Uncovering Covered California…

  • Chamberlin, Keith, MD, MBA, FASA
| Apr 28, 2014

"Covered California" is alive and at least partially well in California. After the Affordable Care Act (ACA) became law, California opted to set up its own insurance marketplace and named it "Covered California", thereby sparing California residents the misery of dealing with the federal government's infamous website, www.healthcare.gov. This column is an attempt at straight talk (increasingly difficult to find) about this new program and what it means for California anesthesiologists.

First, let's define the concept of an insurance exchange. An exchange (such as Covered California) is a marketplace where consumers can compare different plans and apply to enroll in the insurance product of their choice. 

Covered California includes financial subsidies or MediCal enrollment for low-income consumers. I went online to help a friend compare products, and it was remarkably confusing. The buyer must sort through so many variables:

  • All the metallic tiers (bronze, silver, platinum);
  • Choosing a preferred provider option (PPO) or a more restrictive exclusive provider plan (EPO), which mandates the use of in-network hospitals and physicians;
  • Deductibles, copayments, out-of-pocket maximums;
  • Inaccurate or outdated provider lists;
  • What tests and services are or are not covered.

Only one thing became clear – it is not easy for anyone who needs to buy any of these health insurance products.

Your practice WILL be affected

Four major private insurers offer 96% of Covered California plans: Blue Cross (BC) 28%, Blue Shield (BS) 32%, and Healthnet and Kaiser with 18% each. Smaller insurers cover the rest.

California has enrolled more patients than any other state, with 1.2 million enrollees to date, 85% of whom receive some federal subsidy. (As of now, 15% have not paid the first monthly premium and are at risk of being dropped.) 

Los Angeles County holds the highest share of enrollees (26%), which puts that county ahead of seven other states and in a virtual tie with the entire state of New York.

What this means is your practice WILL be affected and you WILL encounter these patients – but under what type of contract or financial arrangement?

Covered California has networks of providers. Either you are in a network or you are not. If not, you run a serious risk of not getting paid for care delivered to Covered California patients. Many plans (particularly the EPO plans in Marin and Alameda Counties) do not offer out-of-network benefits at all. That means if the patient uses an out-of-network physician for any reason other than an emergency, there is no payment. And the exchange networks are quite limited in number – for example, Blue Shield's Covered California network includes only one-third to one-half of the providers in its traditional PPO network. Access to care could be delayed.

The pitfall of "mirror plans"

Are you in the network? How can you find out? All BC/BS and other insurance company providers received some type of letter discussing this. You may have had a choice to opt out of the network as early as 2012, and most of us received some communication asking if we wanted to participate in Covered California. The initial rates offered to many physicians appeared unacceptable, and a number of anesthesiologists and other specialists opted out of inclusion in the exchange network. This would have been a reasonable decision but for the pitfall of "mirror plans".

Every plan that an insurance company offers inside the Covered California exchange is required to have an identical "mirror plan" offered outside of the exchange. The mirror plan can be bought directly from the insurance company or through an independent insurance broker. Mirror plans offer exactly the same benefits, and use exactly the same networks. If you declined to be part of the Covered California network, you are now an out-of-network provider for all these plans – both the Covered California exchange plans and the mirror plans.

If you are denied payment for service as an out-of-network provider, you always have the option to bill the patient directly but there are drawbacks. Patients may be very upset at receiving a bill, feeling that they were misled into thinking they had complete insurance coverage. Collecting any payment from these patients may be associated with large administrative costs.

Blue Cross markets its mirror plan under the “Pathway” name.  The most recent CMA Alert ran under the alarming headline: “Anthem mistakenly lists almost 1000 physicians as participating in exchange network.” Anthem paid physicians who were mistakenly included on the list at 100 percent of Prudent Buyer PPO rates for dates of service between January 1 and March 31, 2014. However, patients were informed that they needed to switch to in-network physicians by March 31, and that claims for service on or after April 1, 2014, would be paid as out-of-network. EPO plans aren't that generous – they simply refuse to pay non-network providers at all.

Blue Shield of California defined three new provider networks during their re-contracting negotiations in 2012: Commercial EPO/PPO Networks A, B, and C. Blue Shield did not declare the real reason behind the creation of these new networks. But physicians who signed new contracts, and did not opt out of Network C, agreed to participate in Blue Shield’s Covered California products and mirror plans whether they realized it or not. Physicians have the option to modify their participation status in any of the Blue Shield products only upon the anniversary of their contract renewal.

Networks A and B are not currently in use but may be used in the future for other purposes. Blue Shield also automatically opted 1,431 practices into their exchange network in July 2013 to fill network adequacy gaps. Physicians currently accepting exchange plans do not have the ability to opt out short of terminating the underlying PPO agreement.

Trust, but verify

So what does this information mean to you on the provider side? Reread your contract with the Blues and all other companies participating in the Covered California exchange (Healthnet, Western Health Advantage, etc.) Read it very carefully. If you have questions about your participation status, contact the plan directly. There is a hard deadline of June 30 to contact these companies if you wish to decline to participate in these exchange plans. Check your current status with each of the carriers for each of their insurance products.

If you check a plan’s website, are shown as participating, and aren’t sure how or why that occurred, ask the plan to provide a copy of the notice they sent to you, including the specific terms of payment rates, opt-out provision, and contract termination.

Anesthesiologists and other hospital-based specialists have an additional unique burden. What if your hospital is enrolled in the exchange network but you are not? Is it incumbent upon anesthesiologists to participate in every plan their hospitals accept? Is it incumbent upon a facility to participate in every plan their physicians accept? Whose duty is it to tell patients that all charges may not be covered? These are times where true business partnerships form and both parties prosper, or become contentious and both parties lose.

No physician wants to take advantage of those individuals who in good conscience signed up for what they believed was network coverage in their area for most specialties.  No physician wants to be taken advantage of by insurance companies trying to meet their coverage requirements by forcing physicians into rates of compensation for services that don't even cover the costs.

What we all want is an honest and open discussion and negotiation about rates and contracts. Being told, “Take this or you are out of ALL plans,” or “We all need to sacrifice to make this work,” (I actually heard that from an extremely profitable insurance company representative) is not how we “partner” with anyone. This is not how we “align incentives” so that the new health care law works.

And believe me, this is only the beginning. Is this what our government leaders had in mind when trying to ensure the noble concept of health insurance coverage for everyone? Do they support confusing and misleading interactions among payers, patients and physicians? Do they want to pit facilities and providers against each other?

Of course not…☺. But check your contracts carefully. Read the fine print – now. Ronald Reagan said, “Trust, but verify.” These are hard times for trust, so verify becomes even more important.

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