Author: Mike Sloyan

Glossary of Health Care and Coverage terminology

Download this Glossary in PDF ITUP Glossary of Terminology ITUP Glossary of Terminology.pdf

Accountable Care Organization (ACO): A team approach to patient care, including physicians, hospitals and other providers; they have a shared financial incentive to improve health outcomes, limit avoidable hospital visits, unnecessary tests, etc.; doctors/hospitals are paid based on their ability to meet quality-of-care indicators; goal is to coordinate providers and facilities so that they share cost savings from improving care for patients; might slow down rise in overall costs

Actuarial Value: The measure of likely payments for medical expenses in a particular health plan’s benefit design; measures the percentage of medical expenses paid by a health benefits package for a standard population (0.00 for a plan that pays nothing to 1.00 for a plan that pays all expected medical expenses).

Adverse Selection: Describes a situation where people at higher risk for health problems are more likely to purchase insurance than those who face smaller risk. This can lead to sharply rising premiums and declining participation, known as the death spiral; to counter this phenomenon, insurance companies may require medical histories and refuse policies or charge higher prices to those with serious illnesses.

Access for Infants and Mothers (AIM): Administered by the state, AIM provides health coverage to pregnant women and their infants with family income between 200% and 300% FPL; see Table 2.

AIDS Drug Assistance Program (ADAP): Covers the cost of authorized prescription drugs for adult California residents with AIDS whose household incomes are below $50,000. Individuals with incomes between 400% FPL and $50,000 are subject to a co-payment, while those below 400% FPL receive drugs free of charge.

American Recovery and Reinvestment Act of 2009 (ARRA): Commonly referred to as the economic stimulus package enacted by the 111th US Congress in Feb 2009; total of $147.7 billion to be directed towards health care, including enhanced Medicaid match, health information technology, NIH funding, VA, community health centers, training, research, etc.; in California’s case, federal matching rate increases from 50% to 61.6% (average for US is 56.2%), and DSH allotment increases by $26.8 million to counter projected increases gaps in coverage during the economic downturn.

Asset Test: A methodology used to evaluate an individual’s financial resources based on federal and state standards to determine Medicaid eligibility. Section 2002 eliminates the use of asset tests in 2014 for most of those eligible for Medicaid other than the aged and disabled.

Basic Health Plan (BHP): An option under the ACA (Section 1331) that allows states to establish a separate health program for individuals with incomes between 134% and 200% FPL. This coverage must be less costly to participants than the coverage they would receive through the California Health Benefit Exchange, and the federal government would cover up to 95% of the cost. Senate Bill 703 (Hernandez) would establish BHP in California.

Bundled Payments (“Episode of Care” Payments): A concept in which insurers pay a single price for services needed in a patient’s entire episode of care. This method aims to emphasize coordination of care among providers, and disincentivize unnecessary services.

CalHEERS: California’s new eligibility and enrollment information technology (IT) system that is known as the “California Healthcare Eligibility, Enrollment, and Retention System” (CalHEERS). The IT system will serve as the Exchange’s infrastructure to determine and store eligibility information for the Exchange, Medi-Cal and other public programs. It will allow people to receive real-time determinations. The project is a partnership between the Exchange, the Department of Health Care Services, and the Managed Risk Medical Insurance Board.

CalWorks: A California program that provides temporary financial assistance and employment focused services to families with minor children who have income and property below State maximum limits for their family size.

California Children Services (CCS): CCS provides diagnostic and treatment services, medical case management, and physical and occupational therapy services to children under age 21 with CCS-eligible medical conditions. Examples of CCS-eligible conditions include, but are not limited to, chronic medical conditions such as cystic fibrosis, hemophilia, cerebral palsy, heart disease, cancer, traumatic injuries, and other infectious diseases.

California Health Benefit Exchange (the Exchange): A health insurance marketplace where individuals, small businesses and employees of businesses can shop for coverage and receive transparent and comparable information about plan provisions It theoretically provides both the choice and bargaining power that was not previously available for individuals and small employers.  Referred to as the Connector in MA. The HIPC or PacAdvantage in California was a marketplace for small employers (1993-2006). May also distribute premium subsidies or refundable tax credits to improve affordability for individuals and small businesses.

Capitation: A flat rate payment system in which providers are given a set amount of money for patient care. This amount is based on the number of patients within the practice, and therefore relieves providers of their need to earn their income by billing for every possible patient service, allows them to focus more on patient health outcomes.

Children’s Health Insurance Program (CHIP): Program administered by the US Department of Health and Human Services that provides matching funds to states for health insurance to uninsured children in families with incomes that are modest but too high to qualify for Medicaid.  See Healthy Families and Table 2.

Certified Application Assistors (CAAs): Qualified individuals that help families, pregnant women and other individuals apply for health coverage or other necessary social services.

CPE (Certified Public Expenditures): Public expenditures that can be used as Medicaid matching funds (money that the state or counties spend and the federal government matches); a state or local government may certify incurred expenses and the federal share of the Medicaid payments are sent back to the state or county.

Community Based Adult Services program (CBAS): The CBAS program will be replacing the Adult Day Health Care benefit on March 1, 2012. The new program will provide necessary medical and social services to individuals with intensive health care needs.

Comparative Clinical Effectiveness: Comparison of two or more treatment options for a given condition, such as two different drugs, or a surgery vs. drug therapy; evaluations of CE consider not only the medical benefits, risks and outcomes, but may also consider costs; seen as a potential method of driving down health care costs

Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA): Law passed under President Reagan that creates an insurance option giving some employees the ability to continue their employment-based health insurance coverage after leaving employment at their own expense.

Co-ops (Cooperatives): Non-profit, member-run insurance plans that mirror credit and farming unions; some are both delivery systems and insurers (like Kaiser); oftentimes they have a longer-term focus, with an emphasis on preventative medicine; may be more successful in keeping costs down because of its non-profit member driven governance model.

Cost Sharing: The portion of payment an individual is responsible for not covered by the funding party.

Cost Shift: Economic transaction that may occur when the uninsured receive uncompensated care or when Medicare/Medicaid underpays doctors/hospitals and providers recoup their losses by “overcharging” private insurers.

County Medical Services Program (CMSP): Provides health coverage for low-income adults at or below 200% FPL who are ineligible for Medi-Cal (see “MIA”) in 34, primarily small rural CA counties. Yolo County will become a participating member of CMSP beginning July 1, 2012.

County Organized Health System (COHS): One of four types of Medi-Cal managed care programs in California, where subscribers must enroll in a single plan.  COHS counties include Orange, San Mateo, Solano, Santa Cruz and Santa Barbara and most recently include Ventura.

Coverage Initiative (CI): Initiative that began in 2007 as a part of a Section 1115 Waiver (informally referred to as the Hospital-Financing Waiver). Ten California counties were awarded funds to pilot efforts to expand and improve health care coverage for eligible low-income, uninsured individuals using county dollars matched by federal funds from the Safety Net Care Pool (SNCP). The federal government allotted $180 million in federal matching funds per year for experimental programs that expanded coverage to the uninsured and increased coordination of care and the use of prevention.

Coverage Levels: Refers to the four “precious metal” benefit levels that will be offered through the California Health Benefit Exchange, including platinum, gold, silver and bronze. These coverage levels will cover 90-60% of expected medical cost, respectively. Catastrophic plans will be available for individuals under 30 and those with financial hardships.

Delivery System Reform Incentive Pool (DSRIP): An aspect of California’s renewed §1115 Medicaid Waiver that allows the state’s 21 public hospitals to draw down as much as $6.5 billion in federal match over the next five years. The incentive program allows hospitals to enhance quality of care, improve the health of populations, integrate services, create health homes, and reduce per capita costs of health care.

Diagnosis-Related Group (DRG): The system used by Medicare to reimburse hospitals. Hospitalizations are classified based on 500 diagnoses, procedures, age, sex, discharge status and presence of complications/comorbidities and Medicare payments to hospitals are based on these groups or factors.

Disease Management: System of coordinated patient health care for chronically ill patients; process of improving quality of life for individuals by preventing/minimizing the effects of a disease, usually chronic, may reduce health care costs and may be tied to improved patient self-care.

Disproportionate Share Hospital (DSH): Medicare and Medicaid payments to a subset of hospitals that treat significant populations of indigent and publicly insured patients.

Donut Hole: Coverage gap in Medicare Part D prescription drug; after a $310 deductible, drug plan pays 75% of drug costs until total costs reach $2,830, at which point the enrollee is in the “donut hole”; when out-of-pocket costs equals $4,550, then the drug plan continues to cover most of the prescription drug costs.

Dual eligible: Individuals over the age of 65 who are entitled to Medicare Part A and/or Part B and are eligible for Medicaid; also known as Medi-Medis.

Early and Periodic Screening, Diagnosis, and Treatment (EPSDT): A health component of Medicaid for eligible low-income children.  EPSDT provides periodic screenings and referral to all medically necessary services available through Medi-Cal, including dental and vision services.

Electronic Medical Records (EMR): Digitized medical records that are intended to reduce health care costs and improve quality of care by avoiding duplicate procedures, reducing medical errors, increased storage and accessibility of records (including film, paper, photographs); providers given incentives to adopt EMR in the 2009 economic stimulus package.

Employer Tax Exclusion: Premiums for employer-sponsored health insurance are exempt from federal income and payroll tax; makes employer-based insurance plans more affordable than individual plans; benefits taxpayers in higher income tax brackets much more than those in lower ones.

Essential Health Benefits (EHB): A minimum set of benefits that plans within the Exchange (and select plans outside the Exchange) must offer to consumers. These benefits must include ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services and chronic disease management, and pediatric services (including oral and vision care).

Exchange Board: Appointed members of the California Health Benefit Exchange staff, including former Schwarzenegger chief of staff Susan Kennedy, former CA HHS Secretary Kim Belshé, CA HHS Secretary Diana Dooley, Board Chair of the Pacific Business Group on Health (PBGH) Paul Fearer, and President and CEO of The California Endowment, Dr. Robert K Ross. Appointed members serve four-year terms.

Family PACT (Planning, Access, Care and Treatment): Program that provides no-cost family planning services to low-income men and women, including teens; those without insurance, with insurance but no family planning/birth control coverage, with insurance but have not met their deductible, without Medi-Cal, with Medi-Cal but no family planning coverage, or those with insurance/Medi-Cal but want to keep family planning services confidential are eligible.

Federal Financial Participation (FFP): same as FMAP. E.g. California receives 50% FFP on its Medicaid program, 67% FFP on its Healthy Families program and will receive 100% FFP for the new Medicaid eligibles.

Federal Medical Assistance Percentages (FMAP): Percentage rates used to determine the amount of federal and state matching funds to certain medical/social service programs; FMAP programs are joint federal-state partnership programs like Medicaid (called “Medi-Cal” in California) and CHIP (called “Healthy Families” in California).

Federal Poverty Level (FPL): Poverty “threshold” as determined by the federal government annually; 100% of FPL of family of four in 48 contiguous states in 2011 was $22,350 (200% FPL would be twice the FPL, 300% thrice and so on).

Federally Qualified Health Center (FQHC): Federally designated community-based organizations that provide comprehensive primary care and preventive care to persons of all ages, regardless of their ability to pay.  FQHCs are reimbursed at higher rates than other non-FQHC clinics, and under the new §1115 Medicaid Waiver, each county must contract with at least one FQHC clinic.

Federally Qualified Health Center “look-alike:Health centers that operate in compliance with the requirements of the FQHC program but do not receive grant funding under §330 of the Public Health Services Act.

General Fund: General Fund revenue is mostly derived from personal income tax, sales tax and corporation taxes, and are used to fund education, health and human services, and correctional programs.

Geographic Managed Care (GMC): One of four types of Medi-Cal managed care programs in California, where subscribers choose among multiple private insurers.  San Diego is an example of a GMC county.

Global Budgeting: This is similar to capitation in that it is also a flat rate payment system in which providers are given a set amount of money for patient care. However, in global budgeting the set amount is negotiated based on the providers (typically a hospital) budget from the preceding year.

Group Insurance: Insurance that covers a group of people, usually employees of a common employer, occasionally professionals in a common group or members of societies (known as associations); can help reduce adverse selection by creating a pool of eligible individuals who belong to a group for reasons other than for purchasing insurance.

Guaranteed Issue: Indicates that insurance applicants cannot be turned down for coverage based on health status (e.g. most small employer health plans are guaranteed issue, most individual policies are not).

HRA (Health Reimbursement Arrangement)/FSA (Flexible Spending Account)/MSA (Medical Savings Account): Types of tax-free health care spending accounts. They are often associated with high deductible or catastrophic coverage.

Health Information Technology (HIT): Comprehensive, computerized management of health information and its secure exchange between consumers, providers, government and quality entities, and insurers; implementation will ideally improve care quality, prevent medical errors, reduce costs, increase efficiency, and decrease paperwork and expand access to affordable care; includes electronic medical records (EMR), and computerized provider order entry (CPOE) for prescription drugs.

Healthy Families Program: California’s version of the Children’s Health Insurance Program (CHIP) that provides subsidized insurance for children in families with incomes up to 250% of FPL and not eligible for no-cost Medi-Cal; administered at the state level by the Managed Risk Medical Insurance Board (MRMIB); see Table 2.

Healthy Kids: Provides coverage to children under age 19 with a family income at or below 300% of FPL and are not eligible for Medi-Cal or Healthy Families due to income or immigration status.

High Risk Pool: Pools organized by the state to serve those who are considered medically uninsurable, usually those who have been denied individual health coverage due to a serious health condition; plans are usually more expensive than traditional individual insurance, but many states cap rates between 125-150% of base individual market rate. The California Major Risk Medical Insurance Program (MRMIP) enrolls slightly over 7,000 of California’s estimated 200,000 medically uninsurable individuals. PCIP (Pre-Existing Condition Insurance Pool) enrolls about 6500 of the medically uninsurable.

Hybrid Model: One of four county models used to finance/deliver care to indigent populations.  Hybrid counties provide outpatient care in county clinics and pay for private hospital care; the hybrid model is a blend of the provider and payor model.

Independent Practice Association (IPA): Association of independent physicians, or other professionals that contract with managed care plans and delivers professional services to the subscribers of managed care organizations.

Individual Mandate: Requires that individuals purchase health insurance or pay a penalty; ideally solves adverse selection problem and allows guaranteed issue of individual insurance; some are concerned that providers and insurance companies will charge even more since they are no longer constrained by what customers are willing to pay in a voluntary market.

Individual Market: Composed of individuals who purchase coverage directly from the insurer and not through an employer or a public program; coverage may be less and cost more than in the group market because individuals lack bargaining power and plans have higher administrative costs due to underwriting (evaluation of each applicant’s health status), marketing and paperwork.

Intergovernmental Transfer (IGT): Transfer of funds from different levels of government, which is used to draw federal matching funds for various health and human services programs. Unlike CPEs, IGT funds can sometimes be matched without first incurring the initial expenses.

Legislative Analyst’s Office (LAO): One of its most important responsibilities includes analyzing the annual Governor’s budget and publishing a review at the end of February (Analysis of Budget Bill), which has individual department reviews and recommendations for legislative action; provides other fiscal and policy information, advice and options to the California Legislature.

Long-Term Care: Care: Care (both medical and non-medical) to people who have a chronic illness or disability that assists them with support services such as activities of daily living. Long-term care can be provided at home, in the community, in assisted living settings or in nursing homes.

Low-Income Health Program (LIHP): An aspect of the renewed §1115 Medicaid Waiver that allows counties to provide coverage for low-income adults (both MIAs and parents). The program includes both Medicaid Coverage Expansion (MCE), which covers adults with incomes between 0 and 133% FPL, and the Health Care Coverage Initiative (HCCI), which covers adults with income between 133 and 200% FPL. Eligibility is assessed based on income as a percent of the FPL and varies by county.

Managed Care: Used to describe a variety of techniques used by health plans to reduce the cost of providing health benefits and improve the quality of care; according to the US National Library of Medicine: “…a variety of mechanisms, including: economic incentives for physicians and patients to select less costly forms of care; programs for reviewing the medical necessity of specific services; increased beneficiary cost sharing; controls on inpatient admission and lengths of stay; the establishment of cost-sharing incentives for outpatient surgery ; selective contracting with health care providers; and the intensive management of high-cost health care cases.”

Managed Care Organization (MCO): An insurer or health that contracts with individual healthcare providers or group of medical service providers to provide a variety of health care services to enrolled individuals.

Medi-Medi (also see dual eligible): People eligible for both Medi-Cal (low-income) and Medicare (over 65 and/or disabled).

Medically Indigent Adult (MIA): Person who does not have health insurance and is not eligible for Medicaid, because the person is not disabled or a senior and does not have minor children living at home and is therefore not Medi-Cal eligible with FFP until 2014 or at state option April of 2010. MIAs were on Medi-Cal until 1983 when their eligibility was terminated and they became a county responsibility.

Medicaid (Medi-Cal): US health care program funded jointly by the states and federal government and is for eligible individuals and families with low-incomes and resources; Medi-Cal is the California Medicaid program; individuals must be residents of CA and have incomes less than 100% FPL for children ages 6-19 and Qualified Medicare Beneficiary Program, 106% of FPL for parents, 133% FPL for children ages 1-6 and the elderly and disabled, 200% FPL for pregnant women, infants up to age 1 and 250% of FPL for Working Disabled Individuals. All individuals receiving cash assistance (SSI and TANF) are eligible. In 2014 pursuant to the ACA, the MIAs, children and adults with incomes under 133% of FPL will become Medi-Cal eligible.

Medical Home: An approach to providing comprehensive primary care that facilitates partnerships between individual patients and their personal physicians and when appropriate, the patient’s family; emphasis put on whole person coordinated/integrated care, enhanced access to care, quality and safety.

Medi-Cal Medically Needy Program: Medicaid program that provides share-of-cost full scope Medi-Cal to “medically needy” parents, children, disabled and elderly above the income threshold for no-cost Medi-Cal.

Medicare Advantage (MA, a.k.a. Medicare+Choice): Medicare Part C option for Medicare beneficiaries to receive their Medicare benefits through private health insurance plans instead of the original Medicare plan (Parts A and B); offers at least the same benefit package as Medicare; members pay monthly premium in addition to Medicare Part B premium.

Medicare Advantage FFS (Fee For Service) plan: Type of Medicare health plan in which a member may visit any Medicare-approved physician/hospital that accepts the plan’s payment; insurance plan, instead of Medicare program, decides how much it will pay; may include extra benefits the original Medicare plan does not cover. Also known as Medicare Part C.

Medicare Part D: Federal program to subsidize the costs of prescription drugs for Medicare beneficiaries that went into effect January 1, 2006; beneficiaries can receive this drug benefit through two types of private plans: the Prescription Drug Plan (PDP) for drug coverage only, or the Medicare Advantage plan that covers both medical services and prescription drugs (MA-PD), which is part of Medicare Part C.

Medicare Payment Advisory Commission (MedPAC): Independent US federal body whose primary role is to advise the US Congress on issues affecting the administration of the Medicare program; mandate is to advise Congress on payments to private health plans participating in Medicare and health providers serving Medicare beneficiaries, as well as evaluating access and quality of care received.

Meaningful Use: Describes objectives for the implementation of health information technology (HIT) that providers must qualify for in order to receive bonus payments through the HITECH Act.

Minimum Loss Ratio (MLR): Proposed requirement that health insurers spend a specified minimum percentage (e.g. 85%) of premium dollars on medical care; sets a maximum cap on administrative and other non-benefit expenses.

Modified Adjusted Gross Income (MAGI): A methodology used in calculating taxable income for the IRS which will be used to evaluate an individual’s income and determine their eligibility for Medicaid beginning in 2014. Section 2002 of the ACA requires states to eliminate the asset test and transition to the Modified Adjusted Gross Income (MAGI) methodology in 2014. Individuals whose eligibility will continue to be determined using the asset test are often referred to as “non-MAGI.”

Navigator: According to the ACA, an Exchange must establish a program under which it awards grants to entities called navigators. Navigators conduct public education and distribute fair and impartial information about enrollment and the availability of tax credits/cost-sharing reductions. Information must be provided in a manner that is culturally and linguistically appropriate to the needs of the population being served by the Exchange.

Notice of Proposed Rule Making (NPRM): A public notice issued by law when one of the independent agencies of the United States government wishes to add, remove, or change a rule or regulation as part of the rulemaking process. It initiates the process for public comment prior to issuance of a final and binding rule.

Office of Statewide Health Planning and Development (OSHPD): Department that collects and reports health care data and administers programs to promote health care accessibility.

PacAdvantage: A purchasing pool through which employers can offer health insurance through a variety of insurance companies and HMOs. PacAdvantage, managed by Pacific Business Group on Health, was formed in 1992 as part of a state initiative to make health insurance more affordable and offer more choices to small businesses. The pool closed at the end of 2006.

Parity: Requirement through the Mental Health Parity Act, which legislates that annual/lifetime dollar limits on mental health benefits are to be no lower than any such dollar amount for medical/surgical benefits offered by a group health plan. Small employer and individual plans are exempt from parity requirements until 2014.

Pay-or-Play: Requires employers to either provide health insurance for employees or pay a fee/tax to offset costs the government incurs to provide health care for the uninsured; could significantly reduce the number of uninsured workers, but could have a negative effect on employment (i.e. reduced wages or lost minimum wage jobs to compensate for increased coverage costs)

Pay-for-Performance (P4P): Payment arrangement that rewards providers or plans meeting pre-established targets for delivery, quality and efficiency of health care services; have also proposed disincentives, such as negative consequences for a high level of medical errors; fundamental change from fee for service payment.

Payor County: One of four county models used to finance/deliver care to indigent populations.  Payor counties pay for care delivered in private hospitals/clinics; examples include Orange, San Diego, and San Luis Obispo.

Primary Care Provider (PCP): Family physician who provides the first contact for a person with an undiagnosed health concern; a patient’s regular source of care and is usually the first medical practitioner contacted by a patient due to ease of communication, location, familiarity and increasingly manages and facilitates the patients’ access to the rest of the medical system.

Provider County: One of four county models used to finance/deliver care to indigent populations.  Provider counties deliver care in their own hospitals/clinics; examples include Los Angeles, Riverside, San Bernardino, Alameda, and San Francisco.

Portability: Ability to preserve and maintain health insurance coverage for people who change jobs, or change status, such as marriage and divorce.

Pre-Existing Condition: Medical condition that occurred before an insurer’s health coverage began; used as exclusions by insurance industry to prevent adverse selection by potential customers who buy coverage only when they need care by denying coverage, excluding the condition or charging higher premiums. Examples can range from high blood pressure, family history of cancer, to acne and domestic violence; a large majority of Americans favor a requirement that insurance companies provide coverage for those with pre-existing conditions.

Pre-Existing Conditions Insurance Plan (PCIP): As California’s new high-risk pool, this federally funded program was designed as a coverage option for individuals with pre-existing conditions until 2014. At this time, insurers will be prohibited from denying coverage or charging higher rates to anyone with a pre-existing condition.

PROMETHEUS Payment Systems: A payment system in which the reimbursement is set on a patient-specific budget for an entire episode of care. This method adjusts for the severity/complexity of the individual’s condition, and only provides a portion of payment for avoidable complications, encouraging collaboration among physicians, hospitals and providers.

Proposition 13: Amendment to the Constitution of CA in 1978 that resulted in a cap on local property taxes in the state, reducing them by an average of 57%; also introduced language requiring two-thirds majority in both legislative houses for future increases in all state tax rates, including income tax rates. Criticized for curtailing local governments’ ability to raise revenues for local needs and hampering state’s ability to raise sufficient revenues to avoid drastic cuts in state services, including publicly funded health services programs, lauded by its supporters for holding down local and state government spending.

Public Private Partnerships (PPP): Government and private ventures that are funded and operated through a partnership of government and one or more private sector entities; involves a contract between a public sector authority and a private party, in which the private party collaborates with the public authority and assumes substantial financial, technical, and operational risk in the project. Example, community clinics in Los Angeles took over the operations of county clinics that deliver primary care to the uninsured and other low-income patients with some financial assistance from the county with funds provided by the federal government.

Purchasing Pool: See Health Insurance Exchange. Seeks to give small firms and individuals similar market power advantages that large firms enjoy when they purchase insurance; intended to simplify administration, decrease premiums, and stabilize health costs as a result of risk pooling.

Qualified Health Plan: Health plans contracted by the Exchange that must offer the essential health benefits, meet marketing requirements, ensure sufficient choice of providers, include community providers, implement quality improvement strategies, present health benefits in a standard format and report data on quality.

Quality Improvement (QI): Formal approach to the analysis of performance (quality) and systematic efforts to improve it; quality improvement organizations (QIO) monitor the appropriateness, effectiveness and quality of care provided to Medicare beneficiaries.

Rate Bands: Limits on the amounts insurers can vary premiums based on age, health status and other factors; may set a floor below and a ceiling above an index rate (or average premium); for example small employer premiums in California may vary no more  +/- 10% based on the health status of an employer’s workforce.

Realignment Funding: Funds derived from a portion of the state sales tax and vehicle licensing fees.  These funds are allocated to counties to provide health care, mental health and social services to their indigent population.

Request for Proposal (RFP): A document that an organization posts to elicit bids from potential vendors for a product or service.

Ryan White HIV/AIDS Program: The Ryan White Program works with cities, states, and local community-based organizations to provide HIV-related services to those who do not have sufficient health care coverage or financial resources for coping with the disease. Ryan White fills gaps in care not covered by other sources. The program is administered by the U.S. Department of Health and Human Services (HHS), the Health Resources and Services Administration (HRSA), and the HIV/AIDS Bureau (HAB).

Safety Net: Hospital, clinic or health system that provides a significant volume of care to low-income, uninsured and vulnerable populations; distinguished by their mission or commitment to provide access to care for people with limited or no access to health care; typically maintains an “open door” and offers patients care regardless of ability to pay.

Safety Net Care Pool Fund (SNCP): Funds uncompensated outpatient care to the uninsured; cannot be used for individuals who do not have requisite legal documentation status.

Seniors and Persons with Disabilities (SPDs): Population of adults (seniors and the disabled) eligible for Medi-Cal who will be enrolled in Medi-Cal managed care as dictated by the 2010 §1115 Medicaid Waiver.

Section 1115 Waiver: Federal waivers that provide states with the opportunity to test new or existing approaches to financing, administering and delivering care to its Medicaid and CHIP populations.  California received federal approval for one in 2005, which was renewed in 2010 to help pay for care to MIAs. The recently approved federal waiver does the following:

1. Funds coverage for medically indigent adults (MIAs) and other low-income adults in county programs (LIHP).

2. Moves some seniors and persons with disabilities into managed care and better coordinates the care of children in the California Children’s Services (CCS) program

3. Funds a variety of state programs for the uninsured and public providers’ uncompensated care

  1. 4.  Funds the evolution of public hospitals into models of coverage (DSRIP).

Single Payer System: Public universal health insurance which collects all medical fees and pays for all services through a single government source; single payer systems may contract for private health care services (Canada’s Medicare) or own/employ resources and personnel (UK’s National Health Service).

Sliding Scale: Variable costs for products/services/taxes based on one’s ability to pay.

Small Business Health Option Program (SHOP): Health insurance marketplace within the Exchange for small business employers.  Eligible employers can receive federal tax credits to be used for health insurance coverage through SHOP.

Special Fund: Funds created administratively or by statute, that are restricted to specific programs/activities.  Examples include the Mental Health Services Fund, which collects funds through 1% income tax on personal income in excess of $1 million and is used towards statewide mental health services outlined in the Mental Health Services Act.

Subsidy: In terms of health care, financial assistance from government to health care programs to cover/provide service to low, moderate, middle and upper income individuals.

Telemedicine: Transferring of medical information through the Internet for consultation purposes, as well as remote medical procedures or examinations; can benefit rural communities where specialists may not be readily available.

Two-Plan Model: One of four types of Medi-Cal managed care programs in California, where subscribers choose between a local organized non-profit safety net plan and a private insurer.  Two-plan model counties include Los Angeles, Alameda, San Francisco, Riverside and San Bernardino.

Uncompensated Care: Total amount of health care services provided to patients who are either unable or unwilling to pay. Uncompensated care includes both 1) charity care, the dollar amount of free care provided to patients who are determined by the hospital to be unable to pay their bill, 2) bad debt, the unpaid obligation for care for patient’s who are unwilling to pay their bill and 3) the difference between a Medi-Cal or Medicare patient and a provider’s cost.

Value-Based Purchasing: Concept that buyers should hold providers of health care accountable for improving quality and efficiency of care; brings together information on quality of health care, including patient outcomes and health status; focuses on managing the use of the health care system to reduce inappropriate care and to reward/identify best-performing providers.

Workforce Development: Wide range of activities, policies and programs that work to enable individuals to pursue careers in health care, frequently targeted to disadvantaged populations and individuals.


Qualified Health Plan Recommendations

March 27, 2012

Mr. Peter Lee, Executive Director
California Health Benefits Exchange
2535 Capitol Oaks Drive, Suite 120
Sacramento, CA 95833

Re: Contracting with Qualified Health Plans (QHP’s)

Dear Peter,

Thank you for the opportunity to comment on the proposed criteria for qualified health plans contracting with the Exchange. Insure the Uninsured Project’s top priorities are price, quality, simplicity to the consumer, innovative approaches to reducing health costs and improving health outcomes, long-term price stability and timely access to the essential health benefits. We will try to answer as many of your thoughtful and detailed questions as we think we have helpful input.

Read more by downloading the pdf below…

QHP Recommendations QHP Recommendations.pdf

Conference Themes

It’s been one week since our 16th Annual Statewide Conference took place and we’re hard at work getting all conference materials and recordings posted.  We wanted to call to your attention our conference papers on the waiver, the exchange, and Medi-Cal simplification: waiver here, the exchange here, and Medi-Cal program simplification here.  Specific papers available at our conference are listed on the conference page.

Conference Materials Now Available!

Conference materials are now available on the conference page, accessible by clicking the ‘Conference’ link in the upper right corner of the site or by visiting The conference binder is password protected for copyright purposes. That password was emailed to all conference attendees but if the email didn’t go through, send an email to with subject line Conference Binder Password.

I will be posting audio recordings and session notes later this week into next week so check back periodically for more content.

Conference Materials Now Available

Conference materials are now available for download on the conference page in the upper right corner of the page.

Conference Sold Out!

Due to high demand this year, ITUP’s upcoming conference California’s March to 2014: Paving the Road to Health Care Reform is SOLD OUT.  We won’t be able to accept any day-of registration as we will be at full capacity.  Doors open at 7:30am on February 7 – get there early to get a good seat.

Exchange Recommendations January 2012


In 2011, ITUP hosted two issue workgroups on the Exchange and 25 regional workgroups on various health policy topics throughout California’s nine regions. Workgroups brought together policy makers, counties, health plans, employers, unions, community groups, providers, advocates, and other public and private stakeholders throughout the state. This brief will summarize participant thoughts and recommendations regarding the creation of the California Health Benefit Exchange. Overall, participants feel that aggressive outreach, a level playing field, continuity of coverage, program simplification and cultural/linguistic appropriateness are some of the keys to a successful Exchange.

Continue Reading the full recommendation (pdf)

Exchange_Reco_01202012 Exchange_Reco_01202012.pdf

Summary of §1115 Waiver


The §1115 Waiver provides a bridge or stepping-stones to implementation of the Affordable Care Act of 201o (ACA). The projected value to the state is more than $10 billion in federal match over the next five years. This briefing paper describes the evolution from our current system to the new system outlined in the ACA, and the waiver’s crucial role in facilitating this transition. [i]

California’s current system for the uninsured is based on a mixture of county and state health programs,[ii] with significant federal subsidies for safety net hospitals[iii] and community clinics[iv] that serve large shares of the uninsured. Estimated county spending on care to the uninsured in California is over $2 billion per year.[v]  Typical care to the uninsured is episodic and highly reliant on inappropriate use of hospital emergency rooms as the ER is open to all regardless of insurance status or ability to pay.

The county system is funded by state realignment funds (a share of the state sales tax and vehicle license fees) to counties, federal DSH and Safety Net Care Pool (SNCP) funds, local matching funds and federal §330 funds.[vi] State programs for the uninsured are funded by the state General and Special Funds with some limited federal matches. There is significant cross subsidization between the state’s Medi-Cal program and county and provider-based care to the uninsured. Ten California counties received a share of $180 million annually in federal match between 2007 and 2010 for a portion of their improved care/coverage to uninsured adults; these were known as coverage initiatives.[vii]

The 2010 federal waiver makes several very important improvements:

  1. Funds coverage for medically indigent adults and other low-income adults under 200% of FPL in evolving county programs (Low Income Health Program) with a federal match at county option. An estimated $2.9 billion in federal match is available, of which up to $6oo million could come from the Safety Net Care Pool.
  2. Moves some seniors and persons with disabilities into managed care, with a projected General Fund savings of $180 million annually.
  3. Better coordinates the care of children in the California Children’s Services program
  4. Funds a variety of state programs for the uninsured and public providers’ uncompensated care with $7.5 billion in Safety Net Care Pool funds.
  5. Funds the evolution/transformation of public hospitals into models of coverage through the Delivery System Reform Incentive Pool (DSRIP).  Up to $6.5 billion from the SNCP is available for DSRIP.

The waiver has been in effect since November 1, 2010. Low Income Health Program (LIHP) coverage started June 1, 2011 although funding for the 10 coverage initiative counties was to be effective November 1, 2010. The details of the Delivery System Reform Incentive Pool (DSRIP) were negotiated between the state, CMS and the California Association of Public Hospitals, retroactive to November 1, 2010.[viii]

In 2014, the ACA will cover uninsured adults and children up to 133% of FPL ($14,000 for an individual) through Medi-Cal managed care, and it will subsidize private coverage for the uninsured, low-wage small employers and the private individually insured with incomes up to 400% of FPL ($88,000 for a family of four) through private (and public if any participate) health plans contracting with the Exchange.[ix] In 2014, the federal government will pay 100% of the costs of the new Medicaid eligibles, phasing down to 90% by 2020. The state’s potential benefit of these provisions is maximally estimated at $18 billion annually by 2018.[x] Beginning in 2014 6 million of California’s 7 million[xi] uninsured will have a choice of managed care plans, providers and benefits through Medi-Cal or the Exchange.

More than 4.5 million of California’s uninsured will be eligible for Medi-Cal expansion (3 million) or for subsidies in the Exchange (1.7 million).[xii] In April 2010, states that covered their Medically Indigent Adults (MIAs), like Arizona, Oregon, New York, Massachusetts, Maine, Vermont and Minnesota, became eligible for federal Medicaid matching funds.  This new waiver allows California counties, who choose to participate in the waiver funding for care to MIAs, to receive comparable match during the years 2011 through 2013, but they must upgrade their systems to meet the minimum standards set by the waiver.[xiii] In 2014 (Medicare) and 2017 (Medi-Cal), the federal government will begin to reduce federal DSH fund subsidies for hospitals’ uncompensated care, based on the assumption that most of the uninsured will enroll in coverage, reducing hospitals’ uncompensated care.[xiv]

Continue reading the full summary (pdf)

[i] This is an update on our earlier paper dated January 18, 2011, based on the most recent Terms and Conditions of the §1115 waiver

[ii] Welfare and Institutions Code §17000 requires counties to provide for care to the county’s indigent residents. We estimate that counties spend on average less than $300 per uninsured – a figure we derive by dividing total reported county spending on the uninsured by the California Health Interview Survey reports on the numbers of uninsured Californians.

In 1983, the state of California terminated eligibility for the medically indigent adults (MIAs) who were not eligible for a federal match, and returned this responsibility to the counties with 70% of what the state at that time paid for their care. That funding eroded over time and with gubernatorial vetoes, and was combined with state’s AB 8 county health funding into a financial package, referred to as realignment (a share of the state sales tax and vehicle license fees). There are three separate realignments to county government: health, mental health and social services, and counties can transfer funds among these accounts in a very limited fashion.

[iii] Hospitals receive federal Medicaid DSH funds to pay for their uncompensated care to the uninsured and Medi-Cal patients. In the 2005 waiver, DSH funds were split between public and private hospitals; publics paid the match for their share of DSH funds with a local match, and the state paid the match for the privates. Private hospitals received $475 million for virtual DSH and public hospitals received over $1 billion annually for DSH. DSH hospitals may also receive federal Safety Net Care Pool (SNCP) funding for their care to the uninsured. SNCP was also a construct of the 2005 waiver and replaced SB 1255 funds, which were used to pay for care to the uninsured in hospital trauma centers and emergency rooms. Private hospitals received $292 million through the private supplemental program, and public hospitals received $580 million annually through SNCP. Counties also have special funding arrangements with hospitals, such as the Los Angeles County arrangements with trauma centers and with private hospitals in the closed MLK Hospital’s catchment area.

[iv] Some community clinics receive federal §330 funds that help pay for their care to the uninsured; clinics reported receipt of over $350 million in federal grants and contracts in 2009. In the past most clinics also received state Early Access to Primary Care (EAPC) funding for care to the uninsured; this funding has been decimated by recent state budgets. Clinics are eligible to receive SNCP funding as well for their care to the uninsured. Los Angeles with its PPP (Public-Private Partnerships) is a good example of clinics collaborating with a county system while being funded by federal waiver funds.

[v] County spending has been reported by counties under the MICRS and CMSP data sets. When the state cut/eliminated Proposition 99 funds for county health, counties stopped sending MICRS reports; thus there is no good data for county health spending in large counties after 2007. Small (CMSP) counties continue to report, but the extent of this data has in our judgment deteriorated since CMSP subcontracted with Blue Cross.

[vi] All of these funding streams are reported in Yoo, 2006-2009 Overview of California’s Uninsured (ITUP, November 2010) at They are reported for each individual county and for the hospitals and clinics in each county at

[vii] These initiatives and their progress are described in a series of ITUP reports. Espejo, Overview, Update and Summary of California’s §1115 Waiver Coverage Expansion Initiatives (November 2007) at and Pizzitola, California’s Coverage Initiative, Year One Challenges and Successes and a Forecast for Year Two (ITUP, December 2008) at  See also, UCLA Center for Health Policy Research, Interim Evaluation of Health care Coverage in California (August 13, 2009) at  Ten counties received funds through this competitive grant process. Kern and Ventura sought to enhance primary care and working relationships with clinics as did Los Angeles. San Diego targeted high-risk patients with diabetes following the Project Dulce model. Orange overhauled its entire system and was able to increase outpatient care, reduce emergency and inpatient care and nearly double the numbers of uninsured indigent treated in the county system. San Francisco funded its Healthy San Francisco program, while Alameda targeted better and more responsive care to its “frequent fliers”, those with unusually high use of county health services.

[viii] See revised Terms and Conditions Attachments P and Q.

[ix] ITUP, Section by Section Guide to Health Reform (April 12, 2010) at States also have an option to provide basic health plan coverage to the uninsured between 133 and 200% if FPL if they are willing to accept a 5% reduction in their federal Exchange allocation; some safety net providers favor this option. This might look like the Healthy Families program for children or a slimmed down Medicaid benefits package. ACA §1331

[x] See ITUP, Before and After Reform in California (March 2010) at In this analysis, we compared 2006 county spending on the uninsured, the 2014 projections and the 2018 projections for implementation of ACA. We used the CBO analyses of ACA and the California Department of Health Care Services analyses of the impacts on ACA in California. The analyses are for each county and for statewide implementation. The statewide figures are that California counties reported spending $1.7 billion on the uninsured in 2006. The projected benefit to California of ACA in 2014 for the Medi-Cal expansion and the Exchange subsidies is $5 billion. By 2018 as we reach full enrollment and if health costs continue to rise at 6% annually, the projected benefit to California of ACA in 2018 reaches nearly $18 billion.

[xi] California’s uninsured numbers are climbing due to the recession-induced loss of employment-based coverage. Lavaredda, Brown et al, Number of Uninsured Jumped from 6.5 Million to More than 7 Million from 2007 to 2009 (UCLA Center on Health Policy Research, March 2010) at

[xii] Lavaredda, Brown et al, National Health Care Reform Will Help Four Million Uninsured Adults and Children in California (UCLA Center on Health Policy Research, March 2010) at

[xiii] Center for Medicare and Medicaid Services, California Department of Health Care Services Bridge to Reform Demonstration, 11-W-00193/9 (November 2, 2010) Sections 42-76.

[xiv] ITUP, Section by Section Guide to Health Reform (April 12, 2010), ACA Section 2551. The federal Medicaid DSH reductions start at a modest $500 million in 2014 and reach $5 billion annually in 2018.

Medi-Cal Transformation


In 2014, up to three million uninsured low income Californians will be eligible to enroll in Medi-Cal, joining the 7.3 million already in the program and another 3 million uninsured will be eligible for private insurance the Exchange.[i] Some want to shift an additional 1 million persons from the Exchange to a Basic Health Plan operated by Medi-Cal.[ii]

Projected participation rates in Medi-Cal vary by a factor of two.[iii] If we fail to fix Medi-Cal we will likely have low enrollment. New program participants will need an eligibility and enrollment system that is easy to understand and use, a primary care doctor and a well-managed delivery system built on prevention and dedicated to improvement in health status.

Since the federal government will pay 100% of the costs of the new eligibles for the first three years, eventually declining to 90% by 2019, this is an enormous opportunity and a daunting challenge for the Medi-Cal program, for those policy makers, advocates and clinicians who care about the health status and health needs of low-income Californians.

To take advantage of the opportunity, we need to address the following before 2014: financing the system, simplifying eligibility and enrollment, and improving reimbursement, outcomes and provider participation. Without making these improvements, participation, subscriber health outcomes and provider satisfaction are likely to be low.[iv]This paper is intended to promote this discussion and hopefully its resolution.

Continue Reading the full text (pdf)

Medi-Cal_Transformation_01202012 Medi-Cal_Transformation_01202012.pdf

[i]Shana Lavaredda and Livier Cabezas, Two thirds of California’s 7 Million Uninsured May Obtain Coverage Under Health Care Reform (UCLA Center For Health Policy Research, February 2011) at www;

[ii] Mercer, Exploring the Financial Feasibility of Basic Health Plan in California (California HealthCare Foundation, May 12, 2011) at

[iii] Long P, Gruber J, “Projecting the Impact of the Affordable Care Act on California,” Health Affairs 30, No. 1 (2011): 63-70 project Medi-Cal participation at 1.7 million and California’s Exchange participation at 4 million. Sommers, B. and Epstein, A, Medicaid Expansion, the Soft Underbelly of Health Care Reform (November 25, 2010) N Eng J of Med 2010; 363:2085-2087. Massachusetts and Pennsylvania had a 80% participation rate, California a 60% participation rate and Oregon and Florida a participation rate of slightly over 40%. The Lewin Group projects added California Medicaid enrollment of 2.3 million due to the ACA. Sheils, J. et al. The Impact of the Medicaid Expansions and Other Provisions of Health Reform on State Medicaid Spending (The Lewin Group, December 9, 2010) at

[iv] Ibid.

California’s §1115 Waiver Implementation


California’s §1115 waiver,[1] approved on November 1, 2010, provides the vital infrastructure to bridge current coverage options into 2014 and offers immediate support and relief to the financially hard pressed[2] safety net system and the individuals they serve.  Local communities face the challenge of implementing three new programs at the same time. California counties are at widely divergent starting points[3] and their efforts need to lead to a unified statewide effort by 2014. This paper provides a snapshot overview of local implementation of the three following elements of the waiver.

The LIHP (Low Income Health Program) provides coverage for low-income adults, both MIAs (medically indigent adults) and parents: Counties can match their spending[4] on eligible uninsured adults with an equal amount of federal matching funds; i.e. counties receive a 50/50 match so that a county that spends $100 million through the LIHP can receive $50 million in FFP. They can cover both physical health and behavioral health services to uninsured adults with the federal funds, and have the flexibility to set their income levels at any point up to 200% of the federal poverty level (roughly $22,000 for an individual, $44,000 for a family of four).

LIHP funds come with important requirements to upgrade county care to the MIAs in preparation for 2014: 1) timely and geographic access[5] to primary, specialty and urgent care, 2) eligibility determinations that comply with federal DRA (Deficit Reduction Act) rules, including enrollment and issuance of ID cards, 3) inclusion of at least one FQHC (federally qualified health center) clinic[6] paid at FQHC rates in the provider network, and 4) a minimum payment for genuine emergency care[7] to county indigents enrolled in LIHP, regardless of where services are delivered.

DSRIP (Delivery System Reform Incentive Pool): This aspect of the waiver provides funding for public hospitals[8] to upgrade and integrate their delivery systems so that by 2014 they have the requisite quality, performance and efficiency to participate in a competitive health market with patient choice of providers and plans through Medi-Cal and the Exchange. These systems must strengthen their ability to manage care of the chronically ill in outpatient settings, integrate with behavioral health, develop medical homes, implement disease registries, improve patient satisfaction and reduce common and avoidable errors in hospital inpatient care.[9] Public hospitals will be eligible to receive incentive payments based on level of achievement of various DSRIP milestones established over the 5-year period. Counties can finance their DSRIP improvements with Intergovernmental Transfers (IGTs).

Mandatory Managed Care for Seniors and Persons with Disabilities (SPDs): In California’s managed care counties, most seniors and persons with disabilities (SPD) will be enrolled in managed care; those with joint Medicare and Medi-Cal coverage (Medi-Medis) are exempt, but may enroll voluntarily. Other voluntary groups include foster care children, those identified as long term care (LTC) recipients, those with other health insurance, those with share-of-cost Medi-Cal, and California Children Services (CCS) children. Enrollment is phased in over the course of the year. Managed care plans must assure continuity of care, risk assessments and treatment plans for the new enrollees.[10] Between a quarter and a third of the new managed care population has both physical and behavioral health diagnoses, requiring better coordination of the physical and mental health sectors.[11]

In preparing this report, we reviewed county documents submitted to the state, the discussions at ITUP regional and issue workgroups[12] and interviewed over 40 individuals involved in local implementation efforts. These are ITUP’s conclusions and characterizations should not be considered as the views of any individual, county, clinic, health plan or other entity.

Continue reading the full text (pdf):

1115_Waiver_Implementation_01202011 1115_Waiver_Implementation_01202011.pdf

[1] California’s Section 1115 Medicaid Demonstration, entitled “California’s Bridge to Reform” (Waiver II-W­ OO193/9), under the authority of section 1115(a) of the Social Security Act (the Act) is granted for the period November 1,2010, through October 31, 2015.

[2] Realignment revenues to counties fell by about 10%, numbers of uninsured increased by about 10%, community clinics uncompensated care increased by 15%, and hospital bad debt and charity care increased by 54%. See Yoo, 2010 Health Care Financing Report (ITUP, January 24, 2011) at and Statewide Overview of the Uninsured 2006-09 (ITUP, 11/9/2010). Zavis, Alexandra. A Fraying Safety Net. Los Angeles Times. July 31, 2011. Article available at:

[3] Centers for Medicare & Medicaid Services. Medicaid Waivers and Demonstration List. Official Programs information available at:             

[4] County spending is known as CPEs or Certified Public Expenditures. Centers for Medicare & Medicaid Services, California Department of Health Care Services. California Section 1115 Comprehensive Demonstration Project Waiver, Bridge to Reform. June 2010. Low Income Health Program. Sec 36-42 and 100-105. See Wulsin, Identification of Certified Public Expenditures under California’s Section 1115 Waiver (ITUP, 3/21/2011) at

[5] Center for Medicare and Medicaid Services, California Department of Health Care Services Bridge to Reform Demonstration, 11-W-00193/9 (November 2, 2010) Special Terms and Conditions. §72. Primary care appointments must be within 30 business days in the first year of the waiver and 20 business days in the second and third years. Specialty care appointments must be within 30 business days of request. Access to primary care must be not more than 30 miles or 60 minutes from a patient’s address.

[6] Ibid. 72 f.  The county must contract with at least one FQHC and pay it at FQHC rates. The clinic could be a county FQHC or a non-profit community FQHC.

[7] Ibid. §63 f. The care must meet EMTALA (Emergency Medical Treatment and Active Labor Act) standards. It applies to diagnosis, treatment, required stabilization and limited post-stabilization care. This applies to in county and out of county care.

[8]Ibid. §35-41

[9] See California Association of Public Hospitals and Health Systems, The Delivery System Reform Incentive Program: Transforming Care Across Public Hospital Systems, a Policy Brief (CAPH, June 2011)

[10]It should be noted that enrollees must request continuity of care if they wish to remain with providers not a part of the managed care network. The provider can then approach the managed care plan about contracting, although some plans may not be open to expanding their network. If a provider is not a part of the managed cared plan’s network, an enrollee may apply for exemption of the mandated transition. Some advocates believe measuring the number of exemption request is a better way of gauging the success of the transition.

[11] See Jans, Stoddard and Kraus, Chartbook on Mental Health and Disability in the US (National Institute on Disability and Rehabilitation Research, 2004) at Marshall Williams S, Chapman D, Lando J. Centers for Disease Control and Prevention. The Role of Public Health in Mental Health Promotion. Morbidity & Mortality Weekly Report, Sept 2, 2005;54(34):841-842. Available at             

[12] Executive summaries of the ITUP Regional Workgroups 2011 are available at