REGULATORY ENVIRONMENT

FOR HEALTH COVERAGE IN CALIFORNIA

Presentation to the California Health Benefit ExchangeFebruary 21, 2012Deborah Reidy Kelch, MPPA

Kelch Policy Group

2

CHCF Report (2011)Ready for Reform: Health Insurance Regulation in CA under the federal Affordable Care Act

Reviewed history and statutory differences

Developed comparison overview between two frameworks

Identified state regulatory issues raised by the federal Accountable Care Act

Made some recommendations for strategies to improve consistency and accountability

Continuing to identify opportunities for coordination and uniformity through the Health Insurance Alignment Project

Kelch Policy Group

Kelch Policy Group 3

Basic Findings

Relative strengths and weaknesses of each regulatory process

Differences are based in law and history

Increasing efforts to coordinate both statute and implementation in recent years

The federal Accountable Care Act makes uniformity and coordination more important than ever

4

Enrollment Trends by Regulator

During the first half of the decade, there were changes in the relative number of lives under each regulator, with notable increases in CDI covered lives, but recently enrollment has stabilized

Kelch Policy Group

5

Markets by Regulator

CDI regulates the majority of commercial individual coveragewhileDMHC regulates the majority of the insured group market

Kelch Policy Group

6

Finding: Potential for costlyadministrative duplication

93% of covered lives under CDI are in products

offered by eight companies that also have

affiliates with products licensed by DMHC,

including two companies that offer the same types

of products (PPO plans) under CDI and DMHC, and

must meet different regulatory requirements

Kelch Policy Group

7

Comparing CDI and DMHCDMHC Product Types CDI Product Types

HMO “full-service” health plans (including Medi-Cal managed care

plans)

PPO full service health plans (Some of the Blue Shield and

Anthem Blue Cross PPO products)

Point-of-Service plans

Specialized plans (dental, vision, mental health, etc.)

Medicare plans

PPO health insurance (disability insurance covering health)

Traditional indemnity insurance

Specialized health insurance (dental, vision, etc.)

Medicare policies, long term care insurance

Other related products (e.g., cash indemnity, disease-specific cash policies, short term coverage, etc.)

Kelch Policy Group

8

Comparing CDI and DMHC

Kelch Policy Group

9

Affordable Care Actelements that reduce differences

Essential health benefits as a minimum Individual and small employer coverage Inside and outside of the Exchange

Uniform cost sharing limits Premium rate filings and review Medical loss ratio standards Standardized consumer disclosure

Kelch Policy Group

10

Qualified Health Plans in the Exchange

Impact of Regulatory Environment Review of quality programs and systems?

Knox-Keene requires and DMHC conducts routine medical surveys of quality assurance programs and utilization review systems and requires health plans to conduct provider onsite reviews

Insurance Code does not

Kelch Policy Group

11

Qualified Health Plans in the Exchange

Impact of regulatory environment Provider payment innovations, new structures

(ACOs)?

Knox-Keene requires regulatory review and approval of provider contracts and risk-based payment arrangements

Provider solvency standards and protections to avoid insolvencies and care disruptions of the past

As innovation emerges, regulatory oversight to ensure provider solvency and consumer protections will be critical

Kelch Policy Group

12

Qualified Health Plans in the Exchange

Impact of regulatory environment Sufficient provider networks in Exchange coverage?

Knox-Keene regulations include geographic and timely access standards (applicable to HMOs and PPOs)

Appointment waiting times (e.g., 48 hours for urgent care appointments)

Insurance Code regulations focus primarily on geographic access standards

No appointment waiting times

Kelch Policy Group

13

Importance of the Regulatory Environment for the Exchange

Understand and consider differences as the Board sets qualified health plan standards

Continue to work collaboratively with both departments

Identify opportunities to better align and augment standards and expectations across regulators and markets

Kelch Policy Group

14

Full report available at:www.chcf.org

http://www.chcf.org/publications/2011/06/health-insurance-regulation-aca

Kelch Policy Group