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February Exchange Board Meeting: Information and Discussion on QHPs

Tuesday’s Exchange Board meeting (agenda) was full of fast-paced and exciting updates, followed by an expert panel intended to give framework for qualified health plan (QHP) requirement determinations.

During his Executive Director update, Peter Lee noted that the Small Business Health Options Program (SHOP) solicitation has been released, the Board is in the process of reviewing applications for Outreach and Enrollment/Assisters, and they just finished final amendments for the QHPs solicitation (they added that the vendor should be able to determine cost-sharing and supplemental benefit offerings). Yesterday, it was announced that the QHP grant was awarded to PricewaterhouseCooper.

The next series of Exchange Board meetings will be designated to these three key issues, in addition to a focus on potential implications of the Basic Health Plan (BHP) in April. The goal is to have key decisions made on these issues before applying for the Level II grant mid-June, which means very tight timeline. In Lee’s words, “We are moving fast and we need you to move fast with us.” The Level II grant will fund the Exchange’s operations through the end of 2014.

A $6M of the $39M Level I Grant has been obligated and the Board submitted details in a quarterly report at the end of December.

California Health Benefit Exchange Timeline

Tuesday’s meeting was focused on QHPs. Three expert panels provided presentations and reactions related to 1) An overview of the California market, regulatory structure and major purchasing strategies, 2) Purchasing in action: Examples of major purchasing strategies and consumer reactor, and 3) Plan, provider and consumer reactors.

Panel 1: An Overview of the California Market, Regulatory Structure and Major Purchasing StrategiesHighlights

The first panel was made up of health policy researchers from the California HealthCare Foundation (Marian Mulkey), Kelch Consulting Group (Deborah Kelch), and UC Berkeley (James Robinson).

Marian Mulkey provided a snapshot of California’s current health plans and products.

The following pie chart shows all health insurance carriers by share of revenue (2010). Total revenue is $105B, $86.9B of which is DMHC and $18.1B of which is CDI. Marian noted that Kaiser has a higher share since they tend to offer a more comprehensive benefit package, which has a higher cost.

All health insurance carriers by share of revenue, 2010 (Total: $105B)

All health insurance carriers by share of revenue, 2010 (Total: $105B)

This next pie chart is a breakdown of individual market enrollment by carrier for Californians (2009) out of 2 million enrollees. Note that Anthem has the highest percentage of enrollment at 40% and Kaiser has the lowest at 17%. This is likely due to the high cost of Kaiser plans (again, due to their more comprehensive benefits package).

Individual market enrollment by carrier for Californians, 2009 (Total: 2M)

The following pie chart shows the small group market enrollment by carrier for Californians.

Small group market share (Total: 2.5M)

The chart below shows the selection of HMO, PPO, POS or HDHP/SO insurance among covered workers.

Enrollment of covered workers.

This chart from the Kaiser Family Foundation shows the extreme variance in estimates for deductibles and coinsurance under a “Silver” level plan (70% AV) in the Exchange, reflecting great uncertainty surrounding plan offerings in 2014.

Estimates of plan designs to meet actuarial value thresholds, 2011

Kelch provided an overview of the regulatory environment for health coverage in California. A 2011 CHCF report found that:

  • During the first half of the decade, there was a noticeable increase in CDI covered lives (1.2% in 2003 to 2.6%);
  • CDI regulates the majority of commercial individual coverage and DMHC regulates the majority of the insured group market; and
  • 93% of covered lives under CDI are in products offered by eight companies that also have affiliates with products licensed by DMHC, including two companies that offer the same types of products (PPO plans) under CDI and DMHC, and must meet different regulatory requirements.

Panel 2: Purchasing in Action: Examples of Major Purchasing Strategies and Consumer Reactor – Highlights

This panel consisted of representatives from various other purchasing pools, including the Massachusetts Connector (John Kingsdale), CalPERS (Ann Boynton),  and Unite HERE Health in Las Vegas (Elizabeth Gilbertson), an expert from Catalyst for Payment Reform (Suzanne Delbanco), and a consumer reactor from Health Access (Beth Abbott).

John Kingsdale, Wakely Consulting Group, provided recommendations on QHP certification criteria based on findings from the Massachusetts Connector. He recommended requiring that plans have:

  • Minimum regulatory requirements alone;
  • Specific product type (HMO, PPO);
  • Overall price/quality/access ranking;
  • Breadth of service area or intent to grow;
  • Access for special populations;
  • Use of FQHCs & safety-net hospitals;
  • Willingness to participate in Medi-Cal & CHIP;
  • Willingness to participate in SHOP & Individual CHBE;
  • Multi-year commitment to CHBE;
  • Commitment to market CHBE and support navigators;
  • Supportive of delivery system reform;
  • Standards of inter-operability w/ CHBE; and
  • Availability of plan data on quality/service.

He also recommended NOT limiting the number of participating plans (at least at first) and presented advantages (transparency and ease of comparison shopping) and disadvantages (can inhibit innovation and initial administrative burden for plan) of benefit standardization. Based on this, his recommendations included:

  • Broad choice especially important for SHOP and unsubsidized households;
  • Standardization should be based on customer preferences;
  • Considerable value in early experimentation & evolution of policy; and
  • Flexibility is crucial, especially in any effort to standardize designs.

Kingsdale said California should consider a mix of standard/unique designs.

Panel 3: Plan, Provider and Consumer Reactors – Highlights

The third panel was a stakeholder panel that included representatives from the California Hospital Association (Duane Dauner), the California Medical Association (Dustin Corcoran), Small Business Majority (John Arensmeyer), the California Association of Physician Groups (Don Crane), and the California Association of Health Plans (Charles Bacchi), and a consumer reactor from the California Pan-Ethnic Health Network (Ellen Wu).

In a joint presentation, Corcoran and Dauner provided recommended QHP contracting strategies in order to provide high-quality and affordable health care:

  • Accessibility, timeliness and risk
    • Patients should not suffer from inadequate access to care and should receive the right care in the right place at the right time.
    • Providers should not suffer financial consequences caused by inadequate networks. Patients should have clear understanding of cost sharing, quality and network and service limitations.
    • All QHPs should adhere to uniform standards for access, timeliness and financial risk.
  • Broad and comprehensive networks
    • QHPs must provide for the total needs of patients (not a narrow network focused solely on price) including wellness, primary and specialty care, education and research.
  • Streamlined enrollment – no wrong door
    • Providers are a “door” for many seeking care for the first time. Hospital emergency rooms and physician offices – must be given the resources, training and tools to ensure enrollment for all seeking care and coverage.
  • Starting from a point of affordability is key.
    • Next year and a half will be spent building the networks who will care for the projected 4.4 mil eligible for Medi-Cal & subsidies
    • IOM analogy: One goes grocery shopping with a budget in mind, instead of loading the cart only to be surprised at the checkout counter
  • Coverage is truly comprehensive only if there are broad networks of providers.
    • The millions of newly insured patients will demand access to doctors and hospitals

They also indicated that California has historically low health expenditures. The per capita health costs are below many other states, 8% below the U.S. average and growing at a slower rate than any other state.

California has one of the lowest per capita expenditures compared to other U.S. states

The reason for this reduced per capita expenditure is the consistently lower utilization levels due to high enrollment (50%) in HMOs.

All of the panel presentations can be accessed here.

Upcoming Meetings

The March meeting, which will be held in Fresno, will focus on the Outreach and Assistance landscape. In April, the Board will focus on the SHOP landscape. At the May meeting, options for the three issues will be presented and decisions will be made at the June meeting.