Some CA hospitals expect staff vaccination rates as high as 95% for the coming flu season, well above the national average.
During the 2015–2016 flu season, the national average for healthcare personnel vaccination was 64%. However, data show rates in California were much higher.
The higher rate of vaccinations was driven in part by regional policies that require non-vaccinated healthcare workers to wear a protective mask during flu season if they opt not to be vaccinated. Thirty-one 31 counties in the state have adopted mask policies since 2011.
Data show that 82% of healthcare workers at hospitals with mask policies received flu shots last year, while 78% of hospital healthcare workers received flu vaccines in counties without mask policies.
In Southern California, where Los Angeles County and San Diego County have mask policies in place, vaccination rates at hospitals continued to climb during the 2015–2016 flu season.
California's flu vaccination rate among healthcare workers has increased steadily since 2011 when Sacramento and Amador counties implemented the first countywide vax-or-mask polices. Since then, 29 more counties have adopted similar policies, as have local health agencies in Long Beach and Berkeley.
Overall vaccination coverage for healthcare personnel was 85% in 2014–2015, compared with 81% in 2013-2014 and 74% in 2012–2013, according to the California Department of Public Health.
Rates for healthcare workers varied by county in 2014–2015, with 12 counties reporting vaccination rates of more than 90%. Amador County reported the highest rate at 96.4% followed by Tehama (95%), Calaveras (95.5%), and Inyo (95.2%).
Counties on the lower range included Mendocino County (59.6%), Glenn (61.3%), Kern (61.8%), and Riverside County (69.8%). None of the counties in the lower range have mask policies.
Rates also vary by individual hospitals and health systems. Sharp HealthCare in San Diego has distributed more than 10,000 doses of flu vaccine to its employees, physicians, and volunteers in the past four weeks. Sharp expects vaccination rates for the 2016–2017 flu season to be on par with last year.
"Last year, we reached a 91% vaccination rate for employees," said Erica Carlson, a spokesperson for Sharp HealthCare, which operates four acute care hospitals and three specialty hospitals in San Diego County.
"Those not vaccinated were required to wear a mask from November 1, 2015 through March 31, 2016. The same masking requirement will be in effect this year."
Scripps Health in San Diego reported a 93% vaccination rate among healthcare employees in 2015–2016. "We are on track to meet or exceed last year's rates," said Janice Collins, a spokesperson for Scripps, which operates four acute care hospitals and 19 outpatient clinics in San Diego County.
The state's Department of Health Care Services disputes OIG's findings.
A federal audit estimates the state Department of Health Care Services (DHCS) made incorrect Medicaid incentive payments to hospitals in California totaling more than $22 million over four years and must repay the federal government.
Those were the findings of an audit from the Office of Inspector General (OIG) released in September by the U.S. Department of Health and Human Services (HHS).
The OIG audit looked at EHR incentive payments made by the DHCS and found that from October 1, 2011 through December 31, 2015, the state agency made incorrect Medicaid EHR incentive payments to 61 of 64 hospitals reviewed. These incorrect payments included a net overpayment of $22,043,234.
The audit contends the DHCS made incorrect payments because it did not follow federal protocols and didn't always make payments in accordance with federal requirements.
OIG also stated that the DHCS did not always review supporting documentation from hospitals to help identify errors in its calculations. As a result, the OIG recommended that the DHCS refund the federal government the $22 million in overpayments made to 61 hospitals.
In a statement, the DHCS countered that the Centers for Medicare & Medicaid Services had advised it that overpayments and underpayments could be addressed through adjustments to future incentive payments to eligible hospitals (EHs).
Additional analysis and validation of data reported by the EHs is required to support the overpayments identified by the OIG, the DHCS stated.
The DHCS has prioritized auditing the 64 EHs reviewed by OIG and intends to have the audits completed within the current state fiscal year. Any overpayments identified will be offset against the EH's future recalculated incentive payments, according to the statement.
If overpayments exceed future payments, DHCS will refund the overpayment to the federal government.
The OIG investigated incentive payments made by the DHCS on behalf of the federal government for a Medicaid EHR incentive program for hospitals. The payments were part of $601 million in Medicaid EHR incentive payments made to 263 California hospitals from 2011 to 2015.
The audit looked at 64 hospitals in the state that received more than $2 million in incentive payments during the first year of the program.
Study suggests that Dignity Health and Sutter Health use their position as "must-have hospitals" to negotiate better deals with insurers that include all-inclusive contracts. The health systems reject the claim.
A study from the University of Southern California in Los Angeles estimates the cost for care at California hospitals increased 76% over the last decade and that costs at large health systems increased by a larger margin.
It found that Blue Shield's average payment for patient admission increased 113% at Sutter Health and Dignity Health facilities from 2004 to 2013 while payments per admission at all other hospitals increased 70%.
Overall, prices at California hospitals increased 76% per hospital admission during the study period. The study noted that "prices grew faster for hospitals in the two largest systems compared with all other hospitals."
Study author Glenn A. Melnick, PhD, Blue Cross of California professor of healthcare finance and director of the Center for Health Policy and Management at USC, said the trends in the study are not isolated to California.
"I think [other health systems] have seen the success of these models in California—in being able to raise prices—and adopted them," said Melnick. Both Sutter Health and Dignity Health disputed the findings.
The study suggests that Dignity Health and Sutter Health, which operate 32 and 25 acute care hospitals in the state respectively, use their position as "must-have hospitals" to negotiate better deals with insurers that include all-inclusive contracts.
"The [health] system gains leverage to negotiate contracts with health plans on an 'all-or-none' basis, requiring the plan to include all system member hospitals in the plans' preferred networks, regard- less of their prices (or quality) relative to other potential substitutes in the market," the study stated.
"This could resally appeared inult in higher prices to health plans and higher health insurance premiums to consumers."
It also found that "prices at hospitals that are members of the largest, multi-hospital systems grew substantially more" during the study period.
"Prices were similar in both groups at the start of the period (approximately $9,200 per admission)," the study stated. "By the end of the period, prices at hospitals in the largest systems exceeded prices at other California hospitals by almost $4,000 per patient admission."
Dignity Health said the study did not consider other factors that drive costs.
"The prices charged for commercially insured patients are affected by a number of factors, including the range of services offered, labor costs (generally higher in Northern California), unfunded mandates such as seismic upgrades, and the costs of covering the rapidly growing share of the Medi-Cal insured population," said Dignity Health in a statement.
Sutter Health questioned the study's methods and findings and why the study did not include other large health systems in addition to Sutter Health and Dignity Health.
"If the study was intended to look at large systems, why did the authors not look at Scripps [Health], Sharp [HealthCare], Tenet [Health], and Adventist Health as well as other growing regional systems?" said Sutter Health's vice president of communications Bill Gleeson.
He added that the study "used old data" and that "our price increases in recent years have been extremely low and, in some cases, essentially flat."
Gleeson also disputed the suggestion that Sutter Health has an "all-or-none" clause in its contracts with health plans, stating that "such provisions simply do not exist at Sutter Health." Melnick said that while Blue Shield of California was the only insurer to supply data for the study, its data is a good reflection of the industry as a whole.
"Blue Shield is a large commercial payer and is likely representative of the overall market," said Melnick.
Covered California premiums could increase as much as 8% in the coming year, nearly double the average increase of 4.1% in the past two years.
The projected increase was included in Covered California's proposed annual budgetfor 2016–2017. The budget summary suggested that several one-time factors will come into play and drive premiums up in 2017 but that projected hikes for 2018–2020 will average about 5%.
"All models reflect the same trend assumptions for gross health insurance premiums, which are projected to increase by 8% in 2017 and 5% each year through 2020," the report states.
"The projected increase in 2017 is driven by the assumed impact of the sunset of the Transitional Reinsurance Program and the Risk Corridors Program, temporary federally sponsored high-claimant risk- mitigation programs. The termination of these federal programs will put a one- time, upward pressure on health insurance gross premiums."
Funds for the Transitional Reinsurance Program come from fees assessed to all private health insurance coverage while the Risk Corridors Program collects fees from health insurers. The programs were designed to keep premium increases at a minimum during the early years of the health insurance exchanges.
After 2017, the report suggests that premiums "are forecast to increase at 5% each year, driven by annual cost increases in hospital services, professional medical services, and pharmaceuticals." The budget also projects individual market medical revenues of $244 million for Covered California in 2016–2017, $300.9 million in 2017–2018, and $319 million in 2018–2019.
The report estimates Covered California's current enrollment at 1.4 million and calculates that 2.5 million people have been enrolled for coverage on the exchange over the past three years, noting that "Covered California's churn reflects the movement of its enrollees through different types of coverage."
Covered California spokesperson James Scullary said the projected 8% rate hikes are still estimates and that the final premium increase for 2017 won't be released until July. But he added that premium increases are likely to be higher this year than in fiscal years 2015 and 2016.
"It's important to note that the premium figures in the budget are just projections at this point," said Scullary. "The rate change may end up being higher than it has been in the past two years (4.2% in 2015 and 4% in 2016) because two federal programs aimed at stabilizing rates are coming to an end. But an 8% increase would still be below the double-digit increases that consumers saw before the Affordable Care Act."
In a related matter, a new survey from the Centers for Disease Control and Prevention (CDC) estimates that the rate of uninsured residents in California dropped to an all-time low of 8.1% in December 2015. The rate is one percentage point lower than the national rate of 9.1%. Broken down by age group, the uninsured rate for children 17 and under is 3.6% in the state and the rate among adults aged 18–64 is 11.1%. The rate for people aged 65 and under is 9.1%. All rates by age category are below national averages.
"California is succeeding in this new era of healthcare by using all the tools of the Affordable Care Act—expanding Medi-Cal and launching a state- based exchange that brings quality and value to our consumers," said Covered California executive director Peter Lee.
According to a CDC report from August 2015, the uninsured rate in the first quarter of 2015 was 9.2%. The slight decrease in the national uninsured rate from 9.2% in the first quarter to 9.1% in December may indicate the rate is starting to flatten out after several years of sharp declines. The CDC estimates the national uninsured rate declined from 14.4% in 2013 to 11.5% in 2014.
The savings were generated by four medical groups in California that assign patients care coordinators and wellness coaches to help them better manage chronic conditions and eliminate unnecessary care.
An Anthem Blue Cross ACO targeting high-acuity patients generated nearly $15 million in savings in one year.
Anthem said the $14.8 million in cost savings were generated by approximately 40,000 Anthem PPO members assigned to four medical groups—Cedars-Sinai Medical Care Foundation, Humboldt-Del Norte IPA, UCLA Health, and Torrance Memorial Integrated Physicians—taking part in Anthem's Enhanced Personal Health Care program, which targets high-acuity patients who typically have one or more chronic health conditions.
The program creates tailored care for the members and assigns them care coordinators and wellness coaches to help them better manage chronic conditions and eliminate unnecessary care.
Fewer Admissions and Inpatient Days
The ACO delivered improvements in several areas including inpatient stays, outpatient visits, and pharmacy costs. Based on patient metrics developed by Anthem before the start of the ACO, inpatient hospital admissions were reduced by 5.1% and inpatient days per 1,000 patients were reduced by 7.7%.
Outpatient visits were reduced by 7.5% and visits to healthcare professionals decreased 6.1% during the study period. Prescription drug use decreased 6.5% while the use of generic prescription drugs increased 6.9%.
Michael Belman, MD, medical director for Anthem Blue Cross, said more coordinated care produces cost savings in a number of different ways. In addition to keeping patients out of hospitals and emergency departments, the program also helps reduce the incidence of outpatient visits and the use of specialists.
"For example, many patients are not referred to specialists as often because their primary care doctor is taking care of the problem themselves," said Belman.
And while care coordinators are involved with patients on a regular basis, they deliver targeted interventions when they're needed most. "Case managers are very involved when a patient is discharged from the hospital to reduce the risk of a preventable readmission," said Belman.
Samuel A. Skootsky, chief medical officer for the UCLA Faculty Practice Group and Medical Group, said the program has helped keep more UCLA patients out of hospitals and emergency departments.
"Our experience has shown that this new model of enhanced care helps patients address health issues before they become bigger issues," said Skootsky. "In turn, this coordinated team approach helps patients avoid hospitalizations and trips to the emergency room and has resulted in UCLA Health providing more accessible and better care at less cost within the Anthem Blue Cross ACO program."
Anthem said 22 medical groups in the state are currently taking part in the Enhanced Personal Care Program. In 2015, Anthem reported that six of those medical groups generated $7.9 million in savings in one year under the program.
The results included about 200,000 patients who were members of UC Davis, Sharp Rees-Stealy Medical Group, Sharp Community Medical Group, Sante Community Physicians IPA, SeaView IPA, and HealthCare Partners.
They generated those savings through a 7.3% decline in hospital admissions per 1,000 patients, a 2.3% decline in outpatient visits per 1,000 patients, and 4.2% increase in the use of generic prescription drugs."
Under the proposed plan, providers will be rewarded or penalized based on how they meet quality-of-care standards. The program will "over time, put at least 6% of reimbursement at risk or subject to a bonus payment based on quality performance" and phase in those incentives over the course of several years.
Covered California officials approved a plan to create quality-of-care standards for providers within its health plans that will include bonuses and penalties based on performance.
The plan is scheduled to go into effect in 2017 and will include quality-of-care metrics and benchmarks that hospitals and physicians will have to meet to remain part of provider networks. Covered California executive director Peter Lee said the program is designed to reward high-performing providers and will be more in line with payment models based on performance.
"We are creating a market that rewards quality over quantity and moves health reform forward in an impactful way," said Lee. "It's about improving the quality of the healthcare system."
Covered California board members voted to adopt the framework for the quality standards but specific benchmarks and metrics will be developed over the course of several months with input from health plans and hospitals. "The specific metrics still need to be worked out and will be completed this summer," said Covered California spokesperson James Scullary.
Under the proposed plan, providers will be rewarded or penalized based on how they meet quality-of-care standards. According to Covered California, the program will "over time, put at least 6% of reimbursement at risk or subject to a bonus payment based on quality performance" and phase in those incentives over the course of several years.
It also proposes to eliminate hospitals from health plans if they consistently fail to meet quality standards but will include a provision that allows health plans to retain low-performing hospitals through corrective action plans. That provision was included to address concerns that eliminating hospitals in rural areas of the state would create access-to-care issues for patients.
The California Hospital Association (CHA) said it supports the decision to phase in financial incentives over several years rather than implement them all at once. "CHA supports Covered California's decision to phase in financial incentives aimed at encouraging hospitals and physicians to work collaboratively together on improving quality patient care," said CHA vice president of external affairs
The California Association of Health Plans (CAHP) said it was satisfied with how the quality standards have evolved over time. "With many significant issues resolved and the rapidly approaching deadline for health plans to submit next year's rates, it is important to move forward," said CAHP vice president of communications Nicole Evans. "While the contract creates a new approach on quality metrics, we will remain engaged as Covered California works on the specifics on how we implement this new program."
Covered California said its bonus and penalty system will be similar to those used by the Centers for Medicare & Medicaid Services for its Medicare programs but that specific benchmarks will be developed through the summer with input from insurers and health systems.
In a related matter, Covered California staff issued a report recommending that its board pursue a federal waiver that would allow undocumented immigrants to purchase health coverage on Covered California. The request would need to be submitted to the federal government through a federal Section 1332 State Innovation Waiver and would not make the undocumented immigrants eligible for subsidies. The board did not adopt a formal stance on the issue and noted that state lawmakers would first need to approve legislation — Senate Bill 10 from Ricardo Lara (D-Bell Gardens) — before they could move forward with the waiver.
"Allowing undocumented immigrants to buy health insurance through Covered California removes a counterproductive exclusion in the federal law," said Anthony Wright, executive director for advocacy group Health Access California. "This exclusion discourages a crucial part of our economy and society from taking responsibility for their health and finances by purchasing coverage and sends an unfortunate signal to many more."
The 48-bed hospital is closing due to financial trouble, but will "continue its efforts during the next three to six months to seek potential buyers," its CEO says.
Colusa Regional Medical Center and its three affiliated health clinics will shut down on April 22 due to chronic financial problems.
The 48-bed rural hospital cited problems similar to Saddleback Memorial Medical Center in San Clemente, which plans to close on May 31 after years of financial problems caused by low patient volume. Colusa Regional Interim CEO and Chief Restructuring Officer Wayne Allen announced plans to close the hospital and its three clinics in a posting on the hospital's website. Allen could not be reached for comment.
"Colusa Regional Medical Center regrets to inform its community of our pending closure of the hospital on April 22, 2016. This includes our clinics in Arbuckle, Colusa, and Williams," Allen stated. "During the last three years, it has become increasingly more difficult for a small community hospital to financially survive." The nearest full-service hospital to Colusa—which is located 65 miles north of Sacramento—is in Marysville almost 30 miles away.
Allen, who was hired as interim CEO in March, said Colusa Regional has "established a plan for the transfer of the healthcare of our patients to other neighboring medical providers and the orderly shutdown of our business to assure continued patient care, quality, and safety." According to Capital Public Radio, Allen said hospital officials are currently in talks with five hospital groups interested in buying Colusa Regional and that it will "continue its efforts during the next three to six months to seek potential buyers for the hospital."
Colusa Regional has been attempting to reduce costs in recent months and on April 1 closed its birthing center. Hospital officials said the birthing center delivered approximately 140 babies each year, with most mothers covered by Medi-Cal. The hospital hoped to save up to $1 million per year by closing the birthing center.
When the decision to close the birthing center was announced in January, former CEO Walt Beck said that "rural communities have seen their hospitals go away. It's really a crisis throughout the country." At the time, Beck said Colusa Regional was not in danger of closing but that the hospital was struggling under "increased regulations" and "unfunded mandates" in addition to low Medicare and Medi-Cal reimbursements and declining inpatient volume. Colusa Regional reported a loss of $4.8 million for its fiscal year that ended March 31, 2015 and had 222 full-time employees at the time.
Colusa Regional is scheduled to close about one month before Saddleback Memorial in San Clemente. The 73-bed hospital announced in February that it will shut down on May 31 following years of financial problems caused mainly by declining patient volume. Hospital officials said its daily inpatient census is about 10 patients per day and that few surgeries are performed at the hospital.
Saddleback officials had been discussing plans to build a new outpatient and urgent care center to replace the hospital but the San Clemente City Council voted in January to rezone the hospital property so that the site could only be used for an acute care hospital, which derailed those plans.
Analysts say the upcoming closure of Colusa Regional and Saddleback Memorial San Clemente isn't part of a trend but reflects changes in healthcare that put smaller hospitals at a disadvantage. "There is no reason to expect a sudden rash of hospital closures in California, since nothing has changed in the financial or economic environment to make this a sudden trend," said Gerald Kominski, Director of the UCLA Center for Health Policy Research. "Inpatient hospital capacity has been slowly contracting for almost three decades so I see these closures as part of that long-term, gradual contraction."
Wayne Allen told a local television station, FOX40, that Colusa employees would be paid their final checks by the end of April, however, he said paid time off was not a sure thing.
The merger "would create the nation's largest insurer, which could have a significant impact on California's consumers, businesses, and the healthcare marketplace," says on consumer advocate. But few studies show "higher insurer market concentration leads to lower health insurance premiums," according to health economist.
A proposed merger between insurers Anthem Inc. and Cigna Corp. drew fire from consumer advocates who say the merger would give Anthem too much market share and potentially lead to higher premiums.
Both proponents and critics of the proposed $54 billion merger spoke at a March 29 public hearing in Sacramento convened by the state Department of Insurance. Executives from Anthem and Cigna said the merger would create a larger and more efficient company that would have more leverage with providers and could lead to more affordable premiums. Consumer advocates questioned those claims and suggested the merger would likely lead to higher rates and fewer choices for consumers.
State Insurance Commissioner Dave Jones said he would issue his decision on whether to approve the merger "in the coming weeks."
"This merger would create the nation's largest insurer, which could have a significant impact on California's consumers, businesses, and the healthcare marketplace," said Jones. "I am considering what is best for consumers and the overall marketplace. Anthem and Cigna bear the burden of demonstrating this proposed merger is in the best interest of California consumers and the health- care marketplace."
Brent Fulton, PhD, MBA, assistant adjunct professor of health economics and public policy at UC Berkeley, presented an analysis of the proposed merger. He agreed the merger could give Anthem and Cigna more negotiating power with providers, which could theoretically lead to lower healthcare costs. But he added that there are few studies that show "higher insurer market concentration leads to lower health insurance premiums."
Consumer advocates and the American Medical Association (AMA) were skeptical about claims that the merger would lead to lower premiums and some groups urged Jones to reject the merger. Health Access California noted that Anthem was fined by the state of California in 2015 for having inaccurate provider directories and has a "troubling record of not meeting its obligations to its customers."
"The Anthem-Cigna merger is the most troubling of the insurance megamergers in California and nationally," said Tam Ma, policy counsel for Health Access California. "Anthem provides coverage for millions of consumers, yet has a record of not meeting basic consumer protection laws. Anthem should not be allowed to get bigger unless it gets better."
The AMA suggested the proposed merger could violate federal antitrust laws in some urban areas of California and recommended that state officials reject the merger proposal.
"California should act to block this harmful merger and foster a more competitive marketplace that will operate in patients' best interests," said Henry Allen Jr., an antitrust attorney with the AMA. "The consequences of the proposed merger would have negative, long-term consequences for healthcare access, quality, and affordability in California."
Consumer advocacy group Consumer Watchdog said the merger will result in "higher prices, reduced choice, and compromised services" for consumers. "It's no longer believable to claim that making the few insurance industry giants larger could benefit consumers," said Carmen Balber, executive director of Consumer Watchdog. "The only action that truly protects California policyholders is for the Department of Insurance to reject the Anthem-Cigna deal."
The $54 billion merger would increase Anthem's membership from 38 million to 53 million members nationwide. In California, the combined membership of Anthem Blue Cross and Cigna would make it the largest insurer in the state with more than 8 million members.
"Anthem and Cigna have limited overlap in a highly competitive industry and together will be in a better position to improve consumer choice and quality," said Anthem Blue Cross spokesperson Darrel Ng. "Additionally, we will be better able to manage the cost drivers that negatively impact affordability for consumers."
State insurance officials approved a $6.8 billion merger between Health Net of California and St. Louis, MO-based Centene Inc. earlier this month and approved a merger between Blue Shield of California and Care1st Health Plan last October.
The state Department of Managed Health Care and the Department of Insurance approved a proposed merger between Centene Corp. and Health Net with conditions that will require Centene to invest in the state’s safety-net infrastructure.
The $6.3 billion merger was approved with conditions that will require Centene to spend $340 million on improving the healthcare safety net in California and building a new customer service and call center for Health Net in California. “The Department’s conditions will improve both plan performance and care for California members,” said DMHC director Shelley Rouillard. “In addition to the plans agreeing to invest in our healthcare delivery system to better serve consumers, I am pleased to announce Health Net’s headquarters and key operations will remain in California.”
California insurance commissioner Dave Jones said the merger should strengthen Health Net’s presence in the state’s commercial markets.
“After a thorough review including extensive public input, I concluded that this transaction provides an opportunity to bring new capital and resources from a major national insurer outside of California (Centene) to enable a California health insurer (Health Net) to continue to compete and offer consumers additional choices in California’s individual, small group, and large group commercial health insurance market,” said Jones.
Under the agreement, Centene will invest $75 million to improve the state’s healthcare infrastructure for underserved patients, invest $200 million to build a service center in an economically distressed community in the state that employs at least 300 people, and invest $65 million to support safety-net programs in low-income and middle-income regions. Health Net, which is currently based in Los Angeles, will also retain its corporate headquarters in California.
The merger will give Centene a major foothold in the Medicaid business in California, where Health Net currently has 1.8 million members. Health Net also has an 18% market share of health plans sold on Covered California. Centene has more than 5.1 million members in 23 states.
Consumer advocacy group Health Access California said it was glad to see state regulators approve the merger contingent on conditions.
“We appreciate that California regulators appropriately conditioned this merger on several commitments to improve quality and customer service and invest in the state’s safety net,” said Anthony Wright, executive director of Health Access. “These are not onerous commitments and many of the conditions were to get Centene to fix deficiencies and follow existing consumer protection laws and regulations.”
Health Access had also requested that DMHC require Centene to not implement rate hikes that are deemed “unreasonable” by state regulators.
The Centene-Health Net deal is the latest in a flurry of insurance industry mergers in California. In October 2015, the DMHC approved a deal that allowed Blue Shield of California to acquire Care1st Health Plan. The $1.2 billion deal was approved on the condition that Blue Shield invest $200 million in improvements, including a $50 million investment to improve the state’s Medi-Cal program.
State insurance regulators are also due to rule on two more proposed mergers that will impact California. Anthem Blue Cross and Cigna are proposing a merger deal worth $52 billion and Aetna and Humana are proposing a $38 billion merger.
The policy would establish quality and cost standards that would weed out hospitals that don't meet minimum benchmarks. The plan has raised concerns among groups representing health plans and hospitals who question how the standards would be developed.
Plan would weed out high-cost, low-performing hospitals Covered California officials are considering a plan to eliminate underperforming and high-priced hospitals from health plans through a new policy that would go into effect in 2019.
The policy, which could be considered by the Covered California board as early as June, would establish quality and cost standards that would weed out 'outlier' hospitals that don't meet minimum benchmarks. The plan has raised concerns among groups representing health plans and hospitals who question how the standards would be developed.
Covered California executive director Peter Lee said now that the health insurance exchange is established, the exchange needs to start focusing on how to improve the value and care provided by its health plans. "We are now shifting our attention to changing the underlying delivery system to make it more cost-effective and higher quality," said Lee. "We don't want to throw anyone out but we don't want to pay for bad quality care either."
The new policy would require health plans to "exclude hospitals that demonstrate high outlier costs" and ensure that "all providers meet minimal quality standards" to remain part of health plans sold on the exchange. Lance Lang, MD, chief medical officer for Covered California, said the policy would include provisions that allow hospitals to improve if they are not meeting cost or quality standards.
"The policies would allow insurers to retain providers who are not meeting minimal standards as long as they can show there is an improvement plan in place," said Lang.
He said quality standards and payment standards have not yet been defined but will be based on "national benchmarks" and established with input from hospitals and insurers. "We need to work together with providers to establish standards that can be used to define outlier designations," he said.
Several groups raised concerns about the proposed standards. The California Hospital Association (CHA) said it agrees with the concept outlined by Covered California but that it has to be executed correctly. "We agree in general with the goals of the policy proposed by Covered California," said David Perrott, MD, senior vice president and chief medical officer for the CHA. "It is how we reach those goals that we're struggling with."
Perrott said it's important that Covered California adopt clear, achievable goals for hospitals and that the goals be fair and equitable to all types of hospitals. "For instance, the metrics that are used will also have to address low-volume hospitals," said Perrott. "If a low-volume hospital has one bad incident in a specific category, it will affect their annual score far more than it would a high-volume hospital."
The California Association of Health Plans (CAHP) said that, in its current form, the policy could strain relations between insurers and providers. In a statement, the CAHP said that "Covered California is proposing a top-down, arbitrary measurement system that carries a big stick. And that can make it difficult for health plans and providers to work together constructively."
Gerald Kominski, director of the UCLA Center for Health Policy Research, said the basic premise of the policy is good and will set Covered California on a path toward developing "value-based contracting" with hospitals.
"Of course, the 'devil is in the details' as others have commented, but the healthcare system will never become more efficient if we continue to delay action because we don't have perfect measures of quality," said Kominski. "We've been conducting research for more than 30 years on healthcare quality and by now, we should be able to start using quality measures to influence purchasing decisions."
