Covered California Announces Contract Changes with Carriers

ContractCovered California adopted significant changes to its contracts with health insurers. The contract provisions were developed over the past year with consumer advocates, health plans, clinicians, other stakeholders, and subject matter experts. Plans must do the following for years 2017 to 2019:

• Ensure that all consumers select or are provisionally assigned a primary care clinician within 30 days of when their plan goes into effect.
• Exchange data with providers. This will enable physicians to be notified if their patients are hospitalized and track trends and improve performance on chronic conditions, such as hypertension or diabetes.
• Identify hospitals and providers that deliver poor-quality care or unwarranted high-cost care. Health plans will be expected to work with them to improve their care or lower their costs. Hospitals that don’t improve and don’t provide justification will be excluded from Covered California networks as early as 2019. Covered California will adopt a payment system for hospitals, such as the one employed by the Centers for Medicare and Medicaid Services (CMS). Over time, it will put at least 6% of reimbursement at risk or subject to a bonus payment based on quality performance.
• Manage high-cost pharmaceuticals and help consumers understand the effectiveness and costs of their drug treatments as well as any alternatives.
• Track health disparities, identify trends in disparities, and reduce disparities, beginning with four major conditions: diabetes, hypertension, asthma, and depression.
• Develop programs to identify and manage at-risk enrollees with requirements to improve in targeted areas.
• Provide tools to help consumers understand their diagnosis and treatment options and understand their share of costs based on the contracted costs of their plan.

Covered California will encourage plans to promote advanced models of primary care including patient-centered medical homes and integrated health care models, such as accountable care organizations. Also, Covered California is improving its patient-centered benefit design for 2017 plans. Outpatient care in Silver, Gold, and Platinum plans will not be subject to a deductible. Bronze plan consumers would get three outpatient visits that are not subject to the deductible, in addition to the free preventive visits. For 2017, Covered California is proposing to lower out-of-pocket costs for primary care and urgent care.


Blue Shield Offers City of Hope Providers

The City of Hope has announced an agreement with Blue Shield of California to participate in the insurer’s individual and family plan products. Combined with an existing agreement with Anthem Blue Cross, the new agreement ensures that a majority of the health exchange’s eligible participants will have access to City of Hope’s cancer care. Patients who are enrolled in a Blue Shield of California individual and family plan through Covered California or directly through Blue Shield were eligible as of November 1 to access City of Hope or its doctors, as an in-network provider. Future Covered California enrollees will be eligible for coverage, which includes access to City of Hope, as follows:

  • Enrolling in a Blue Shield or Anthem Blue Cross plan for coverage beginning January 1, 2016.
  • Enrolling from Dec. 16, 2015 to January 15, 2016, for coverage beginning February 1, 2016.
  • Enrolling from January 16, 2016 to January 31, 2016, for coverage beginning March 1, 2016.

City of Hope also recently renewed agreements for commercial patients who purchase Blue Shield insurance directly through the insurer for five years. An Anthem Blue Cross agreement to provide services at the institution’s medical center to its commercial patients also was renewed.

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Healthcare Providers Are Losing Confidence in the ACA

Healthcare providers are losing confidence that the ACA can deliver its key objective: to provide affordable healthcare. But they say that the ACA will have beneficial effects in other aspects of health care. Only a third of the providers say that the ACA will lower the per-patient cost of healthcare, down from two-thirds last year, according to the 2015 Mortenson Healthcare Industry Study. Nearly 80% say the ACA needs significant revisions.

A majority of providers say that several ACA provisions can improve patient outcomes, such as those relating to facility design, information technology, waste and energy reduction, and environmental improvements. Many providers are confident that transparency and wellness initiatives will lead to better healthcare. They say that the ACA will improve care by making providers rethink how they provide services. Nearly 70% say the ACA will shift reimbursements from fee-for-service to quality of outcomes, which would be a dramatic change for the healthcare industry

Addressing Disparities in Pediatric Care

With its dense care network, California has the potential to improve healthcare access for publicly insured children. The state could improve access by providing incentives for providers to accept these patients. In contrast, states, such as Mississippi, would not generate the same improvement since access for privately insured children is also lacking, according to an analysis by Georgia Tech.

Hyper-Growth Expected for Private Exchanges

Hyper-Growth Expected for Private Exchanges
Hyper growth in private exchanges is projected to continue through 2018, according to a report by Accenture. Six million people enrolled in a private health insurance exchange for the 2015 plan year, continuing a remarkable adoption trend that exceeds 100% annual growth since 2013. The mid-size employer segment of 100 to 2,500 employees is driving initial growth with the expansion of the consultant-led exchanges servicing this market.

Accenture expects enrollment to grow for employees under 65 and dependents to 12 million in 2016 and 22 million in 2017.Accenture expects growth to remain on track to reach 40 million enrollees by 2018.

Two key factors that limit private health insurance exchanges will dissolve in the near term: a lack of mature solution providers and adoption delays among large employers. Private health insurance exchange adoption has been constrained by a lack of mature solution providers that can meet market demand. As the market and service providers mature, adoption rates of private health insurance exchanges are expected to accelerate.

Technology vendors in the mid- and larger market segments are emerging players. These startup-like companies have capital and resource constraints that inhibit the rapid deployment of their platforms. During this first wave of private exchange rollout, large scale rollout successes have been limited to more mature market players operating with the scale needed to serve their customers (national benefit consultant exchanges).

Few technology providers have emerged in the small employer market (100 employees or fewer). There has been a reluctance to compete with public Small Business Health Options Program (SHOP) exchanges. However, enrollment has been well below expectations for these public small group exchanges. The door may now be open for new commercial alternatives to provide an exchange experience for small firms.

These capacity constraints will erode as exchanges see continued consolidation (e.g., acquisition of bswift), capital investment (e.g., equity investment in Benefitfocus), and organic growth.

Many large employers have been reluctant to be early adopters of private health insurance exchanges. The standardized solutions that most exchanges offer are not aligned with traditional employer offerings. Highly customized benefit designs have been important to large employers. The complexities of the exchange selection process have taken some prospective buyers by surprise with new options, such as defined contribution, implementation, and ongoing benefit administration. Others are wary of regulatory uncertainty and evolving requirements. Risk-averse employers want proof of  savings. They also want to see the enhanced customer experience that’s been touted by leading exchange sponsors.

New entrants are designing specialized exchange models to meet employer demands. For example, single-carrier exchanges now offer more customizable plan designs. Sponsors are enhancing implementation and change management services and back-end benefit administration.

Employers face increasing administrative requirements under the Affordable Care Act (ACA), such as new minimum essential coverage reports due to the IRS (section 6055). These requirements add to an already substantial compliance workload (ERISA, HIPAA, COBRA). Private health insurance exchanges can significantly reduce these requirements with reporting and compliance services.

The employer mandate will compel employers to revisit their benefit strategy. Coupled with lower than expected SHOP enrollment, more smaller firms may consider private exchanges for a simpler path to comprehensive and compliant coverage.

Many employers have not dropped coverage altogether, as some initially forecast. In fact, most employees view health insurance as a critical employer-provided benefit. Seventy-six percent of consumers see health insurance as the primary or an important factor in staying with their employer. As employers seek a compelling alternative, the private exchange model of reducing costs and administrative burden emerges as a clear favorite.

The 40% excise tax on high-cost plans, “the Cadillac tax,” will go into effect in 2018. This could affect as many as 38% of large employers and 17% of all American businesses if insufficient action is taken. Private health insurance exchanges will provide an ideal alternative to these legacy high-cost plans. They will give employees new options to manage their health. Accenture expects private exchange enrollment to spike in 2017 as employers look to avoid these looming penalties. Employers’ drive to meet consumer expectations will lead to 40 million members on private exchanges by 2018

Most Providers Like the ACA

Nine out of 10 healthcare providers say that,  once it is fully established, the Affordable Care Act (ACA) will be a step forward in addressing long-term health issues, and 83% say it is good for Americans, according to a survey by Mortenson Construction. However, 86% say the ACA needs major revisions.

Seventy-nine percent of providers say health reform creates significant uncertainty for the healthcare industry. Seventy-four percent predict that it will challenge their organization’s financial condition, and 72% say it already has. The survey also reveals the following:
• In 2013 60% of healthcare providers were optimistic about the future of U.S. health care compared to 85% in 2012.
• Four out of five say the ACA will shift reimbursements to pay for the quality of outcomes.
• 71% say the ACA will improve quality and outcomes, and 65% say it will lower the cost of care
• 95% say that specialized facilities, such as MRI centers, cancer centers, and urgent care centers, will grow in prominence in the next three years.

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Research Finds Momentum for Health Care Payment Reform

Efforts are well underway to change the way health care providers are compensated. The trend is moving away from fee-for-service toward payment for a bundled set of services, according to research commissioned by the Health Care Incentives Improvement Institute. While some early commercial-sector adopters have abandoned bundled payments, other payers and providers in the public and commercial sectors are making it a part of their permanent reimbursement strategy. Certain challenges plague the carriers’ bundled payment efforts, including a lack of data, leadership, resources, and a lack of engagement in local efforts. For more information, visit

Anthem Must Pay Providers More

The California Department of Managed Health Care (DMHC) is requiring Anthem Blue Cross to pay health care providers money owed to them for the underpayment of interest on late paid claims for services dating back to 2007. Anthem must pay claims submitted to the company for services provided July 1, 2007 to April 30, 2011. Anthem must also make changes to its claims payment and provider dispute processes, including improved training and auditing policies and procedures to ensure the appropriate payment of claims. The full settlement agreement can be found here:

Providers Warn That Medicare Cuts Will Threaten Radiation Care

Provider organizations submitted commentary to the Centers for Medicare & Medicaid Services (CMS) addressing the drastic effect that reimbursement cuts would have on a variety of radiation services. Dr. Deepak A. Kapoor, president of The Large Urology Group Practice Association (LUGPA) said, “Patients with cancer depend on this state-of-the-art treatment The cuts proposed by CMS will limit patients’ access to advanced radiation services, including intensity-modulated radiation therapy and stereotactic body radiation therapy, which are the preferred modalities for radiation treatments for patients with prostate and head and neck tumors.”

Dr. Michael J. Katin President of the Association of Freestanding Radiation Oncology Centers (AFROC) said, “A cut in reimbursement to freestanding radiation therapy centers and community-based cancer practices this massive would put financial strain on community radiation oncology practices, negatively impacting patient access. These cuts may force community treatment centers to limit services and potentially close, denying Medicare beneficiaries and other patients with cancer access to life-saving cancer treatment – especially underserved and rural populations.”

Last Updated 09/22/2021

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