California's Unprecedented Move in Regulating Health Plans
Moving into a realm usually reserved for health care regulators, the California health marketplace Thursday unveiled sweeping reforms to its contracts with insurers, seeking to improve the quality of care, curb its cost and increase transparency for consumers.
The attempt to impose quality and cost standards on health plans and doctors and hospitals appears to be the first by any Obamacare exchange in the nation.
Among the biggest changes: Health plans will be required to dock hospitals at least 6 percent of their payments if they do not meet certain quality standards, or give them bonuses of an equal amount if they exceed the standards.
The plan, to be implemented over seven years, is based on a similar strategy pursued by the federal agency that oversees the government-run Medicaid and Medicare health insurance programs.
The California Hospital Association, in a statement issued late Thursday, said it supported the exchange’s decision to phase in the plan incrementally.
The exchange, known as Covered California, will also require health plans to identify hospitals and doctors that are performing poorly on a variety of quality metrics or charging too much for care. The plans must dump the providers from their networks as early as 2019 if they don’t mend their ways. The plans could choose not to cut the hospitals or doctors, but they would have to explain in writing why, and detail what the providers are doing to address their deficiencies.
“Covered California’s mission is not just getting patients health insurance; it’s about improving the quality of the health care delivery system,” Peter V. Lee, the exchange’s executive, said in a written statement. “We are creating a market that rewards quality over quantity.”
Some doctors have noted that provider networks in many of the health plans sold by Covered California are already thin and warned that cutting the networks even more would only exacerbate the problem. And, they say, some hospitals and physicians might balk at the stringent new requirements and decline to participate in Covered California networks.
The insurers are not happy about transparency provisions that involve disclosing the rates they negotiate with their providers. Health plans have long resisted efforts that would let competitors or the public see the deals they make with doctors and hospitals.
But Covered California officials believe that scrutinizing the negotiated rates will help the exchange identify high-cost providers and allow policyholders with high deductibles to see the differences in price before undergoing a medical procedure.
Nicole Evans, spokeswoman for the California Association of Health Plans, said that in some rural areas, where hospitals are few and far between, eliminating even one that is deemed to be underperforming might seriously compromise access to medical care.
“Or maybe one of them didn’t score as well on one quality measure but other quality measures are higher,” she said.
Evans added, though, that she was pleased Covered California would at least allow exceptions to this rule.
Among other elements of Covered California’s contract overhaul:
- Health plans must assign a primary care doctor to enrollees within 30 days of coverage.
- Health plans and doctors must share data to better track and treat patients with chronic conditions such as diabetes.
- Plans are obliged to monitor and reduce health disparities among all their patients, starting with four major conditions: diabetes, hypertension, asthma and depression.
- They also are required to better manage the price of high-end pharmaceuticals and aid consumers in reducing the cost of expensive drug treatments.
- The health plans must help consumers better understand their diseases and treatment choices — and their share of the costs for those treatments.