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Covered California News & Commentary

Topics of interest to both consumers and agents related to Covered California and the ACA biased in favor of the successful implementation of the Exchange and deliberately apolitical.

June 2012 Archives

Cost Sharing Methods Studied

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Covered California contracted with the Center for Healthcare Decisions to design and conduct 10 discussion sessions with uninsured Californians who are potential Covered California customers. Approximately 120 Californians participated in two-hour discussions which included two groups conducted in Spanish. Recruitment criteria included participants who were:

  • without health insurance for at least one year;
  • between 200-400% of the FPL (eligible to qualify for some premium support, but not cost-sharing assistance);
  • legal residents of California; between ages 30 and 64 (those under 30 would qualify for catastrophic coverage only); and,
  • able to read and write English (eight groups) or speak Spanish as their first language (two groups).

Cost Sharinf Options.png

Multiple Cost-Sharing Methods Studied

Since there are multiple ways to structure cost-sharing, Covered California wanted to learn how potential health plan members would respond to the question, What is the fairest way to structure cost-sharing when trying to meet the needs of many people? (Click image to enlarge.)

Responses to cost-sharing models

  • Annual deductible: Disconcerting; a barrier to access.
  • Co-payments: 80% chose Plan B for lowest co-pays.
  • Co-insurance: Huh?
  • Annual OOP maximum: Not as worried; playing the odds.

General Observations

  • Participants tended to focus on those aspects of cost-sharing with which they were familiar. During the ‘choose your cost-sharing plan’ discussion, nearly 80% of participants in each group chose Plan B because of its reasonably-priced co-payments for office visits and medications - services participants most often used.
  • Regardless of the annual deductible, participants still viewed the co-payment as the key to their ability to access health care. The primary concern for many participants was being able to afford to see a doctor when they needed one.

Coinsurance is Problematic

  • Almost all participants were unfamiliar with this type of cost-sharing and did not give it much attention in their discussion and decision-making.
  • As it was presented on the three cost-sharing models chart (Image above), co-insurance was often misunderstood, even after the facilitator gave a specific example of how it might apply.
  • The different rates of co-insurance (30/35/40%) did not raise concerns; participants viewed the differences in co-payments as much more meaningful.

Navigator Compensation Update

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Proposition 26 Changes

Covered California Legal Counsel recently determined that due to Proposition 26, fees collected by the Exchange cannot be used to fund application assistance for Medi-Cal enrollment as previously recommended. Prop 26 ensures that fees collected by Covered California can only be used to fund Exchange-specific functions, such as enrollment into qualified health plans. Any Navigator providing enrollment assistance services for any public plans would not be compensated by a per-enrollment fee.

The Exchange has two options in addressing the legal concern about use of Exchange QHP revenue for Medi-Cal enrollment.

  1. Require Navigators to complete the eligibility process required for potential enrollment in Medi-Cal and refer eligible individuals to the appropriate entity (to be designated by DHCS or MRMIB) for enrollment.
  2. Require Navigators to both complete the eligibility process required for potential enrollment in Medi-Cal and support the individual’s enrollment in the plans or options relevant to their eligibility.

Covered California staff has recommended adopting option #2 so that even without payment from other sources, Navigators be required to complete eligibility and enrollment processes for Medi-Cal. Covered California will work with Medi-Cal to identify sources of funds and appropriate terms of Navigator entities for those programs.

Use of Grant Funds

The Covered California Education and Outreach Grant Program will be integrated and aligned with the Covered California Navigator Program and will be funded at a newly designated amount of $20 million per year for 2014 and 2015. Some of the grants will be reserved to target and support organizations that demonstrate that they have a robust Navigators network within their organization who would help individuals enroll into coverage. Some of the grants will be reserved for organizations who do not wish to have staff serving as Navigators, but only want to focus on outreach and education.

Eligibility and Certification

Eligible enrollment assisters must be affiliated with an enrollment entity. Individual navigators are not eligible for enrolling individuals in Exchange products. The Assisters Program will require that all organizations or enrollment entities register with the Exchange and meet established eligibility criteria. Registration will be renewed annually.

Certified Enrollment Assisters should complete at a minimum a two-day Assisters Training offered by the Exchange at no cost to the enrollment entity. Project Sponsors may consider an abbreviated version of the training program for currently certified HICAP trained assisters, health insurance agents, and other individuals already trained to enroll consumers in health coverage.

The Project Sponsors, or their designated entity, should recruit and monitor the Assister’s network, including both compensated and non-compensated Certified Enrollment Assisters to ensure that the program maintains geographic, cultural and linguistic access to target markets.

Good News

Although the health reform law - Affordable Care Act (ACA) - will add $478 billion to U.S. health care spending over the next 10 years, the law has little effect the annual growth rate, according to a report by CMS’ Office of the Actuary published in the journal Health Affairs. Without the ACA, health spending would increase by 5.6% annually, compared with 5.7% with the law in place. These new estimates undermine claims by some critics that the law will dramatically drive up healthcare spending.

The report also notes that the ACA is expected to reduce the number of uninsured U.S. residents by 30 million and that the law will decrease spending between 2015 and 2021 by about 0.1% annually because of Medicare cuts and a new tax on high-cost insurance plans.

Bad News

But the new estimates also show how little the ACA will do to fundamentally change the trajectory of healthcare spending. The report suggests that consumers, employers and government will continue to face higher and higher medical bills as rising costs outpace economic growth.

Other provisions of the law that are credited with slowing spending include a new tax on high-cost “Cadillac” insurance plans, scheduled to go into effect in 2018, and new regulations limiting administrative spending (MLR) by health insurers.

The authors of the report said they were unable to assess the potential effects of provisions of the ACA designed to make doctors and hospitals deliver care more efficiently by working together.

Employer contributions to employees’ health insurance premium is directly linked to affordability for employees. However, premium contributions are becoming more unaffordable for employers as well. Employers are increasingly looking toward benefit plans that shift a higher share of costs to employees or are choosing to stop offering coverage altogether. The Covered California SHOP must consider the extent to which it requires small businesses to make premium contributions on behalf of their employees.

The following options were considered:

  • Option 1. Require contributions consistent with current market underwriting rules: Establishes minimum employer contributions at levels consistent with the current small employer market.
  • Option 2. Require contributions at least meet minimum federal tax credit: Establishes minimum employer contributions at levels that ensure the tax credit can be taken, if other requirements are satisfied.
  • Option 3. Require contributions at a level higher than current market or federal tax credit: Establishes minimum employer contributions at levels higher than the current market or federal tax credit requirements to qualify for a tax credit to support more affordable coverage for employees.

Covered California SHOP is going to go with Option 1 - matching current market underwriting rules - which require an employer to pay 50% of the employee’s premium for the lowest price plan among those options offered. Option 2, matching the federal tax credit rules would amount to nearly the same thing - 50% - but add unnecessary complexity. Option 3, higher requirements than the outside market, would negatively affect the SHOP’s enrollment.

On June 1, 2012, the U.S. Department of Health and Human Services (HHS) released a proposed rule to establish data collection standards for essential health benefits (EHBs) of health plans and the process for state exchanges to certify qualified health plans (QHPs). The rule proposes that issuers of the three largest small group market products in each state (Kaiser Permanente and Anthem in California) be required to report information on covered benefits.

HHS also proposes that implementation of accreditation standards occur in two phases—in phase one, the National Committee for Quality Assurance (NCQA) and URAC, an independent nonprofit organization, would be recognized as accrediting entities on an interim basis. In phase two, a criteria-based review process would be adopted through future rule making.

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