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Summary and Analysis of SB X1 3 (Hernandez)

The summary is available for download:
Summary and Analysis of SB X1 3 Summary and Analysis of SB X1 3.pdf

 

This is the Administration’s effort to authorize bridge plans (i.e. Medi-Cal managed care plans that participate in the Exchange for limited purposes). HHS issued guidance that “bridge plans” could be authorized for two purposes: 1) allow individuals who lost their Medi-Cal coverage to retain their plan and provider network in the interests of continuity of care and 2) allow families with children in Medi-Cal or CHIP and parents who are in the Exchange to enroll the entire family in the same plan and provider network.[1] The goals are to provide continuity of care and coverage as well as to assure coverage of the entire family in a single plan and provider network.

This bill requires the Exchange to contract with “bridge plans”, requires bridge plans to be a Medi-Cal managed care contractor, meet Knox Keene requirements, meet federal “qualified health plan requirements”, have a 85% medical loss ratio and enroll only bridge plan eligible subscribers.[2]

The bridge plan eligible subscribers under the proposed legislation are the parents and other family members of Medi-Cal/Healthy Families children, those losing Medi-Cal, and those with incomes under 200% of FPL.[3] The first two groups of eligibles are know as the “narrow bridge” and are expected to be readily authorized by the federal government.[4] The third tier is known as the “broad bridge” and is not authorized by the federal government.[5] Individuals in the first two tiers can only enroll in the Medi-Cal managed care plans with which they or their family members are already connected.

The bill exempts bridge plans from the requirements to offer all five tiers of coverage and from the requirements to market their plans inside and outside Covered California.[6] The effect of this is that bridge plans would be able to market the most heavily subsidized plans (silver and bronze) to the most heavily subsidized individuals (those with incomes under 200% of FPL) and only through the Exchange (which will do the marketing for the bridge plans).

The bill exempts bridge plans from the guaranteed issue, guaranteed renewal, open enrollment, no pre-existing condition exclusions, no creaming or skimming or selective marketing requirements in the ACA and SB X 1 2 (Hernandez) and AB X 1 2 (Pan).[7] It is unclear why the Administration and the bridge plans would want to exempt the bridge plans from these vital consumer protections and highly unlikely that they would be approved by the federal government.

According to the Senate Health Committee analysis, bridge plans would bid after the rates for the full scope plans are established.[8] It is unclear why bridge plans should be given this particular bidding advantage.

The operating assumption is that bridge plans will be able to offer more affordable coverage because they are built on Medi-Cal provider networks whose rates and costs of care are significantly less than commercial insurance networks. This assumption is as yet untested and unproven. The fear and concern that some have expressed is that their lower premiums will devalue the subsidies available in the Exchange for other forms of coverage and have adverse financial impacts on all other subscribers than the bridge plan members.[9] The perceived advantage of bridge plans is that they will offer more affordable coverage for moderate-income individuals and families who otherwise would face affordability barriers.[10]



[1] See ITUP, Summary of CMS Frequently Asked Questions on the Exchange and Medicaid Expansions (December 13, 2012) at http://itup.org/legislation-policy/2012/12/13/summary-of-cms-faqs-on-exchange-medicaid/

[2] Proposed Government Code §100504.5 from SB X1 3 (Hernandez)

[3] Ibid.

[4] Senate Health Committee Analysis of SB X1 3 (Hernandez), dated 3/20/13 at www.leginfo.ca.gov Over 700,000 individuals could meet the narrow bridge definition.

[5] Ibid.

[6] Proposed amendments to Government Code §100503 from SB X1 3 (Hernandez)

[7] Proposed Insurance Code §10961 from SB X1 3 (Hernandez)

[8] Senate Health Committee Analysis of SB X1 3 (Hernandez)

[9] Ibid.

[10] Ibid.

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