BILL ANALYSIS �
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UNFINISHED BUSINESS
Bill No: SB 3X1
Author: Hernandez (D)
Amended: 6/19/13
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
SENATE FLOOR : 37-0, 4/11/13
AYES: Anderson, Beall, Berryhill, Block, Calderon, Cannella,
Corbett, Correa, De Le�n, DeSaulnier, Emmerson, Fuller,
Gaines, Galgiani, Hancock, Hernandez, Hill, Hueso, Huff,
Jackson, Knight, Lara, Leno, Lieu, Liu, Monning, Nielsen,
Padilla, Pavley, Price, Roth, Steinberg, Walters, Wolk,
Wright, Wyland, Yee
NO VOTE RECORDED: Evans, Vacancy, Vacancy
ASSEMBLY FLOOR : 77-1, 6/27/13 - See last page for vote
SUBJECT : Health care coverage: bridge plan
SOURCE : California Health and Human Services Agency
DIGEST : This bill requires the California Health Benefit
Exchange (known as Covered California), by means of selective
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contracting, to make a bridge plan product available to
specified eligible individuals, as a qualified health plan
(QHP). Exempts the bridge plan product from certain
requirements that apply to QHPs relating to making the product
available and marketing and selling to all individuals equally
(guaranteed issue) outside Covered California and selling
products at other levels of coverage. Requires the Department
of Health Care Services (DHCS) to include provisions relating to
bridge plan products in its contracts with Medi-Cal managed care
plans (MCPs). Requires Covered California to evaluate three
years of data from the bridge plan products, as specified.
Repeals Covered California's authority for enrollment in a
bridge plan product on the October 1 that falls five years after
the date of federal approval.
Assembly Amendments add language to (1) delete the "broad
bridge" that have allowed individuals with incomes below 200% of
the federal poverty level (FPL) who were not previously on
Medi-Cal to enroll in a bridge plan; (2) request federal
approval to cap income eligibility for individuals leaving
Medi-Cal for a bridge plan at 250% of the FPL at the time of
application; (3) make this bill inoperative on October 1, five
years after federal approval of the bridge plan and require an
evaluation and report to the Legislature; and (4) move numerous
provisions of this bill from the Government Code to the Welfare
and Institutions Code.
ANALYSIS :
Existing federal law:
1. Requires, under the Patient Protection and Affordable Care
Act (ACA), each state, by January 1, 2014, to establish an
American Health Benefit Exchange that makes 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
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issue"). 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 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 the
Healthy Families Program (HFP), or loses eligibility for the
Medi-Cal program or HFP and becomes eligible for premium tax
credits through Covered California.
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
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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. Defines a bridge plan product as an individual health benefit
plan that meets the standards for licensure by the Department
of Managed Health Care under the Knox-Keene Health Care
Service Plan Act of 1975 or as a health insurer licensed
under the Insurance Code that contracts with the Covered
California.
2. Authorizes health care service plans and health insurers
offering a bridge plan product to limit the product to a
specified group of individuals and exempts bridge plans from
being subject to the requirement to sell products within each
of the five levels of coverage available in Covered
California and the guaranteed issue requirement, inside and
outside Covered California.
3. Requires DHCS to ensure that contracts with Medi-Cal MCPs or
insurers for the purpose of providing Medi-Cal managed care
coverage also limit enrollment in any bridge plan product to
the following individuals:
A. An individual who is eligible for Covered California
whose Medi-Cal or HFP coverage was terminated, and whose
income is at or below 250% of the FPL and requires
Covered California to adopt a process to ensure there is
no gap in coverage;
B. Other members of a household in which there is a
Medi-Cal or HFP enrollee if they are counted as part of
the Modified Adjusted Gross Income household; and,
C. Effective no later than January 1, 2015, and
depending on operational capacity, a parent or caretaker
relative of a child on Medi-Cal.
4. Requires Covered California to seek federal approval to allow
those individuals described in #3) above to enroll in a
different bridge plan product if the individual's primary
care provider is included in the contracted network of a
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different bridge plan and the bridge plan the individual
would otherwise be eligible for is not offered in the
individual's service area or the product is not offered as
bridge plan product by Covered California.
5. Requires, to the extent federal approval has been obtained
and for the purpose of allowing, to the greatest extent
possible, a person to remain with the same plan when a person
must move from Medi-Cal to a QHP in Covered California,
Covered California to make bridge plan products available
using its selective contracting authority.
6. Provides that to be qualified as bridge plan product, the
plan must:
A. Be a health care service plan or health insurer that
contracts with DHCS to provide Medi-Cal managed care
services;
B. Meet Covered California requirements to contract as a
QHP;
C. Meet a medical loss ratio (MLR) of 85% and requires
the methodology for calculating the MLR to be, to the
extent possible, the same as is utilized by other health
care service plans and insurers under applicable
licensure and Covered California requirements;
D. Limit enrollment to specified eligible individuals;
and,
E. Demonstrate that the provider network is
substantially similar to the MCP offered by the health
care service plan or health insurer.
7. Provides for health care service plans and health insurers
that contract with Covered California to obtain approval from
the respective licensure authorities and to operate pending
the approval or denial.
8. Provides that a health care service plan or a health insurer
selling a bridge plan product is not required to offer,
market, and sell the bridge plan product to any individual,
except individuals eligible pursuant to a contract entered
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into by DHCS and allows Medi-Cal MCPs to limit enrollment
into bridge plan products based on limitations in contracted
network capacity.
9. Requires a health care service plan or an insurer selling a
bridge plan product to provide an initial open enrollment
period of six months, an annual enrollment period, and a
special enrollment period consistent with the annual
enrollment and special enrollment periods of Covered
California.
10.Requires Covered California to provide information on all
available QHPs in the area, including, but not limited to,
bridge plan product options for selection by individuals
eligible to enroll in a bridge plan product.
11.Adds, to the annual report that Covered California is
currently is required to produce, data relating to bridge
plan products regarding the extent of overlap between MCP
health care provider and facility networks and those
contracting for services in the bridge plan.
12.Authorizes Covered California to adopt regulations to
implement the provisions of this bill after consultation with
stakeholders, as specified in existing law, and exempts the
process for adoption from the requirements for the
Administrative Procedures Act, until January 1, 2016.
13.Provides that the Medi-Cal MCP is to only offer a bridge plan
product if the premium contribution amount in the silver
category for the eligible individual is equal to or less than
the premium contribution amount for the lowest cost plan in
the silver category that would have been available to the
individual without the bridge plan product.
14.Authorizes DHCS to enter into a contract with Covered
California to delegate the implementation of any part of
these provisions to Covered California.
15.States it is the intent of the Legislature that Covered
California provides a more affordable coverage option for
low-income individuals, improve continuity of care for
individuals moving from Medi-Cal to Covered California, and
reduces the need for individuals enrolled in a MCP to change
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plans due to changes in household income.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Assembly Appropriations Committee:
1. Covered California . Adding bridge plans to the existing
information technology (IT) system under development to
support Covered California may increase project costs. At
this time, Covered California is planning to incorporate
bridge plans into the California Healthcare Eligibility,
Enrollment, and Retention System (referred to as CalHEERS),
though it is unclear 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 IT costs, they may be
covered within the project's five-year operations and
maintenance budget of $176 million (mostly federal funds) or
by fees charged by Covered California on participating health
plans.
2. The ongoing administrative costs of operating Covered
California will be paid by fees on participating QHPs based
on the number of people enrolled through Covered California
(generally 3% of the average premium per member per month).
Although this bill does not expand eligibility for Covered
California, some consumers would not apply for coverage
without a bridge plan option making it easier to maintain
coverage. The marginal impact on Covered California
enrollment due to the bridge plan option is not known at this
time.
3. DHCS . Minor costs to DHCS for establishing bridge plans.
Availability of a bridge plan option will likely lead to a
very small increase in Medi-Cal enrollment to the extent this
bill accomplishes its goal of helping people maintain
continuous coverage despite changing circumstances. The
transition from the bridge product to Medi-Cal will be
seamless and is intended to prevent a person from falling off
of coverage altogether. The magnitude of this impact and its
fiscal implications to Medi-Cal are unknown at this time.
4. DMHC . Estimated costs to the Managed Care Fund (fee
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supported) are $414,000 in 2013-14, $370,000 in 2014-15, and
$528,000 ongoing. DMHC's costs are primarily workload
increases for enforcement, financial oversight (including
routine exams and review of plans' MLR), licensing, and
premium rate review.
5. The Department of Insurance (CDI) . There is no CDI estimate
at this time because there are no Medi-Cal managed care plans
regulated by CDI. In order to qualify to sell a bridge
product, a carrier must first be a participant in Medi-Cal
managed care. It is unknown whether this could change in the
future.
SUPPORT : (Verified 6/27/13)
California Health and Human Services Agency (source)
American Cancer Society Cancer Action Network
California Association of Public Hospitals & Health Systems
California Hospital Association
California Mental Health Directors Association
California Primary Care Association
California State Association of Counties
County Health Executives Association of California
Glendale City Employees Association (prior version)
Health Access California
Local Health Plans of California
Los Angeles Board of Supervisors
Los Angeles Care Health Plan
March of Dimes, CA Chapter
Organization of SMUD Employees (prior version)
Planned Parenthood Affiliates of California
Private Essential Access Community Hospitals
San Bernardino Public Employees Association (prior version)
San Luis Obispo County Employees Association (prior version)
Santa Clara County Board of Supervisors (prior version)
Santa Rosa City Employees Association (prior version)
SEIU California
Western Center on Law and Poverty
ARGUMENTS IN SUPPORT : This bill is sponsored by the
California Health and Human Services Agency as one of the
options to be considered in the special session of the ACA
implementation. According to the author's office, this bill
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establishes a bridge health insurance plan for low-income
individuals, the parents of Medi-Cal and HFP-eligible
individuals, and individuals moving from Medi-Cal coverage to
subsidized coverage through Covered California. The author's
office states that a bridge plan is a Covered California product
that promotes continuity of care, provides an additional
coverage choice to hard-working Californians, and reduces the
negative effects of "churning" back and forth between systems of
coverage where 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, this bill will prevent disruptions in individuals'
provider networks and improve continuity of care. In addition,
the author's office argues this bill makes it more likely that
Covered California-eligible parents of Medi-Cal enrolled
children is covered by a single health plan with the same
provider network. The author's office 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.
According to the author's office, despite the premium and
cost-sharing subsidies available through Covered California,
there is a concern that low-income individuals will have
difficulty affording even subsidized premiums, which will
adversely affect enrollment in Covered California.
Additionally, significant churning between Medi-Cal and Covered
California income eligibility and low Medi-Cal health plan
participation in Covered California requires individuals
experiencing a change in income to switch health plans and
potentially health care provider networks. The federal Centers
for Medicare & Medicaid Services (CMS) indicated that a state
could allow a Medicaid (Medi-Cal in California) health plan to
offer QHPs in the Exchange on a limited-enrollment basis to
certain populations. 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 limited terms
consistent with this bill.
The Western Center on Law and Poverty (Western Center) supports
this bill's limitation on the premiums charged for bridge plans
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to ensure that consumers' premium contribution is the same or
less than what they would pay in the lowest cost silver plan
without the bridge. The Western Center argues that this ensures
that beneficiaries eligible for the bridge will not have the
purchasing power of their tax credits undermined. However,
Western Center argues that this provision does nothing to ensure
greater affordability for the bridge plan than the lowest cost
silver plan. Western Center urges that this bill be amended to
set a specific threshold of premium differential to achieve the
stated goal of better premium affordability and that Covered
California use its selective contracting authority to only
approve bridge plans that have at least a 15% price differential
with the second lowest cost silver plan. Even with a 14% price
differential, Western Center writes, consumers at 200% FPL would
pay a premium of $44 to $58 per month, still a cost-prohibitive
amount for some consumers at this income level. Anthem Blue
Cross believes the 85% MLR requirement should be eliminated,
given that plans will already need to comply with the 80%
federal MLR requirement and further states that the proposed 85%
standard does not account for the additional requirements
affecting plans offered in Covered California.
The American Cancer Society Cancer Action Network writes in
support that continuity of coverage is essential in order to
achieve positive health outcomes for all individuals, but even
more so for individuals with a history of complex health issues,
including cancer, and that this bill keeps low-income consumers
enrolled in Covered California and connected to the health care
system. Also in support, the California Association of Public
Hospitals and Health Systems (CAPH) writes that the bridge plan
will help ensure that many low-income individuals and families
will be able to afford plans offered through Covered California.
CAPH argues that the bridge-eligible population has minimal
room in their monthly budget for health care premiums, and that
developing a more affordable option for these low-income
families will make a big difference in whether or not they
enroll. In addition, CAPH writes that the bridge plan will help
core safety net providers like public hospital systems continue
to serve the state's remaining uninsured (estimated at three to
four million individuals) by contributing to a diverse payor mix
with Covered California enrollees.
ASSEMBLY FLOOR : 77-1, 6/27/13
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AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Ch�vez, Chesbro, Conway,
Cooley, Dahle, Daly, Dickinson, Eggman, Fong, Fox, Frazier,
Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell,
Gray, Grove, Hagman, Hall, Harkey, Roger Hern�ndez, Holden,
Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,
Maienschein, Mansoor, Medina, Melendez, Mitchell, Morrell,
Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan, Perea, V.
Manuel P�rez, Quirk, Quirk-Silva, Rendon, Salas, Skinner,
Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk,
Williams, Yamada, John A. P�rez
NOES: Donnelly
NO VOTE RECORDED: Patterson, Vacancy
JL:d 6/28/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
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