dental services for adults, or improving provider reimbursement rates.  Instead, the May Revise cites higher Medi-Cal costs ($467 million) due to the “federal government and courts either rejecting or delaying approval of previously adopted legislative actions” to further reduce a very lean Medi-Cal provider reimbursement rate.

County Indigent Health and the Safety Net

In addition to the state’s plan to expand the Medi-Cal program, the May Revise also addressed the 58 elephants in the room: how will this affect county funding and responsibilities to care for uninsured adults?

“The state currently dedicates about $1.5 billion annually to counties for health care, primarily for services for indigent adults – many of the same people who will move to Medi-Cal under the new law.  While the need for county indigent services will continue and preserving a safety net is a priority, the state cannot – and should not – pay for the same services twice.  Consequently, the May Revision proposes that over time, as the state takes on more responsibility for health care, counties take on more financial responsibility for certain human services programs.”

The May Revise proposes a mechanism to “determine the level of county savings based on actual experience,” where funds will be determined by measuring actual county costs for providing services to Medi-Cal and uninsured patients, and the revenues received for such services (patient care revenue, federal funds, health realignment, and net county contributions to health care services).  The difference between total revenues and total costs will govern each county’s funding future, and these savings will be used to support human services programs at the local level, including CalWORKS, CAlWORKS-related child care programs and CalFresh.

The revised budget estimates that $300 million in 2013-14, $900 million in 2014-15, and $1.3 billion in 2015-16 and 2016-17 will shift from local health programs to local human services programs.

Other HHS Program Adjustments

• Managed care organization (MCO) tax: proposes a tax on Medi-Cal managed care plans, which will be matched with federal funds; $128.1 million General Fund savings in 2012-13, $342.9 million General Fund savings in 2013-14
• Coordinated Care Initiative (CCI) for Medicare/Medi-Cal dual eligibles: delay demonstration from October 2013 to January 2014; $119.6 million General Fund savings in 2013-14
• In Home Supportive Services (IHSS) reductions: after reaching an agreement with plaintiffs in the Oster and Dominguez class-action lawsuits in March 2013, the 20% across-the-board reductions will be repealed pending legislation. The settlement will require an 8% across-the-board reduction effective July 1, 2013, with a savings of $176.4 million in General Funds

The May Revision is available online.

Legislation
Legislature Passes First Set of Special Session Bills
The Senate and Assembly voted to approve ABX1 2 (Pan, D-Sacramento) and SBX1 2 (Hernandez, D-West Covina) respectively, which would reform the individual and small employer health insurance markets and ban pre-existing conditions as a reason for insurance denial.  The bills are headed to the Governor’s desk; both are expected to be signed into law. An ITUP summary of the legislation is available online.

Governor Signs Legislation to Disarm Individuals Convicted of Felonies and Individuals with Court Determinations of Mental Illness
Governor Brown has signed into law SB 140 (Leno, D-San Francisco), which would allocate $24 million to help disarm 19,700 individuals with court determinations of mental illnesses or felony convictions.  State law enforcement officials have the authority to seize weapons from individuals not permitted by law to own them, but funding limitations have led to delays.  The bill would allow the state Dept of Justice to hire 36 additional agents, doubling the size of the Armed Prohibited Persons System staff.  The funds will come from surplus fees paid by gun purchasers.

Legislation to Repeal Medi-Cal Provider Cuts Sees Progress
The Senate and Assembly Committees on Health respectively passed SB 640 (Lara; D-Long Beach) and AB 900 (Alejo; D-Watsonville), which would reverse the Medi-Cal provider rate cuts imposed in 2011.  The cuts have yet to be implemented due to a pending federal court decision in a lawsuit challenging the cuts.  After passing with unanimous bipartisan votes, the bills head to appropriations committees in their respective houses.

Covered California
April Exchange Board Meeting: Supplemental Benefits, QHP Contracting, Eligibility and Enrollment 
During the April meeting, Covered CA board members and staff discussed a variety of issues, including qualified health plan contracting,supplemental benefits (adult vision/dental), and eligibility and enrollment; action was not taken on these items.  Rancho Cordova, Fresno and Concord were announced as the three service center sites, which will provide toll-free telephone application assistance.  Staff also noted that the Outreach and Education grant awardee announcement would be delayed from late April to mid May, with contracts beginning in July.

An additional, abbreviated meeting will be held in Sacramento on May 7 for the board to take action on model plan contracting; a second May meeting will be held on the 23rd.  A series of town hall meetings will be convened across the state, which will allow community members and stakeholders to provide feedback to Covered California: San Jose (May 10), San Diego (May 17).  All meeting materials are available online.

Medi-Cal
Access to Dental Care Improving for Medi-Cal Children
A report by DHCS found that dental managed care plans in Sacramento and Los Angeles have significantly improved access to dental care for children enrolled in Medi-Cal.  The rate of Sacramento children receiving treatment from a dentist increased from 32.3% in 2011 to 43.7% in 2012, with similar increases for Los Angeles children with Medi-Cal coverage (24.6% in 2011 to 36.8% in 2012).

§1115 Waiver
Lawmakers Seeking to Leverage LIHP Infrastructure for Care to the Remaining Uninsured
Some state lawmakers are considering a plan that would use an estimated $700 million in county savings from Medi-Cal expansion to offer basic health care to the remaining uninsured.  When Low Income Health Program beneficiaries are transitioned into the Medi-Cal program in 2014, their health care will be fully paid for by the federal government for three years, saving counties about $1.4 billion.  This proposed plan would use part of the county savings to open county LIHPs to 1 million undocumented residents and 2 million legal residents who cannot afford to purchase health insurance next year.

Mental Health
LA, SF Investigate Alleged Patient Dumping by Nevada Mental Health Hospital
The Joint Commission, a non-profit firm that accredits hospitals, and city attorneys in San Francisco and Los Angeles, is investigating a Nevada mental health hospital that allegedly bussed hundreds of mentally ill patients to cities in CA and other states.  A Sacramento Bee investigation of bus receipts kept by the Nevada Division of Mental Health and Developmental Services revealed that the Rawson-Neal Psychiatric Hospital has sent more than 1,500 patients to other cities since July 2008.  A third of these patients were sent to CA, including 200 to LA County, 70 to San Diego County, and 19 to Sacramento.  CMS is also reviewing the hospital’s discharge practices; if violations are found, the hospital could lose federal funding.

Two employees at the Rawson-Neal Psychiatric Hospital have been firedand another three will be disciplined as a result of an internal investigation.

Provider Capacity
UCLA Program to Help Foreign-Born Physicians Practice in US
To reduce the state’s primary care shortage, the UCLA International Medical Graduate Program will offer foreign-born physicians a stipend, board preparation classes, mentorship and references to help them find primary care residencies.  The program specializes in helping Latino immigrants who are seeking a medical license, which is a costly and time-consuming process; in return, enrollees must agree to work in an underserved area for 2-3 years after obtaining their license.  The program has already placed 54 Hispanic physicians into family medicine training programs.

Payment Reform
Care Based Incentive Shows Early Pay-for-Performance Success
The non-profit health plan Central California Alliance for Health’s pay-for-performance initiative has demonstrated some successes.  The Care Based Initiative, which contracts with physicians and non-profit community and county clinics in Merced, Monterey and Santa Cruz, offers significant financial incentives for meeting criteria, such as minimizing preventable hospitalizations, extending office hours, and submitting claims electronically.

Prison Health
Judge Denies Governor’s Request to End Federal Oversight of Prison Health Care
A federal judge rejected Governor Brown’s request to end federal oversight of CA’s prison health care system.  Due to unacceptable medical malpractice or neglect, oversight of the prison’s health care system was transferred to the federal government in 2006.  In January, the Administration filed a request that would transfer oversight to the state; this request was denied in early April due to remaining “ongoing constitutional violations” and “deliberate indifference” to ongoing mental health issues.  Additionally, a panel of 3 federal judges rejected the governor’s request to end a court-mandated reduction to the state’s prison population.  The judges ruled that court-ordered prison population caps are necessary to curb unconstitutionally poor inmate care.

Philanthropy
First 5 L.A. Awards $11M to UCLA for Improved Dental Care
First 5 L.A. awarded the UCLA School of Dentistry $11 million to improve community dental clinics in underserved areas of LA County.  The funds will be used to establish the UCLA-First 5 L.A. Children’s Dental Care Program (CDCP), which will provide dental care for children up to age five and pregnant women for the next five years.

Data
Over 300,000 Large-Firm Employees Projected to be Medi-Cal Enrollees in 2014
In a recent study by the UC Berkeley Labor Center, the CalSIM modelpredicts over 310,000 Californians working for large firms will be enrolled in Medi-Cal in 2014.  Currently, 250,000 Californians working in firms with 500+ employees are enrolled in Medi-Cal, with 44% in the retail/restaurant industries.  In 2014, this number is expected to rise by 60,000 to 100,000 due to Medi-Cal expansions.  The recently introduced AB 880 (Gomez, D-Los Angeles) would impose a penalty on private employers with 500+ employees who have non-disabled, non-elderly employees that enroll in Medi-Cal; public employers would be exempt.

Nine CA Hospitals Among 100 Best in US
In the 2013 edition of Becker’s Hospital Review’s 100 Great Hospitals in America, nine CA hospitals were included in the list: Cedars-Sinai Medical Center (Los Angeles), Hoag Memorial Hospital Presbyterian (Newport Beach), John Muir Medical Center (Walnut Creek), Scripps Green Hospital (La Jolla), Stanford Hospital & Clinics (Palo Alto), Tri-City Medical Center (Oceanside), UC-San Diego Medical Center and UCSF Medical Center.  The Becker’s review is a compilation of hospital ranking data from several sources, such as Healthgrades, the American Nurses Credentialing Center, the Studer Group, the Malcom Baldrige National Quality Award, and U.S. News & World Report.

Fewer CA Employers Offering Health Insurance
According to a survey by the California HealthCare Foundation, the proportion of employers offering health coverage to employees declinedfrom 71% in 2002 to 60% in 2012.  During that time period, the cost of health insurance has increased almost 170%, which is five times the state’s overall inflation rate of 31.5%.  Additionally, 21% of employers said they increased workers’ share of premium costs in 2012, with 17% reducing benefits or absorbing increases.

Legislation
Special Session Bills See Mixed Progress
Two bills were discussed during the first Special Session hearings in late February:

The first two sets of bills have passed a floor vote, and are being considered in committee in the second house. The third set has seen less progress, with ABX 1-3 yet to be officially introduced; SBX 1-3 is in committee in its house of origin. Spring recess will end April 1.

Bills to Expand Scope of Practice for Non-Physicians Introduced
Senator Hernandez (D-West Covina) has introduced a set of three bills that would expand scope of practice for non-physicians to address provider shortage problems. SB 491, SB 492 and SB 493 would expand the roles of nurse practitioners, optometrists and pharmacists, respectively. Senator Pavley (D-Agoura Hills) has developed a separate bill (SB 352) that would expand the scope of practice for physician assistants.

Legislation to Upgrade Rx Monitoring Database Introduced
Senate President Pro Tempore Steinberg (D-Sacramento) and Senator DeSaulnier (D-Concord) have introduced SB 809, which would upgrade a database that monitors physicians who overprescribe certain medications. The Controlled Substance Utilization Review and Evaluation System (CURES), which tracks patients’ prescription drug history to curb illegal sales and misuse of medication, is currently operated by one full-time employee. The bill would upgrade CURES and establish two criminal enforcement teams to investigate suspicious prescribing patterns. To pay for the estimated $9.6 million in upgrades, the bill would implement a one-time assessment fees for health plans and workers’ compensation insurers; increase license fees on physicians, pharmacists, dentists and other drug prescribers; and tax drug manufacturers.

Covered California
March Board Meeting: QHP Contracting, Assisters Program, Health Disparities
The March board meeting discussed final recommendations for a “narrow bridge” program (would allow Medi-Cal beneficiaries to keep their Medi-Cal managed plans and provider network when their incomes increase above 138% of FPL and permit Exchange parents and Medi-Cal children to be served in the same managed care plan), qualified health plan model contract issues and plan design, and health disparities and promoting health equity. The board took action to require background checks for in-person assisters, with Covered California paying for background checks through 2014. Covered California staff announced that Contra Costa County will operate a customer call center; Sacramento and Fresno will potentially house the other call center sites. All meeting materials are available online. The next board meeting will be held on April 23 in Sacramento, and the first town hall meeting will be held in the Inland Empire on April 25.

Medi-Cal
CMS Approves State Plans to Coordinate Care for Dual-Eligibles
CMS signed a Memorandum of Understanding with California, approving the state’s plan to test a new model for providing coordinated care to dual-eligibles enrolled in both Medicare and Medi-Cal. The demonstration project (Cal MediConnect) will provide vision and dental benefits, and will affect 456,000 beneficiaries, 200,000 of which will be in Los Angeles County. Enrollment in Cal MediConnect will begin no earlier than October 1, 2013, and all beneficiaries will be able to opt out of the demonstration at any time.

LA County Partners with OneLA to Enroll Uninsured Residents
To prepare for enrolling newly eligible Medi-Cal beneficiaries in 2014, Los Angeles County is partnering with OneLA, an organization of churches, synagogues and non-profits. The program will offer enrollment events at churches, schools and community centers, and will be managed by the county’s Department of Health Services and OneLA. Trained volunteers will screen residents to determine eligibility for Medi-Cal and Healthy Way LA, which is operating the county’s LIHP.

Mental Health
DMHC Report Finds Kaiser’s Mental Health Services Lacking
According to a report by the Department of Managed Health Care, Kaiser Permanente has made patients wait excessively long periods between appointments, and provided patients with inaccurate information that may have dissuaded them from seeking long-term individual therapy. Kaiser has stated it has taken several steps to improve their services, including updating its educational materials, improving the process for tracking appointments, and working with the National Union of Healthcare Workers to shorten wait times between appointments.

Provider Capacity
The California Endowment to Invest $90M to Bolster Healthcare Workforce
The California Endowment announced it will invest $90 million over four years to expand the state’s workforce to provide care to millions of newly insured residents:

Data
Healthiest Counties Have More Primary Care Physicians
A RWJF/University of Wisconsin analysis found that U.S. residents living in healthier counties are 1.4 times more likely to have access to a physician and dentist than residents living in the least healthy counties. Counties where residents do not live as long and experience poorer physical/mental wellness also had the highest rates of smoking, teen birth and physical inactivity, as well as more preventable hospitalizations. In California, the highest-ranking counties according to health outcomes are: Marin, Placer, Santa Clara, San Mateo and Yolo. The lowest-ranking counties are: Lake, Siskiyou, Tehama, Kern and Del Norte

California Receives D Grade for Health Care Price Transparency
In a national report card from the Catalyst for Payment Reform and the Health Care Incentives Improvement Institute, California received a “D” grade for its transparency on pricing for hospital/clinic services. Massachusetts and New Hampshire were the only states to earn an “A” grade, while 29 states received an “F” grade for having little to no transparency requirements. California was one of seven states to receive a “D” grade.

The California Institute for Mental Health (CiMH) and Integrated Behavioral Health Project (IBHP) will be convening the California Innovations Summit on May 22-23, 2013 to advance the Triple Aim: improved care, population health and reduced costs for individuals with complex mental health, substance use and physical health conditions.  The two day conference will be held in San Francisco, with key note speakers Jürgen Unützer (Professor and Vice Chair, University of Washington) and Edward H. Wagner (Director emeritus, MacColl Center and Group Health Research Institute).  Day One will focus on innovations and emerging practice in integrating/coordinating care, with presentations on health home pilots, dual eligible pilots and Kaiser Permanente integrated care advances; Day Two will have focused dialogues to identify critical learning and next steps.

For more information, please visit CiMH’s website.

This is a continuation of a previous ITUP report on the Exchange, which was updated until the February board meeting. This report will be continually updated to incorporate ongoing developments. Please refer to the previous report for background information and issues addressed during board meetings prior to February 21, 2012.

All meeting materials, including agendas, presentations, discussion drafts, and applicable stakeholder comments, are available online.

The Exchange board is focusing on 7 core issues:
- business, operations and financial sustainability
- enrollment and information technology
- communication support, research and marketing, outreach and education
- assisters strategy
- health plan management and delivery reform
- small business health options program (SHOP)
- essential health benefits, basic health plan

This paper serves to report on developments on these topics.

The full document is available below:

UPDATED:
Exchange Update (January 9, 2013).pdf
Exchange Update (November 8, 2012).pdf.pdf
Exchange Update (September 26, 2012).pdf
Exchange Update (September 10, 2012).pdf
Exchange Update (August 2, 2012).pdf
Exchange Update.pdf

Additional Attachments:
Letter to the Exchange.pdf
SHOP Input.pdf
Marketing, Outreach, and Education Input.pdf
Assisters Input.pdf

During the last meeting of 2012 (possibly the world), the Exchange board discussed a myriad of topics with updates on several key topics.

Executive Director’s Report
During his monthly report, Peter Lee announced the tentative planning calendar for 2013, with the January meeting being held in Los Angeles.

The board has also submitted its Level 2 grant application for $750 million to the federal government last month, and a decision is expected in mid-January 2013. The blueprint application was submitted in mid December, and a certification decision is expected by January 1, 2013.

Jim Brown provided an update on CalHEERS, and outlined the revised release approach. Previously, Exchange staff planned to release in 3 phases beginning on July 1, 2013 through December 31, 2013. The revised approach has been fleshed out as follows:

Chief Technology Officer Juli Baker updated the board on the customer service center.

The general parameters for the service center are:

• CalHEERS to determine eligibility and facilitate plan enrollment for consumers (Medi-Cal/Exchange)
• Counties to handle walk-in customers, including Exchange and County programs
• Drive to completion of enrollment from any point of entry into the system
• Minimize “bouncing” customer back and forth, with one warm hand-off at most
• Ongoing cases to be handled at the “agency of record” (e.g. Medi-Cal handled by counties; Exchange by Central Service Center)
• Sort calls seeking eligibility for workload management between Service Center and Counties, with warm hand-off requirement to assure consistent service

The Quick Sort process was also outlined:

• While the questions will be refined during design and based on experience, minimal sample questions will be used to sort. Examples include:
  • Number of people in family
  • Anyone seeking coverage under age 19 or pregnant?
  • Anyone seeking coverage for elderly or disabled?
  • Annual income?
• Initial cut off points for sort to County:
  • Single, childless adults with incomes up to 138% of FPL
  • Pregnant women with incomes up to 200% of FPL
  • Children of adults not applying for coverage, household incomes up to 250% of FPL
• Continuous review of referral metrics to determine the need for adjustments
• All processes for the first year will be reviewed and revised where appropriate
• Pending CMS review

Processes for multiple program families and paper application/verification issues were also addressed.

Federal Proposed Rules
Exchange staff highlighted the federal proposed rules that were recently released, and noted the comment deadline for specific subjects:

• December 26, 2012: Health insurance market rules
• December 26, 2012: Standards related to essential health benefits, actuarial value and accreditation
• January 4, 2013: Establishment of multi-state plans
• January 7, 2013: Notice of benefit and payment parameters for 2014
• January 25, 2013: Incentives for wellness programs in group health plans

In particular, staff pointed out key areas for comment:

• Geographic rating areas: proposed rule limits states to 7 rating areas, but allows states such as California to request more than 7
• Essential health benefit substitution: California law prohibits substitution of essential health benefits but proposed rule is unclear regarding state authority to prohibit substitution
• Actuarial value calculator
  • Calculator will be used to verify actuarial values of QHPs
  • AV calculator does not account for California’s lower utilization of health care service
• Risk adjustment: Federal proposed risk adjustment methodology does not account for California’s delegated group model
• Proposed rules on stand-alone pediatric vision EHB may be pending

Focus Groups for Marketing and Outreach Efforts
Larry Bye from the National Opinion Research Center (NORC) summarized findings from a qualitative study of uninsured and individually insured Californians to better inform marketing and outreach efforts. NORC conducted 412 in-person one-on-one interviews, covering 13 race/ethnic segments and 12 language with more than 30 interviews per language (English, Spanish, Korean, Vietnamese, Chinese, Khmer, Armenian, Farsi, Arabic, Russian, Hmong and Tagalog); 75% were uninsured and 25% private insured, 75% employed, and evenly split across gender, four age categories, income categories and family types.

Findings
The survey found that there was a low level of knowledge regarding the ACA with considerable confusion. Prior to learning about upcoming changes, 57% felt good about the ACA, with 35% unsure and 6% bad. After learning about Covered California, 94% of interviewees expressed interest in learning more; reasons are tabulated below:

Even more respondents (97%) expressed an interest in shopping through Covered California, with over 50% of respondents citing the ability to compare plans side-by-side as their main reason to do so.

NORC found that calculated risk takers (18-34 years old, more likely male, single, employed, white, 400% FPL+) are, by far, the least likely to purchase a plan, while underserved families (25-44 years old,

Qualified Health Plan Update
Andrea Rosen updated the board on QHP designs, including the current status of the standardized design, recommended changes to the out-of-network policy, model contract provisions, and a plan management timeline. Input is welcome on benefit design and model contracting provisions, and should be sent to qhp@hbex.ca.gov.

Also, David Panush summarized alternative strategies to promote affordability and safety net continuity through contracting with Medi-Cal managed care plans. Two options were presented:

• Option 1. Contracting to achieve greater affordability – Covered California negotiates contracts with Local Initiatives, COHS or other Medi-Cal managed care plans with robust safety net provider networks to offer a plan option with very low or zero premium costs for those with incomes between 133-200% of FPL
  • Option 1.A – Best price option: Allow LI or COHS the first right of refusal, then allow any Medi-Cal managed care plan to place bids
  • Option 1.B: Allow any Medi-Cal managed care plan the option to contract
• Option 2. Potential streamlining approaches for Covered California to encourage participation of Medi-Cal managed care plans

Either option may help maximize enrollment for low income Californians by offering an affordable plan option with very low premiums, and could reduce churn between Medi-Cal and  Covered California plans, while leveraging the existing Covered California procurement, contracting and quality mechanisms to promote efficient plan processes/oversight.  It could, however, add administrative complexity and give Medi-Cal managed care plans a competitive advantage in a section of the insurance market.

The health disparities panel has been postponed to the next board meeting, which will be held on January 18, 2013 in Los Angeles.  All meeting materials are available online.

1. Plans in the individual and small employer markets must offer the 10 essential health benefits. 45 CFR §147.150 Plans in the individual market must offer child only coverage as well.
   1. Comment: this does not apply to grandfathered plans or to large and mid sized employer plans.
2. A state can require “qualified health plans” to offer additional required benefits. §155.170 However
   1. The state must pay the full incremental cost of the additional required benefits either to the individual or to the QHP.
   2. QHP must have a fully accredited actuary report the costs of the additional required benefits to the Exchange.
   3. A state required benefit enacted on or before 12/31/11 is not considered an additional required benefit.
3. The accreditation timelines for QHPs are as follows: See §155.1045
   1. Exchanges must set a uniform timeline for accreditation.
   2. For federally facilitated Exchanges, the plan must have accreditation in the first year or being in the process of applying for it.
   3. In the second and third year, the QHP must have accreditation by a recognized accrediting agency for the Exchange, or a commercial or Medicaid health plan.
   4. By the fourth year, a QHP must be accredited as an Exchange plan.
4. Definitions. See §156.20
   1. Actuarial value means the percent of costs paid by the health plan – i.e. 60, 70, 80 or 90%.
   2. Base benchmark plan means the basic plan selected by each state – i.e. the three largest small group plans, largest HMO, three largest state employee plans and 3 largest federal employee plans.
   3. EHB benchmark plan means the ten essential health benefits – e.g. hospitals, doctors, prescription drugs and behavioral health.
   4. EHB package means the scope of covered benefits with cost sharing.
   5. Percent of total allowed costs means the plan’s share of expected health costs.
   6. Comment: What is the difference between “actuarial value” and “percent of total allowed costs”?
5. States must select a base benchmark plan, §156.100 from the following ten benefit choices
   1. The three largest small group products
   2. The three largest state employee health plans
   3. The three largest federal employee health benefit plans
   4. The largest commercial HMO benefit
   5. If a state makes no selection, it will be the largest product in the small employer market, which is the plan that was selected by the California legislature.
   6. The US Office of Personnel Management sets the base benchmark for the multi-state plan. §156.110
6. The ten essential health benefits that must be covered are: ambulatory, emergency, hospitalization, maternity and newborn, mental health and substance abuse, prescription drugs, rehabilitative and habilitative, laboratory, prevention and wellness, and pediatric including oral and vision. §156.110
   1. If the base benchmark plan fails to cover any of the above categories, the state must choose a benefit from among the other products.
      • The pediatric dental benefit must be the CHIP benefit or the federal employees dental plan with the largest enrollment.
      • The pediatric vision benefit must be the CHIP benefit or the federal employees vision plan with the largest enrollment.
      • The state can determine the extent of coverage of habilitative services
   2. Benefit designs must be non-discriminatory and balanced.
7. Essential Health Benefits §156.115
   1. Plan benefits must substantially equal the EHB benchmark
      • Prescription drug benefits must have at least one drug for each US Pharmacopeia category and class
   2. Behavioral health benefits must comply with the federal parity laws
   3. Preventive care (see §147.130) must be covered with no copays if,
      • The care is rated of A or B for efficacy by the US Preventive Services Taskforce
      • Immunizations recommended by the CDC
      • Screening and preventive services for children as provided by HRSA guidelines
      • Screening and preventive services for women as provided by HRSA guidelines
   4. If the benchmark plan does not cover “habilitative” services, they must be covered in parity with rehabilitative services or as determined by the plan and reported to HHS
   5. Benefit substitution is permitted within the same essential benefit category (i.e. trade-offs within the hospital benefit or the behavioral health benefit, but not between the hospital and behavioral benefits) and must be actuarially equivalent to the benefit being replaced.
   6. EHB does not include dental or vision services for adults, long term or custodial nursing home care or cosmetic orthodontia.
8. Prescription drugs §156.120
   1. Plans must cover the greater of
      • One drug in each US Pharmacopeia category and class
      • The same drugs covered by the EHB benchmark plan
   2. Plans must allow subscribers to request coverage of clinically appropriate drugs not covered by the health plan.
9. Discrimination § 156.125
   1. Benefit plan designs must not discriminate based on age, disability, quality of life or degree of medical dependency.
10. Cost sharing §156.130
    1. The annual limitation on cost sharing is linked to §223(c)(2)(A)(ii)(1) of the Internal Revenue Code. In 2013 it is $6,250 for an individual and $12,500 for a family.
       • The amount will increase annually by average percentage in increase in insurance premiums.
    2. The maximum deductible for small group plans is $2,000 for an individual and $4,000 for a family.
       • The amount will increase annually by average percentage in increase in insurance premiums.
       • The annual deductible can exceed this amount if the plan cannot reasonably reach the actuarial value (e.g. bronze plans have a 60% actuarial value) without exceeding the maximum deductibles.
    3. Out of network costs of care do not count towards meeting one’s deductible or annual out of pocket limits.
    4. Cost sharing cannot be discriminatory. See §156.125
    5. Emergency services have to be provided without regard to prior authorization or network requirements. The cost sharing requirements are governed by §147.138(b)(3). In essence a plan must pay the same for in and outwork emergency services, but the out of network provider can charge the patient (but not the plan) more for their services.
11. Calculating Actuarial Value §156.135
    1. The plans must use the actuarial value (AV) calculator developed by HHS.
       • There is an exception where the benefit design is not compatible with the AV calculator, in which case the plan can use an actuary.
    2. Employer contributions to HSA and HRA accounts are counted as part of the plan coverage in calculating actuarial value.
    3. Beginning in 2015, a state can use its own data in calculating the actuarial value of its health plan offerings.
12. Levels of coverage §156.140
    1. Bronze = 60% AV
    2. Silver = 70% AV
    3. Gold = 80% AV
    4. Platinum = 90% AV
    5. De minimis variations in the AV are +/- 2%, in other words a silver plan might cover between 68% and 72% of expected medical expenses.
13. Minimum value (MV) (see § 156.145) is a concept that applies to large and mid sized employer group plans, whether insured or self insured. Under the ACA § 1302(d)(2)(c) these plans are not subject to the EHB requirements of small group and individual plans, but rather set their own levels of covered benefits and MV refers to the minimum percent (60%) of expected medical costs for the benefits that a large and mid sized employer group plan opts to cover.
    1. HHS and IRS will create a MV calculator
    2. HHS and IRS will designate safe harbor plans
    3. Alternatively, an actuary may certify MV for large and mid sized employer group plans.
    4. MV is determined by using the expected medical use of the plan’s covered benefit for populations covered by self-insured group plans.
14. Stand-alone dental plans for pediatric dental benefits §156.150. These plans must offer a reasonable level of coverage of expected dental costs as defined below.
    1. A low level of coverage means a 75% AV.
    2. A high level of coverage means a 85% AV.
    3. De minimis variations are +/- 2%.
    4. The level of dental coverage must be certified by an actuary.
15. Accreditation agencies for QHP plans §156.275
    1. NCQA and URAC are the only accrediting agencies for QHPs currently recognized by HHS
    2. This rule sets the requirements for other entities to be certified by HHS as accrediting agencies.

This summary is also available for download:
Summary of EHB, AV and Accreditation of QHP.pdf

ITUP’s 17th Annual Conference
Registration for our 17th annual conference is now open!  Confirmed speakers include:

• John Arensmeyer, Founder & CEO, Small Business Majority
• Kim Belshé, Executive Director, First 5 L.A.
• Diana Bontá, CEO, The California Wellness Foundation
• Alex Briscoe, Director, Alameda County Health Care Services Agency
• Diana Dooley, Secretary, CA Dept. of Health and Human Services
• Toby Douglas, Director, CA Department of Health Care Services
• Paul Fearer, Board Member, CA Health Benefit Exchange
• Jon Freedman, Chief of Strategy, L.A. Care Health Plan
• Dean Germano, CEO, Shasta Community Health Center
• Ken Jacobs, Chair, Center for Labor Research and Education – UC Berkeley
• Howard Kahn, CEO, L.A. Care Health Plan
• Mitch Katz, Director, L.A. County Dept. of Health Services
• Peter Lee, Executive Director, CA Health Benefit Exchange
• Peter Long, CEO, Blue Shield of California Foundation
• Louise McCarthy, President and CEO, Community Clinic Association of Los Angeles County
• Marian Mulkey, Director of Health Reform & Public Program Initiative, California HealthCare Foundation
• Katherine Neuhausen, Clinical Instructor, UCLA Department of Family Medicine
• David Panush, Director of Government Relations, CA Health Benefit Exchange
• Robert Ross, President & CEO, The California Endowment
• Andy Schneider, Consultant
• Rusty Selix, Executive Director, Mental Health Association ofCalifornia
• Marvin Southard, Director, L.A. Department of Mental Health
• Alan Weil, Executive Director, National Academy for State Health Policy

For more information, please visit our website.

The California Health Benefit Exchange
November Board Meeting Discusses Consumer Assistance/Ombudsman Program, Tribal Consultation Policy and Application for Federal Financial Support
During the November meeting, the Exchange board provided updates on the CalHEERS project, service center operations, and Exchange naming and branding.  Additionally, the board voted to adopt staff recommendations on qualified health plan (QHP) solicitation and regulation, tribal consultation policy, consumer assistance/ombudsman program, and the state’s federal establishment support and blueprint application (Level 2 grant).

The next meeting will be held on December 18, 2012 in Sacramento, and will discuss health equity, assisters program requirements, and eligibility/enrollment policy.  A potential decision may be made on the outreach and education grant program.  All meeting materials are availableonline.

Legislation
Voters Pass Governor’s Tax Plan, Ban on Multistate Business Tax Breaks
With a 54% majority, Governor Brown’s compromise tax plan passed on November 6.  Also known as Proposition 30, the ballot initiative will increase the personal tax on annual income in excess of $250,000 for individuals and $500,000 for couples; extend income taxes on the wealthy from 5 to 7 years; and increase the sales tax by 0.25% for four years.  Molly Munger’s rival tax plan, Proposition 38, received less than 30% support, and failed to pass. Voters also passed Proposition 39, which would eliminate tax breaks for multistate businesses.   The Legislative Analyst’s Office (LAO) estimates that the state could generate $6 billion annually between 2012-13 and 2016-17 through Proposition 30; theCalifornia Budget Project (CBP) projects that Proposition 39 will generate an estimated $1 billion in additional state revenues, and would grow over time.

Special Session Delayed To January 2013
The special session, which was called by the Governor to focus on ACA-related legislation, will be held concurrently with the regular session that will begin on January 7, 2013.  It had been previously speculated that the special session would be held in December of this year.

Budget
With November Election Results, LAO Fiscal Outlook Shows Promising Economic Future
The Legislative Analyst’s Office recently released its annual fiscal outlook report, which showed that the budget situation has vastly improved, with a projected $1.9 billion budget problem to be addressed by June 2013.  Assuming the continuation of a steady economic recovery, the LAO projects that there is a strong likelihood that the state will have budgetary surpluses in subsequent years and be able to begin to pay down debt.  The full report is available online.

Medi-Cal
DHCS Releases Phase 1 Network Adequacy Report in Preparation for Healthy Families Transition
Mere months before the beginning of the transition of Healthy Families children into the Medi-Cal program, DHCS has released its Phase 1 Network Adequacy report.  The first phase of the transition will be split into two parts, with Part A starting January 1 and Part B starting March 1, 2013.  The report concludes that all health and dental plans in Part A of Phase 1 have adequate networks and provider capacity, with the exception of HealthNet in San Diego County. Part A includes Alameda, Orange, Riverside, San Bernardino, San Diego (except HealthNet), San Francisco, San Mateo and Santa Clara counties; Part B is comprised of 17 additional counties, including Los Angeles County.

Challenge to CBAS Enrollment Denied by Federal Judge
A federal judge denied a motion that would have forced DHCS to alter its eligibility and enrollment procedures for the new Community Based Adult Services (CBAS) program.  Disability Rights California (DRC), the advocacy group that filed the motion, has until December 1, 2012 to appeal the ruling.  The CBAS program was developed in part from asettlement agreement when DRC challenged the state’s plans to eliminate the Adult Day Health Care (ADHC) benefit for Medi-Cal beneficiaries.  As of September 2012, approximately 2,400 former ADHC beneficiaries have outstanding appeals of eligibility, or are awaiting a decision from DHCS.

Provider Capacity
UC Regents Request $15M for New Medical School
Following the passage of Proposition 30, the University of California regents plan to request $15 million in state funding to support the UC-Riverside School of Medicine, which is slated to open in 2013.  The new medical school’s mission is to focus on training primary care physicians, who would remain in the Inland Empire, which is a medically underserved area.

Health Disparities
Clinton Foundation to Launch Health Disparities Project in Coachella Valley
The William J. Clinton Foundation announced an initiative to reduce health disparities in the state’s Coachella Valley, which has some of the highest health disparities in the US.  The initiative seeks to reduce disparities resulting from education, income levels and race.  General Electric, Tenet Healthcare and Verizon have been announced as corporate partners.

Data
CA Hospitals Rank 11th in Patient Safety
In their national report card on patient safety, the Leapfrog Group found that CA hospitals ranked 11th in the nation.  Additionally, of the 246 CAhospitals, 92 (37%) received an A grade, 56 (23%) a B grade, and 98 (40%) a grade of C or lower.  Nationally, only 19% of all hospitals received an A grade, and 44% received grades of C or lower.  The report was based on 26 measures of data, such as adherence to recommended methods of care, bedsores, falls in the hospital, and frequency of bloodline infections.

Added State Medicaid Costs from ACA Expansion to be Minor
A study by the Kaiser Commission on Medicaid and the Uninsured foundthat the additional cost of implementing Medicaid expansion is small relative to total state Medicaid spending.  Between 2013-2022, Californiais projected to spend only 3.8% more state funds on an expanded Medi-Cal program while increasing enrollment by almost 2 million in 2022.

Anthem Blue Cross and University of California Announce Project on Health Care Policy
Anthem Blue Cross of California and the University of Californiaannounced the California Health Alliance, a collaborative project that will focus on developing health care policy and improving access to care inCA.  Medical and health professional schools in the UC system will participate in this project, which aims to develop research, policy and best practices on improving the health care system.

USC Study Finds 11% of CA Children Lacked Health Insurance in 2011
According to a study by the USC Keck School of Medicine, about 11% ofCA children lacked health insurance in 2011, which was higher than the national average.  Also, between 2002 and 2011, public coverage through Medi-Cal and the Healthy Families program increased by 46%, while employer-based coverage declined by 16% during that time.

New Poverty Measure Shows CA Has Highest Poverty Rate in US
According to the new Supplemental Poverty Measure (SPM) by the Census Bureau, California has the highest poverty rate in the US, with 23.5% of its residents living at or below poverty level; under the traditional method of calculating poverty rates, the state’s poverty rate is lower at 16.3%.  To replace the current system that was devised in the 1960s, the Census Bureau is testing the SPM, which includes information on child care, health care and housing costs.  The national average under the SPM measure is 15.8%, compared to 15% under the current system.

Last night, Americans voted to re-elect President Barack Obama.  The Democratic and Republican parties maintained control of the Senate and House respectively, with Democrats gaining two seats in the Senate.  This means federal implementation of the Affordable Care Act will go forward, with January 1, 2014 as the date when expanded coverage will begin.

Californians voted for a temporary tax increase to protect public education through Proposition 30, which assures a base of funding for K-12 and public higher education.  These results implicitly acknowledge that California has already cut public programs quite severely; the failure of Proposition 30 would have had devastating impacts on education and on the California General Fund that could have impaired the state’s implementation of the ACA. Proposition 30 also protects the 2011 realignment of mental health and other services to the counties.

Exit polling showed that the nation’s voters remain sharply split on ObamaCare, with California voters among those most supportive of its implementation. Since the ACA gives states options as to whether to expand Medicaid and operate the Exchange, it is likely that the pace of national implementation will vary widely depending on the views of state policy makers and their electorates.

We hope that California’s implementation will proceed quickly and even more importantly, effectively. California’s successes and its missteps are likely to be scrutinized under a public spotlight, and widely reported by both supporters and detractors.

Together, these national and state results mean that ACA implementation can proceed in California, with the strong support of state voters. However, state implementation needs to be impeccable to not only retain voter support within the state, but also garner support in other parts of the country where the ACA may be viewed less favorably. It is a unique opportunity to implement this landmark legislation in a manner that best improves the health, health outcomes, economic growth and productivity of the Golden State and all its citizens.

Thank you to everyone who voted, who campaigned on behalf of candidates, and who worked tirelessly to educate voters on important ballot initiatives.  There is still a considerable amount of work to be done, but yesterday’s results will go a long way towards expanding affordable and accessible health care to all Californians.

ITUP’s 17th Annual Conference
Registration for our 17th annual conference is now open!  Confirmed speakers include:

• John Arensmeyer, Founder & CEO, Small Business Majority
• Kim Belshé, Director, First 5 L.A.
• Diana Bontá, CEO, The California Wellness Foundation
• Alex Briscoe, Director, Alameda County Health Care Services Agency
• Diana Dooley, Secretary, CA Dept. of Health and Human Services
• Toby Douglas, Director, CA Department of Health Care Services
• Jon Freedman, Chief of Strategy, L.A. Care Health Plan
• Dean Germano, CEO, Shasta Community Health Center
• Howard Kahn, CEO, L.A. Care Health Plan
• Mitch Katz, Director, L.A. County Dept. of Health Services
• Peter Long, CEO, Blue Shield of California Foundation
• Louise McCarthy, President and CEO, Community Clinic Association of Los Angeles County
• Marian Mulkey, Director of Health Reform & Public Program Initiative, California HealthCare Foundation
• Katherine Neuhausen, Clinical Instructor, UCLA Department of Family Medicine
• David Panush, Director of Government Relations, CaliforniaHealth Benefit Exchange
• Robert Ross, President & CEO, The California Endowment
• Andy Schneider, Consultant
• Rusty Selix, Executive Director, Mental Health Association ofCalifornia
• Marvin Southard, Director, L.A. Department of Mental Health
• Alan Weil, Executive Director, National Academy for State Health Policy

For more information, please visit our website.

The California Health Benefit Exchange
California’s Exchange Christened “Covered California”
The Exchange board voted to adopt Ogilvy’s recommendations to name the Health Benefit Exchange, “Covered California.”  Other considerations included Eureka and Ursa, but did not test as well among four quantitative focus group sessions; CaliHealth was not chosen due to potential ownership/trademark problems.  Ogilvy’s presentation to the board, which includes focus group results and a tentative logo, can be found online.  The final name, logo, tagline and domain will be announced during the week of November 12, 2012.

October Board Meeting Discusses Branding and User Experience, Revisits Supplemental Benefits and Employer Choice
During the October meeting, the Exchange board discussedbranding/naming and qualified health plan solicitation.  After initially voting against the idea earlier this year, the board voted to allow the sale ofsupplemental dental/vision benefits for adults in the individual exchange.  Regarding the SHOP exchange, the board also voted to adopt staff recommendations for employers to choose the tier of coverage and employees the issuer and/or plan.  All board meeting materials are available online; for more information, click here.

The next meeting has been rescheduled from November 20 in Los Angeles to November 14 in Sacramento.

Legislation
Support for Proposition 30 Slipping
In the run up to the November election, a Public Policy Institute ofCalifornia (PPIC) poll found that 48% of respondents would vote yes, with 44% voting no and 8% undecided.  The margin has narrowed since July, when a Field Poll showed 54% in favor of Proposition 30; another Field Poll in September showed 51% of likely votes in favor of the proposition.  This ballot measure would temporarily increase sales taxes by 0.25% and personal income tax in excess of $250,000 to fund public education.

Governor Brown Vetoes Health Bills, Calls Special Session in December
Governor Brown vetoed a number of health care bills that reached his desk at the end of September:

• SB 961 (Hernandez)/AB 1461 (Monning): reforms individual insurance markets to mirror federal rules under the ACA
• SB 393 (Hernandez): encourages use of patient-centered medical home model of care
• SB1318 (Wolk): proposes requirement to raise flu vaccine compliance among health care workers to 90% by 2015 instead of 2020
• SB359 (Hernandez): regulates hospital charges for out-of-network emergency care
• AB 1000 (Perea): makes oral chemotherapy more affordable and accessible
• AB 2152 (Eng): requires insurers to give more notice about health coverage changes

Several of these issues, as well as the basic health plan, may be addressed during the special session, which will be held in December or January of next year.

Medi-Cal
Medi-Cal Faces $85 Billion in Federal Spending Reductions Under House Budget Plan
According to a report by the Kaiser Commission on Medicaid and the Uninsured, California could face $85.3 billion in federal spending reductions over 10 years if the Medicaid program is block granted, as proposed by the House Budget Committee.  This reduction, which is a 22% decrease in projected expenditures, is calculated to be equivalent to 2.1 million fewer beneficiaries.

Medi-Cal Reimbursement Rates Only 43% of Medicare Rates in 2010
An analysis of the Urban Institute’s data shows that Medi-Cal providers received only 43% of Medicare rates in 2010, the second lowest in the US.  This is a decline from 2008, when California reimbursed its Medicaid providers 47% of Medicare rates.  Low reimbursement rates have been tied to poor provider participation in the Medicaid program.  The ACA will increase primary care reimbursement rates to Medicare levels for two years, but it is unknown if California will be able to sustain these rate increases.

§1115 Waiver
Low Income Health Program Enrollment Nears 500,000
The Department of Health Care Services (DHCS) released new Low-Income Health Program monthly enrollment data by county during August 2012.  Total LIHP enrollment was 487,324, with over 200,000 Los Angeles LIHP enrollees.  CMSP, Alameda and Orange counties had the next highest enrollment at 55,685, 44,464 and 42,291 enrollees respectively. For more information, click here.

Sacramento County Announces November Launch of LIHP
Sacramento County announced plans to launch a low income health program (LIHP) in November. The county initially planned to operate a LIHP in August, but negotiations with participating hospitals caused a delay.  Up to 14,000 adults whose incomes are less than 133% of the federal poverty level could be eligible for the program. Sutter Health and Dignity Health have contracted to provide services to LIHP participants, and Kaiser Permanente is expected to enter contract negotiations this month.

Information Technology
UnitedHealthcare to Provide Critical Access Hospitals $20M for IT
UnitedHealthcare will provide $20 million in grants to help 11 critical access hospitals in Central and Northern California implement electronic health records (EHR).  The California State Rural Hospital Association, the California Critical Access Hospital Network and the California Rural eHealth Information Network helped identify eligible hospitals and the funding amount for each.

Long Term Care
CalPERS Approves Long Term Care Premium Increases
The California Public Employees’ Retirement System’s (CalPERS) Board of Administration unanimously approved a plan to raise long-term care insurance premiums by 85% for 114,000 state workers and retirees.  This rate hike is higher than the 75% increase that was considered earlier this month. CalPERS’ long-term care policyholders currently pay $1,400-$2,400 annually in premiums; the rate increase will take effect in 2015 and will be phased in over two years.

Prison Health System
CA to Start Regaining Control of its Prison Health System
Federal officials will begin transferring administrative functions for CA’s prison health care system to state officials.  U.S. District Judge Thelton Henderson had appointed federal receiver J. Clark Kelso to oversee the state’s prison health care system after determining that an average of one inmate per week died as a result of malpractice or neglect.  According to Kelso, the state will be given a few administrative responsibilities to demonstrate if state officials have “the will and capacity to maintain improvement” and eventually assume full control of the prison health care system.

Managed Risk Medical Insurance Plan
MRMIP to Cut Premiums in 2013
The Managed Risk Medical Insurance Board voted to decrease MRMIP premiums by an average of 12% next year.  MRMIP is a state insurance plan for those who cannot obtain health insurance due to pre-existing conditions.  Program officials were considering a 10% rate increase, but the passage of AB 1526 (Monning) this year allowed the program to subsidize rates for members at no less than 100% of comparable rates for the individual insurance market. The bill also prohibits any subsidy provided to the subscriber to affect the calculation of premiums.

Data
1.2M Californians Lost Job-Based Insurance from 2009 to 2011
A study by the UCLA Center for Health Policy Research found that about 1.2 million CA residents lost their employer based health insurance coverage from 2009 to 2011; the percentage of employer coverage dropped from 56.4% I n2011 to 49.7% in 2011.  Conversely, the percentage of state residents enrolled in public safety net programs (Medi-Cal and Healthy Families) increased from 15.7% in 2009 to 19.1% in 2011.  The percentage of uninsured state residents remained largely unchanged at 21% of population under the age of 65 – almost 7 million Californians.

CA Had Second-Highest Count of Uninsured Children in 2011
According to a report by the Georgetown University Health Policy Institute’s Center for Children and Families, California had the second-highest count of uninsured children in 2011 with 745,000.  Only Texas had a higher number of uninsured children at 916,000.  The report found thatCA ranked 35th in percentage of uninsured children at 8%, which was below the national average of 7.5%.  The state, however, also had a significant decline (1.5%) in the rate of uninsured children between 2009 and 2011.