Covered California First State Exchange to Set Quality, Cost Standards for Health Plans

Entering  a realm usually reserved for health care regulators, California's healthcare marketplace (known as Covered California) has announced sweeping new reforms to its contracts with insurers, in what it says is an effort to improve quality of care, curb its costs 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 is to be implemented over the next seven years.

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.

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.

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.

(Source: By Ana B. Ibarra and David Gorn; Kaiser Health News, April 8)