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1 Coverage, Competition, and Delivery System Reform: Lessons Learned from Covered California AMGA 2016 Institute for Quality Leadership Lance Lang, Chief Medical Officer November 16, 2016

2 Affordable Care Act is Expanding Coverage 1

3 Affordable Care Act, National Data 2

4 3

5 A record of Success in California California s uninsured rate has been cut in half to 8.6 percent from 2013 to In raw numbers, California decreased the number of uninsured by 3.2 million people, CMS found that among state exchange populations, Covered California had the healthiest risk mix in the nation in 2015, about 19 percent lower than the national average. Health plans in the California market have succeeded financially For the individual market, over the past three years the average rate increase has been about 7 percent Covered California is on solid ground. We are sustainable without federal or state support, with substantial reserves and funding from an assessment on plans that averages 2 percent of the combined premium both on and off the exchange. 4

6 Key Decisions The state expanded its Medicaid program Health insurance premiums were lower in states that expanded Medicaid. Covered California s board directed it to take an active role to shape the marketplace to work for consumers. California like about only a dozen other states converted all health coverage in the individual market into compliant plans and created one common risk pool as of

7 How Covered California Makes the Promise Real CREATING COMPETITIVE MARKETS OFFERING AFFORDABLE PRODUCTS EFFECTIVELY REACHING AND ENROLLING CONSUMERS ENCOURAGING THE RIGHT CARE AT THE RIGHT TIME Plan competition for enrollment (seek at least three plans) Provider-level competition and distinction between plans Benefit designs foster informed consumers High enrollment of subsidy eligible to assure good risk mix Long term affordability through delivery system changes Robust and ongoing marketing Cost effective enrollment support Benefit design promoting appropriate access Requirements for plans to promote effective delivery of coordinated care 6

8 Covered California: Building on Central Hypothesis for the Affordable Care Act Incentives Matter Many consumers need financial incentives to be motivated to purchase insurance. Healthier individuals need greater external incentives, meaning absent robust incentives risk pool will be worse raising costs Insurance Needs to be Sold In absence of mandate, insurance needs to be sold to encourage healthier enrollment Competition Matters Benefit Designs Matter Cost and Value Depend on the Delivery System Competition between plans promotes better value for consumers Competition between/among providers promotes better value While some consolidation at the plan AND provider levels can promote efficiencies and better care; it also may foster undue price increases The design of health benefits directly impacts both how consumers select and use their health care coverage. Benefit designs can promote or inhibit appropriate access to care Benefit designs can promote or inhibit retention of better risk pool Coverage is important, but value and affordability are driven by delivery of care right care, right setting, right price. The Triple Aim is more likely to be fostered by payment aligned to value and with narrower/integrated networks (broad networks with FFS payment will not promote value) There is huge variation in cost and quality at the treatment, provider and facility levels The Fabric of Coverage Spans Public and Private Payment New insurance rules and subsidies mean that the spectrum of coverage spans public and private options with increasing movement between them Expanded coverage has cross-sectoral impacts increasing coverage through Medicaid and Exchanges reduces costs to employer-coverage and Medicare 7

9 Californians, in millions The Affordable Care Act Is Being Woven Into the Fabric of Health Care in California and the Nation The Affordable Care Act has dramatically changed the health insurance landscape in California with the expansion of Medicaid, Covered California and new protections for all Californians UNINSURED million ineligible for Covered California due to immigration status UNINSURED From 2013 to 2015, the number of uninsured Californians has been reduced by almost half MEDI-CAL INDIVIDUAL MARKET subsidized, unsubsidized and new Medi-Cal COVERED CALIFORNIA 0.9 As of March 2015, Covered California had approximately 1.3 million members who have active health insurance. California has also enrolled nearly 3 million more into Medi-Cal of whom over 2 million are newly eligible EMPLOYER SPONSORED 17.8 Consumers in the individual market (off-exchange) can get identical price and benefits as Covered California enrollees 5 0 EMPLOYER All Californians now benefit from insurance policy changes Data shown in above graph is from: California Health Benefits Review Program ( Center for Medicare and Medicaid Services, The Commonwealth Fund ( California Healthcare Foundation ( Covered California 2015 Active Member Profiles ( and ABx1 Quarterly Report ( Note: Medicare recipients and other publicly funded insured are not included in the graph. 8

10 Covered California is Big and Having Big Impacts It is now one of the largest purchasers of health insurance in California and the nation. 1.4 MILLION consumers have active health insurance as of March 2016 Covered California is now the second largest purchaser of health insurance in the state for those under age 65. $ 6.4 BILLION estimate of funds collected from premiums in 2015 Covered California s size gives it the clout to shape the health insurance market. 2.5 MILLION consumers served since Covered California began offering coverage on Jan. 1, 2014 (as of March 2016) More than 1.1 million Californians have benefitted from coverage through Covered California. Many of them now have either employerbased coverage or Medi-Cal. 9 out of 10 consumers enrolled in coverage receive financial help to pay their premiums 9

More Than Two and a Half Million Consumers Served The majority of those served have continuous coverage and of those who have left Covered California, the vast majority (85 percent) continue to have

11 More Than Two and a Half Million Consumers Served The majority of those served have continuous coverage and of those who have left Covered California, the vast majority (85 percent) continue to have health insurance. Prior to 2014, Covered California forecasted that about one-third of enrollees would leave coverage on an annual basis. In the period from January 2014 through September 2015, more than two million Californians have had coverage for some period of time with approximately 700,000 of those no longer active in June As of June 2015, the actual rate of disenrollment is about 33 percent. Based on a recently completed Covered California survey of members who left ( disenrolled ), the vast majority (85 percent) left for employer-based, Medi-Cal, Medicare, or other coverage. Estimated from Covered California enrollment data and 2015 member survey (n=3,373) 10

12 2017: Transition Year for Premiums Covered California Rate Change Year Compounded Average Weighted average increase 4.2% 4% 13.2% 7% Lowest-price Bronze plan (unweighted) Lowest-price Silver plan (unweighted) Second -lowest-price Silver plan (unweighted) If a consumer shops and switches to the lowest-cost plan available in the same metal tier 4.4% 3.3% 3.9% 3.9% 4.8% 1.5% 8.1% 4.8% 2.6% 1.8% 8.1% 4.1% -4.5% -1.2% California: Initial rates in 2014 lower than anticipated and plans designed networks and delivery to meet marketplace demands from outset; in 2014 California carriers paid IN to the Risk Corridor Program For 2017, 80% of consumers can lower premiums or have increase of less than 5% by shopping for lowest plan at same tier Changes in 2017: Transition Year ALL States: end of reinsurance valued at 4-7% Transition Year Many States (NOT California): final years of uncertain pricing due to conversion to single individual market risk pool Transition Year Some Plans: correcting for incorrect pricing and Special Enrollment 11

Covered California Enrollees Able to Choose Both Low Premium and Low Out-of-Pocket Designs More than 69 percent of Covered

percent of all subsidy eligible enrollees qualified for an Enhanced Silver, which means even lower out-of-pocket costs when

Platinum 3 % 40,000 Gold 4 % 52,000 2015 Subsidized Enrollment by Metal Tier Bronze 24 % 280,000 ENHANCED Silver 94 17 % 199,000

as of April 2015, including only subsidized enrollees who have paid for coverage.

More than 120,000 enrollees pay less than $ 10 per month per individual.

13 Covered California Enrollees Able to Choose Both Low Premium and Low Out-of-Pocket Designs More than 69 percent of Covered California subsidy-eligible enrollees selected a Silver Plan which have NO deductibles for any out-patient services and 58 percent of all subsidy eligible enrollees qualified for an Enhanced Silver, which means even lower out-of-pocket costs when accessing services. Platinum 3 % 40,000 Gold 4 % 52, Subsidized Enrollment by Metal Tier Bronze 24 % 280,000 ENHANCED Silver % 199,000 Silver 11 % 128,000 ENHANCED Silver % 128,000 ENHANCED Silver % 357,000 Source: Covered California enrollment data as of April 2015, including only subsidized enrollees who have paid for coverage. A few notes on monthly premium costs: 77 percent pay less than $ 150 per month per individual. More than 120,000 enrollees pay less than $ 10 per month per individual. 25 percent of enrollees in an Enhanced Silver 94 plan pay less than $ 25 per month per individual, while more than half pay less than $ 50. In addition, these individuals pay only $ 3 for doctor visits. Covered California s Patient-Centered Benefit Design: Bronze three office visits and lab work, not subject to deductible. Silver, Gold, Platinum no deductibles on any outpatient services. 12

utilization of the right care at the right time with many services that are not

14 Covered California 2017 Patient-Centered Benefit Designs In California, standard benefit designs allow apples-to-apples plan comparisons and seek to encourage utilization of the right care at the right time with many services that are not subject to a deductible. Benefits below shown in blue are not subject to a deductible. 13

15 Effective Outreach, Partnerships, and Policies Creating a Healthy Risk Mix that Benefits the Entire Individual Market Good Risk in California In 2015 California had the healthiest risk mix in the nation, about 19% lower than the national average. This is the second year in a row that California had the best risk mix. In 2014 Health insurance companies had consistently strong financial performance, contributing more than half of all risk corridor excess profits ($182 million). The Percent of Enrollment of 18 to 34 Year Olds Continues To Grow % 34 % 38 % Through our innovative data analysis, we were able to prove to our health insurance companies that the risk scores were decreasing over time, allowing Covered California to negotiate better prices. Sources: Summary Report on Transitional Reinsurance Payments and Permanent Risk Adjustment Transfers for the 2015 Benefit Year, and Health Services Research. Sorting Out the Health Risk in California s State-Based Marketplace. Andrew B. Bindman, Dennis Hulett, Todd P. Gilmer, and John Bertko. 14

Covered California is Successfully Enrolling the Full Diversity of Those Eligible for Subsidies Ethnicity Projected Eligible Population 1 First Open Enrollment (2014) Second Open Enrollment (2015)

16 Covered California is Successfully Enrolling the Full Diversity of Those Eligible for Subsidies Ethnicity Projected Eligible Population 1 First Open Enrollment (2014) Second Open Enrollment (2015) Third Open Enrollment (2016) Asian 21% 23% 18% 20% African-American 5% 3% 4% 4% Latino 38% 31% 37% 36% White 34% 35% 34% 34% Other 4% 8% 6% 7% Covered California s Third Open Enrollment succeeded in enrolling 439,000 individuals. 1 CalSIM version 1.91 Statewide Data Book Henry J. Kaiser Family Foundation Coverage Expansions and the Remaining Uninsured: A Look at California During Year One of ACA Implementation. Menlo Park, CA. An independent study conducted by the Kaiser Family Foundation 2 confirmed Covered California s success at enrolling Latinos. Covered California enrollees are more racially diverse than Californians with private coverage 60 percent identify as a race/ethnicity other than white and Latinos make up 36 percent of the total. 15

17 Covered California Health Plan Offerings for 2017: Broad Choice and Multiple Local Options For full details on plans and rates, see Health Insurance Companies and Plan Rates for 2017: 16

18 Evolution of Covered California Quality Agenda Agenda spelled out in the Affordable Care Act and translated into a Covered California contract attachment. For contract years , Covered California said tell us what you do that is aligned with ACA For 2016 and beyond, Covered California asks plans and their contracted providers to work with us to fulfill the quality vision. To collaborate on programs with other payers based on priorities informed by advocates and experts, and To define mutually agreed upon programs and target outcomes. Principles in adopting specific strategies. Alignment with other purchasers. Encouraging multi-payer collaboration. Holding health plans accountable for managing contracted networks to reduce variation in performance. 17

Covered California is Promoting Improvements in the Delivery of Care Covered California contract requirements to promote the triple aim of improving health, delivering better care and lowering costs

PPO) must have a primary care clinician. Plans must promote enrollment in patient-centered medical homes and in integrated healthcare models/accountable Care Organizations.

19 Covered California is Promoting Improvements in the Delivery of Care Covered California contract requirements to promote the triple aim of improving health, delivering better care and lowering costs for all Californians include: Promoting innovative ways for patients to receive coordinated care, as well as have immediate access to primary care clinicians All Covered California enrollees (HMO and PPO) must have a primary care clinician. Plans must promote enrollment in patient-centered medical homes and in integrated healthcare models/accountable Care Organizations. Reducing health disparities and promoting health equity Plans must "track, trend and improve" care across racial/ethnic populations and gender with a specific focus on diabetes, asthma, hypertension and depression. Changing payment to move from volume to value Plans must adopt and expand payment strategies that make a business case for physicians and hospitals. Assuring high-quality contracted networks Covered California requires plans to select networks on cost and quality and in future years, will require exclusion of "high cost" and "low quality" outliers allowing health insurance companies to keep outlier providers, but detailing plans for improvement. Note: for detailed information about improvements in the delivery of care, Covered California requires health insurance companies to abide by Attachment 7 of the model contract. To view Attachment 7, go to Covered California Board presentation slides on Attachment 7: 18

ENSURING THE RIGHT CARE AT THE RIGHT TIME DIAGNOSIS 1. Many consumers especially the newly insured do not have a primary care clinician to be their entry point and guide to the delivery system. 2.

Payment has been based on more is better (the fee-for-service model) and not payments that reward outcomes and effective coordination. COVERED CALIFORNIA S SOLUTION 1.

20 ENSURING THE RIGHT CARE AT THE RIGHT TIME DIAGNOSIS 1. Many consumers especially the newly insured do not have a primary care clinician to be their entry point and guide to the delivery system. 2. Patient care is often fragmented and uncoordinated, resulting in care that delivers inconsistent outcomes and high cost. 3. Payment has been based on more is better (the fee-for-service model) and not payments that reward outcomes and effective coordination. COVERED CALIFORNIA S SOLUTION 1. Require all plans, regardless of model, to connect Covered California enrollees to a primary care clinician within 60 days of their health plan coverage date. 2. Plans must change payments to support populations rather than widgets a) Revenue for alternatives to face to face care and for team-based care b) Implement new models: Advanced Primary Care (PCMH) and Integrated HealthCare Models (ACOs) 11

21 Randy MacDonald, Sr VP House Ways and Means Hearing April 29, 2009 I will start with the very last question asked by the committee--what is the single most important thing to fix in healthcare? Primary care. Strengthen primary care -- transform it and pay differently using a model like the Patient Centered Medical Home. Congressman: And the second issue? Well, if you don't fix the first issue and do not have a foundation of powerful primary care then you can do nothing else. You have to fix primary care before you can even begin to address a second issue.

22 Ten Building Blocks of High-Performing Primary Care T Bodenheimer et al AnnFamMed March 2014

23 Covered California Primary Care Agenda 1. Empanelment 2. Payment Reform 3. Move enrollment to PCMH recognized practices 4. Data Exchange To be implemented under Qualitied Health Plan Contracts through a multi-stakeholder process The Covered California plan is credible partly because of the CMMI Practice Transformation Initiative 22

24 Draft Primary Care Payment Model 23

25 PRIMARY CARE PAYMENT MODELS (PCPM) Covered CA goals met with either Category 3 or 4 models 24

26 Target Target: The Individual PCP Practice 25

27 Primary Care Capitation Advantages: Most direct connection to population health Relatively administratively simple compared with FFS payments Flexibility to develop creative and innovative approaches to care delivery Strengthens continuity of care and clinician accountability Performance component can be used to balance many of the challenges Challenges Encounters not reliable data source for risk adjustment Diversity of payers Residual concern re under treatment and lack of incentive for access Would need to modify benefits to exclude Primary Care from deductible 26

28 APM built on Fee for Service Advantages Most tested primary care reform Provides claims data for all other uses including risk adjustment Evolutionary Maintains some volume incentive to support access Synergistic with high deductible benefit structure Aligns with CMS model of CPC+ FFS foundation Stratified Care Management Fee Performance bonus paid either prospectively or retrospectively Disadvantages Continues volume based incentives with all the burdens of documentation often outweighing focus on outcomes 27

Integrated Healthcare Models (aka ACO s) Covered California Definition A system of population-based care coordinated across the continuum including multi-discipline physician practices, hospitals and

29 Integrated Healthcare Models (aka ACO s) Covered California Definition A system of population-based care coordinated across the continuum including multi-discipline physician practices, hospitals and ancillary providers with accountability for triple aim metrics Adapted from CalPERS language An area of health plan differentiation But must evolve common evaluation metrics Required to ensure a progressively greater share of enrollment cared for within these models 28

30 PROMOTING AND REWARDING QUALITY CARE AT THE BEST VALUE DIAGNOSIS 1. Payments for volume pays more when things go wrong than right 2. Many patients suffer avoidable complications with an estimated 400,000 Americans dying annually as a result. a) Low Risk C-section rate range 12 to 68% b) Blood stream infection rate with central line range from 0 to 5.7 times expected PLAN 1. Work with health plans to connect doctors and hospitals to quality improvement Track, trend and improve care against measured goals. 2. Require that doctors and hospitals be selected based on quality performance. 3. As of 2019, plans will either exclude low performing outliers or provide a justification for inclusion in the network. 4. Require plans to implement payment reform to reward outcomes and results in hospitals. 12

31 % 70% 60% NTSV CS Rate Among CA Hospitals: 2014 (Nulliparous Term Singleton Vertex) (Source: Linked OSHPD-Birth Certificate Data) 50% 40% 30% Range: 12% 70% Median: 25.3% Mean: 26.2% National Target =23.9% 20% 10% 0% 40% of CA hospitals meet national target Large Variation = Improvement Opportunity 13

32 Colon Surgical Site Infection 2014 Standardized Infection Ratio (SIR): Distribution in California Hospitals with confidence intervals Blue Shield PPO Non Blue Shield PPO SIR CA Pooled Average (1.06) SIR data is from the California Department of Public Health (CDPH). 31

Covered California Will Require Transparency, Payment and Network Selection to Promote Higher-Value Care Repeated research shows no correlation between more expensive health care and better quality.

33 Covered California Will Require Transparency, Payment and Network Selection to Promote Higher-Value Care Repeated research shows no correlation between more expensive health care and better quality. Covered California will use all tools at its disposal to encourage consumers to use lower-cost/higher-quality providers, such as: Plan network policy disclosure. Health insurance tools with cost and quality information for consumers. Promoting the exclusion or justifying the inclusion of high-cost/low-quality outlier providers. Distribution of physicians with Higher Efficiency equals lower relative cost for each instance of care delivered. Source: Adapted from Regence Blue Shield and Pacific Business Group on Health 32

REDUCING HEALTH DISPARITIES AND PROMOTING HEALTH EQUITY DIAGNOSIS Health outcomes vary dramatically by gender and ethnic group: Women s coronary care lags that for men Latinos and

African-Americans are less likely to receive treatment for major depressive disorder.

34 REDUCING HEALTH DISPARITIES AND PROMOTING HEALTH EQUITY DIAGNOSIS Health outcomes vary dramatically by gender and ethnic group: Women s coronary care lags that for men Latinos and African-Americans are more than twice as likely to be admitted to hospitals for uncontrolled diabetes than are Whites or Asian/Pacific Islanders. African-Americans are less likely to receive treatment for major depressive disorder. COVERED CALIFORNIA S SOLUTION Not all the outcomes resulting from social disparities are with the control of the health care system, but will. Require health plans to track, trend and improve care over time care related to diabetes, asthma, hypertension and depression across all payers to achieve negotiated goals 14

35 Tracking Quality by Race/Ethnicity 34

36 COVERED CALIFORNIA: GIVING CONSUMERS TOOLS TO MAKE THE BEST CHOICES DIAGNOSIS 1. The wide variation in costs even for covered services is often unknown to consumers who do not have the right tools available to pick a provider based on cost and quality. 2. It s hard for consumers to calculate their out-of-pocket costs, with two out of three individuals saying it is difficult to know how much specific doctors or hospitals charge for medical treatments or procedures. 2 COVERED CALIFORNIA S SOLUTION 1. Require plans to develop tools (online/mobile) that enable consumers to compare costs and quality when choosing a provider. 2. Require plans to promote consumers access and use of a personal health record. 3. Require plans to promote patient engagement and shared decision-making between patients and their providers. 1 Insurance Company Payment is taken from California Healthcare Compare 2 Kaiser Family Foundation, Health Tracking Poll, April

37 Shopping Matters: Cost of Care Varies Greatly Even for Those Insured Medical Services Delivered Range of Payments from Insurance Companies to Providers* Range of Covered California Enrollee Cost per Service Appendicitis $6,381 - $35,645 $1,276 - $6,250 Knee replacement and repair $15,800 - $84,443 $3,160 - $6,250 Scenarios represent an individual in a 2016 Covered California Silver 70 plan who met the deductible. Cost of these procedures would be substantially lower for a Covered California member receiving cost-sharing subsidies in a Silver 73, Silver 87 or Silver 94 plan, or in a Gold or Platinum plan. The high-end of the range for the Covered California enrollees cost represents the maximum out-ofpocket for a 2016 Silver 70 plan, assuming these services were received in the plan s network. The wide range of insurance company payments may represent a difference in surgery setting (i.e. outpatient vs. hospital), complexity and contract-term differences. * Source: Insurance Company Payment is taken from California Healthcare Compare consumer-reports/index.htm 36

Covered California is Assuring Consumers Have Tools to Navigate Cost and Quality Starting in 2017, Covered California will require health insurance companies to build consumer tools that include

38 Covered California is Assuring Consumers Have Tools to Navigate Cost and Quality Starting in 2017, Covered California will require health insurance companies to build consumer tools that include the following: Consumer out-of-pocket costs for common services. Nationally-endorsed quality measures. Personalized financial tools to track progress toward deductibles and out-ofpocket expenses. 37

39 Health Care Delivery after the Election Implications for Key Stakeholders The role of the federal and state oversight will change in ways we cannot predict. The priority given to assuring equity is in doubt. Cost containment will be job #1. Healthcare spending will increase, but at a slower pace. MACRA will drive delivery system change. Provider accountability is here to stay: the line between financing and delivering care will fade as providers take on risk and responsibility for affordability. Quality, especially safety, will be a component of how network adequacy is defined and regulated. 38

40 Lessons Learned and Policy Options for the Next Administration: Building on Experience Subsidies Matter: revision the level and nature of subsidies to help more Americans have access to affordable care Assuring Competition and Choice: effective markets and good enrollment will promote plan options, gaps need to be addressed with real options Benefit Designs: build on lessons from Simple Choice and other patient-centered benefit designs to promote access to care and retention Marketing and Outreach Investments: ongoing and substantial marketing commitments are essential Delivery System Quality and Costs Must Be Focus: marketplaces should play a role with other public and private purchases to promote improvements in care delivery 39

41 Information for consumers CoveredCA.com Information on exchange-related activities hbex.coveredca.com 40

Covered California s Promise

Covered California s Promise Vision: To improve the health of all Californians by assuring their access to affordable, high-quality care. Mission: To increase the number of insured Californians, improve