Public Partner: The California Health Benefit Exchange Aligned C A L I FOR N I A H EALTH C ARE with Medi-Cal F OU NDATION Overview Medi-Cal’s efforts to improve the health status and It is estimated that by 2019 the Affordable Care health care outcomes of low-income, high-need Act (ACA) will increase the number of people individuals. As a close ally of Medi-Cal, a public- with health insurance nationwide by 32 million. partner Exchange would carefully consider the Medicaid is projected to account for about implications of its decisions on Medi-Cal spending Issue Brief one-half of this increase in coverage.1 Enrollment and the California state budget, and seek whenever in Medi-Cal, California’s Medicaid program, is possible to avoid policies that would add to projected to increase by 20% or more beginning budgetary pressures to reduce Medi-Cal benefits, in 2014, at which time one in four Californians provider payments, or eligibility. are expected to have health care coverage through this program.2 Many low-income individuals are This paper describes the choices the Exchange expected to alternate between coverage through would make and the expected effects of those Medi-Cal and through the California Health choices if it were to partner with Medi-Cal. Benefit Exchange (CHBE) due to fluctuations in However, this vision for the Exchange cannot be income. realized unless state lawmakers and the program officials who establish and implement Medi-Cal’s The demands and opportunities associated with governing policies are willing to partner with the these changes in coverage make supporting and Exchange and take certain necessary additional improving the Medi-Cal program essential if the steps beyond what is already required by the promise of federal health reform is to be achieved. ACA. In addition, Medi-Cal’s policies, systems, One possible approach is to develop the CHBE as and processes would need to be modified to a “public-partner” Exchange, with an emphasis on accommodate the needs of the Exchange. (This coordination with Medi-Cal as a strategic priority. is briefly discussed under “Public Program Implications” on page 12.) If both the Exchange A public-partner Exchange would go beyond and Medi-Cal actively pursued a collaborative what is required by the ACA, which outlines a approach, the Exchange could play an important vision for aligning the systems and processes used role in fostering improvements to Medi-Cal by state Exchanges and Medicaid to determine including better customer service, greater eligibility for, and enroll individuals in, publicly consumer choice, and higher quality care for financed and subsidized coverage. A public- millions of low-income Californians. partner CHBE would focus on enrolling and retaining eligible, low-income individuals, and Values and Benefits maximizing continuity of coverage and care for Adopting a public-partner approach for CHBE people who experience changes in income and would help to strengthen and advance the goals of program eligibility. It would adopt an array of Medi-Cal, which serves as an important societal policies and practices that would align with safety net by providing essential health coverage O ctober 2011 would be even greater if, instead of pursuing different Public Purchasers Besides partnering with Medi-Cal, CHBE could partner goals or competing strategies, CHBE and Medi-Cal with other public and quasi-public programs such worked closely together as purchasers, providing the as Healthy Families and CalPERS. While partnering marketplace with a coherent and consistent set of signals with other public purchasers deserves consideration, and incentives. this paper focuses on Medi-Cal for two reasons. The first is to provide an anchor for an exploration of the opportunities and challenges associated with partnering Another benefit of aligning CHBE and Medi-Cal is that with California’s largest public purchaser in greater it would improve continuity of coverage and care among depth than would otherwise be possible. The second individuals who experience frequent changes in income. is that broadening the focus to include other public and According to a recent national estimate, half of all adults quasi-public purchasers would significantly dilute the significance of partnering with any one of them, given with family incomes below 200% of FPL will experience the differences in goals and purchasing strategies of a shift in eligibility from Medicaid to an insurance these purchasers. exchange, or the reverse, within a year.5 These eligibility shifts can lead to gaps in coverage and disruptions in care. Moving in and out of health coverage, referred to and long-term support to 7.4 million low-income as “churning,” is detrimental to individuals, providers, Californians, including children, their families, health plans, and the health system as a whole. As a result individuals with disabilities, and the elderly. Low-income of churning, individuals may miss important preventive Californians are more likely to be in poorer health than care, forgo needed medications, or delay treatment. the general population, yet they often face numerous Providers become frustrated when patients don’t comply barriers to obtaining timely, high-quality health care.3 with follow-up care. Health plans waste money marketing Some of these barriers include language, low literacy, to and re-enrolling members in the same plan, costs that physical or cognitive disability, lack of transportation, are either passed on to Medi-Cal or, in the future, might and difficulty finding primary care physicians and be to Exchange enrollees in the form of higher premiums. specialists willing to see them. Medi-Cal is also a major As a public-partner Exchange, CHBE would work source of funding for safety-net providers on which many with Medi-Cal to align coverage policies and provider Californians rely for care. networks. The Medi-Cal program also faces many challenges. With Finally, a public-partner CHBE could help preserve expenditures comprising 19% of the state budget and Medi-Cal as the backbone of the health care safety net for costs growing faster than state revenue, Medi-Cal is under all Californians. Medi-Cal faces constant pressure to cut constant pressure to slow the growth of state spending program expenditures. By avoiding activities that would via means such as cutting benefits and reducing provider add to Medi-Cal’s costs or undermine its efforts to control payments.4 spending, a public-partner CHBE could help Medi-Cal avert or minimize future cuts in benefits and provider The potential benefits of aligning CHBE and Medi-Cal payments. are significant. While the influence of Medi-Cal on California’s health care delivery system is already Although the potential benefits of partnering with substantial, both the likelihood and magnitude of Medi-Cal are enormous, there are also big challenges. meaningful improvements in quality, efficiency, and As with any large bureaucracy, Medi-Cal can be slow to outcomes across the state’s entire health care system evolve in the absence of a clear consensus or mandate. 2  |  California HealthCare Foundation In addition, Medi-Cal is not a typical payer or insurer; provided through the ACA to help ensure that it is also an instrument of federal and state social policy low-income Californians in particular are aware of and and a reflection of budget priorities. As such, its payment have access to opportunities provided under the ACA. policies and managed care contracting practices have These resources include grant funding for states to favored traditional safety-net providers over private develop programs that provide enrollment information, providers; it has scaled back outreach and imposed referrals, and assistance to consumers, and that help additional barriers to enrollment during tight fiscal times; resolve individual tax subsidy issues.6 The ACA also and it has maintained its historical links with county establishes grants for “navigators” who will educate the social services agencies to determine Medi-Cal eligibility public, share information, facilitate enrollment, and for most applicants, despite the de-linking of Medi-Cal provide culturally competent support and assistance.7 and welfare 15 years ago. To fulfill its potential, a public- partner CHBE would have to find a way to thrive within To meet the needs of Californians who apply for an environment of externally imposed priorities and publicly funded coverage, a public-partner Exchange constraints. could conduct outreach in locations where low-income Californians are likely to be found (for example, popular Key Features and Operational shopping destinations in targeted communities, libraries, Considerations community centers, and schools), through means that The Exchange’s operations will have implications for the are easy to access (such as kiosks). Outreach activities Medi-Cal program and the people it serves, potentially — whether conducted in person, online, or through affecting state program costs as well as the quality and traditional media — would be coordinated in a culturally accessibility of care available under Medi-Cal. The ACA appropriate manner, using easy-to-understand instructions requires highly integrated systems for eligibility screening and descriptions to help guide applicants with a wide and enrollment between the Exchange and Medi-Cal. An range of literacy skills through their options. Exchange focused on partnering with publicly funded programs would go further than what is required by A public-partner Exchange might require that federal rules. It would ensure that outreach activities are participating agents and brokers be certified in public aligned with the goals of both programs, and that systems assistance offerings to ensure that they are able to explain for eligibility screening and enrollment are particularly both commercial and public options to consumers and attuned to the needs of low-income consumers. A public- businesses. partner Exchange would also make it a priority to ensure the health plan options available to beneficiaries maximize There may be times when an ambitious outreach strategy access to and continuity of care, and to make sure that targeting low-income populations may not be aligned performance incentives and any requirements imposed with policymakers’ goals for the Medi-Cal program. There on participating health plans — such as consumer are nearly 500,000 low-income uninsured Californians protections and data reporting requirements — are who are eligible for Medi-Cal but not enrolled.8 By aligned with the goals of Medi-Cal. simplifying eligibility rules, streamlining the enrollment process, and creating a “culture of coverage,” the ACA Outreach may substantially reduce the number of eligible-but- A public-partner Exchange would coordinate its outreach not-enrolled beginning in 2014. Alternatively, because activities with Medi-Cal to advance a common goal. millions more will be eligible for Medi-Cal, the number CHBE would take advantage of outreach resources of eligible-but-not-enrolled could grow. Under current Public Partner: The California Health Benefit Exchange Aligned with Medi-Cal  |  3 federal law, California is responsible for 50% of the cost must be referred to the appropriate program without of covering those who were eligible for Medi-Cal under having to submit an additional application, or the state pre-ACA rules and, eventually, for 10% of the cost of risks losing federal Medicaid funding. covering the newly eligible. Consequently, outreach efforts that increased the number of uninsured Californians who A public-partner CHBE would provide a “one-stop shop” enrolled in Medi-Cal would also increase general fund for individuals to enroll in coverage across the Exchange spending. and public programs. Per the ACA this process must be web-based, but to meet the needs of California’s most For this reason, one view of a public-partner Exchange vulnerable citizens, it should also be accessible through is that it would work with Department of Health Care other means, including a toll-free call center, kiosks in Services (DHCS) to create a unified outreach strategy. high-traffic areas, culturally competent navigators, and Just as state lawmakers have done with Medi-Cal, the assistance from community outreach workers. Computers public-partner Exchange might ramp up its outreach may not be accessible for all applicants, and when they efforts among low-income populations when the state are accessible, barriers such as language, education, and is in strong fiscal health. When the state is struggling to physical ability may impede effective navigation of this balance its budget, the Exchange might shift its outreach system. The Exchange’s enrollment system would be efforts to focus on privately insured or higher-income mindful of these needs. uninsured, tailor outreach to the highest-need individuals, or scale back outreach altogether. Regardless, the Further, the CHBE enrollment process should facilitate Exchange would always endeavor to make it easy to enrollment into other public programs such as enroll in Medi-Cal for those who want to do so. CalWORKs and CalFresh.11, 12 This would help create a first-class eligibility system that ensures that the needs Eligibility Determination and Enrollment of vulnerable populations are met. The system should CHBE will play a central role in coordinating eligibility also enable individuals who transition from Medi-Cal to for Medi-Cal and for subsidized qualified health subsidy-eligible status or vice versa to move seamlessly, plans (QHPs). Draft federal regulations state that “the with no interruption in coverage, between Exchange alignment of methods for determining eligibility is QHPs and Medi-Cal plans. one part of an overall system established by the ACA that allows for real-time eligibility determination of The Exchange, regardless of its strategic focus, would most applicants and allows for prompt enrollment adopt policies and practices that make it easy for of individuals in the insurance affordability program individuals to compare plans across several characteristics, for which they qualify.”9 Federal regulations also such as quality of care, covered benefits, provider require exchanges to determine eligibility for certain network, and consumer experience. A public-partner Medicaid applicants, as well as compulsory data sharing Exchange would also allow plans to be compared in terms between exchanges and Medicaid to facilitate real-time of whether individuals would have to switch health plans determinations for non-modified adjusted gross income or change regular health care providers if they moved populations.10 between Medi-Cal and the Exchange. Furthermore, by January 1, 2014, states must implement For example, the Exchange could seek to provide a single application form for Medicaid, Children’s Health consumers with a directory of health plans and physicians Insurance Program, and exchange QHPs. Beneficiaries that allowed consumers to easily determine which had 4  |  California HealthCare Foundation openings for both new Exchange participants and new approval would likely be needed to enact 12 months Medi-Cal enrollees. The Exchange could also provide of continuous eligibility for Exchange subsidies, summary data, such as the percent of a health plan’s and state policymakers would need to consider providers accepting new patients from the Exchange and options to adopt the same policy for Medi-Cal.14 from Medi-Cal. The CHBE should also make it easy for Furthermore, the federal government must clarify enrollees of all levels of literacy to understand and analyze whether Medi-Cal is liable when someone chooses plan quality and assess which plans would be the best fit to remain in a subsidy plan, and the extent of for them and their families. that liability. Continuous eligibility policies would reduce churning among individuals whose incomes Continuity of Coverage fluctuate temporarily; however, they would only delay To foster continuity of coverage, draft federal regulations churning among those who experience longer-lasting require annual eligibility redetermination processes for changes in income. both state exchanges and Medicaid. A public-partner ◾◾ Allow former Medi-Cal beneficiaries to maintain CHBE would emphasize additional approaches to enrollment in Medi-Cal plans for a fixed period. advance greater continuity of coverage and care for Another approach to addressing the continuity individuals when their income changes. Examples of such problem may be to allow targeted individuals guidelines include the following: whose lose their eligibility for Medi-Cal to remain ◾◾ Adopt 12 months of continuous eligibility for in their Medi-Cal plans.15 This option, if allowed coverage subsidies through the Exchange and/ under federal rules, could be offered to individuals or 12 months of continuous eligibility for transitioning off of Medi-Cal who become eligible Medi-Cal. To reduce the amount of churning, both for subsidies through the Exchange when their Medi-Cal and the CHBE should consider providing Medi-Cal plan is not licensed to serve the commercial 12 months of continuous eligibility to their members. market and does not offer coverage through the This is currently a federal option for children Exchange. Under this approach, individuals would enrolled in Medicaid, and may be an option for be able to apply their Exchange tax credit toward adults pending further Health and Human Services their premium, and would qualify for the reduced guidance. Under continuous eligibility, Medi-Cal cost-sharing available to all Exchange enrollees at beneficiaries whose income rises would continue their income level. The premium would be based on to maintain eligibility for the remainder of the the Medi-Cal capitation rate, adjusted for differences 12-month period, though they would have the option in benefits covered through Medi-Cal and the of applying for tax-subsidized coverage through Exchange. Although this approach would not fully the Exchange. Similarly, Exchange participants address disruptions in coverage, it would be especially whose income falls would continue to maintain effective for beneficiaries who experienced frequent eligibility for the Exchange, but they would have or temporary changes in income. However, federal the option of applying for Medi-Cal. The July 15, authority may be needed to apply an individual’s tax 2011 proposed federal regulations on exchange credit toward a non-qualified plan. Another potential establishment closely follow the ACA mandate that hurdle is that it would require Medi-Cal to develop QHPs must have annual open enrollment periods a process to collect and track premiums, and to for qualified individuals to enroll or change plans.13 establish additional health plan capitation rates that The proposed rule also requires states to adopt reflect the benefit package provided by Exchange annual redetermination processes. However, federal plans. The converse of this approach — to allow Public Partner: The California Health Benefit Exchange Aligned with Medi-Cal  |  5 former tax subsidy-eligible enrollees who become from Medi-Cal to subsidy-eligible (i.e., eligible for eligible for Medi-Cal to remain in their QHP for CHBE), or vice versa. A public-partner Exchange would a fixed period — is also a possibility, but would also prioritize expanding access to care, improving quality, likely require that QHPs accept Medi-Cal capitation and reducing costs, particularly for the low-income payment rates as payment in full. population. It would be willing to forego some aspects of consumer choice to achieve these ends. Contracting and Choice of Plans Under federal law, exchanges are responsible for certifying One challenge facing CHBE is that the health plans QHPs for which federally funded, sliding-scale tax credits available to commercially insured individuals in California will be made available to those with incomes between are largely different from those available to Medi-Cal 139% and 400% of FPL in 2014. In California as in enrollees (see “Managed Care Enrollment in California” other states, this certification process will determine on page 7). One option would be to pursue a BHP that the extent to which the health plan options available to offers consumers with incomes between 138% and 200% low-income individuals are consistent across the Exchange of FPL the same health plan choices available to Medi-Cal and Medi-Cal. beneficiaries (see sidebar). Some alternative options for overcoming this challenge include the following: A public-partner Exchange would adopt a contracting ◾◾ In each county, the Exchange could contract approach aimed at maximizing uniformity among with at least one Medi-Cal managed care plan provider networks across commercial and Medicaid lines that meets state and federal requirements. To of business, and thus minimizing the need for individuals advance goals related to continuity of coverage and to switch plans or providers when their eligibility changes care, a public-partner Exchange could contract with at least one Medi-Cal managed care plan in each county. This would give all low-income Exchange The Basic Health Program Option enrollees the option to enroll in a low-cost plan in Related to how to best serve low-income consumers and how to maintain continuity across programs and which continuity of care is assured if the individual’s plans is the question of whether California should pursue income falls below 138% of FPL. It would provide a Basic Health Program (BHP). Under a BHP, consumers the same benefit to Medi-Cal beneficiaries to ensure between 138% and 200% of the federal poverty level they would not have to switch their provider if their (FPL) would be enrolled in a new state program that provides coverage at a lower premium than comparable income changes. The Exchange could contract with coverage through the Exchange. The BHP holds promise all Medi-Cal-participating plans in counties where for improving affordability for its target population and two or more plans operate, but this approach comes improving continuity of coverage for people moving with a significant drawback: it could make coverage across the 138% FPL threshold. However, open questions remain about key design features of the through a mainstream plan unaffordable for many BHP and its impact on the Exchange’s risk mix and beneficiaries.17 negotiating leverage, enrollees’ access to care, and state costs.16 If California were to create a BHP, much of the ◾◾ Open up the Medi-Cal managed care contracting rationale for and benefits to the Exchange of partnering process to allow additional plans to participate, with Medi-Cal as described in this paper would certainly and establish incentives for Exchange plans to extend to partnering with the BHP in the context of participate in Medi-Cal. Another option is to beneficiaries whose incomes fluctuate above and below 200% of the FPL. establish financial and non-financial incentives for health plans that participate in the Exchange to 6  |  California HealthCare Foundation Managed Care Enrollment in California Only three of the 27 plans that offer coverage to privately insured individuals contract with Medi-Cal: Anthem Blue Cross, HealthNet, and Kaiser. Moreover, although these three plans account for 64% of total managed care enrollment in California, they account for only 38% of Medi-Cal managed care enrollees. This difference is due to two factors. The first is that access to commercial plans is restricted by Medi-Cal: Among the 27 counties where Medi-Cal managed care is available, Medi-Cal offers no commercial health plan option in the 11 counties with a County-Organized Health System, and it offers only one commercial health plan option in 12 counties. The second is that the state’s largest health plan, Kaiser, tightly restricts Medi-Cal enrollment in most counties in which it is available. Kaiser accounts for 40% of California HMO enrollment but only 4% of Medi-Cal managed care enrollment. The provider networks available to Medi-Cal beneficiaries are also different, even among those enrolled in commercial plans. Blue Cross and HealthNet create different provider networks for their Medi-Cal beneficiaries because many providers will not accept payment rates that are based on Medi-Cal’s low fee-for-service rates. Medi-Cal fee-for-service physician fees average only 56% of Medicare fees (and Medicare reimbursement is less than commercial reimbursement).18 Health plans participating in Medi-Cal have indicated they must often pay their physicians more than Medi-Cal fee-for-service rates in order to ensure sufficient access to care for their members.19 Their networks for Medi-Cal beneficiaries are also more likely to include traditional safety-net providers such as Federally Qualified Health Centers and public hospitals, which receive enhanced Medicaid reimbursement under federal law. Table 1. Share of Managed Care Enrollment, by Health Plan Type, 2011 S h a r e o f Med i - C a l Share of All Number M a n a g ed C a r e HM O E n r o l l m en t of Plans E n r o l l m en t in California Health Plans Participating in Medi-Cal Local Initiatives 9 23%* 7% County-Organized Health Systems 5 19%* 6% Other Plans with Public Program Focus 6 20% 6% Commercial Plans with Medi-Cal and 3 38% 64% Commercial Members Health Plans Not Participating in Medi-Cal Commercial and Other 22 0% 17% Total 45 100%† 100% *Excludes members enrolled in a commercial or other plan for their care. †Members enrolled in managed care account for 57% of Medi-Cal beneficiaries. The remaining 43% of Medi-Cal beneficiaries — including beneficiaries in 31 counties that have no health plan option available to them — receive care through the fee-for-service system. Source: Estimates based on Medi-Cal enrollment in August 2011 from the DHCS and Medi-Cal managed care enrollment by plan in April 2011. Adjustments for Medi-Cal managed care members who enroll in a subcapitated plan based on worksheet prepared by Cattaneo and Stroud, which reflects enrollment in March 2011. Public Partner: The California Health Benefit Exchange Aligned with Medi-Cal  |  7 also participate in Medi-Cal. The Exchange could discussed in the sidebar, “Managed Care Enrollment offer financial incentives modeled after the Healthy in California,” due to Medi-Cal’s low payment rates, Families Premium Discount Program, in which the commercial plans have created different provider premiums are discounted for health plans designated networks in their commercial lines of business than in as “Community Provider Plans.” That designation is their Medi-Cal lines. used to reward health plans based on their contracts ◾◾ Require Exchange plans to participate in with “traditional and safety-net providers,” but a Medi-Cal as a condition of participating in the similar approach could be used to reward plans that Exchange. The Exchange could require health plans participate in both the Exchange and Medi-Cal. that want to participate in the Exchange to also Similarly, Medi-Cal could offer non-financial participate in Medi-Cal. A drawback is this may not incentives through its default enrollment algorithm, advance continuity of care if participating health which is currently used to assign a higher share of plans establish different provider networks for the members who don’t make a health plan choice of two groups. Moreover, there is a risk to both the their own to the health plan that scores highest based Exchange and Medi-Cal that some health plans may on a combination of quality measures and safety-net decide not to participate in the Exchange under participation. these rules, or that health plans may require higher This approach would require Medi-Cal to open up capitation rates under one or both programs to its County-Organized Health System and two-plan participate. Commercial plans interested in becoming models of managed care, which operate in 25 of the 27 Exchange QHPs may or may not be interested in counties in which Medi-Cal managed care is available. taking on Medi-Cal. Medi-Cal capitation rates are These models would be replaced with a county- among the lowest Medicaid rates in the country, and based, regional, or statewide Geographic Managed many Medi-Cal beneficiaries have different and more Care-type model. Medi-Cal, however, may not want complex needs than the commercial population. Also, to open up its contracting to include more commercial as discussed above, Medi-Cal may resist opening up plans. Medi-Cal’s one-plan and two-plan models of its contracting process to include more commercial managed care provide a level of financial protection plans. to traditional safety-net providers who provide a ◾◾ Require Medi-Cal plans to participate in disproportionate share of care to low-income Medi-Cal the Exchange as a condition of continued and uninsured individuals. These closed systems also participation in Medi-Cal. Like many of the allow participating plans to keep their marketing costs options, this would require the approval of Medi-Cal. low, which allows Medi-Cal to pay less to the plans It is not certain that all Medi-Cal-participating plans than it would otherwise. would want to participate in the Exchange, or that Even if Medi-Cal opened up its contracting process, it they would be capable of participating (i.e., have is not clear that modest incentives would be sufficient experience managing risk), or that they would be for convincing large commercial plans like Kaiser or allowed to by their governing boards. Also, depending Blue Shield to participate in Medi-Cal if they do not on the requirements set by the Exchange Board, some already. Another limitation of this approach is that, Medi-Cal plans may need to raise substantial new although it would allow enrollees whose income falls capital to handle premium collection and marketing. below the threshold to maintain coverage through their These plans would have to meet a new set of rules, same plan, it may not improve continuity of care. As as well as additional accreditation and financial 8  |  California HealthCare Foundation reserve requirements, and meet rules that require each protection standards with Medi-Cal in the following plan to offer every insurance type (from “precious areas: metals” to catastrophic). In addition, expanding ◾◾ Access. The Exchange would seek to implement the into new markets may not align with the mission or same standards as Medi-Cal for access to providers operational and political capabilities of some regional, and for availability of culturally-appropriate nonprofit Medi-Cal plans. Therefore, a CHBE information accessible to people with disabilities and that prioritized the needs and options available to low literacy. Medi-Cal enrollees would make an effort to clarify participation requirements sooner rather than later, ◾◾ Care management and coordination. Exchange and might place greater weight on the needs and plans would offer robust, culturally sensitive care constraints of Medi-Cal managed care plans than, management to enrollees. This would include early for example, the needs and demands of plans that identification of members’ needs, development of participate only in the commercial market. a formal care plan for high-risk individuals, and coordination with other health care services used Health Plan Requirements by members, including behavioral health care, Analysts predict that 8 to 10 million Californians will community-based care for members with disabilities, be eligible for Medi-Cal when the expansion takes place and specialty care for children enrolled in the in 2014, with individual Exchange enrollment growing California Children’s Services program. to nearly 4 million by 2016, including 2 million eligible ◾◾ Performance monitoring and improvement. The for subsidies and another 1.8 million individual policy Exchange would incorporate many of the same holders without subsidies.20 health plan performance monitoring measures used by Medi-Cal so that low-income consumers could A public-partner Exchange would use the procurement compare performance across plans and programs. process to leverage the combined purchasing strength of the CHBE and Medi-Cal to improve the health care and ◾◾ Grievances and appeals. Exchange plans would health outcomes of enrollees of both purchasers. It would align their grievance and appeals processes as closely work closely with Medi-Cal to identify opportunities to as possible with the Medi-Cal process. DHCS align contract standards, quality improvement goals and requires all health plans to maintain a Member activities, payment policies, and health plan contracting Grievance System, and provides complaint resolution and oversight. support through the DHCS Ombudsman Program’s toll-free telephone line. At any time during the Consumer Protections and Other Contract grievance process, beneficiaries or their representatives Standards may request an investigation through the state’s Medi-Cal’s consumer protections have historically hearing process. Requiring consistency across exceeded the protections mandated in The Knox programs would streamline administrative processes, Keene Act, and California’s §1115 Comprehensive decrease confusion for Medi-Cal and Exchange plan Demonstration Waiver further expands these participants, and help them to navigate this process. protections.21 To achieve administrative simplification and better serve low-income consumers, a public-partner The Exchange should not simply adopt Medi-Cal’s Exchange would seek to develop common consumer consumer protections and health plan standards. Rather, the objective should be for the Exchange and Medi-Cal Public Partner: The California Health Benefit Exchange Aligned with Medi-Cal  |  9 to work together to identify a set of protections and utilization of community-based long-term care than in standards that reflect current best practices. Some the Exchange population. differences between the Exchange and Medi-Cal are inevitable. Safety-Net Protections Most low-income Californians will be eligible for Quality Improvement coverage through Medi-Cal or for tax subsidies through A public-partner Exchange would work closely with the Exchange. However, many low-income individuals Medi-Cal to align their quality measurement and quality will continue to rely on the health care safety net, such as improvement activities. This would include: those who are ineligible for public programs, those who are exempt from the mandate, and those who choose not ◾◾ Developing mutually agreed-upon priorities. to enroll. Many Medi-Cal enrollees also rely on the safety The Exchange and Medi-Cal would collaborate to net, either because they choose to get their care from a determine a set of common quality measures, and to safety-net provider or they are unable to find an available determine which populations and which problems provider in another setting. to target for intervention. For example, the two might collaborate to prioritize quality improvement An Exchange that partners with Medi-Cal would pursue projects that also seek to reduce costs, such as projects other means to protect and improve the safety net. targeting inappropriate emergency room use or For example, the Exchange could develop a pay-for- inappropriate Caesarean sections. performance system that incorporates safety-net ◾◾ Pursuing common interventions to achieve participation as one measure of health plan performance, improvement goals. The two purchasers would modeled after Medi-Cal’s auto-assignment algorithm.22 adopt identical evidence-based protocols, team up on technical assistance collaboratives with both Exchange Health Plan and Provider Payment and Medi-Cal plans, and adopt a unified approach to Payment methods and rates are among the most health plan performance incentives. powerful tools in a purchaser’s toolkit, and the combined purchasing power of Medi-Cal and the Exchange would ◾◾ Providing consumers with a unified report card be immense. As discussed above, Medi-Cal has among the on health plan performance. A unified, easy-to- lowest health plan and physician payment rates nationally, use report card to inform consumers as they make and the Exchange should not seek to model its rates their health plan and provider selections would be after Medi-Cal. However, a public-partner Exchange and less expensive to produce than two separate report Medi-Cal could align their payment methods, possibly to cards. It would offer other benefits as well, such as include a common method for risk adjusting health plan improving the statistical power of comparisons of capitation rates and a unified approach to health plan quality and consumer satisfaction by health status, performance incentives. language spoken, and other variables. The programs would continue to differentiate themselves A public-partner Exchange would move cautiously when it makes sense. For example, Medi-Cal is likely to with respect to establishing health plan payment levels. include measures and quality improvement initiatives Medi-Cal’s low provider payment rates already limit that reflect characteristics common in its enrollees, such access to providers through the program; the Exchange as a higher incidence of serious mental illness or greater could potentially exacerbate this problem. If Exchange plans are able to reimburse providers at a much higher 10  |  California HealthCare Foundation rate than that offered by Medi-Cal (because these plans The Healthy Families Experience receive higher reimbursement from the Exchange than The experience of the Healthy Families program from Medi-Cal), then providers might be able to fill provides a real-life example of the opportunities and their practices with newly insured Exchange enrollees challenges associated with partnering with Medi-Cal. Staff of the Managed Risk Medical Insurance Board and significantly limit or terminate their participation (MRMIB), which runs Healthy Families, and of DHCS, in Medi-Cal, resulting in potential access problems which operates Medi-Cal, have worked together for Medi-Cal beneficiaries. If the supply of Medi-Cal in several areas, including the development of a providers were to become acutely limited, the state may streamlined paper application for coverage under both need to increase reimbursement rates for Medi-Cal programs, development and testing of Health-e-App (an online application for children and families), and providers. Alternatively, if Exchange plans reimbursed outreach to consumers. providers at rates similar to Medi-Cal, provider MRMIB and DHCS have also pursued different paths participation in the Exchange could suffer and some in many key areas. The managed care programs of providers might choose to practice in another state. Healthy Families and Medi-Cal are quite different, and the two entities have not collaborated as much as Administration they might have in terms of establishing health plan contract standards, quality measures, and performance There are numerous opportunities for the Exchange and incentives. For example, both have adopted performance Medi-Cal to collaborate on procurement-related activities incentives (the Healthy Families Preferred Provider in order to keep administrative costs low for themselves Program, and Medi-Cal’s default assignment algorithm), and for participating health plans. For example, together but they have chosen different measures of health plan performance. Also, Healthy Families pioneered the use the programs could implement a single, cost-effective of certified application assistants and public access to means for determining eligibility and enrolling people Health-e-App, which might not have been possible if into any program for which they qualified.23 They collaboration with Medi-Cal in these areas had been could jointly conduct outreach activities and pursue required. opportunities to use the same personnel to conduct activities such as health plan contracting and oversight, rate setting, medical review, and quality improvement. Customer Service Issues There may also be administrative functions the Exchange While many of the service needs and expectations of should conduct separately because collaboration might low-income consumers are the same as other consumers, interfere with the Exchange’s ability to take risks and a public-partner CHBE would be particularly attuned to innovate. Healthy Families provides a useful case study the service needs of lower-income enrollees who move in this regard (see sidebar, “The Healthy Families across programs as their income shifts. For example, Experience”). as discussed above, a public-partner Exchange would need to offer culturally appropriate services suitable for addressing the diverse needs of Medi-Cal beneficiaries. Materials would be available at appropriate reading levels, in different languages, and in alternative formats. Low-income applicants will want to know which programs they are likely to qualify for and how much of a subsidy they will receive. Ideally, they would enter Public Partner: The California Health Benefit Exchange Aligned with Medi-Cal  |  11 information only once — whether entering it through program priorities, and altering some of its policies and an Exchange portal or when completing an application practices. with the assistance of a county eligibility worker — and have that information available the next time they For example, Medi-Cal should consider whether to need it. And, as discussed previously, an Exchange provide 12 months of continuous eligibility in order to focused on serving Medi-Cal beneficiaries would make reduce churn. Also, Medi-Cal should consider its models extensive use of “navigators” to provide community of managed care, which limit beneficiaries’ choice of outreach and assistance to Medi-Cal populations. These plans to one or two. These models were developed when navigators would provide information to help low-income Medi-Cal managed care enrollment was much smaller individuals determine if they would need to switch plans that it is now — and a fraction of what it will be in 2014. or providers if their income fluctuated above or below There will also be a significant decline in the number 138% of FPL. of uninsured, which these models were designed to protect. Finally, for a public-partner Exchange to thrive, Other customer service aspects of the Exchange would be Medi-Cal’s administration must be open to a more of benefit to all consumers, whether low-income or not. transparent model of governance, since meetings and For example, the Exchange would implement an easy-to- decisions of the CHBE are open to the public. use online system that allows consumers to view and compare their choices, and a toll-free number in case they Even if Medi-Cal and the CHBE are able to align want to talk to a person to answer a question, get help themselves at the outset, this collaboration could completing their application, or address other problems be difficult to maintain over time due to changes in or issues. leadership and program goals and priorities. The two organizations may want to consider articulating a Public Program Implications formalized governance and decision-making structure to A public-partner Exchange would, by definition, be ensure continued collaboration over time. highly attuned to its impact on and relationship with other public health coverage programs. The Exchange Role of the Board and Staffing Requirements would work to promote and support not just Medi-Cal, Closely aligning CHBE and Medi-Cal would require but to some extent also Healthy Families and other public putting structural mechanisms in place to ensure programs, including CalWORKs and CalFresh. This type significant staff coordination and collaboration over the of coordination would provide families with immediate long term. A public-partner CHBE would ensure there assistance and would eventually lead to improved overall was adequate staff responsible for: health among those served. ◾◾ Coordinating performance measurement and quality improvement activities across the programs The vision of the Exchange as a partner with Medi-Cal cannot be realized unless Medi-Cal wants to partner and ◾◾ Ensuring that member services continue to meet the takes appropriate steps to do so. Specifically, Medi-Cal needs of individuals as they move across programs must modify its systems and processes to accommodate ◾◾ Monitoring the financial impact of adverse selection the Exchange as a partner. This may include sharing staff, and churning across plans jointly procuring services, considering the perspectives of the Exchange and Healthy Families when establishing its ◾◾ Coordinating IT systems 12  |  California HealthCare Foundation In addition, the CHBE should have a staff person programs for low-income people would be available to responsible for ensuring regular communication and workers losing eligibility for employer-sponsored coverage. collaboration with the staff who administer Medi-Cal, and for resolving challenges as they arise. Ideally, at least Metrics for Success one board appointee would have deep experience with For a public-partner Exchange, the ultimate measure Medi-Cal, including understanding Medi-Cal finance and of program success would be its ability to provide the roles of state and federal funds in supporting it. user-friendly access to quality health care services in a cost-effective manner for low-income Californians. The Just as a public-partner Exchange would align many of types of indicators to track would include: its own administrative activities with Medi-Cal, it would ◾◾ Percent of Medi-Cal-eligibles enrolled in coverage also align many of its health plan contract requirements with those of Medi-Cal plans. Aligning health plan ◾◾ Continuity of coverage for individuals who move contract requirements — such as the data that health between Medi-Cal and subsidy-eligible coverage plans are required to collect and provide to the Exchange (e.g., uncovered days per switcher) and to Medi-Cal — would result in lower health plan ◾◾ Percent of health plans and providers available administrative costs, and these savings could be passed on to both subsidy-eligible and Medi-Cal-eligible to the state in the form of lower capitation rates. individuals; continuity of provider relationships for populations at up to 200% FPL To take this concept even further, a public-partner Exchange and Medi-Cal could agree to allow health ◾◾ Broad array of consumer satisfaction, access, and plans to report their performance outcomes for a quality of care measures, stratified by income, particular population (e.g., low-income children) across race/ethnicity, language spoken, disability, and both programs rather than seeking out and reporting type of coverage results separately for each. As in many of the areas ◾◾ Degree of alignment of quality, process, and where the Exchange and Medi-Cal could align, some consumer satisfaction metrics across Exchange, differences would be appropriate due to differences in the Medi-Cal, and Healthy Families programs populations or priorities of the Exchange and Medi-Cal. ◾◾ Annual change in general fund expenditures for Integration Between Individual and Small Medi-Cal compared to annual change in general Business Health Options Program (SHOP) fund revenues Exchanges A public-partner Exchange would focus first and foremost Risks and Unintended Consequences on the experience of low-income individuals, and would Aligning the Exchange with Medi-Cal offers many be more concerned about integration and coordination potential benefits and could greatly amplify the impact for individuals among public programs than with of the Exchange. It also presents some great challenges. integrating offerings between the individual Exchange and These challenges, described below, could undermine or the SHOP Exchange. As such, the SHOP Exchange may slow the Exchange’s ability to innovate quickly. They operate with greater independence from the individual could also result in lower enrollment in the Exchange. Exchange under this model. However, the two exchanges The California Exchange Board should be aware of the would work together to ensure that information about following potential issues that may arise if it pursues the public-partner Exchange approach. Public Partner: The California Health Benefit Exchange Aligned with Medi-Cal  |  13 ◾◾ Collaborating with Medi-Cal may impede enrollment and its long-term viability. Also, if a innovation. To collaborate with Medi-Cal (or any public-partner Exchange dials back outreach activities other large purchaser), the Exchange may have to in order align itself with Medi-Cal, it could sacrifice sacrifice the opportunity to test ideas quickly and to enrollment and its own revenues. immediately adopt ones that work. The process of ◾◾ Collaborating with Medi-Cal could lead to developing common goals and strategies takes longer adverse selection of sicker individuals into the when another party is involved and many decisions Exchange and drive up costs for all Exchange affecting the Medi-Cal program are made by federal participants. A public-partner CHBE could and state policymakers through the legislative exacerbate adverse selection if relatively healthy, process, not by program officials. The process of higher-income people are put off by the Exchange’s implementing new approaches within Medi-Cal can link to public programs. This in turn could drive take a long time given the size and complexity of up premiums for all potential customers and lead to the program, and its competing goals and shifting further enrollment declines and adverse selection. priorities also tend to slow innovation. For example, Medi-Cal’s goals of improving the health care and ◾◾ Collaborating with Medi-Cal may make it more health outcomes of its members may be at odds difficult for the Exchange to partner with other with other goals, such as slowing the growth of state public or private purchasers. Due to limited spending by cutting benefits or raising copayments. resources and a broad set of needs — especially Many aspects of Medi-Cal are also county-based, during the start-up phase of a large, complex such as its eligibility determination process and its organization — there will inevitably be competing managed care program, which may impede state- demands for time and focus. There is a risk that a based or regional solutions. focused effort on public programs could result in less attention by the CHBE toward creating viable ◾◾ Collaborating with Medi-Cal could lead to partnerships with commercial plans and, through lower enrollment in the Exchange. Alignment them, opportunities to influence a broader set of with Medi-Cal may turn off potential participants provider relationships and care delivery arrangements. if the Exchange is viewed as being a state “welfare” Similarly, if decisions resulting from a partnership program. This issue was a key consideration when with Medi-Cal result in commercial plans being the state designed Healthy Families. While much discouraged from participating in the Exchange on has been done at the federal and state levels to a broad scale, the CHBE will be unlikely to have de-link Medi-Cal from welfare (e.g., elimination the transformative effect on the health insurance of the face-to-face interview requirement), there is marketplace envisioned in the ACA. still room for improving the customer experience with Medi-Cal, from the enrollment process, to finding a trustworthy provider in a satisfactory setting, to getting authorization for needed services. If consumers seeking coverage through the Exchange have a poor experience because of policies the Exchange has adopted in order to align itself with Medi-Cal, this could adversely affect Exchange 14  |  California HealthCare Foundation Conclusion P r o j e c t C o n t r i b u to r s The creation of CHBE offers an unprecedented CHCF Project Lead opportunity for California to ensure that the health care Marian Mulkey needs of all Californians — including the state’s most vulnerable citizens — are met. At one extreme, California Primary Contributors Lori Chelius could create a system that is purely market-driven and Lesley Cummings market-focused with only legislatively required ties to Rick Curtis entitlement programs. Conversely, California could Suzanne Gore use its existing publicly funded coverage programs as Patrick Holland the foundation for its CHBE and closely align these Emma Hoo programs. Ann Hwang, MD Carolyn Ingram There are many advantages to tying the CHBE closely to Jon Kingsdale Medi-Cal. Such a linkage could support seamless access Ed Neuschler to care when people inevitably move between coverage Chris Perrone options. A CHBE tied to Medi-Cal could also benefit Sandra Shewry from the combined purchasing power of a coordinated Nancy Wise system to drive quality improvement and greater Lucien Wulsin efficiency. About the F o u n d at i o n The California HealthCare Foundation works as a catalyst to However, a closely aligned system also has several fulfill the promise of better health care for all Californians. drawbacks depending on the choices made. A public- We support ideas and innovations that improve quality, partner CHBE would navigate these challenges driven increase efficiency, and lower the costs of care. For more by its ultimate goal of meeting the health care needs of information, visit us online at www.chcf.org. low-income Californians while creating a system that is administratively and fiscally sustainable. Public Partner: The California Health Benefit Exchange Aligned with Medi-Cal  |  15 Endnotes 1 1.The CalWORKs program provides temporary financial 1.Congressional Budget Office, analysis of HR4872 assistance and employment-focused services to families (Reconciliation Act of 2010) and HR 3590 (Patient with minor children who have income and property below Protection and Affordable Care Act) as published in letter state maximum limits for their family size, dated March 20, 2010 to House Speaker Nancy Pelosi. www.ladpss.org/dpss/calworks. Estimate for increase in Medicaid coverage includes 1 2.The CalFresh Program, formerly known as Food Stamps expected enrollment growth in the Children’s Health and federally known as the Supplemental Nutrition Insurance Program. Assistance Program, helps to improve the health and 2.Published estimates of the projected increase in Medi-Cal well-being of qualified households and individuals enrollment range from 1.7 to 3.0 million, depending on by providing them a means with which to meet their a variety of assumptions including take-up rates among nutritional needs, www.dss.cahwnet.gov/foodstamps. those eligible. Enrollment growth of this magnitude 1 3.Department of Health and Human Services, Patient represents a 23% to 41% increase over Medi-Cal’s current Protection and Affordable Care Act; Establishment of enrollment of 7.4 million. Such growth would bring total Exchanges and Qualified Health Plans proposed rule, Medi-Cal enrollment from 9.1 to 10.4 million people. 76 Federal Register 41866 (July 15, 2011), www.gpo.gov. As of the 2010 Census, the California population was 37.3 million people. 1 4.Annual redetermination and 12 months of continuous eligibility are not synonymous. Continuous eligibility 3.California Health Interview Survey, 2009, accessed guarantees eligibility even if income rises, whereas annual August 3, 2011 using askCHIS. Comparison of redetermination does not. self-reported health status by poverty level. 1 5.R. Curtis and E. Neuschler, “Continuity for (Former) 4.California HealthCare Foundation, Medi-Cal Facts and Medi-Cal Enrollees and Affordability for the Low-Income Figures, 2009. Exchange Population: Background and an Alternative 5.B. Sommers and S. Rosenbaum, “Issues in Health Reform: Approach,” Institute for Health Policy Solutions How Changes in Eligibility May Move Millions Back (July 2011). And Forth Between Medicaid And Insurance Exchanges,” 1 6.For further analysis on the Basic Health Program option, Health Affairs (February 2011). see Mercer, “State of California Financial Feasibility 6.Affordable Care Act §1002. of a Basic Health Program” and Institute for Health Policy Solutions, “Continuity for (Former) Medi-Cal 7.Affordable Care Act §1311(i). Enrollees and Affordability for the Low-Income Exchange 8.2007 California Health Interview Survey. Population,” both available at www.chcf.org. 9.CMS-2349-P, “Medicaid Program; Eligibility Changes 1 7.Ibid. Under the Affordable Care Act of 2010,” Federal Register 1 8.S. Zuckerman, A. Williams, and K. Stockley, “Medi-Cal 76, no. 159 (August 17, 2011). Physician and Dentist Fees: A Comparison to Other 1 0.CMS-9974-P, “Patient Protection and Affordable Care Medicaid Programs and Medicare,” California HealthCare Act; Exchange Functions in the Individual Market: Foundation (April 2009). Eligibility Determinations; Exchange Standards for 1 9.J. Mittler and M. Gold, “Building and Sustaining Employers,” Federal Register Vol. 76, no. 159 Physician Networks in Medi-Cal Managed Care and (August 17, 2011). Healthy Families,” California HealthCare Foundation (May 2003). 16  |  California HealthCare Foundation 2 0.Two estimates converge on this figure. First, Peter 2 3.For example, see California HealthCare Foundation, Long and Jonathan Gruber, in “Projecting the Impact “Modernizing Enrollment in California’s Health Programs of the Affordable Care Act on California,” Health for Pregnant Women and Children: A Blueprint for the Affairs 30, no.1 (2011): 6370, estimate the Exchange Future” (September, 2007). size in California will be 4 million in 2016, but, per personal communication with Dr. Gruber, this estimate includes all non-grandfathered individual coverage. (With grandfathered plans included, the individual market also totals 4.9 million.) Dr. Gruber reports that individual tax-credit recipients will total about 2 million. Second, the UC Berkeley Labor Center and the UCLA Center for Health Policy Research also project 2 million individual Exchange enrollees with subsidies in 2016, and 1.8 million individual policyholders without subsidies (Jerry Kominski, “The Potential Impact of the Affordable Care Act on California,” Presentation to CHBE at May 11, 2011 meeting). 2 1.Examples include Medi-Cal contract standards that require participating health plans to: (1) conduct a health risk stratification of newly enrolled members and administer a DHCS-approved health risk assessment survey within 45 days for members deemed to be at a higher risk; (2) conduct facility site reviews to assess the physical and non-physical accessibility of provider facilities; (3) provide continued access for up to 12 months to an out-of-network provider with whom the member has an ongoing relationship if the provider will accept the higher of the health plan’s payment rates or Medi-Cal fee-for- service rates; and (4) submit procedures to DHCS for administering and monitoring the provision of complex care management. 2 2.The Medi-Cal auto-assignment algorithm scores health plans based on the quality of care they provide (using selected HEDIS measures) and level of safety-net participation. The measures of safety-net participation include the percent of hospital discharges of Medi-Cal members from disproportionate share hospitals and the percent of members assigned to Federally Qualified Health Centers (and certain other safety-net providers) as their primary care physician. Health plans with higher scores are rewarded with a greater share of auto-assigned members — that is, Medi-Cal beneficiaries required to enroll in managed care who do not select a health plan. Public Partner: The California Health Benefit Exchange Aligned with Medi-Cal  |  17