BILL ANALYSIS �
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THIRD READING
Bill No: SB 3X1
Author: Hernandez (D)
Amended: 3/6/13
Vote: 21
SENATE HEALTH COMMITTEE : 8-0, 3/20/13
AYES: Hernandez, Anderson, Beall, DeSaulnier, Monning, Nielsen,
Pavley, Wolk
NO VOTE RECORDED: Vacancy
SENATE APPROPRIATIONS COMMITTEE : 7-0, 4/8/13
AYES: De Le�n, Walters, Gaines, Hill, Lara, Padilla, Steinberg
SUBJECT : Health care coverage: bridge plan
SOURCE : California Health and Human Services Agency
DIGEST : This bill requires the states Health Benefit Exchange
(Covered California) 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% of the
federal poverty level (FPL).
ANALYSIS :
Existing federal law:
1. Requires, under the Patient Protection and Affordable Care
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Act (ACA), as amended by the Health Care Education and
Reconciliation Act of 2010, each state, by January 1, 2014,
to establish an American Health Benefit Exchange (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. 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.
Existing state law:
1. Establishes Covered California in state government, 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 and four members with specified expertise who
are appointed by the Governor and the Legislature.
2. 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/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.
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3. 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
provide health care coverage choices that offer the optimal
combination of choice, value, quality, and service.
4. 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, as defined, a product that is certified
by Covered California.
2. 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% of
FPL, to the extent approved by the appropriate federal
agency.
3. Limits the ability of previous Medi-Cal or HFP enrollees to
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enroll in a bridge plan product to only the Medi-Cal or HPF
plan in which the individual was previously enrolled.
4. 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.
5. 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.
6. 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.
7. Prohibits the above provisions from being implemented in a
manner that conflicts with a requirement of the ACA.
8. 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.
9. 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).
C. Permits a health plan or health insurer offering a
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bridge plan product in Covered California to limit the
products it offers in Covered California solely to a
bridge plan product.
10.Requires, until December 31, 2014, a health plan or health
insurer that contracts with Covered California to offer a
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.
11.Deems a health plan/insurer in #10) 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.
12.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 [Hernandez] and AB
X1 2 [Pan]) to the extent approved by the appropriate federal
agency.
Comments
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 Covered
California, 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 Covered California 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 Covered California. CMS stated
a Covered California 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:
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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
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.
The Covered California 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.
Covered California 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.
Covered California must accurately identify bridge
plan-eligible consumers, and convey to the consumer his/her
QHP coverage options.
Covered California 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
Covered California, to support the administration of advance
payments of premium tax credits.
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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% 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 receive cost-sharing subsidies in the silver
benefit tier, so individuals are likely to buy coverage in this
benefit tier.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Administrative costs to establish bridge plans . The costs to
the DHCS and Covered California to establish bridge plans are
likely to be minor as they have already begun the process of
developing this option.
Information Technology costs . Adding bridge plans to the
existing information technology system under development to
support Covered California may increase project costs. At
this time, Covered California is planning to incorporate
bridge plans. However, it is not clear yet whether adding
bridge plan support functions can be accomplished within the
project's current development budget of about $183 million
(mostly federal funds). If there are additional Information
Technology costs, those costs may be covered within the
project's five-year operations and maintenance cost of $176
million (mostly federal funds) or by fees charged by Covered
California on participating health plans.
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Ongoing administrative costs for Covered California . The
administrative costs of operating Covered California will be
paid by fees on participating qualified health plans based on
the number of people enrolled through Covered California
(generally 3% of the average premium per member per month).
It is important to note that this bill does not expand
eligibility for Covered California. However, it is likely
that some Exchange-eligible consumers will not apply for
coverage without a bridge plan option (for example, because
switching health plans and/or having to find a new primary
care doctor will discourage healthy consumers who have lost
Medi-Cal coverage from applying for coverage).
The marginal impact on Covered California enrollment due to
the bridge plan option is not known at this time. However,
projections made by the Urban Institute and the UC Labor
Center for enrollment in a proposed Basic Health Plan (which
serves a similar population) indicate that potentially around
100,000 additional consumers will enroll in a Basic Health
Plan, if available. Using these projections as a proxy for
the marginal enrollment in Covered California due the
availability of a bridge plan option, administrative costs
(and fee revenues) for Covered California are likely to be
about $15 million per year.
Enrollment impacts on Medi-Cal . The availability of a bridge
plan option will likely increase enrollment in Medi-Cal.
There are two elements of the bridge plan option that are
likely to increase overall Medi-Cal enrollment. First, a
low-cost bridge plan option is likely to keep low-income
consumers enrolled in Covered California and connected to the
health care system. A bridge plan participant who experiences
a reduction in income may be more likely to apply for Medi-Cal
than a person who has dropped coverage in the absence of a
bridge plan option. Second, the fact that bridge plans will
mirror Medi-Cal managed care plans means that a bridge plan
participant will not experience disruptions of coverage or
need to change primary care providers if he/she shifted from a
bridge plan to Medi-Cal managed care. This is likely to
encourage bridge plan participants who experience a reduction
in income to apply for Medi-Cal. The magnitude of this
impact, and its fiscal implications to Medi-Cal, is unknown at
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this time.
SUPPORT : (Verified 4/9/13)
California Health and Human Services Agency (source)
California Association of Public Hospitals and Health Systems
California Hospital Association
California Primary Care Association
California State Association of Counties
County Health Executives Association of California
L.A. Care Health Plan
Local Health Plans of California
Los Angeles County
March of Dimes California Chapter
Santa Clara County
OPPOSITION : (Verified 4/9/13)
Bay Area Council
ARGUMENTS IN 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%
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 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.
ARGUMENTS IN OPPOSITION : The Bay Area Council states in
opposition, "We share the goals of providing affordable coverage
and continuity of care that this bill intends to address. In its
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current form, though, we believe that it goes beyond these ends
and tilts the state towards substantially more public rather
than private coverage, which is contrary to the goals of the
Affordable Care Act. The CEOs that govern the Council are
particularly concerned that this will aggravate the "cost
shift," in which the underpayment by the state Medi-Cal program
must be backfilled by our members through substantially higher
private insurance premiums."
JJA:d 4/10/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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