Author: Marina Acosta

Covered California August Board Meeting

After a month-long break, the Covered California Board reconvened for its monthly meeting on August 18, 2016. Covered California provided updates on media coverage and enrollment numbers for Covered California for Small Business (CCSB). Board members approved readoption of the requirements for the certified application counselor program and individual eligibility and enrollment regulations. Covered California provided updates on its application for a Section 1332 federal waiver under the Affordable Care Act (ACA) and signaled its intent to adopt the final application at the September board meeting. Finally, the Board discussed draft CCSB eligibility and enrollment regulations with action to be considered at the September meeting.1

Covered California in the Media

Executive Director Peter Lee announced that Covered California continues to target hard-to-reach populations through diverse media outlets, including media focused on the LGBTQ community, and ethnic communities, such as Latinos and Asians. Some of the media outlets utilized by Covered California are San Diego’s LGBT Weekly, La Opinión, Los Angeles Sentinel, Hispanos Press and local Chinese-language news channels. Covered California affirmed its commitment to maximizing enrollment of California’s diverse communities

Covered California for Small Business

Peter Lee provided a membership, sales and operations update for CCSB. CCSB has 3,838 groups enrolled, covering 28,964 members. In terms of new business sales, Covered California reported they are at 128% of their year-to-date membership goal with a large increase (230x) in in-bound leads. (An in-bound lead is potential business that results from satisfied CCSB clients recommending CCSB to others.) Finally, Covered California reported CCSB’s operational metrics: setting up groups in three days (99%), invoicing a new group within three days (100%) and resolving account maintenance issues (93%).

1332 Waiver Update

Covered California presented a draft of the §1332 ACA waiver for review and public comment. The waiver seeks to allow undocumented immigrants to purchase unsubsidized health coverage through Covered California. If the waiver is approved, undocumented individuals would be able to buy their coverage from California Qualified Health Plans (CQHPs) offered on the Exchange. CQHPs will be exact mirrors of the Qualified Health Plans (QHPs) currently offered on the Exchange, but would not be subject to the ACA citizenship requirements. Currently, undocumented immigrants can only purchase health coverage off-exchange.

Covered California’s draft application revealed that the State’s proposal meets all the requirements set out by the Centers for Medicare and Medicaid Services (CMS) for a successful waiver. For example, Covered California held public meetings to discuss the waiver and met the “guardrails” as prescribed by CMS for state waiver requests. The guardrails include satisfying certain rules on enrollment, affordability, comprehensiveness and deficit neutrality. Covered California retained experts from the University of California Berkeley and Los Angeles to conduct independent analyses and ensure that the waiver met all requirements.

Public comment on the waiver is due September 6, 2016 by 5:00 p.m. Covered California plans to submit the final waiver to CMS in mid-September. Covered California’s detailed timeline is below. At the September board meeting, Covered California will ask the Board to authorize the submission of the final waiver.


To view the waiver in its entirety, and for details on where to submit comments, please click here. Check out ITUP’s, “7 Things to know about Covered California’s §1332 Waiver,” for more information on the waiver.

Remote Identity Proofing Regulations Readoption

The Board approved remote identity proofing regulations for the Exchange. Remote identity proofing allows applicants to verify their identity through questions generated from the federal data services hub run through Experian. The new regulations include additional forms of identification verification.

Certified Application Counselors Emergency Regulations Readoption

At the June board meeting, the Board discussed and heard public comment on the role of certified application counselors (CACs) and their responsibilities. At this meeting, the Board adopted revised regulations that add the following requirements for CACs:

  1. CACs must to refer enrollees to the appropriate channels for grievances, complaints or questions
  2. CACs must inform enrollees that they are not a tax advisor or attorney and provide enrollees with referrals to resources for tax advice and premium tax credit reconciliation, and
  3. CACs may give only nominal gifts to enrollees for purposes other than enrollment.

Individual Eligibility and Enrollment Regulations Emergency Readoption

The Board considered and adopted new eligibility and enrollment regulations for the individual exchange, which includes a change to special enrollment period rules. Special enrollment allows individuals to apply for coverage outside of the annual open enrollment period if they experience life changes such as marriage, divorce or loss of a job. The new rule requires a person applying for coverage because of a permanent move to have minimum essential coverage for one or more days in the 60 prior to the move, in order to be eligible. The rule does not apply to those moving to California from outside a U.S. territory or for someone that is newly eligible for federal subsidies from a non-Medicaid expansion state.

Regulations Emergency Adoption

The California Legislature authorized Covered California to make emergency rulemaking decisions for eligibility and enrollment regulations for CCSB through January 1, 2019.

Covered California presented and discussed new CCSB enrollment and eligibility regulations, and heard public comments. Covered California proposed changes as presented at the meeting are below. Action by the Board will take place next board meeting.


Covered California’s next board meeting will be September 5, 2016. For all material from this meeting, please go here.


1 Covered California has a general practice of noticing an item for review and public comment prior to scheduling the item for action at the following board meeting.

7 Things to know about Covered California’s §1332 Draft

On August 5, 2016, Covered California released a draft of California’s proposed Affordable Care Act (ACA) Section 1332 waiver to permit undocumented immigrants to buy health insurance on the State’s Exchange, albeit without federal subsidies. Here are 7 things to know from the draft. (more…)

Covered California June 2016 Board Meeting

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.

In the Lead-up to Medi-Cal for Undocumented Children, California’s Community Health Centers Weigh-In

California’s community clinics and health centers (CCHCs) highlight early challenges and successes in enrolling eligible children in a recent issue brief by Pacific Health Consulting Group (PHCG) with support from the Blue Shield of California Foundation. (more…)

Covered California May 2016 Board Meeting

The Covered California Board of Directors met on May 12, 2016 in Sacramento. Covered California presented their proposed 2016-17 budget and associated program changes, including a health plan assessment level of 4% for the individual market and 5.2% for the small business market, the closing of the Contra Costa Public Service Center, and a reduction in funds to the Navigator Program. Additionally, PricewaterhouseCoopers reported its findings from a market analysis of the Covered California individual market for 2016-2022. Finally, Covered California announced the completion of a series of special enrollment kickoff meetings that took place in April, and highlighted significant enrollment growth in Covered California for Small Business.

2016 Special Enrollment Outreach Kickoff Meetings

Covered California hosted thirteen special enrollment outreach kickoff meetings in the month of April (Graph 1). Over 600 certified agents and navigators attended the meetings. The meetings included a review of open enrollment numbers, policies, strategies, and best practices to use during the special enrollment period and various enrollment tools and resources available. Covered California reported receiving a lot of positive feedback from meeting participants.

Graph 1: Map of Special Enrollment Outreach Kickoff Meetings

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Source: Covered California Executive Director’s Report, May 12, 2016

Covered California for Small Business

Covered California reported that Covered California for Small Business is seeing tremendous sales growth. Sales are up 83% from 2014 to 2015 and the number of selling agents is up 70%. Additionally, Covered California reported first quarter sales added 4,942 new covered lives, reaching 126% of the goal set for the quarter.

Enrollment in Covered California for Small Business through March 31, 2016 is 3,663 small business groups covering 27,467 members with an average group size of 7.5 employees.

2016-2022 Market Analysis and Planning

PricewaterhouseCoopers (PwC) presented the results of a market analysis for 2016-2022 conducted for Covered California. PwC reviewed enrollment and enrollment projections, and modeled ten policy and market change scenarios (such as enactment of the minimum wage in California, changes in unemployment, and potential federal policy changes in the Affordable Care Act [ACA]) that could affect Covered California enrollment in the future. PwC evaluated Covered California fiscal stability based on models related to average tenure and the revenues generated by health plan fees based on enrollment.

Overall, PwC found that Covered California enrollment is likely to remain relatively flat (between 1.1 million and 1.8 million) over the next five years, but could grow if Covered California seizes specific opportunities to manage turn-over, churn and retention. PwC noted that the individual market, characterized by significant numbers of individuals coming in and out of coverage (churn) prior to the ACA, remains a churning market post-ACA. To ensure just minimal growth, Covered California must newly enroll 700-800,00 and re-enroll 800-900,000 annually to account for the level of churn in the market.

Other highlights of the report include:

  • Acquisition costs. Individual market acquisition costs (the average costs to acquire and enroll new customers) are lower as a percent of total premiums than before ACA implementation. Overall acquisition costs decreased from 7.6% of premiums to 5.8% in the individual market. Acquisition costs in the post-ACA market are comprised of 6.6% from Covered California channels and 4.9% from other channels. In order to increase its acquisition spend, PwC concluded that Covered California will need to improve its cost structure, become more efficient, or increase revenue.
  • Enrollment penetration. For 2016, 69% of the subsidy-eligible and 12% of the non-subsidy-eligible individuals enrolled in Covered California. Covered California has already served 2.5 million Californians and is on track to touch three-quarters of those eligible in 2016. Take-up rates are highest among the lower income levels.
  • Areas of opportunity. PwC analyzed areas of opportunity to manage churn, turn-over and retention and found that the greatest areas for potential enrollment in Covered California are individuals leaving Medi-Cal and employment-based coverage, retaining existing members, and targeting those who remain uninsured. PwC estimated a potential increase in enrollment of as much as 331,000 from successfully addressing all of the eight opportunities analyzed.

Review the PwC findings in more detail here.

2016-17 Proposed Budget, Forecast and QHP Assessment Fee

Covered California staff presented the proposed 2016-17 budget for discussion to the board and stakeholders. The budget will be noticed for action, potentially with revisions, at the June board meeting. The 2016-17 fiscal year will be the first year of Exchange operations without a new federal appropriation. The proposed budget totals $308 million (Table 1), which is less than the 2015-16 approved budget of $335 million, but an increase over the projected (actual) 2015-16 budget of $299 million.

Table 1: Comparison of 2015-16 Approved Budget, 2015-16 Projected Budget, and 2016-17 Proposed Budget (in millions)


Source: Covered California 2016-17 Budget. Table created by ITUP.


– Covered California projected expenditures for 2015-16 are $36 million less than the approved budget of $335 million. The projected expenditures are lower in all areas, with the largest changes in Service Center costs (-$11.6 million) and Outreach and Sales, Marketing costs (-$14 million).

The 2016-17 budget proposes an increase of $9 million above the projected expenditures for 2015-17, primarily due to increases in salaries and benefit costs and the addition of seven new staff positions.


– For 2015-16, Covered California revenues are expected to be $22 million below original estimates. Current effectuated enrollment is lower than the medium projection used to develop the 2015-16 budget (i.e. 1.48 million enrollees correlating to $234.4 million from plan assessments). ITUP notes that the current effectuated enrollment for 2015-16 of 1.32 million enrollees is even less than the lowest enrollment projection of 1.37 million enrollees.


– Covered California’s budget includes year-end reserves for 2015-16 of $221.8 million, $24 million higher than originally forecasted. According to Covered California’s multi-year forecast, 2016-17 reserves would cover expenditures for between five and nine months.

Table 2: Minimum Number of Months Covered California Reserves Can Cover Expenditures by Fiscal Year


Source: Covered California 2016-17 Budget.

The 2016-17 budget year is the first year that Covered California will not be receiving federal funds, resulting in expenditures of $58 million from reserves (Graph 2).

Graph 2: Covered California’s Budget and Sources of Funding: FY 2014-15 through 2019-20


Source: Covered California 2016-17 Budget.

Fee Assessments

– For 2016-17, Covered California health plan assessments will transition from a flat fee of $13.95 per enrollee to a percentage of gross premiums paid beginning in 2017. Based on Covered California’s forecast, revenues will exceed expenditures in FY 2017-18 with assessments set at 4%.

The revised formula of 4% of premiums results in higher health plan payments than the $13.95 flat fee. The 2016-17 health plan contract proposed a 3.5% fee and the federal exchange charges health plans 3.5%. The fee for Covered California for Small Business for 2016-17 is 5.2%.

Forecast Effectuated Enrollment

– Between 2015-16 and 2016-17, the forecasted effectuated enrollment numbers have decreased (Table 3). For example, for 2015-16 the forecasted effectuated enrollment was 1.467 million, under the medium enrollment projection, but is revised to 1.321 million, a reduction of 11%. Additionally, for 2018-19, the forecast is revised from 1.978 million to 1.473 million, a change of -25%. Overall, Covered California notes enrollment projections show more moderate growth compared to previous projections.

Table 3: Comparison of FY Budgets 2015-16 and 2016-17 Medium Enrollment Projections (in millions)


Source: Covered California 2016-17 Budget. Table created by ITUP.

Other Proposed Budget Changes

In presenting the 2016-17 proposed budget, Executive Director Peter Lee highlighted the following:

  • Closure of one Public Service Center in Contra Costa.
  • Termination of its contract with Health Consumer Alliance to provide assistance in addressing consumer issues with Covered California or its Qualified Health Plans. Consumer assistance will be provided via a new internal Office of Ombudsman. The Office of Ombudsman is budgeted at $2 million. Advocates expressed concern that the Office of Ombudsman will not be an independent, impartial entity and costs more than the Health Consumer Alliance contract.
  • Reduction in funding for the Navigator grant program from $13 million to $5 million. The reduction will reduce the number of lead grantees from 69 to 46 and result in a reduction in individuals served from 77,000 to 28,000.

Covered California for Small Business Model Contract

Covered California adopted minor changes to the Covered California for Small Business contract, which can be reviewed on slide 27 of Covered California’s Policy and Action Items for May.

Special Enrollment Period Policies and Individual Eligibility and Enrollment Regulations Emergency Readoption

Adoption and Approval

Covered California adopted emergency regulations related to special enrollment. The new regulations maintain the reliance on consumer attestation of eligibility for special enrollment but allows Covered California to request documentation to verify eligibility for special enrollment.


The proposed special enrollment period policies were updated from last month’s discussion and were discussed again in this meeting. Covered California’s updated special enrollment policy proposes to institute a statistically valid random sampling of enrollees to verify eligibility for special enrollment, requiring appropriate documentation. A written request will be sent to an enrollee asking to provide documentation of the qualifying event making them eligible for special enrollment. The enrollee will have 30 days to provide documentation. After the 30-day period, Covered California will deem an enrollee eligible or ineligible for enrollment. Covered California will accept attestations when documentation cannot be provided on a case-by-case basis.

Covered California expects to discuss the special enrollment policy in future meetings as the federal government released new federal interim rules on May 6, 2016. The new federal interim rules impose new eligibility requirements for special enrollment periods related to permanent move and consumers that are newly eligible for tax credits. These new federal rules will need to be included in Covered California’s special enrollment policy.

Covered California reported that, starting in 2017, electronic verification of eligibility will be phased in, with an alternative to determine eligibility with non-electronic documents or in cases where documentation does not exist.

Certified Application Counselor Program Regulations

The Covered California Board approved the proposed amendment to continue paying for background checks for new applicants for the Certified Application Counselor Program.

Next Meeting

The next meeting will be held on June 16, 2016. Documents and a video recording from this board meeting are available on the Covered California website.

Coverage for All Children Approaches: Health4All Kids Webinar Breaks It Down

The Children’s Partnership joined with partner organizations (see Figure 1 below) to host a “Health4All Kids” webinar on the upcoming Medi-Cal coverage expansion for undocumented children. The webinar highlighted key facts about the expansion, the implementation process, the opportunities and challenges, and the new toolkit to assist communities in preparing for a smooth transition.

Figure 1: Health4All Kids Webinar Partner Organizations

Screen Shot 2016-04-28 at 9.19.47 AM

Key Facts about the Expansion

Currently, undocumented children are only eligible for emergency Medi-Cal (“restricted scope” Medi-Cal). Restricted-scope Medi-Cal just covers emergency medical services whereas “full-scope” Medi-Cal is comprehensive coverage, including preventative services, primary care, vision, dental, prescription drugs, and specialty mental health and substance abuse services. Below are key facts about the expansion:

  •  May 16, 2016 is the scheduled start date
  • Coverage will be retroactive to May 1, 2016
  • All income eligible children up to age 19 (below 266% of the federal poverty level (FPL)) can enroll in full-scope Medi-Cal
  • The state will automatically transfer children with restricted scope Medi-Cal to full-scope Medi-Cal and the children will not have to reapply
  • Children with county-based coverage (i.e., local Healthy Kids programs and county health programs like My Health LA) or the Kaiser Child Health Plan must apply for Medi-Cal unless the child is already known to the Medi-Cal system
  • The same Medi-Cal enrollment rules apply for the expansion as for traditional Medi-Cal children
  • Children newly enrolled in Medi-Cal will have a choice of Medi-Cal managed care health plans, if the option is available in their county
  • Families will pay some premiums if their household income is above 160% FPL.

What Families Need to Know

  • All families should enroll their children in restricted scope Medi-Cal now in order to be transferred to full-scope Medi-Cal on May 16, 2016
  • Families can enroll in restricted scope Medi-Cal with an application assister, by phone, at a county office or county website, or through the Covered California website
  • If a child already has a family member enrolled in Medi-Cal, no new application is needed; families can contact their local county assistance office and get other children in the family added to the case

In addition, families need to know that an undocumented child’s enrollment in the California Children’s Services (CCS) program, a program that provides medical services for special health care needs, will not be affected. These children may retain their CCS specialist under the CCS program. Undocumented CCS children will now be eligible for full-scope Medi-Cal.

Community Opportunities and Challenges

Communities across the state are faced with the challenge of informing and educating families with eligible children about the new coverage opportunity. Community-based organizations (CBOs) and clinics will need to communicate to families about the following:

  • Medi-Cal does not share immigration information
  • Premium costs may apply
  • How the managed care model works and the importance of choosing a health plan

Health4All Kids’ Toolkit

The new toolkit ( will help organizations achieve a smooth transition for families in their community. In the toolkit, CBOs and clinics can find information (in English and Spanish) to assist families transitioning to Medi-Cal, including key facts about the expansion, how to apply, Deferred Action for Childhood Arrivals (DACA), and details of the enabling legislation, SB 75. The figure below is a screenshot from the Health4AllKids website showing the array of helpful topics found in the toolkit.

Figure 2: Topics under Health4All Kids “Tools for Organizations” Website Tab

Screen Shot 2016-04-21 at 2.51.39 PM (2)

Final Thoughts

The expansion to cover all children has been a long time coming for the health organizations and the advocates who have been working on this for decades. ITUP recognizes and applauds the years of hard work, determination and dedication of all those organizations and individuals who kept the state focused on meeting this basic need for the children of California!

The families of the newly eligible children will find relief in their efforts to ensure their children have the required immunizations and preventive exams children require and access to the health care services they need to get and keep children healthy. ITUP will continue to monitor the progress of California’s efforts to cover all kids. Stay tuned!

Health4All Kids will have a follow-up town hall on May 6, 2016 at 1 pm and a Twitterchat on May 10, 2016 at 11 am.

Link to webinar slides. Link to webinar (will be added once available).

Covered California April 2016 Board Meeting

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

Contract Overview

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

table 1 cc

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).

Graphic 1:

Screen Shot 2016-04-15 at 1.30.16 PM (2)  

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

table 2 cc

* 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).

Graphic 2:

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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

table 3 cc
*Articles from previous QHP contracts were absorbed under 2017 headings.

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.

Hospital Data – OSHPD 2014

Below are detailed excel sheets of the 2014 Office of Statewide Health Planning and Development (OSHPD) hospital utilization and financial data. As 2014 marks the start of ACA implementation, the data is a good measure of the changes that took place as a result of the law. Hospitals were analyzed by region, as well as by type. For the purposes of our analyses, non-comparable facilities (Kaiser, Shriners) were excluded. Changes in services and finances from the 2013 to 2014 year are also shown for each region.

ITUP will be highlighting important takeaways from the dense data presented here. Stay tuned!

2014 Statewide Hospital Overview by Type 

2014 Statewide Hospital Overview by Region

Hospital All – Compare 13 and 14 

City and County Hospitals – Compare 13 and 14

District Hospitals – Compare 13 and 14

Investor Hospitals – Compare 13 and 14

Non-Profit Hospitals – Compare 13 and 14

Bay Area Hospitals – Compare 13 and 14

Central Coast Hospitals – Compare 13 and 14

Central Valley Hospitals – Compare 13 and 14

North Central Hospitals – Compare 13 and 14

North Rural Hospitals – Compare 13 and 14

Southern California – Compare 13 and 14

Covered California January and February 2016 Board Meetings

Summary of 3rd Open Enrollment

Open enrollment 3 (OE3) closed Sunday, January 31, 2016. Executive Director, Peter Lee, reported that 439,392 new signups occurred through February 6, 2016. Data from this third enrollment shows that consumers are shopping around and that the health plans with the lowest prices end up with the bulk of the new enrollees.

Main Data Points of 2016 Enrollment:

  •  88% of all enrollees are subsidy eligible.
  • Most of the race and ethnicity enrollment percentages stayed the same as open enrollment 2 (OE2), except Latino enrollment went down by one percent (37% to 36%) and “Other” went up by one percent (3% to 4%).
  • Enrollees age 18 to 25 increased from 13% in OE2 to 17% for OE3.
  • Male and female enrollees make up an equal share of 50%.
  • CEC and navigator utilization by enrollees showed a marked decrease from last open enrollment (10% to 6%), while there were increases for certified insurance agents (43% to 45%) and self-service (30% to 32%).
  • Anthem, Blue Shield, Health Net, and Kaiser Permanente cover the most lives in the exchange. Over the past three years, Anthem has lost enrollees (30% OE1 to 25% OE3), Blue Shield has gained (27% to 28%), Health Net has lost the most enrollees (19% to 14%), and Kaiser has stayed consistent from last year (24%), but lost new enrollees (28% to 23%).
  • New enrollees mostly chose Blue Shield (27%) followed by Anthem (24%) and then Kaiser (23%) for OE3. Molina Healthcare enrollment numbers for new enrollees was quite remarkable going from 3% OE2 to 12% OE3.
  • There was a slight increase in enrollees choosing a bronze plan (29% to 31%) and decrease in enrollees choosing a silver plan (63% to 62%) and platinum plan (3% to 2%) compared to OE2.

Tax Form 1095 Update and Lessons Learned

Covered California issued about 1.7 million 1095 tax forms to their consumers for tax season. By January 31st, the rest of the forms were to be mailed out. Corrections to the 1095 forms started in February.

Covered California reported a number of improvements in generating accurate 1095 forms for consumers, including: standardization of the reconciliation process between Covered California and all the health plans; a 1095 project plan which improved the IT infrastructure, among other things; creation of a consumer facing online form; improved notices to address consumer questions; and a specialized service center team to address disputes from consumers. These process improvements will hopefully increase the efficiency of the 1095 process.

Covered California Comments on HHS Notice of Benefit and Payment Parameters for 2017

In December, Covered California issued a number of comments on the federal Health and Human Services’ (HHS) proposed benefit and payment parameters for 2017. Specifically, they commented on the topic of user fees, standard benefits, direct enrollment, web-based entities, and other topics. Covered California stated that the 3% user fee for the state-based marketplace on a federal platform was too low. Federally-facilitated marketplaces’ user fee is set at 3.5%. In Covered California’s new re-certification contracts with Qualified Health Plans (QHPs), the user fee will be changed from a flat fee to a percentage set at 3.5%. Covered California also commented that setting standardized health benefits and clearly communicating this information to consumers through the federal website are best practices. With standardized health benefits, consumers would be able to easily compare packages using price and quality measures; displaying confusing plan information on the website could lead to smaller enrollment or a worse risk pool. Additional topics were discussed, and letters with all the details can be found here.

1332 State Innovation Waiver

Starting in 2017 states can apply for a 1332 State Innovation Waiver as part of the Affordable Care Act (ACA). The waiver allows states to waive some of the law’s mandates to allow for new, broad, innovative state-based models for expanding health coverage. States may waive the individual mandate, the employer mandate, the essential health benefits and health benefit exchanges, and the subsidies for coverage. A discussion on potential options will take place on February 23, 2016. Executive Director of ITUP, Lucien Wulsin, will be presenting at the forum, along with others. Please find the broadcast here on February 23, 2016.

Vision Program

Covered California now offers links to vision coverage. At this time there is only one carrier, VSP Vision Care. VSP’s monthly premium for an individual is $15.16. The carrier, and others that may be added, are responsible for customer service functions and must conduct annual consumer surveys. Enrollment is year-round. For more information on Covered California’s Vision Coverage please visit their web page.

Special Enrollment

Promotion of Special Enrollment

Special enrollment occurs when an individual enrolls in Covered California outside of open enrollment dates as a result of certain qualifying events such as loss of health insurance, marriage, birth, and income changes. Covered California uses radio and digital ads to educate Californians on this opportunity. Covered California has also collaborated with a number of private and public agencies to send people to Covered California during a gap in health care coverage. Collaborative agencies working with Covered California include the QHPs, private sector consulting groups, Employment Development Department, Courts system, State Workforce Investment Board Rapid Response Teams, and California Department of Veterans Affairs. Covered California is committed to being an affordable option to the uninsured.

Emerging Potential Trends for Covered California Special Enrollment Period Enrollees

A presentation by actuarial John Bertko highlighted that the risk mix of special enrollment consumers is more costly than the risk mix of open enrollment consumer. It is suggested this may be from unsubstantiated qualifying events. Other observations from the presentation included that SEP members are younger and COBRA enrollment in some plans has declined slightly as individuals may be moving to the lower cost Covered California options. The exodus of individuals in COBRA is increasing average costs of COBRA. These trends are significant because special enrollment increased from 11% to 13% from year one to year two, and a growing, more costly risk pool must be accounted for in premium costs set by health plans.

At this time, individuals may sign up during special enrollment by attesting to a qualifying event. It is believed that requiring documentation of individuals seeking coverage during special enrollment, versus just attestation, would decrease the number of enrollees and improve the risk mix. With a poor risk mix, potentially from some consumers gaming the system, there could be significant increases in premiums. Such increases in premiums would be largely felt by the middle income and non-subsidized individuals (on- and off-exchange), as they would pay for these increases. Lower income individuals would be protected from these premium increases due to federal subsidies, but the federal budget would grow from an increase in premiums.

Subsequently, Covered California has proposed requiring documentation with verification of a qualifying event to enroll during special enrollment. A letter would be sent to the potential enrollee asking for valid documentation. The enrollee would need to provide proof within ten days to their potential QHP. The QHP would forward the documentation to Covered California. Covered California would then make final determinations to approve coverage (or not) based on the documentation.

Consumer advocates were unsupportive of the proposed plan, while health plan advocates backed the proposed change in special enrollment requirements. Consumer advocates are concerned documentation requirements will serve as insurmountable barriers that will unfairly block eligible, low-income, and non-English speaking consumers — as historically has been the case in the past with such requirements. The ten-day turnaround time for submitting documentation was especially troubling to consumer advocates as any individual would have a hard time retrieving documentation in such a small time frame. Even Medi-Cal allows 30 days for consumers to submit required documentation. Additionally, the proposed recommendation to send required documentation through the QHP was also a point of concern for consumer advocates as the health plans may not be the best administrative agency to handle this documentation; it would be better if Covered California had a mechanism to collect this information themselves. Health plan advocates support collecting valid documentation citing the integrity of the process and ensuring people are playing by the rules and not gaming the system. Without such mechanisms in place to ensure a fair system, premiums will increase and those playing by the rules will end up on the losing end.

2017 Qualified Health Plan Certification

During the past two board meetings, the details of the 2017 certification were proposed (January) and updated (February). In a following blog post this will be further discussed, as the information is robust.

Action Items

There were no action items during the January meeting. During the February meeting the Board adopted certified plan-based enrollment program regulations.

Next Meeting

There will be no Covered California meeting in March and the next meeting will be on April 7, 2016.

For all meeting materials click here.

Love and the Health Plans: MCO Tax Proposal Imminent with Details to Follow

Love is in the air and the largest health plan association is not immune. Several media outlets are reporting that a new Managed Care Organization (MCO) tax is getting support from the California Association of Health Plans.

Details of the new plan are not yet released, but it seems as though the insurance companies will give a little, to get a little. Insurance companies will pay a tax for the match from the federal government, but will also get some additional tax breaks for a three-year period.

The tax must get love (love is defined as a two-thirds approval vote) from the legislature. But, similar to every girl’s need for a best friends’ nod of approval when introducing a new beau, the nod of approval from the California Association of Health Plans on the new MCO tax plan is not insignificant.

The MCO tax has been a source of tension since the Centers for Medicare and Medicaid Services (CMS) informed California their current structure was not acceptable and is at risk of losing $1 billion for the Medi-Cal program. Currently, only Medi-Cal managed care plans incur the tax that is matched by the federal government for additional money, violating federal health care-related tax rules on who (“broad-based”) and how (“no hold harmless”) the tax is levied. Without the $1 billion, a new source of revenue would be needed to makeup for the loss from the MCO tax or cuts to the Medi-Cal program and/or cuts to other non-Medi-Cal programs supported by California’s General Fund would need to take place.

It is in everyone’s best interest that Cupid’s arrow was able to bring about the love fest between Governor Brown and the California Association of Health Plans. The final arrow has to hit its target — a 2/3rds vote in the legislature, as early as next week.

ITUP will be sure to report out the specifics of the plan as details emerge.

giphy               Snoopy Cupid and Charlie Brown