Speak with a Covered California certified agent! Call (888) 413-3164 or Shop Online Now

Shop and Compare

California Health Insurance Plans and Rates

It's easy. Just enter your zip code.

Covered California Q&A

Covered California and Obamacare related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the Covered California and Obamacare knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.


A Plain Vanilla Marketplace?

By on | 5 Comments

Question: If all of the plans on and off the exchange are the same - benefits and rates, then there’s no competitive advantage except in the networks. Am I right?

Answer: You’re partly right. If a carrier participates in Covered California, they must also offer the same plans or “mirror” those plans off-exchange. But, participating exchange carriers can also offer some alternative plans. For example, Anthem will offer 8 Bronze plans and 4 Silver plans off-exchange that do not mirror the exchange plans. Of course, they still have to be ACA-compliant and conform to the actuarial values for each level. Blue Shield, on the other hand, will be offering no alternative plans off exchange, only mirrored plans. Cigna, who does not participate in Covered California, will be offering only alternative plans off-exchange. So, the 2014 marketplace is not quite a plain vanilla as we first thought.

5 Comments

I do hope you’re right. We’ll find out on Oct 1. Meanwhile you can do a web search and find hundreds of references to narrow networks in the exchanges. Blue Shield has more or less announced it several times. This article in yesterday’s LA Times discusses it, but it’s by far not the first reference - this has been a topic for many months.

http://www.latimes.com/business/la-fi-insure-doctor-networks-20130915,0,2814725.story

What I have been told is that doctors who have accepted, say, all Blue Shield PPO plans, or all Anthem Blue Cross plans, will have to separately sign up for the exchange networks of those companies. Higher cost providers may not even be invited. All providers will be reimbursed at a lower rate than normal, if they choose to participate.

Some doctors with busy practices simply do not need or want this new block of business. The assumption is many people on the exchange will be newly insured for the first time - people with possibly long-standing untreated medical conditions, who have never had a regular doctor, don’t know how co-pays and deductibles plus co-insurance works (they may shop strictly based on premium price without realizing the implications), aren’t compliant with their prescriptions, miss appointments, etc. These will be more time-consuming patients. Not every doctor will want their practice flooded with them, nor have room in their practices to take them.

Many hospitals are not participating, and few of the larger ones are in every plan. It may be that the UC system in CA is ONLY in Anthem Blue Cross, but that is changing by the moment.

My current insurer maintains MANY drug plans with different rules - there are 3 tier plans and 4 tier plans, and drugs covered in one plan may not be covered at all, or may have restrictions, in another. Some drug plans are subject to step therapy; others are not. So insurers already have been segmenting their individual and family coverage into tons of variations despite the “administrative burden.”

Then you’ve got IFP plans on the market today with zero drug coverage, or with annual limits; or with generic only coverage. Every one of these variations is a burden. Some of these practices will be outlawed on 1/1/14.

Maintaining narrower networks of doctors is NOT a big deal. This is what insurance companies DO - they have high administrative costs in order to do this. It’s why single payer would be cheaper in terms of administration.

High cost doctors will prevent them from keeping the premiums down. They want “hungrier” doctors with more room on their schedule who want to till up empty slots in exchange for lower reimbursement rates.

We’ll see in less than 2 weeks how this plays out. I’m expecting a lot of disappointments. I’m pretty sure I won’t find any single exchange plan in my region in which the few doctors I see and the hospitals I want in my network are participants. Some tough choices may lie ahead.

I doubt there is any truth to this statement. If one understands “networks”, this makes no sense.

Physicians join HMO and PPO networks because they want to be exposed to as many potential patients as possible (that’s the marketing point of the insurers) — what other reason is there for physicians to join as many networks as they do? Two “mirror” plans (on and off exchange) must provide the same benefits, otherwise the mirror is cracked. Different networks such as that suggested would crack the mirror.

And insurance companies don’t make different formularies based on a plan’s basic benefits. They make formularies based on what they want to cover and what they don’t as well as to what extent. The metal tier copays alone determine the insured’s out-of-pocket cost, not what drugs are covered or not.

But it is also an extreme administrative expense to make up and maintain separate networks and drug formularies. PPO networks are often different than HMO networks, however, simply because the compensation methods are not the same, and some physicians don’t want HMO comp or restrictions.

Medicare Advantage HMO and PPO networks tend to be the same as the regular HMO and PPO networks as well. Physicians join them because they get the same comp as their regular patients, not reduced comp as they might from CMS at the federally restricted rates.

With a mandate to meet 80% medical loss ratios, why would an insurer expose itself to such administrative burdens and added costs?

One only needs to visit any insurer’s website and use the “Find a Physician” tool to see that the networks are the networks — they are not distinguishable other than perhaps HMO vs PPO. Not all insurers offer PPOs either.

And if you use Kaiser as the example, how would they distinguish their staff physicians between an on or off exchange plan or a group or individual plan or a small group vs large group plan? That would be an administrative nightmare.

That’s just another example why the comment makes no sense.

I doubt there is any truth to this statement. If one understands “networks”, this makes no sense.

Physicians join HMO and PPO networks because they want to be exposed to as many potential patients as possible (that’s the marketing point of the insurers) — what other reason is there for physicians to join as many networks as they do? Two “mirror” plans (on and off exchange) must provide the same benefits, otherwise the mirror is cracked. Different networks such as that suggested would crack the mirror.

And insurance companies don’t make different formularies based on a plan’s basic benefits. They make formularies based on what they want to cover and what they don’t as well as to what extent. The metal tier copays alone determine the insured’s out-of-pocket cost, not what drugs are covered or not.

But it is also an extreme administrative expense to make up and maintain separate networks and drug formularies. PPO networks are often different than HMO networks, however, simply because the compensation methods are not the same, and some physicians don’t want HMO comp or restrictions.

Medicare Advantage HMO and PPO networks tend to be the same as the regular HMO and PPO networks as well. Physicians join them because they get the same comp as their regular patients, not reduced comp as they might from CMS at the federally restricted rates.

With a mandate to meet 80% medical loss ratios, why would an insurer expose itself to such administrative burdens and added costs?

One only needs to visit any insurer’s website and use the “Find a Physician” tool to see that the networks are the networks — they are not distinguishable other than perhaps HMO vs PPO. Not all insurers offer PPOs either.

And if you use Kaiser as the example, how would they distinguish their staff physicians between an on or off exchange plan or a group or individual plan or a small group vs large group plan? That

That’s just another example why the comment makes no sense.

Blue Shield plans may “look” mirrored but in-exchange the number of participating physicians is expected to be 1/3 to 1/2 the full network which should continue to be available off exchange. Is that not true?

Drug formularies will also likely be different.

The “competitive” advantage lies in the fact that while the identical plans must exist both on and off the exchange, only a plan purchased through the exchange will qualify for a tax credit.

A plan with a “better” set of benefits not offered on the exchange could be priced lower than the exchange-based plans, but would not provide a tax credit benefit.

So which is preferable? (1) A plan that costs $800 per month after a tax credit, but only offers 60% actuarial value, or (2) A plan that costs $1000 without a tax credit and provides 70% actuarial value because the deductible, copayments, coinsurance, and stop loss are lower — but in reality may offer 80% actuarial value because of the added benefits which happen to be the ones a person is more likely to use?

This is not going to be an easy process. Agents who are not appointed with Anthem or CIGNA will not know about or be able to discuss those alternative plans. So what will the consumer end up with?

Leave a comment

Do You Have California Health Insurance Questions?

Ask An Expert

View Previous Questions
Call Us at (888) 413-3164


© 2019 California Health Benefit Advisers, LLC
Home / About / Start Shopping / Ask a Question

“Covered California,” “California Health Benefit Exchange”, and the Covered California Logo are registered trademarks or service marks of Covered California, in the United States. This web site is owned and maintained by California Health Benefit Advisers, LLC, which is solely responsible for its content.