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CaliforniACA – May Newsletter

Since the passage of the Patient Protection and Affordable Care Act (ACA), California has taken important steps to implement various provisions of the new legislation. Insure the Uninsured Project (ITUP) is pleased to release the first of its monthly newsletters aimed to keep policymakers, stakeholders and the media informed of California’s progress in implementing federal health reform. This newsletter will provide brief updates as California improves its delivery systems and access to coverage for millions of its residents. Our goal is to provide ‘just the facts,” so please let us know if you find us editorializing.

For more, please visit our website (www.itup.org) and direct any questions or comments to info@itup.org.

Updated Data on Newly Eligibles

A UCLA report found that 1.71 million non-elderly Californians who were uninsured for all or part of 2009 are eligible to participate in and receive subsidies for Exchange plans; an estimated 0.7 million individually insured will also be eligible for subsidies. An additional UCLA study determined that about 2.1 million nonelderly Californians who were uninsured for part or all of 2009 will be newly eligible for Medi-Cal.

Health Data from OSHPD

According to studies by Office of Statewide Health Planning and Development, the rate of c-sections increased from 27.1/100 births in 2005 to 29.8/100 births in 2009. State numbers are still below national average of 31.0/100 births. Cardiac procedures declined by 17% (81,709 in 2005 to 67,619 in 2009), perhaps due to increased use of blood thinners and other medications.

Maternal Mortality Data from CDPH

California Department of Public Health study reports rising maternal mortality rates (8 deaths per 100,000 live births in 1999 to 14/100,000 in 2008), with black women four times more likely to die from pregnancy-related causes than women of other racial/ethnic groups.

New Medi-Cal Legislation

On April 26, the Assembly Health Committee passed AB 43 (Monning). This bill would allow the state to expand Medi-Cal eligibility, as required by federal law (individual under 65 with incomes less than 133% FPL), on January 1, 2014. On April 27, The Senate Health Committee passed SB 677 (Hernandez). This bill would simplify Medi-Cal eligibility rules by eliminating the assets test and changing the income standard to Modified Adjusted Gross Income (MAGI).

The Low Income Health Program (LIHP)

Twenty-five individual counties, 34 counties represented by the California Medical Services Program (CMSP), the California Rural Indian Health Board, and the Pasadena Health Department, have submitted LIHP applications that have been initially approved. Currently, counties are working with DHCS and CMS to finalize their LIHP plans. Some county LIHPs may go “live” as early as June 1, some will be retroactive to November 1, 2010, while others will take several more months to be rolled out. CMSP’s LIHP is scheduled to begin on Jan. 1, 2012.

Delivery System Reform Incentive Pool

Public hospital systems in California are developing and/or expanding medical homes and improving care coordination through the Delivery System Reform Incentive Pool (DSRIP). Through DSRIP, public hospitals may be able to draw down as much as $3.3 billion in federal funding over the next 5 years.

CCS Pilot Projects

The CCS pilot projects in the waiver seek to test four different models for children with serious and chronic conditions: (1) Accountable Care Organizations, (2) Enhanced Primary Care Case Management, (3) Managed Care, and (4) Specialty Health Plan. Letters of intent to participate in one of the aforementioned demonstration projects were due on May 6. Potential applicants could include some combination of CCS providers and medical groups, children’s hospitals, health plans, counties, and county organized health systems. Medical groups and their Children’s Hospital partners, for the most part, are developing these models.  The final RFP was issued on April 19, and applications are due July 15, with final contract awards announced on October 14.  

Pilot Projects for Dual Eligibles

On April 14, 2011, HHS announced that California is one of 15 states to receive federal funding for models that coordinate care for dual eligibles.  The $1M in federal aid will support project management, actuarial services, data analysis, and seed grants to pilots for outreach and education. The RFI was released on April 29 with RFI responses due by June 1.  DHCS will likely issue an RFP in October, announce pilots in March 2012, and begin operations in the last quarter of 2012.

The Exchange Board Holds First Meeting

The board of the California Health Benefit Exchange (HBEX) met for the first time on April 20 and for the second on May 11 with four of five board members present at each.  The fifth, to be appointed by the Senate Rules Committee (chaired by Senate President Pro Tempore Darrell Steinberg), has yet to be announced. An Executive Director should be hired by August 1.  Pat Powers, formerly of PacAdvantage and more recently the Center for Health Improvement, was appointed as the HBEX interim administrative officer. Materials from this meeting can be found here.

Dependent Coverage Numbers Higher Than Anticipated

Early numbers of dependents enrolling in their parents’ health plans indicate that total enrollment might exceed HHS estimates. The provision was effective as of September 23, 2010. HHS estimated 1.2 million young adults would sign up for coverage in 2011. As of May 3, 2011, over 600,000 young adults had enrolled. Among California plans, Blue Shield reported that 22,000 young adults had enrolled.

ERRP Funding Runs Out Early

On April 1, 2011, the Early Retiree Reinsurance Program announced that effective May 6 of this year, they would no longer be accepting applications due to the rate at which reimbursements had been dispersed. The program was allocated $5B through January 1, 2014. According to the Kaiser Family Foundation, 518 group health plans in California had been approved for funding through the Early Retiree Reinsurance Program as of January 1, 2011. Of these, 24 had received payments that totaled $65M. California’s acceptances comprised approximately 10% of those nationwide (5,450).

Hospitals Commit to Quality Improvement

California is moving forward with the U.S. Department of Health and Human Services’ Partnership for Patients Initiative, a new public-private collaboration between the government, hospitals and other providers to help improve the quality, safety and affordability of health care for all Americans. Many California hospitals and CHA have already signed the Partnership for Patients pledge to make the goals of harm reduction and improved care transitions top priorities for boards of directors, senior leaders, clinicians and staff. Partnership for Patients will build on the numerous steps hospitals have already taken to develop a culture of safety within their organizations.

California Hospitals See Higher Net Incomes

California’s hospitals are improving their bottom lines. The percent of hospitals operating at a loss is decreasing, yet in 2009 32% were still operating with a negative total margin and 37% were operating with a negative operating margin. Net income from operations slowly rose between 2005-2008 and increased two fold between 2008-2009. Total net income (which includes income from investments) rose steadily between 2005-2007 before falling by 43% 2007-08, when hospital investment income plummeted during the height of the recession. California hospitals have started to restore profitability after reducing total expenses and increasing care-related income. Every source of non-operating revenue (contributions, investment income, county funding, and district assessments) declined with investment income falling quite substantially. Full data available here.

HIT Grants Roll Out

Meaningful use stage 2 requirements, aimed at bringing additional functionality such as health information exchange, care coordination and patient interactivity, have been delayed by one year. The Health Information Policy committee cited concerns by vendors and providers that the timeline is too tight to roll out more advanced electronic health record technology. HHS has announced $12M in grants (available at grants.gov) to help health care providers in rural areas achieve meaningful use.

ACOs Start Up in California

Beginning July 1, 2011, Blue Shield of California is teaming with five healthcare providers to form two accountable care organizations. Partnerships will be formed between Brown and Toland Physicians Group and California Pacific Medical Center to create an ACO which will serve 21,000 members assigned by HHS and will include Pacific Medical Center’s four campuses: California, Davies, Pacific and St. Luke’s. A second ACO formed by Blue Shield, Hill Physicians Medical Group, Catholic Healthcare West and the University of California, San Francisco is also expected to start next month. This ACO will serve 5,000 members assigned by HHS and includes CHW’s Saint Francis Memorial Hospital, St. Mary’s Medical Center, UCSF’s Parnassus and Mount Zion centers.

Ambulatory Intensive Care

PBGH, CalPERS and Boeing have initiated two pilots to test ambulatory intensive care approach to improve outcomes and reduce costs for patients with multiple chronic conditions. The two sites are in the Humboldt and Los Angeles/Orange regions.


DMHC has asked Blue Shield of California to justify its average cumulative rate hike of 37.5% on 70,000 individual policyholders. Aetna reduced its proposed rate hikes for individual policyholders from 15.6-17.9% to 12.1%. Anthem Blue Cross preceded with its premium rate hikes (ranging from 14.4-16.7%) which had been deemed ‘unreasonable’ by DMHC. The agency does not have statutory authority to stop such an increase. Under AB 52 (Feuer), currently pending in Assembly Appropriations, state regulators will be able to reject health insurance rate hikes deemed ‘excessive.’

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