BILL ANALYSIS �
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SBX1 3
AUTHOR: Hernandez
AMENDED: March 6, 2013
HEARING DATE: March 20, 2013
CONSULTANT: Bain
SUBJECT : Health care coverage: bridge plan.
SUMMARY : Requires Covered California (the state's Health
Benefit Exchange) to establish a "bridge" plan product by
contracting with Medi-Cal managed care plans for individuals
losing Medi-Cal coverage (for example, because of an increase in
income), the parents of Medi-Cal or Healthy Families Program
(HFP) children, and individuals with incomes below 200 percent
of the federal poverty level (FPL). Limits enrollment in bridge
plan products only to eligible individuals, and exempts these
products from specified provisions of existing law, including a
requirement that Covered California products be sold in the
outside market.
Existing federal law:
1.Requires, under the Patient Protection and Affordable Care Act
(ACA, Public Law 111-148), as amended by the Health Care
Education and Reconciliation Act of 2010 (Public Law 111-152),
each state, by January 1, 2014, to establish an American
Health Benefit Exchange that makes qualified health plans
(QHPs) available to qualified individuals and qualified
employers. If a state does not establish an Exchange, the
federal government is required to administer the Exchange. The
ACA establishes requirements for the Exchange and for QHPs
participating in the Exchange, and defines who is eligible to
purchase coverage in the Exchange.
2.Allows, under the ACA and effective January 1, 2014, eligible
individual taxpayers, whose household income is between
100-400 percent of the FPL inclusive, an advanceable and
refundable premium tax credit based on the individual's income
for coverage under a QHP offered in the Exchange. The ACA also
requires a reduction in cost-sharing for individuals with
incomes below 250 percent of the FPL, and a lower maximum
limit on out-of-pocket expenses for individuals whose incomes
are between 100 and 400 percent of the FPL. Legal immigrants
with household incomes less than 100 percent of the FPL who
Continued---
SBX1 3 | Page 2
are ineligible for Medicaid because of their immigration
status are also eligible for the premium tax credit and the
cost-sharing reductions.
3.Requires, under the ACA, health plans offering coverage in the
individual or group market to accept every employer and
individual that applies for coverage (known as "guaranteed
issue" or GI). Permits a health plan to restrict enrollment to
open or special enrollment periods. Permits health plans to
deny coverage to individuals if the health plan has
demonstrated, if required, to the applicable state authority
that it will not have the capacity to deliver services
adequately to any additional individuals because of its
obligations to existing group contract holders and enrollees,
and it is applying this provision to all and individuals
without regard to the claims experience of those individuals,
employers and their employees (and their dependents) or any
health-status related factor.
4.Defines, under the ACA, a QHP, and requires a QHP to offer at
least one product in the silver level and at least one plan in
the gold level in the Exchange.
Existing state law:
5.Establishes the California Health Benefit Exchange in state
government (known as Covered California), and specifies the
duties and authority of Covered California. Requires Covered
California be governed by a board that includes the Secretary
of the California Health and Human Services Agency (Agency)
and four members with specified expertise who are appointed by
the Governor and the Legislature.
6.Permits Covered California to collaborate with the Department
of Health Care Services (DHCS) and the Managed Risk Medical
Insurance Board, to the extent possible, to allow an
individual the option to remain enrolled with his or her
carrier and provider network in the event the individual
experiences a loss of eligibility for premium tax credits and
becomes eligible for the Medi-Cal program or HFP, or loses
eligibility for the Medi-Cal program or HFP and becomes
eligible for premium tax credits through Covered California.
7.Requires the Covered California board, in the course of
selectively contracting for health care coverage offered to
individuals and small employers through Covered California, to
seek to contract with health plans and insurers so as to
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provide health care coverage choices that offer the optimal
combination of choice, value, quality, and service.
8.Requires health plans that participate in Covered California
to fairly and affirmatively offer, market, and sell in Covered
California at least one product within five levels of coverage
in federal law (platinum, gold, silver, bronze and
catastrophic). Requires health plans that sell any products
outside of Covered California, as a condition of participation
in Covered California, to fairly and affirmatively offer,
market and sell in the outside market all products made
available in Covered California.
This bill:
1.Requires Covered California, to the extent approved by the
appropriate federal agency to contract with and certify as a
QHP, a bridge plan product that is certified by Covered
California.
2.Defines a "bridge plan product" as an individual health
benefit plan offered by a health plan or health insurer that
contracts with Covered California. Requires, in order to be a
qualified bridge plan product, the plan or insurer to:
a. Be a health plan or health insurer that contracts with
DHCS to provide Medi-Cal managed care plan services;
b. Meet minimum requirements to contract with Covered
California as a QHP under specified provisions of state and
federal law;
c. Enroll only eligible individuals in the bridge plan
product; and
d. Comply with an 85 percent medical loss ratio.
3.Permits any of the following bridge-plan-eligible individuals
to have the option of enrolling in a bridge plan product if
one is available:
a.Individuals who are determined to be eligible for Covered
California that can demonstrate that their Medi-Cal coverage
or HFP coverage was terminated, as defined in regulations
adopted by Covered California.
b.Other members (such as parents) of the modified adjusted gross
income household in which there are Medi-Cal or HFP enrollees.
c.Individuals who are eligible for Covered California and who
have a household income of not more than 200 percent of FPL,
to the extent approved by the appropriate federal agency.
SBX1 3 | Page 4
4.Limits the ability of previous Medi-Cal or HFP enrollees to
enroll in a bridge plan product to only the Medi-Cal or HPF
plan in which the individual was previously enrolled.
5.Limits the ability of individuals in the household of a
Medi-Cal or HFP enrollee to enroll in a bridge plan to only
the Medi-Cal or HFP plan in which the member of the household
is enrolled.
6.Requires Covered California to provide information on all of
the available Covered California-QHPs in the area, including,
but not limited to, bridge plan product options.
7.Requires DHCS to ensure that its Medi-Cal managed care
contracts contain a provision requiring the contracting health
plan or insurer to provide coverage in its bridge plan product
to its Medi-Cal managed care enrollees and other eligible
individuals, if the Medi-Cal managed care plan offers a bridge
plan product.
8.Prohibits the above provisions from being implemented in a
manner that conflicts with a requirement of the ACA.
9.Requires Covered California to have the authority to adopt
regulations to implement the above-described provisions.
Exempts, until January 1, 2016, the adoption, amendment, or
repeal of a regulation from the Administrative Procedure Act.
10.Exempts bridge plan products from:
a.The requirement that health plans and insurers participating
in Covered California fairly and affirmatively offer, market
and sell all products made available in Covered California to
individuals purchasing coverage outside of Covered California.
b.The requirement that health plans and insurers participating
in Covered California fairly and affirmatively offer, market
and sell in Covered California at least one product within
each of the five levels of coverage (platinum, gold, silver,
bronze and catastrophic).
11.Permits a health plan or health insurer offering a bridge
plan product in Covered California to limit the products it
offers in Covered California solely to a bridge plan product.
12.Requires, until December 31, 2014, a health plan or health
insurer that contracts with Covered California to offer a
SBX1 3 | Page
5
qualified bridge plan to do all of the following:
a.File a material modification to expand its license to include
individual health benefit plans, if the health plan/insurer
has not been approved by the regulator to offer individual
health benefit plans.
b.File an amendment to expand its license to include a bridge
plan product as an individual health benefit if the
plan/insurer has been approved by its regulator to offer
individual health benefit plans.
13.Deems a health plan/insurer in 12) above compliant with the
existing law that requires health plan/insurers to have a
license/certificate and be in good standing with their
respective regulatory agencies.
14.Prohibits a bridge plan product from being required to comply
with the specified provisions of the individual market ACA
bills pending in the Legislature (SB X1 2 and AB X1 2) to the
extent approved by the appropriate federal agency. Those
provisions include guaranteed issue, the ability to add
dependents to coverage, open enrollment, prohibitions on
pre-existing conditions, restrictions on health plan
application, marketing and solicitations, the requirement that
plans and insurers comply with their respective regulatory
codes, and guaranteed renewal.
15.States legislative intent that Covered California:
a.Provide a more affordable coverage option for low-income
individuals, improve continuity of care for individuals moving
from Medi-Cal to the Covered California, and reduce the need
for individuals previously enrolled in the Medi-Cal program to
change health plans due to changes in their household income.
b.Offer quality, affordable health plan choices that, to the
extent possible, will be the lowest cost silver plan offered
in the individual's geographic region through Medi-Cal managed
care plans that bridge Medicaid coverage and private
commercial health insurance for eligible lower income
individuals.
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee.
COMMENTS :
1.Author's statement. SB X1 3 would establish a bridge plan
within Covered California for certain low-income individuals
SBX1 3 | Page 6
and individuals moving from Medi-Cal coverage to subsidized
coverage in Covered California. These products would promote
continuity of care, expand the number of coverage options, and
reduce "churning" whereby individuals are required to shift
health plans and health coverage programs because of changes
in their household income. By allowing individuals to remain
within their current health plan when they shift health
subsidy programs, SB X1 3 will prevent disruptions in
individuals' provider networks and improve continuity of care.
In addition, SB X1 3 would make it more likely that Covered
California-eligible parents of Medi-Cal enrolled children
would be covered by a single health plan with the same
provider network. The author states there are a number of life
experiences that affect an individual's income eligibility for
health subsidy programs (through Medi-Cal and Covered
California), such as the birth of a child, marriage or
divorce, getting or losing a job or receiving a pay raise or
pay reduction, and the aging out of a child from coverage. SB
X1 3 could potentially provide a more affordable health plan
choice, which will increase the number of individuals signing
up for coverage (particularly individuals moving from no-cost
Medi-Cal to paying premiums in Covered California), and
therefore expand enrollment within Covered California.
2.Centers for Medicare and Medicaid Services "bridge" plan
option. On December 10, 2012, the Centers for Medicare and
Medicaid Services (CMS) issued a "Frequently Asked Questions
on Exchanges, Market Reforms, and Medicaid" that outlined the
bridge plan option. CMS indicated that a state could allow a
Medicaid health plan to offer QHPs in the Exchange on a
limited-enrollment basis to certain populations. CMS stated
this approach is intended to promote continuity of coverage
between Medicaid or HHP and the Exchange. CMS stated an
Exchange may allow an issuer with a state Medicaid managed
care organization contract to offer a QHP as a Medicaid bridge
plan under the following terms:
a.The state must ensure that the health plan complies with
applicable laws, and in particular with a provision of the ACA
that requires health plans to GI coverage, but that provides
an exception to the GI requirement to a health plan whose
provider network reaches capacity. CMS states such a health
plan may deny new enrollment generally while continuing to
permit limited enrollment of certain individuals in order to
fulfill obligations to existing group contract holders and
enrollees. If the health plan demonstrates that the provider
network serving the Medicaid managed care organization and
SBX1 3 | Page
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bridge plan has sufficient capacity only to provide adequate
services to bridge plan-eligible individuals and existing
Medicaid and/or HFP-eligible enrollees, the bridge plan could
generally be closed to other new enrollment. However, in order
to permit additional enrollment to be limited to bridge plan
eligible individuals, the state must ensure there is a legally
binding contractual obligation in place requiring the Medicaid
managed care plan to provide coverage to these individuals.
b.The Exchange must ensure that a bridge plan offered by a
Medicaid managed care organization meets the QHP certification
requirements, and that having the Medicaid managed care
organization offer the bridge plan is in the interest of
consumers.
c.The Exchange must ensure that bridge plan eligible individuals
are not disadvantaged in terms of the buying power of their
premium tax credits as part of considering whether to certify
a bridge plan as a QHP.
d.The Exchange must accurately identify bridge plan-eligible
consumers, and convey to the consumer his or her QHP coverage
options.
e.The Exchange must provide information on bridge plan-eligible
individuals to the federal government, as it will for any
other individuals who are eligible for QHP in the Exchange, to
support the administration of advance payments of premium tax
credits.
3.Federal Exchange premium subsidies. Federal premium subsidies
in Covered California are based on the individual's income,
and cap the amount an individual has to spend on the second
lowest cost silver plan. The difference between what the
individual pays for the second lowest-cost silver plan and the
actual cost of the premium is paid by the federal premium
subsidy. Individuals can use the dollar amount of the federal
premium subsidy to buy another plan (in the platinum, gold,
silver or bronze tiers) but must pay the difference between
the federal premium subsidy amount and the actual premium. In
addition to the federal premium subsidies, individuals with
incomes at or below 250 percent of the FPL receive
cost-sharing subsidies (that lower the average amount an
individual would pay out-of-pocket for co-payments,
co-insurance and deductibles). However, individuals only
SBX1 3 | Page 8
receive cost-sharing subsidies in the silver benefit tier, so
individuals are likely to buy coverage in this benefit tier.
The chart below illustrates how the premium subsidies would
work:
-----------------------------------------------------------------
|Exchange Plan | | 133% | 150% | 200% |
| | | FPL | FPL | FPL |
|---------------------------------------+-+-------+-------+-------|
|Annual dollar amount of income in 2013 | | $ | $ | $ |
|for a single person | |15,282 |17,235 |22,980 |
| | | | | |
|---------------------------------------+-+-------+-------+-------|
|Percentage of income person pays for | | 3.0%| 4.0%| 6.3%|
|2nd lowest cost silver plan | | | | |
|---------------------------------------+-+-------+-------+-------|
|Hypothetical 1st Lowest Cost Silver | | $ | $ | $ |
|Plan Premium of $380 | | | | |
| | |380 |380 |380 |
|---------------------------------------+-+-------+-------+-------|
|Hypothetical 2nd Lowest Cost Silver | | $ | $ | $ |
|Plan Premium of $410 | | | | |
| | |410 |410 |410 |
|---------------------------------------+-+-------+-------+-------|
|Premium Subsidy | | $ | $ | $ |
| | | | | |
| | |372 |353 |289 |
|---------------------------------------+-+-------+-------+-------|
|Amount Person Pays Monthly for 2nd | | $ | $ | $ |
|Lowest Cost Silver Plan | | | | |
| | |38 |57 |121 |
|---------------------------------------+-+-------+-------+-------|
|Amount Person Pays Monthly for 1st | | $ | $ | $ |
|Lowest Cost Silver Plan | | | | |
| | | 8 |27 |91 |
-----------------------------------------------------------------
4.Bridge plan process, eligible individuals and timing. Under
the bridge plan option, Covered California would establish a
sequential bidding process to allow bridge plans to bid after
the rates for the QHPs in Covered California are known. Data
from the UC Berkeley Labor Center estimates that the number of
potential bridge plan eligible individuals in 2014 would be
between 670,000 and 840,000, assuming an April 2014 effective
date.
SBX1 3 | Page
9
5.Prior legislation.
a.SB 900 (Alquist), Chapter 659, Statutes of 2010, establishes
Covered California as an independent public entity within
state government, and requires Covered California to be
governed by a board composed of the Secretary of California
Health and Human Services Agency, or his or her designee, and
four other members appointed by the Governor and the
Legislature who meet specified criteria.
b.AB 1602 (John A. P�rez), Chapter 655, Statutes of 2010,
specifies the powers and duties of Covered California relative
to determining eligibility for enrollment in the Covered
California and arranging for coverage under QHPs, requires
Covered California to provide health plan products in all five
of the federal benefit levels (platinum, gold, silver, bronze
and catastrophic), requires health plans participating in
Covered California to sell at least one product in all five
benefit levels in Covered California, requires health plans
participating in Covered California to sell their Covered
California products outside of Covered California, and
requires health plans that do not participate in the Covered
California to sell at least one standardized product
designated by the Covered California in each of the four
levels of coverage, if Covered California elects to
standardize products.
c.SB 703 (Hernandez) of 2011-12 would have implemented the Basic
Health Program (BHP) state option contained in the ACA to
provide health care coverage to individuals under 200% of
poverty who do not qualify for Medi-Cal in lieu of these
individuals receiving coverage in Covered California. SB 703
was held on the Assembly Appropriations suspense file.
6.Support. This bill is sponsored by the Health and Human
Services Agency (Agency), which states that in calling for the
Special Session on Health Care Reform Implementation, Governor
Brown specifically stated that options to allow low-cost
health coverage to individuals with incomes up to 200 percent
of the FPL within Covered California be considered. Agency
states it believes the bridge program will promote continuity
of care and coverage by creating an affordable product for
lower-income Californians who are eligible for tax subsidies,
and that this program is consistent with federal guidance
related to this continuity principal in that it would allow
Californians transitioning from Medi-Cal or Medi-Cal/HFP
coverage to Covered California to stay with the same health
SBX1 3 | Page 10
plan or issuer and provider network. In addition, Agency
states this bill reflects its commitment to timely
implementation of the ACA by providing for these low-cost
options to be offered as soon as possible. The immediate
bridge program would be implemented in 2014 as it continues to
work with its Covered California and federal partners to
develop a proposal to expand the eligibility for a broader
bridge plan.
7.Support with amendments. Western Center on Law & Poverty
(WCLP) writes it supports the goals of increased
affordability, continuity of care for lower income populations
in Covered California, and maintaining a safety net system of
care, and it supports including individuals under 200 percent
of the FPL within the bridge-eligible population. WCLP states
that greater affordability in bridge plans is achieved only if
bridge plan premiums are enough below the second lowest cost
silver plan that there would be little to no premium cost for
the lowest cost plan, and WCLP has questions about how this
necessary difference in premiums will be achieved besides
relying on the Medi-Cal plans to set lower premiums. WCLP also
writes that it wonders whether the price differential, if
achieved initially, will be maintained in the following years.
WCLP urges that this bill set a specific threshold of premium
differential to achieve the stated goal of better premium
affordability. Without a sufficient premium differential, some
individuals will be worse off because their premium subsidy
will have a lower value. WCLP states that it has testified
before the Covered California Board and urged it to use its
selective contracting authority to only approve bridge plans
that have at least a 15 percent price differential with the
second lowest cost silver plan. WCLP also writes that Covered
California should require that participating Medi-Cal bridge
plans provide at least the same provider network that they
offer Medi-Cal beneficiaries. WCLP also writes seeking
amendments to the provision that allows someone to enroll in a
bridge plan only if they are or their family member is in the
plan. WCLP urges this bill be amended to allow, for those
whose plan is not a bridge plan, that they be able to enroll
in another available bridge plan in their county. Finally,
WCLP urges this bill be amended to specify the period of time
after which someone lost Medi-Cal that they would be eligible
for the bridge, instead of leaving this up to later-enacted
regulations. WCLP recommends the time period of 6 months, as
SBX1 3 | Page
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described in the Covered California Board recommendation
brief.
The National Health Law Program and the California Immigrant
Policy Center write in support but expresses similar concerns
and seeks similar amendments as WCLP.
8.Support if amended. Molina Healthcare writes it would support
this bill if it were amended to allow Medi-Cal subcontractors
to contract directly with Covered California to offer a bridge
plan product into which eligible members may enroll. Molina
argues it is the subcontracted Medi-Cal managed care plan's
provider network from which the member receives services, and
the best opportunity for continuity of provider network is to
allow the member to select a bridge plan offered by the
Medi-Cal managed care subcontracted plan in which the member
was enrolled.
Health Access California writes it would support this bill if it
is further amended to protect consumer affordability and the
safety net of county hospitals and community clinics as well
as to assure a functioning insurance market.
9.Policy issues
Affordability of bridge plan. If a bridge plan is available to
an individual, federal regulations require the bridge plan
premium be taken into account in determining the first and
second lowest-cost premiums for that individual. For example,
if the second lowest-cost plan in Covered California is $410,
the first lowest cost plan is $380 and the bridge plan is
$370, a bridge-eligible person's second lowest cost plan would
be $380 (instead of $410).
In order for the bridge plan to provide a more affordable
product for a person selecting the bridge plan, the dollar
premium gap between the bridge plan and the second lowest-cost
plan must exceed the premium gap between the first and second
lowest cost plan in Covered California (if the bridge plan
were not offered). If the bridge premium gap is less than the
premium gap in Covered California without the bridge, the
individual will pay more out-of-pocket for premiums for the
bridge plan as compared to the lowest cost plan in Covered
California without the bridge plan option.
In addition, the lower premiums in the bridge plan product
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would also reduce the dollar subsidy amount the individual
could use to purchase a different product in Covered
California. For example, if an individual at 150 percent of
the FPL has a second lowest cost premium plan of $410, and the
availability of the bridge plan ($370) results in the first
lowest-cost plan ($380) becoming the second lowest-cost plan,
the individual's federal premium subsidy is reduced from $353
to $323.
It is unknown how bids submitted by bridge plans will compare
to publicly disclosed bids that will have already been
submitted to Covered California by QHPs. If bridge plans
barely underbid the lowest-cost silver plan compared to the
premium gap for the first and second lowest-cost plan in
Covered California, the bridge plan option would result in a
higher premium for the first lowest cost plan and a reduced
premium subsidy. If bridge plan bids exceed the premium gap
that would otherwise be available in Covered California, the
bridge plan product would be more affordable than the
lowest-cost Covered California option. To ensure the same or
greater premium gap exists between the first and second
lowest-cost Covered California product as compared to the
first and second cost plan when the bridge is available, one
option would be to require the premium gap for the bridge
product to be equal to or exceed the premium gap for the
Covered California first and second lowest-cost products if
the bridge were not available. However, this may result in
plans being unable to participate in the bridge program if
they are unable to meet that premium target. Additionally, it
does not address the lowering of the subsidy amount if the
person decides to buy a product that is not the first or
second lowest-cost silver plan.
"Bridge" and "broad bridge." This bill makes three groups of
individuals eligible for the bridge plan: (a) individuals
transitioning from Medi-Cal or Medi-Cal/HFP coverage to
Covered California; (b) the parents of Medi-Cal and HFP
eligible children and (c) individuals who are eligible for
Covered California and who have incomes below 200 percent of
the FPL.
Both (a) and (b) are referred to as the bridge or "narrow
bridge" while individuals in (c) are called the "broad bridge"
population. The broad bridge population is included in this
bill so that individuals who are low income would be eligible
to purchase a lower cost bridge plan product. However, the
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broad bridge population is not specifically referenced in the
federal FAQs. The board of Covered California approved
implementation of the narrow bridge program, contingent on
federal approval, and opted to continue research on the broad
bridge model and have discussions with the federal government
to develop options for Covered California Board's
consideration for implementing a broad bridge. In Governor
Brown's call for a special session in January 2013, he asked
the Legislature to consider and act upon legislation necessary
to implement the ACA, which included the option that allows
low-cost health coverage to be provided to individuals in
Covered California with income up to 200 percent of the FPL,
to the extent allowed by federal law or regulations.
Option versus requirement for Medi-Cal managed care plans to
participate in bridge plan option. This bill allows, rather
than requires, health plans and health insurers that contract
with Covered California, and are Medi-Cal managed care plans,
to participate in the bridge plan option. This may result in
parts of the state not having a bridge plan product available.
A requirement to participate in the bridge plan option was not
included because plans may not be able to offer a product at
the lowest premium level, depending upon their anticipated
enrollment, provider network and underlying cost structure.
Exemptions from provisions of individual market bills. This
bill references the individual market ACA bills currently
pending in the Legislature (SB X1 2 [Hernandez] and AB X1 2
[Pan]) by exempting the bridge plan products from specified
requirements of those bills. Staff recommends the exemption in
those bills be reworded to more narrowly focus on the specific
provisions requiring an exemption, such as GI and guaranteed
renewal, for the bridge plan product.
SUPPORT AND OPPOSITION :
Support: California Health and Human Services Agency (sponsor)
Board of Supervisors County of Santa Clara
California Association of Public Hospitals and Health
Systems
California Hospital Association
California Immigrant Policy Center (with amendments)
California Primary Care Association
California State Association of Counties
L.A. Care Health Plan
March of Dimes California Chapter
SBX1 3 | Page 14
National Health Law Program (with amendments)
Western Center on Law and Poverty (with amendments)
Oppose: None received.
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