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ITUP’s December Newsletter


L.A. Care Will Absorb Costs of Medi-Cal Rate Reduction

In October, CMS approved a 10% reimbursement rate cut to certain classes of providers, combined with a plan to monitor beneficiary access to services. Earlier this month, L.A. Care Health Plan, the largest Medi-Cal managed care plan in California, announced its plan to absorb the mandated cut for some of its directly contracted Medi-Cal providers, including physician groups and IPAs. The decision to withhold the cut is projected to cost L.A. Care between $10M and $20M, which will be funded by the plan’s general fund and cost containment initiatives.  L.A. Care currently serves about 800,000 Medi-Cal beneficiaries in LA County. Read more here.

§1115 Waiver

Path2Health, CMSP’s Low Income Health Program, Will Begin January 1, 2012

The federal government recently approved the CSMP Governing Board’s proposal for a Low-Income Health Program (LIHP), which will be known as Path2Health. LIHP is a coverage expansion program under the State’s §1115 Medicaid Waiver allowing counties to receive a federal match for care delivered to their low-income, uninsured population. Path2Health will take effect on January 1, 2012. Read more here.

Dual Eligibles

Coordinating Care for California’s Dual Eligibles

California recently received a $1M grant from the federal government to better coordinate care for dual eligibles. Coordinating care for this population presents a large cost-savings opportunity for the state. In California, there are nearly 1.2 million dual eligibles. Duals account for 10% of the total Medi-Cal population and 25% ($8.6B) of the total state Medi-Cal budget. Similarly, 21% of the Medicare population are dual eligibles and account for 36% of Medicare spending. DHCS will select demonstration sites by spring 2012 and demonstrations will begin on January 1, 2013 if they are approved by CMS. Read more here. Another key consideration is whether this should be handled at the state or federal level. Read more in this RWJF report.

California Health Benefit Exchange

California Could Determine its own Essential Health Benefits

On December 16, the Department of Health and Human Services (HHS) posted a bulletin regarding the Essential Health Benefits (EHBs). EHBs are the minimum set of services that all plans in the individual market must offer in 2014, according to ACA. HHS’s Friday bulletin proposed that EHBs should be defined on a state-by-state basis using a benchmark approach. In 2014 and 2015, states may select a benchmark plan whose services would become the EHBs for the state. States have the option to select either one of the three largest state employee health plans, one of the three largest federal employee health plans, one of the three largest small group plans, or the largest HMO plan offered by the state’s commercial market. Read more here.

Information Technology Vendor – Draft Request for Proposals Released

A few months ago, the Exchange Board contracted with the firm ClearBest to develop a Request For Proposals (RFP) for an IT vendor. On December 20, the draft RFP was posted to their website. The RFP provides applicants with a basic framework, a scope of work, and a list of requirements related to creating the IT system. It reflects many of the comments submitted by stakeholders. Stakeholders will have until December 30to submit comments and a final RFP will be released on January 18, 2012. With the help of ClearBest, the Exchange Board will select a final vendor by April 17, 2012. Read more here.

Pre-Existing Condition Insurance Plan

Details Behind PCIP’s Potential Enrollment Cap

When actuaries originally estimated monthly claims data, they based their calculations on data from individuals in commercial plans and MRMIP (the state’s original high-risk pool). Estimates showed that claims for these individuals averaged $1,000 per month per subscriber. Since the state was allocated $761M of the federal $5B allocation, they determined PCIP would have capacity for 23,000 individuals. In February, the state had enrolled 1,352 individuals and monthly claims were averaging $1,100. Just last month, the state had enrolled 5,290 individuals and monthly claims were averaging $3,000. MRMIB recently received more funding so that they would not have to cap enrollment. Read more from this ITUP blog on the issue and this HHS press release on additional federal funding.

Children and Young Adults

The Recommended Future of the Healthy Families Program

On January 1, 2014, states must launch their Health Benefit Exchanges. Exchanges will offer premium subsidies to individuals who fall between 133% and 400% FPL. In addition, Medicaid eligibility will expand to 133% FPL from the current 100% FPL. And thus the question arises: What do we do with the Healthy Families Program? Stan Dorn (Urban Institute) recently provided recommendations on the future of HFP. Dorn looked at three options: keep Healthy Families as is in MRMIB, shift it to Medi-Cal or shift it to the new Exchange Board to administer. He recommended a partial shift of children 6-16 with incomes between 100 and 133% of FPL from Healthy Families to Medi-Cal now and waiting to make the larger decision of the interface of Healthy Families children and their parents in the Exchange until the Exchange is up and operating. Read more here.

California Receives over $1.6M to Fund School-Based Health Centers

ACA allocated $200M in funding between 2010 and 2013 to improve delivery and support expansion of services at School-Based Health Centers (SBHCs). In 2011, $95M was awarded to 278 SBHCs that serve 790,000 patients. With the funding, these centers are expected to increase capacity to serve an additional 440,000 children. This month, the Department of Health and Human Services, Health Resources and Services Administration (HRSA) announced over $14M for 45 SBHCs in 29 states in 2012. The funding will help these centers expand capacity by 53,000 from the current 112,000. California received more than $1.6M for four SBHCs. Read more here.

2.5M Young Adults Gain Health Insurance

The National Center for Health Statistics found that due to the dependent coverage provision in the ACA, the number of young adults (ages 19-26) with health insurance increased from 64% to 73%, or an increase of 2.5 million. This figure is significantly greater than the one million estimated by the HHS’ Office of the Assistant Secretary for Planning and Evaluation. Read more here.

Early Retiree Reinsurance Program

ERRP Will End This Year

California began its Early Retiree Reinsurance Program (ERRP) on June 1, 2010. The program, which received $5B nationally as a part of ACA, offers financial assistance to employers offering coverage to younger retirees (ages 55-64) to help employers retain coverage for early retirees. Due to a large interest in the program, the Center for Medicare and Medicaid Services (CMS) stopped accepting applications on May 6. This month, CMS announced that they have spent $4.5B of ERRP’s $5B as of December 9. Because of the early exhaustion of funds, the program will stop taking claims for expenses incurred after December 31, 2011. The program was supposed to last through 2013. Read more here.

Medical Loss Ratios

HHS Releases Final Rule on MLRs

HHS published an interim final rule with a 60-day public comment period on December 1, 2010. The final rule reflects feedback from approximately 90 comments, including rules regarding mini-med and expatriate policies, fraud reduction expenses, rules regarding accounting for IDC-conversion costs, community benefit expenditures, and rules regarding the distribution of rebates in group markets. This quick summary of the final rule provides regulations from the interim final rule, a summary of stakeholder comments on the regulations, and HHS’s determination for the final rule.

Small Employers

Health Care Decision Making Among Small Business Owners

Pacific Community Ventures conducted 804 telephone surveys with small businesses all across California to gauge the owners’ understanding of the Affordable Care Act and purchasing insurance through the Exchange. Some results include: Only 9% of small business owners say they are “very aware” of new Affordable Care Act (ACA) provisions, 62% have not yet heard of the Exchange, and 57% are unfamiliar with the tax credit. Additionally, Messaging about the Exchange should highlight cost reduction, pooled purchasing and simplicity. The survey found small employers strongly distrusted the role of government. Learn more from this presentation.

Rate Review

Implementing Rate Review in California

AB 52 (Feuer) was recently introduced in California to regulate insurance rates. In October, AB 52 was made into a 2-year bill to be considered next year. Dr. Richard Scheffler (Professor of Health Economics and Public Policy at UC Berkeley) and his team recently conducted study on rate regulation review methods and costs in two states to measure comparative viability in California. Currently, more than half of the states have prior approval authority for health insurance rates. Read more here.

Accountable Care Organizations

Thirty-Two ACOs Chosen to Participate in Pioneer Model

On December 19, CMS announced that 32 organizations (PDF) have been chosen to participate in the Pioneer ACO Model. California participants included HealthCare Partners (Southern California), Brown & Toland Physicians (Bay Area), Heritage California (Southern, Central, and Coastal California), Monarch Healthcare (Orange County), Primecare Medical Network (Southern California) and Sharp Healthcare (San Diego). The first performance period will begin on January 1, 2012. Read more here.

Health Information Technology

100,000 Providers Adopt EHRs

The Office for the National Coordinator for Health Information Technology announced a major accomplishment of the 62 regional extension centers (REC): enrolling 100,000 nationwide providers for the adoption of electronic health records.  Los Angeles’ REC, HITECH-LA, achieved enrollment of 2,500 providers.


Public Policy Institute of California recently created an inventory of research related to ACA. The following recent articles are from that inventory.

California’s Health Care Workforce – Are We Ready for the ACA?

This UCSF research brief summarizes the comprehensive report California’s Health Care Workforce: Readiness for the ACA Era. The brief and corresponding report explore the current and future capacity of California’s health care workforce to meet the expected increase in demand resulting from expanded insurance coverage under the Patient Protection and Affordable Care Act (ACA). Both documents present data, analyses, and policy recommendations for addressing the workforce challenges presented by the ACA.

Accountable Care Organizations for PPO Patients: Challenge and Opportunity in California

This Integrated Healthcare Association (IHA) paper examines the challenges and opportunities facing contemporary efforts to adapt ACO principles and practices to the commercial PPO population in California. It builds on an earlier IHA White Paper that examined the record of medical groups and IPAs in coordinating care using ACO principles for the HMO population, including patients enrolled in commercial HMO, Medicare Advantage, and Medicaid managed care plans. Although these new ACO initiatives aimed at the PPO population are still in the early stages of development, and much work remains to be done, the basic outlines of the new plan designs and provider programs are now available.

Proposed Regulations Could Limit Access to Affordable Health Coverage for Workers’ Children and Family Members

This UC Berkeley Labor Center policy brief analyzes the proposed regulations defining affordable job-based coverage under the ACA. The analysis estimates that if affordability for additional family members was determined based on the cost of family coverage, an additional 144,000 Californians, more than half of them children, would become eligible to gain access to affordable coverage through the health insurance exchange.

Primary Care, Everywhere: Connecting the Dots Across the Emerging Health Landscape

The next few years of health care reform in the United States will see the influx of millions of new patients searching for care. Primary care providers will be in the best position to deliver that care, but not enough of them exist to meet present, let alone future, demand. In response to this unmet need, some innovative providers have begun to extend their services, delivering primary care more broadly across their communities through a combination of: leveraging technology to broaden access to health information and care outside traditional office hours; reorganizing teams to deliver care inside and outside traditional settings; expanding touch points for patients through a widespread network of locations; re-imagining what belongs under the umbrella of primary care. This paper explores the current limits of primary care in the US, looks at illustrative models that deliver primary care in a variety of settings, identifies barriers to innovation, and outlines prospects for the future. Read more from this California HealthCare Foundation report.

Connecting Eligible Immigrant Families to Health Coverage and Care: Key Lessons from Outreach and Enrollment Workers

Given their high uninsured rate and limited access to private and public coverage, one group who could significantly benefit from this coverage expansion is lawfully residing immigrant families. However, it will be important to address barriers eligible immigrant families often face to enrolling in coverage and accessing needed care. Based on findings from focus groups conducted with outreach and enrollment workers who serve immigrant communities, this report identifies the role of Medicaid and CHIP for immigrant families; key barriers eligible, lawfully residing immigrant families face to enrolling in coverage and accessing care; successful strategies to overcome these barriers; and considerations for implementing the coverage expansion under health reform. Read more from this KCMU issue paper.


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