Stakeholders Weigh In on Merging California's Health Plan Regulators

Health reform allows states to create a Basic Health Program that covers legal residents who earn up to 200% of the federal poverty level, but are ineligible for Medicaid. Watch a video of the CHCF briefing exploring the issue.

Some providers are adopting a model where clinicians, staff, patients, and families collaborate to improve chronic disease care. A new Web site features stories, experiences, and resources about this team-based approach.

In 2009, national health care spending grew at the slowest pace seen in half a century, while still exceeding overall economic growth, according to the latest CHCF California Health Care Almanac report.

California health care advocates and insurance industry leaders are discussing whether to combine the Department of Insurance and the Department of Managed Health Care into a single health insurance oversight agency, the Los Angeles Times reports.

Debate about merging the two departments was prompted by the release of a new California HealthCare Foundation report outlining the challenges involved in the state's approach to health insurance regulation. CHCF publishes California Healthline (Helfand, Los Angeles Times , 6/24).

Background

California is the only state with two agencies that oversee health insurers.

DMHC oversees health plans -- primarily HMOs -- that cover 21.6 million state residents. DOI regulates most PPOs and traditional indemnity plans, which cover about 2.4 million Californians ( California Healthline , 3/14).

Gov. Jerry Brown (D) has oversight over DMHC, and Insurance Commissioner Dave Jones (D) oversees DOI.

The two agencies have different requirements for the level of health benefits that insurers must provide. They also enforce different sets of laws and have separate regulatory authority.

Supporting the Merge

Advocates for merging the two agencies say the two-department system has confused customers, increased costs and could undercut the state's ability to implement the federal health reform law.

They say a single agency would be better poised to serve California residents and tackle new reform law requirements.

Anthony Wright, executive director of Health Access California, said, "At the end of the day, we want a consolidation that takes the best of both," adding, "it doesn't make sense for consumers to have two regulators.

June 22 Insurance Insider News | California Broker Magazine

Affected policyholders will be able to switch plans without having their medical histories reviewed. Consumer groups had accused the state’s largest for-profit health insurer of closing some insurance plans to new members while dramatically raising rates without offering comparable options as required by state law.

The lawsuit stemmed from Anthem’s decision to close individual Share policies to new business in September 2009. Under the settlement, policyholders who stick with their closed plans will see rate hikes no more than the average for all closed plans. Anthem, meanwhile, announced Monday that it would cut in half July 1 rate hikes — to 3% on average from 6% — for nearly 18,000 policyholders at small businesses.

The California HealthCare Foundation is holding a Seminar and Webinar Thursday, June 23 from 12:00 – 1:30 PM at the California State Association of Counties Conference Center 1020 11th Street, 2nd Floor in Downtown Sacramento. For more information, visit www.chcf.org/sacramento .

Blue Shield of California, AllCare Independent Physician Association, and Doctors Medical Center of Modesto (a Tenet Healthcare Corporation hospital) signed a three-year accountable care (ACO) initiative to provide integrated, cost-efficient healthcare to approximately 8,000 Blue Shield HMO members in Stanislaus County.

The partners expect to see little or no increases in healthcare costs for members of the ACO in 2012 and low single digit increases in 2013 and 2014. To achieve this goal, the organizations will implement long-term strategies to improve quality and efficiency. They will share clinical and case management information and coordinate comprehensive healthcare services. This initiative launches January 1, 2012 and will continue for a minimum of 36 months. The parties intend to extend the collaboration even longer in order to have a sustainable impact on healthcare costs for members and employers over time. For additional information, visit www.blueshieldca.com .

HEALTHCARE

The rate of inaccurate claims payments increased since last year among leading commercial health insurers, according to a report by the American Medical Association (AMA). Commercial health insurers have an average claims-processing error rate of 19.3%, an increase of 2% over last year. That’s an extra 3.6 million in erroneous claims payments compared to last year and $1.5 billion in unnecessary administrative costs to the health system. The AMA estimates that eliminating health insurer claim payment errors would save $17 billion.

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