California Unveils Qualified Health Plans, Expected Premiums for Health Benefits Exchange

Covered California, the state agency implementing the Affordable Care Act (ACA), has announced participating health insurers and proposed premiums for the state’s exchange, which is expected to provide health insurance coverage to roughly 5 million Californians following its launch in January 2014.

In all, 13 commercial health plans were selected to offer products on the exchange, including California’s three largest insurance providers, Kaiser Permanente, Anthem Blue Cross and Blue Shield of California.

The California Medical Association (CMA), representing more than 37,000 physicians across the state, has been an active partner in the implementation process, providing feedback to the exchange board every step of the way as it works to establish the framework for the massive coverage expansion under the ACA. However, physicians are still concerned about some pieces of the exchange.

“We certainly want to see Covered California be a success in expanding coverage to Californians,” said Paul R. Phinney, MD, CMA president. “We look forward to working together to resolve remaining questions and concerns that might deter physicians from participating in the exchange.”

One major concern for contracting physicians is a loophole in the ACA that could see physicians left to foot the bill for services provided to patients who haven’t paid their insurance premiums. The law allows for a three month “grace period” for non-payment of premiums, but only requires insurers to pay the claims through the first month of non-payment. The final version of the exchange model contract included a provision that requires 15 days advance notice to physicians when a patient has entered the second month of the grace period, but still leaves the burden of 60 days worth of unpaid claims on the physician and the patient.

“The notification requirement is certainly a step in the right direction,” said Dr. Phinney. “That said, the remaining risk is still large enough that some physicians could be put out of business if left on the hook for tens or thousands of dollars. It is imperative for access to be more than an empty promise of an insurance card, that physicians are not deterred from participating in Covered California.”

While Covered California staff has stated that exchange enrollees will have access to an adequate network of health care providers, CMA has repeatedly asked that the exchange take extra steps to ensure that provider directories submitted by plans contain up-to-date and accurate networks.

A history of poorly monitored network adequacy in California, along with the fact that many physicians are likely to be hesitant to contract with exchange plans, casts doubt over Covered California’s claim that it will provide enrollees access to “80 percent of practicing physicians” in the state.

“We need to ensure adequate networks, because without them, the expansion of health care coverage will be for naught,” Phinney said. “Access to coverage doesn’t equal access to care.”

The exchange’s expected premiums could also pose a challenge for success of the new marketplace.

Under the rates announced on Thursday, the total monthly premium for a “silver” level (basic) plan in the Sacramento region for a 40-year-old single individual would range from $332 to $476. Federal subsidies will be offered on a sliding scale for people with incomes up to $45,960. Individuals eligible for the highest subsidy, $276 per month, would still face out-of-pocket expenses of $56 for monthly premiums. A 21-year-old enrollee could expect to pay more than $130 per month for the most affordable catastrophic plan.

Given that the annual penalty for not having health insurance during the exchange’s first year will be $95 or one percent of income, it remains to be seen whether healthy people will be willing to pay the high cost of participating in the exchange. Higher premiums could also have patient delinquency implications, which may result in more physicians being on the hook for two months of claims submitted during the “grace period” for premium non-payment.

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