Summary

New High Risk Entity Covered California Appears Ready to Operate California’s First Statewide Health Insurance Exchange, but Critical Work and Some Concerns Remain C O M M I T M E N T Y TIRGE TNI July 2013 Report 2013‑602 L E A D E R S H I P The first five copies of each California State Auditor report are free. Additional copies are $3 each, payable by check or money order. You can obtain reports by contacting the California State Auditor’s Office at the following address: California State Auditor 555 Capitol Mall, Suite 300 Sacramento, California 95814 916.445.0255 or TTY 916.445.0033 OR This report is also available on our Web site at www.auditor.ca.gov. The California State Auditor is pleased to announce the availability of an online subscription service. For information on how to subscribe, visit our Web site at www.auditor.ca.gov. Alternate format reports available upon request. Permission is granted to reproduce reports. For questions regarding the contents of this report, please contact Margarita Fernández, Chief of Public Affairs, at 916.445.0255. For complaints of state employee misconduct, contact the California State Auditor’s Whistleblower Hotline: 1.800.952.5665. Elaine M. Howle State Auditor Doug Cordiner Chief Deputy July 18, 2013 2013‑602 The Governor of California President pro Tempore of the Senate Speaker of the Assembly State Capitol Sacramento, California 95814 Dear Governor and Legislative Leaders: As authorized by California Government Code, Section 8546.5, the California State Auditor (state auditor) presents this audit report designating Covered California’s establishment of a health insurance exchange as a high‑risk issue in California. To implement provisions of the federal Patient Protection and Affordable Care Act (Affordable Care Act), state law required Covered California to create and operate for the first time in California a health insurance exchange, which is a competitive insurance marketplace in which individuals and small businesses will be able to purchase qualified health plans (QHPs) starting on October 1, 2013. This report concludes that although Covered California has made great strides in implementing key federal and state requirements pertaining to the exchange’s establishment and operations, critical work and some concerns remain. Specifically, Covered California’s financial sustainability is wholly dependent on enrollment in QHPs offered through the exchange. Recognizing this, Covered California has worked diligently and collaboratively with various stakeholders, including the California Department of Health Care Services and the Management Risk Medical Insurance Board to streamline eligibility and enrollment as well as to promote and support enrollment. Even so, future enrollment is unpredictable and is based on market factors outside of Covered California’s control. Consequently, enrollment in the exchange and the financial sustainability of Covered California will need to be monitored. Additionally, to ensure that its QHPs comply with Affordable Care Act requirements, Covered California needs to develop monitoring, recertification, and decertification procedures for QHPs offered through the exchange. Respectfully submitted, ELAINE M. HOWLE, CPA State Auditor 555 Capitol Mall, Suite 300 Sacramento, CA 95814 916.445.0255 916.327.0019 fax www.auditor.ca.gov Blank page inserted for reproduction purposes only. California State Auditor Report 2013-602 v July 2013 Contents Summary 1 Introduction 5 Analysis Results Covered California’s Governance and Oversight Appear Adequate 9 Covered California Has a Comprehensive QHP Certification Process, but Its Recertification and Decertification Processes Have Yet to Be Developed 14 Covered California Has Worked Diligently and Collaboratively to Streamline the Eligibility and Enrollment Processes 18 Covered California’s Planned Outreach Efforts Are Extensive and Appear to Satisfy Federal and State Requirements 25 Although Covered California Has a Thoughtful Funding Plan, Whether Funding Will Be Sufficient to Support Covered California’s Operations Remains to Be Seen 28 Recommendations 32 Appendix Monthly Premiums for Qualified Health Plans Offered Through Covered California 33 Response to the Audit Covered California 37 vi California State Auditor Report 2013-602 July 2013 Blank page inserted for reproduction purposes only. California State Auditor Report 2013-602 1 July 2013 Summary Results in Brief Audit Highlights . . . Under the federal Patient Protection and Affordable Care Act Our review of Covered California’s (Affordable Care Act), the public entity known as Covered implementation of portions of the federal California is responsible for creating and operating a health Patient Protection and Affordable Care insurance exchange (exchange) for the first time in California. Act (Affordable Care Act) highlighted The exchange is a competitive insurance marketplace in which the following: individuals and small businesses will be able to purchase health insurance. According to the Affordable Care Act, the exchange must » Until Californians actually start enrolling be ready by October 1, 2013, for consumers to enroll in qualified in Covered California’s qualified health health plans (QHPs). Faced with this looming deadline, Covered plans, the future solvency of its health California has made great strides in implementing key federal and insurance exchange remains uncertain state requirements pertaining to the exchange’s establishment and thus, we are adding Covered and operation. However, until Californians actually start enrolling California’s operations to our list of in Covered California’s QHPs, the future solvency of the exchange high‑risk issues that the State faces. remains uncertain. Because of this potential financial challenge, we are adding Covered California’s operations to our list of high‑risk » Although Covered California’s governance issues that the State faces. and oversight appear adequate, an in‑depth independent audit is needed to Covered California’s governance and oversight appear adequate. further analyze its financial controls. State law created an independent board to oversee Covered California, and the board has adopted several conflict‑of‑interest and » Covered California’s plans for service financial disclosure policies in accordance with federal requirements. centers in Contra Costa, Fresno, and To ensure that it appropriately spends $910 million in federally Sacramento counties seem to meet awarded funds, Covered California has developed financial internal consumers’ needs for assistance; however, controls that an in‑depth independent audit will need to analyze it is facing hiring challenges that could further, a task that Covered California is pursuing. In compliance delay implementation of these centers. with state law, Covered California has adopted a procurement policy that emphasizes competition, and staff appear to follow this » Although Covered California’s outreach policy when initiating contracts. In addition to establishing its own plans appear to be more than adequate, procurement policy, Covered California has unique authority to keep the effect of this outreach will not details of its individual contracts confidential. Despite this authority, be known until enrollment begins in it has publicly released many of its contracts, including their October 2013. associated dollar amounts. Covered California recently developed a draft contract transparency policy that essentially directs staff to » Financial sustainability will be an follow the Public Records Act—except for QHP contracts and bids— area of risk that will need to be when determining whether to release contracts publicly. However, monitored because future enrollment the policy has not yet been formally adopted by the board. is unpredictable and is based on market factors outside of Covered Covered California is responsible for developing processes for California’s control. certifying QHPs to ensure that these plans meet, and continue to meet, federal and state requirements. Covered California established a multistep QHP certification process and selected 13 issuers that will offer QHPs through the exchange starting in fall 2013. As it moves forward, Covered California must implement QHP monitoring, recertification, and decertification processes to comply with federal law. 2 California State Auditor Report 2013-602 July 2013 The State’s success in implementing the Affordable Care Act will largely depend on the effectiveness of the enrollment processes that Covered California puts in place. To this end, Covered California has worked diligently with the California Department of Health Care Services (Health Care Services), the Managed Risk Medical Insurance Board (insurance board), and other stakeholders to streamline eligibility and enrollment as well as to promote and support enrollment. Specifically, Covered California has collaborated with Health Care Services and the insurance board to develop the California Healthcare Eligibility, Enrollment, and Retention System (CalHEERS), which aims to streamline how individuals and businesses in California will obtain health coverage. Currently, CalHEERS is in the development and testing phase but, as noted above, it must be operational no later than October 1, 2013. In addition to obtaining project management services from the California Health and Human Services Agency’s Office of Systems Integration, Covered California is using an independent consultant to review the work of its systems developer. If the CalHEERS project experiences delays or other difficulties, Covered California has created contingency plans. In addition, Covered California’s plans to operate service centers in Contra Costa, Fresno, and Sacramento counties seem to meet consumers’ needs for assistance; however, it is facing hiring challenges that could delay implementation of these centers. A successful outreach, marketing, and education effort is also critical to Covered California’s success. Recognizing this, Covered California has allocated a significant amount of its federal funds for these activities. In fiscal year 2012–13, Covered California’s budget for marketing and outreach was $89 million, representing about 24 percent of its total budget, and the entity estimates that it will spend $106 million, or 28 percent, of its overall budget in fiscal year 2013–14 for these same efforts. In concert with Health Care Services and the insurance board, Covered California established a comprehensive marketing plan that outlines the goals, objectives, and strategies of the statewide marketing, outreach, and education program. Although the effects of Covered California’s outreach activities will not be realized until after enrollment begins in October 2013 and continues in subsequent enrollment periods, its outreach plans appear to be more than adequate. After January 2015, when the federal government will award no additional Affordable Care Act grants, Covered California anticipates that revenues from the participation fees assessed on QHPs offered through the exchange will pay for its operations. Recognizing that its financial condition is dependent on enrollment in the QHPs offered through the exchange, Covered California appears to have engaged in a deliberate and thoughtful financial planning effort to anticipate the contingencies it may face. California State Auditor Report 2013-602 3 July 2013 Despite these efforts, future enrollment is unpredictable and is based on market factors outside of Covered California’s control. Hence, financial sustainability will be an area of risk that will need to be monitored. Recommendations To provide as much public transparency as possible, Covered California’s board should formally adopt a policy to retain confidentiality only for contracts, contract amendments, and payment rates that are necessary to protect Covered California’s interests in future contract negotiations. To comply with federal requirements, Covered California should develop a plan and procedures for monitoring, recertification, and decertification of qualified health plans. To ensure financial sustainability, Covered California should conduct regular reviews of enrollment, costs, and revenue and make prompt adjustments to its financial sustainability plan as necessary. Agency Comments Covered California concurred with the findings of our report and agreed to implement our recommendations. 4 California State Auditor Report 2013-602 July 2013 Blank page inserted for reproduction purposes only. California State Auditor Report 2013-602 5 July 2013 Introduction Background Nearly 49 million Americans were without health insurance in 2011, according to U.S. Census Bureau data. With 7.4 million uninsured residents, California was the state with the largest number of people who lacked medical coverage. Over the past decade, premiums have risen five times faster than inflation, and the percentage of employers offering health insurance coverage has declined from 71 percent to 60 percent.1 As a result, the number of uninsured Californians has risen steadily over the past 10 years. To expand health insurance coverage and to make health care more accessible and affordable, the U.S. Congress enacted the federal Patient Protection and Affordable Care Act (Affordable Care Act) in March 2010. The Affordable Care Act and its implementing regulations authorize states to take the lead in applying many of the legislation’s reforms. In particular, each state has the opportunity to create and operate its own health insurance exchange (exchange), a competitive marketplace in which individuals and small businesses will be able Significant Provisions of the Federal Patient to purchase health insurance. California was the Protection and Affordable Care Act That Have first state to enact legislation creating a Already Taken Effect state‑operated exchange. The California Health • No‑Cost Preventive Care: Prohibits health insurance Benefit Exchange, recently renamed Covered issuers (issuers) from charging deductibles or co‑payments California, is in the process of establishing such for preventive care measures, such as immunizations, a marketplace, which must be operational by cancer screenings, and diabetes screenings. October 2013 to comply with federal requirements. • No Denial of Coverage for Children With Preexisting Condition: Prohibits issuers from denying coverage to children under age of 19 because of medical conditions The Affordable Care Act or preexisting conditions. • Extended Coverage for Young Adults: Requires that The Affordable Care Act aims to expand access to most issuers and employers providing dependent health insurance, control health care costs, and children coverage make that coverage available to adult improve the quality and efficiency of the health care children up to age 26. delivery system. The Affordable Care Act includes numerous provisions that take effect over several • Ban on Health Policy Rescissions: Prohibits issuers from years. Beginning in 2010 many key reforms of the canceling health coverage retroactively except in cases of fraud or intentional misrepresentation. Affordable Care Act have already taken effect. The reforms summarized in the text box seek to • No Lifetime Limits on Benefits: Prohibits issuers from protect consumers, increase access to health care, imposing lifetime dollar limits on benefits. improve quality, and lower costs. For example, the Source: The federal Patient Protection and Affordable Care Act Affordable Care Act prohibits health insurance issuers from denying coverage to children under 1 We obtained data and an analysis related to California from the California Health Care Almanac: California Employer Health Benefits Survey: Fewer Covered, More Cost, California HealthCare Foundation, April 2013. 6 California State Auditor Report 2013-602 July 2013 the age of 19 years due to preexisting conditions—that is, health problems that developed before the children applied to join the plans. Starting in 2014 this protection from denial based on preexisting conditions will extend to Americans of all ages. Many of the Affordable Care Act’s other significant reforms will occur in 2014 and beyond. The Affordable Care Act requires most Americans to maintain a minimum level of health insurance coverage beginning in 2014. To this end, starting in fall 2013, individuals and small businesses will have access to an exchange in which they can compare and shop for health plans. Households with incomes between 100 percent and 400 percent of the federal poverty level may be eligible for federal tax credits that cover a portion of the cost of coverage. Under the Affordable Care Act, states may expand their Medicaid program to cover more low‑income Americans.2 California’s Implementation of the Affordable Care Act The Affordable Care Act gives states the option to create their own exchange or to allow the federal government to operate an exchange for them. In 2010 the Legislature enacted the California Patient Protection and Affordable Care Act and created the California Health Benefit Exchange, which is intended to be an organized, transparent marketplace for individuals and small business owners to purchase affordable quality health care coverage and to claim available federal tax credits and other subsidies. In 2012 California’s exchange was renamed Covered California. The Role of Covered California Covered California is an independent public entity with a five‑member governing board of directors. The board’s membership consists of the secretary of the California Department of Health and Human Services or the secretary’s designee and four other California residents—two appointed by the governor, one by the speaker of the Assembly, and one by the Senate Committee on Rules. State law requires the board to meet the minimum requirements of the Affordable Care Act as well as other specified criteria. Covered California’s mission is to increase the number of insured Californians, improve health care quality, lower costs, and reduce health disparities through an innovative, competitive 2 The federal government announced on July 2, 2013, that employers with at least 50 full time workers will have until January 1, 2015, to comply with certain Affordable Care Act mandates. However, because the exchange is to be used by individuals and small businesses, this delay does not have a significant impact on Covered California. California State Auditor Report 2013-602 7 July 2013 marketplace that empowers consumers to choose the health plans that give them the best value. Figure 1 displays Covered California’s organizational structure and staff as of June 2013 as well as its planned staffing levels. Figure 1 Covered California’s Organization and Staffing Board Office of the Executive Director (number of current positions/number of planned positions) 6/6 O D pe iv r i a s t io io n ns Finance Division Deve P lo r p o m du e c n t t and Legal Division Prog D r i a v m isi o P n olicy Com an m d u P n u ic b a l t ic io ns Rel G a o ti v o e n r s n D m iv e i n s t io n Sales Division Relations Division Director, Director, Chief Financial Chief Counsel Director, Program Communications Government Officer Policy & Public Relations Relations 30/55 8/12 8/9 17/47 3/4 Chief Deputy Director, Small Executive Director, Business Health Operations Options Program 39/52 5/7 Deputy Director, Director, Health Eligibility & Plan Management Enrollment 22/34 8/20 Chief Technology Officer 33/55 Deputy Director, Service Centers 18/660 Source: Organization chart obtained from Covered California’s federal grant application with updates provided by Covered California’s executive staff. Note: Current positions are as of June 2013, and planned positions are to be filled by 2014. State law prohibits the use of California’s General Fund to establish or operate Covered California. Since September 2010 the federal government has awarded Covered California more than $910 million in grants for research, planning, information technology development, and implementation of the exchange. Beginning in 2015 Covered California must be self‑sustaining—state law requires Covered California to support its operations from a reasonable charge assessed on qualified health plans and other supplemental products, including dental and vision plans. 8 California State Auditor Report 2013-602 July 2013 The Expansion of Medi‑Cal to Cover More Adults The Affordable Care Act also gives states the option to significantly expand their Medicaid programs—publicly financed health coverage programs for low‑income Americans. The federal government will initially pay all additional costs of the expansion and will later reduce its contributions to 90 percent. California has decided to implement the optional expansion of Medi‑Cal—the State’s Medicaid program—to cover an estimated 1.4 million adults with incomes at or below 133 percent of the federal poverty level who are currently ineligible but who will be “newly eligible” to receive health coverage under the Medicaid expansion. In addition, individuals who are currently already eligible for Medi‑Cal but are not yet covered may be encouraged to enroll in the program because of a number of factors, including the requirement that most individuals obtain coverage, enrollment and eligibility simplifications, and enhanced marketing and outreach activities to encourage individuals to obtain health coverage. However, unlike the newly eligible population, the State will continue to be responsible for 50 percent of the costs for services for these individuals who would have been eligible under current Medi‑Cal eligibility standards. According to the Legislative Analyst’s Office (LAO), in the short term, fiscal savings to the State would far outweigh the nonfederal costs associated with providing health care to the expansion population. After several years, when the enhanced federal matching rate has decreased from 100 percent to 90 percent, the LAO estimates that overall savings to the State would likely continue to outweigh costs. Specifically, under the expansion, more than a million individuals could obtain Medi‑Cal coverage, thereby reducing the overall amount of uncompensated care provided in California. In addition, increased Medi‑Cal funding would offset county costs for indigent health care. California State Auditor Report 2013-602 9 July 2013 Analysis Results Covered California’s Governance and Oversight Appear Adequate Covered California, the public entity implementing the State’s health insurance exchange (exchange) under the federal Patient Protection and Affordable Care Act (Affordable Care Act), has complied with the key federal and state requirements related to governance and oversight that we reviewed. With the addition of receiving annual audits of its use of federal funds—a task it is pursuing—Covered California will improve its oversight and the controls it has in place to ensure that it spends funds appropriately. Overseen by an independent five‑member board of directors, Covered California has established policies and procedures to address state and federal requirements concerning conflict‑of‑interest disclosures, including disclosures of financial interests. In August 2011, to comply with state requirements, the board hired an executive director who is responsible for managing the day‑to‑day operations of Covered California. Finally, although Covered California generally uses a competitive procurement process, its contracts can lack some transparency because of a broad statutory exemption allowing the entity to not disclose certain elements of its contracts to the public. Covered California recently drafted a policy to use this exemption in limited circumstances only; however the policy has not yet been adopted by the board As of June 2013 Covered California has been awarded more than $910 million in federal grants for funding through 2014. Table 1 on the following page indicates, a key task remaining for Covered California is to provide for annual independent audits to ensure that its internal controls are adequate and that it spends federal funds appropriately. Covered California Has Thus Far Satisfied the Requirements of Federal Oversight Agencies Covered California currently complies with federal financial oversight requirements, and it is exploring options for having independent audits performed of its use of federal funds. Since September 2010 the federal government has awarded Covered California more than $910 million in grants for research, planning, information technology development, and the implementation of its exchange. Table 2 on page 11 shows, as of May 2013, Covered California has spent nearly $132 million of its federal grants. This federal funding came with many stipulations as to how and when Covered California could use the funding provided. For example, Covered California must receive authorization from the federal government if it wants to use the funds awarded for a different purpose than what the grant agreement approves. In 10 California State Auditor Report 2013-602 July 2013 accordance with federal law, Covered California submits an annual report to the federal government detailing its expenditures. In addition, the federal grant’s terms and conditions require Covered California to submit quarterly progress reports in which it provides expenditure data and contractual information to the federal government as one means of ensuring that it is using funds for authorized purposes. Table 1 Covered California’s Compliance With Key Federal and State Governance and Oversight Requirements PROGRESS TOWARD FEDERAL REQUIREMENTS FOR COVERED CALIFORNIA COMPLETION STEPS THAT COVERED CALIFORNIA HAS TAKEN Must make publicly available a set of governance standards In August 2012 Covered California’s board of directors approved that include guidelines for ethics, conflicts of interest, and made public bylaws that include all of the required elements.  accountability and transparency, and disclosures of financial interest. Must implement procedures for disclosure of financial Established procedures for disclosure categories for employees interests by members of its board or governance structure.  who receive gifts or income from health insurance issuers, among other sources. Must keep an accurate accounting of expenditures and Partnered with the California Department of Social Services for annually submit a report detailing these accountings to the accounting services and sends financial and progress reports  federal government. quarterly and annually to the U.S. Department of Health and Human Services. Must use grant funds in accordance with federal requirements. Prepared and submitted the reports described above, and plans to h obtain independent audits of its federal expenditures starting with fiscal year 2012–13. STATE REQUIREMENTS FOR COVERED CALIFORNIA Must be governed by a board as specified in state law and the In April 2011 the board, whose composition appears to comply board must hire an executive director to manage operations.  with state law, convened its first meeting. In August 2011 the board hired an executive director. Must apply for available planning and establishment grants. Applied for and received four federal grants totaling more than  $910 million. Must establish and use a competitive contracting process. The board adopted a contracting process that emphasizes  competition, and Covered California generally uses competitive bidding for all high‑dollar contracts. Sources: 45 Code of Federal Regulations, Section 155.110; 42 United States Code, sections 18031 and 18033; California Government Code, sections 100500 and 100505; and California State Auditor’s analysis of Covered California’s policies. = Completed h = Progressing as expected 5 = Yet to begin Existing federal oversight notwithstanding, Covered California is still required to maintain its own processes, or internal controls, for ensuring that it spends federal funds appropriately. The federal Office of Management and Budgets has not yet published specific guidance on Affordable Care Act funding, but as a general principle applicable to all federal funds, state agencies must establish an adequate system of internal controls. Currently, Covered California depends on the California Department of California State Auditor Report 2013-602 11 July 2013 Social Services (Social Services) to provide accounting and other administrative services until Covered California establishes its own finance division. Social Services also assists Covered California in completing federal financial reporting activities. According to Covered California’s chief financial officer, Covered California is working with Social Services to transition administrative functions to Covered California. To this point, Covered California has established some written policies and procedures for its financial functions, including contract management processes and procurement protocols. The chief financial officer stated that as Covered California continues to grow and transition operations from Social Services, it will continue to develop additional administrative, accounting, and budgeting policies and procedures. Table 2 Covered California’s Spending as of May 2013 FUNDS AWARDED TO FUNDS SPENT BY AVAILABLE FEDERAL GRANTS COVERED CALIFORNIA COVERED CALIFORNIA BALANCE Planning for health insurance exchange $1,000,000 $530,000 $0* Phase 1 implementation 39,421,383 39,421,383 0 Phase 1.2 implementation 196,479,629 79,966,093 116,513,536 Phase 2 implementation 673,705,358 12,040,298 661,665,060 Totals $910,606,370 $131,957,774 $778,178,596 Sources: Federal Notice of Awards, Covered California’s quarterly financial report submitted to the U.S. Department of Health and Human Services, and Covered California’s June 2013 report to its board. * Planning grant dollars are no longer available. For its current stage of organizational development, Covered California’s internal controls appear adequate; however, it needs a formal audit process designed to assess its financial and program compliance with federal requirements. State law does not require the board to begin receiving annual audits until January 2016. However, the terms of Covered California’s federal grants stipulate that grantees are subject to federally required annual audits for state agencies spending more than $500,000 in federal grant dollars. Covered California’s chief financial officer has sought approval from both the California Department of Finance and the California State Controller’s Office to contract with an independent accounting firm to conduct an audit covering fiscal year 2012–13. As of June 2013 a decision regarding this audit had not been finalized. Ensuring that these audits are conducted will help Covered California identify potential weaknesses and will also help it prepare for the time when it must be financially viable on its own. 12 California State Auditor Report 2013-602 July 2013 Covered California Appears to Follow Its Procurement Policy Covered California has broad statutory authority to establish its own procurement and contracting policy. The board adopted a procurement and contracting policy that emphasizes competition, and we found that staff have followed this policy when initiating contracts. The Public Contract Code generally governs how state entities enter into contracts to acquire goods and services; however, state law exempts Covered California from these requirements. According to its general counsel, this exemption is necessary for Covered California to meet critical deadlines for planning, establishing, and operating the insurance exchange. State law requires the Covered California board to establish and use its own competitive process to select participating health insurance issuers (issuers) and any other contractors. In December 2011 the board adopted a procurement policy that was later updated in February 2013, which gives Covered California flexibility to use standard state procurement methods, such as leveraged purchase agreements, or to use its own contracting methods. The policy allows staff to award contracts without competitive bidding but only with written justification and only when timeliness or unique expertise is required. In August 2012 Covered California established draft procurement and contracting procedures, which gives staff direction on how to carry out the board‑approved policy. As shown in Table 3, less than half of its contracts, and only about 1 percent of the total dollar amount awarded to date, were awarded without competitive bids. The remaining contracts were bid competitively, involved interagency agreements that do not require competition, or were based on existing contracts the California Department of General Services had negotiated. Table 3 Covered California Contracts Awarded as of May 2013 TYPE OF CONTRACT CLASSIFIED BY NUMBER OF AVERAGE DOLLAR TOTAL DOLLAR AMOUNTS METHODOLOGY USED IN THE AWARD PROCESS CONTRACTS AWARDED AMOUNT FOR EACH CONTRACT FOR ALL CONTRACTS Contract not competitively bid 40 $175,220 $7,008,799 Competitively bid contract 23 19,445,288 447,241,621 Interagency agreement 19 2,251,921* 40,534,578* Master services agreement† 8 5,392 43,138 California multiple award schedule† 5 225,211 1,126,056 Totals 95 $22,103,032 $495,954,192 Source: California State Auditor’s analysis of information provided by Covered California’s contract manager. * We excluded contract amounts from Covered California’s interagency agreement with the California Health and Human Services Agency’s Office of Systems Integration (OSI) because the contract amounts would duplicate a competitively awarded contract already appearing in the table that OSI pays on behalf of Covered California. † These are existing contracts negotiated by the California Department of General Services and available to all government entities. California State Auditor Report 2013-602 13 July 2013 We reviewed 10 contracts, five that were competitively bid and five that were not, totaling nearly $513 million, to determine if Covered California followed its contracting policies and procedures. We found that for all 10 contracts, the entity followed its established policies and procedures. Furthermore, Covered California’s bylaws state that the board will periodically review awarded contracts over $5,000 and will ensure that all such contracts are necessary and consistent with state regulations pertaining to the Affordable Care Act. In February 2013 the board adopted a policy regarding a quarterly board review of all contracts awarded during the preceding quarter. The board conducted its quarterly review during the June 2013 board meeting; however, based on the board meeting document, it is difficult to determine what the review specifically entailed. Even so, the fact that the board has the opportunity to examine all contracts awarded is an important additional control over Covered California’s contracting practice. Covered California Has a Uniquely Broad Exemption to Keep Its Contracts Confidential In addition to establishing its own procurement policy, Covered California has unique statutory authority to keep details of all of its contracts confidential. Despite this authority, Covered California has publicly released many of its contracts, including their associated dollar amounts. Recently, Covered California developed a written policy, which the board has yet to adopt, limiting its use of its authority to withhold contract details only to certain contracts and bids. According to state law, Covered California must release a contract for public inspection one year after the contract is signed; however, it may keep the rates of payment in a contract and the contract amounts confidential indefinitely. In addition, state law specifies that the deliberative processes—discussions and communications Covered California has related to the contracting process—are exempt from disclosure. Despite this authority, Covered California has publicly released Despite unique authority to keep many of its contracts, including the associated dollar amounts of its contracts confidential, Covered the contracts. The varied contracts that Covered California has California has publicly released selected to disclose include contracts for legal and consulting many of its contracts. services and for information technology development services. In May 2013 Covered California drafted a policy concerning contract disclosure that would have Covered California essentially mirroring the requirements found in the Public Records Act and only using the statutory exemption for qualified health plan (QHP) contracts and bids. According to its general counsel, the policy has not been formally adopted by the board. However, the general counsel explained that Covered California has, for the last few months, been releasing all contracts, including their rates, 14 California State Auditor Report 2013-602 July 2013 in response to public records requests, with appropriate redactions based on exemptions available to all public entities under the Public Records Act. The general counsel stated that Covered California may make use of its statutory exemption so it will not be at a negotiating disadvantage in future contracting efforts. In 2013 Senate Bill 332 was introduced to change Covered California’s statutory exemption from contract disclosure. Specifically, this legislation would require that all Covered California’s contracts with participating issuers be open to inspection by the Joint Legislative Audit Committee, and that the rates of payment sections of these contracts be open to public inspection three years from the date the contract is available for public inspection. Whether or not this legislation is enacted, Covered California will continue to face difficult decisions regarding the disclosure of its contracts. For this reason, and to provide as much public transparency as possible, Covered California’s board should formally adopt a policy to retain confidentiality only for contracts, contract amendments, and payment rates that are necessary for limiting negotiating disadvantages with future contracts. Covered California Has a Comprehensive QHP Certification Process, but Its Recertification and Decertification Processes Have Yet to Be Developed A key function of Covered California is to establish processes for certification, recertification, Essential Health Benefits Required by the Federal and decertification of QHPs to ensure that these Patient Protection and Affordable Care Act plans meet, and continue to meet, federal and state requirements. As Table 4 indicates, Covered Qualified health plans offered in each state’s health California has established a comprehensive, insurance exchange must provide the following: multistep certification process for QHPs that • Ambulatory and emergency services will be sold through the exchange. This process ensures that the QHPs selected for sale through • Hospitalization and laboratory services the exchange will, among other requirements, • Maternity, newborn, and pediatric care provide essential health benefits, as defined in the • Mental health and substance use services text box, and will be available for enrollment in October 2013. Facing numerous time‑sensitive • Prescription drug coverage deadlines, Covered California rightly prioritized • Rehabilitative and habilitative services the QHPs’ certification process over other considerations. As Covered California moves • Preventive and wellness services and chronic disease management forward, it needs to develop formal plans and procedures to monitor and recertify QHPs, and Source: The federal Patient Protection and Affordable Care Act, it also needs to develop the criteria upon which it sections 1301 and 1302. will decertify noncompliant QHPs or it will risk not complying with federal requirements. California State Auditor Report 2013-602 15 July 2013 Table 4 Covered California’s Compliance With Key Federal and State Requirements for Qualified Health Plans PROGRESS TOWARD FEDERAL REQUIREMENTS FOR COVERED CALIFORNIA COMPLETION STEPS THAT COVERED CALIFORNIA HAS TAKEN Must establish and complete a process for the Established a QHP certification process and in June 2013 selected  certification of qualified health plans (QHPs). 13 issuers that will offer QHPs through the health insurance exchange. Must monitor the QHP issuers for demonstration of Included language in the QHP contract template allowing for ongoing ongoing compliance with certification requirements. monitoring and requiring submission of specified performance data, h but it has not yet established policies and procedures or developed a monitoring plan. Must establish a process for recertification and Has not yet established procedures and criteria for how it will recertify 5 decertification of QHPs. or decertify a QHP. STATE REQUIREMENTS FOR COVERED CALIFORNIA In each region of the State, provide a choice of QHPs at Ensured that each region of the State has a choice of QHPs at each of  each of five federally specified coverage levels. the five federally specified coverage levels. Sources: 45 Code of Federal Regulations, Part 155; California Government Code, Section 100502 et seq.; and the California State Auditor’s analysis of Covered California’s plans. = Completed h = Progressing as expected 5 = Yet to begin Consistent with state law, in August 2012 the board determined that, rather than accepting all issuers that meet minimum Affordable Care Act requirements, Covered California will function as an active purchaser, a role that allows it to contract selectively with specific issuers. Covered California may also exclude other issuers as long as the criteria for selection are consistent with its seeking to provide health insurance coverage choices that offer the optimal combination of choice, value, quality, and service. According to an August 2012 board briefing document, the active purchaser role allows Covered California to influence the competitiveness of the marketplace as well as the cost of coverage. To fulfill this role, Covered California has established a multistep certification process that consists of an initial solicitation, evaluation of issuer responses, negotiations with issuers, reviews by state regulators, tentative certifications, and final agreements. Figure 2 on the following page details the timing of these activities, some of which have had to occur concurrently. In January 2013 more than 33 issuers expressed interest in offering QHPs through the Covered California exchange. In May 2013, after several months of extensive evaluation, negotiation, and reviews, Covered California tentatively selected 13 issuers that will offer QHPs through the exchange starting in fall 2013. One of the requirements in the QHP solicitation was that all potential issuers be licensed and “in good standing” to offer health insurance coverage in California. In collaboration with the California Department of Managed Health Care (Managed Health Care) and the California Department of Insurance (Insurance), 16 California State Auditor Report 2013-602 July 2013 Covered California compiled a list of requirements that potential issuers must meet to qualify for the good standing criterion. These requirements include financial solvency and adequate reserves, sufficient administrative and organizational capacity, and benefit design standards that meet federal and state mandates. The QHP solicitation requires potential issuers to attest that they meet these and other regulatory compliance requirements, and the document explains that Managed Health Care and Insurance have primary responsibility for regulatory review of issuers’ claims of good standing and for providing Covered California recommendations based on this review. Figure 2 Timeline Showing Covered California’s Certification Process for Qualified Health Plans Covered California issued Regulators reviewed whether tentative certifications Covered California bidders were licensed and in Regulators released solicitation document good standing reviewing rates Bidders Covered California Covered California Covered California prepared responses evaluated responses negotiated with bidders anticipates entering into final agreement with issuers November December January February March April May June July 2012 2012 2013 2013 2013 2013 2013 2013 2013 Source: Covered California’s solicitation for qualified health plans. Covered California’s evaluation of solicitation responses consisted of two parts. A team of Covered California staff and consultants performed the initial evaluation. These reviewers evaluated the responses against the criteria the board had approved. Following the initial evaluation, the executive team evaluated responses that met the board‑approved requirements. According to the interim health plan management director (plan management director), a key factor that the executive team considered was ensuring that the exchange would offer an appropriate number and type of plans in each of the State’s 19 regions. Specifically, state law requires Covered California to offer individuals and small businesses in each region a choice of QHPs in each federally specified coverage level or metal tier, which the text box describes. The purpose of the tiers is to allow consumers to compare QHPs that offer similar levels of coverage which, along with Covered California’s standardization of benefits and cost sharing (for deductibles, co‑payments, and so forth), should help consumers make informed decisions. California State Auditor Report 2013-602 17 July 2013 To help ensure compliance with state requirements The Coverage Levels or Metal Tiers Specified and to encourage competition throughout the State, in the Federal Patient Protection and Covered California encouraged issuers to submit Affordable Care Act QHP bids in all the rating regions in which they are licensed, and it gave preference to issuers that Percentage of medical costs covered by health developed QHP bids that met quality and service insurance issuer: criteria while offering coverage options that provide Bronze 60% reasonable access to the population of geographically underserved areas of the State as well as to the more Silver 70% densely populated areas. The plan management Gold 80% director told us that Covered California’s goal was to Platinum 90% have two or three issuers offering between four and six QHPs per rating region. In addition, California adopted a fifth coverage level for plans that provide catastrophic coverage only. According to the plan management director, Sources: 42 United States Code, Section 18022, and the in April 2013, Covered California entered into California Government Code, Section 100503. negotiations with QHP issuers over premium rates and coverage terms and conditions. The premium rates within the same metal tier may vary only by region, age of participant, and family size. In May 2013 Covered California completed its price negotiation with the selected issuers. However, before the premium rates are finalized, Managed Health Care and Insurance have to conduct a review of the negotiated rates to ensure that the rate development and justification are consistent with federal requirements. As of June 2013 Covered California tentatively selected 13 issuers that will offer QHPs through the exchange starting in fall 2013 and is awaiting the result of the regulatory agencies’ review before it signs final agreements with each of the 13 issuers.3 As indicated in the Appendix, each region of the State has a choice of QHPs at each of the five federally specified coverage levels. We also summarize the QHP rates offered throughout the State in the Appendix. For example, a 40‑year‑old individual living in Sacramento County will pay an average monthly premium of $379 for a silver plan. According to the plan management director, once the final agreement is signed, the certification process is complete. Barring anything unforeseen, this process appears to have allowed Covered California to certify QHPs before the first enrollment period beginning in October 2013, in accordance with federal law. In addition to establishing and completing a certification process for QHPs, Covered California must develop and implement monitoring, recertification, and decertification processes in order to be in compliance with federal regulations. However, Covered California has yet to formally establish policies and procedures 3 On July 15, 2013, Managed Health Care announced that it found that the QHP rates offered through Covered California’s exchange were justifiable. However, Insurance had not completed its review as of publication of this report. 18 California State Auditor Report 2013-602 July 2013 or develop a plan to monitor issuers for ongoing compliance with certification requirements. To its credit, Covered California built into the QHP contract the authority to perform ongoing monitoring of issuers, and it also requires issuers to submit specified performance data. According to the plan management director, Covered California will monitor compliance both proactively, through required performance reports on issuers, and Covered California has not reactively, through responses to consumer complaints and regulator established formal procedures or a inquiries. However, Covered California has not established formal plan for ongoing monitoring of its procedures for ongoing monitoring. The plan management director qualified health plans. anticipates implementing these procedures in August 2013. The plan management director also anticipates that recertification will be less intensive than the initial certification process and added that requirements for recertification and decertification will be based on certification requirements, with some modifications. Moreover, she stated that while Covered California recognizes the importance of recertification and decertification procedures, creating and completing the original certification process ahead of the enrollment period took precedence for the board. We agree that Covered California’s effort to certify QHPs was a massive undertaking that was rightly among the top priorities of this new entity. However, as Covered California moves forward, it must adopt procedures for monitoring, recertification, and decertification of QHPs so that it can ensure that individuals and businesses purchasing health coverage through the exchange receive insurance that meets the requirements of the Affordable Care Act. Covered California Has Worked Diligently and Collaboratively to Streamline the Eligibility and Enrollment Processes As in the case of its certification procedures, Covered California’s processes for evaluating and enrolling insurance applicants are developing rapidly. Although Covered California still has substantial work to do, its current efforts and plans appear to be adequate. The State’s success in implementing the Affordable Care Act depends largely on the effectiveness of the enrollment processes that Covered California establishes. The exchange that Covered California will operate must be able to determine applicants’ eligibility for QHPs, for certain federal subsidies, and for the Medi‑Cal program; and it must allow individuals to submit their application online, in person, by mail, or by phone. To comply, Covered California, in collaboration with the California Department of Health Care Services (Health Care Services) and the Managed Risk Medical Insurance Board (insurance board), has engaged a systems developer to design and implement the California Healthcare Eligibility, Enrollment, and Retention California State Auditor Report 2013-602 19 July 2013 System (CalHEERS), an information technology (IT) system that will provide online tools for individuals and businesses to obtain health coverage through the exchange. Covered California has entered into an agreement with the Office of Systems Integration (OSI) at the California Health and Human Services Agency (California Health and Human Services) to provide project management of CalHEERS and the systems developer. Additionally, Covered California has a contract with an independent consultant that will oversee the CalHEERS project, and Covered California has developed a contingency plan to manage risk and recovery from unintended developments. To address the needs of consumers who request assistance, Covered California is planning to operate service centers, and it is developing a single streamlined application, available online and as a paper document, to collect information necessary for eligibility determinations. Table 5 summarizes Covered California’s efforts to fulfill federal requirements for establishing processes that determine applicants’ eligibility for enrollment in one of the exchange’s QHPs. Table 5 Covered California’s Progress in Implementing Key Federal Requirements for the Exchange’s Eligibility and Enrollment Processes PROGRESS TOWARD FEDERAL REQUIREMENTS FOR COVERED CALIFORNIA COMPLETION STEPS THAT COVERED CALIFORNIA HAS TAKEN Must provide consumers with a single streamlined Adopted the federal application model as a starting point and is application that will allow Covered California to working with key stakeholders to revise the application to meet the h determine the eligibility for health care coverage and State’s unique needs. federal subsidies. Must maintain a Web site that includes certain Contracted with a systems developer to design and develop the information and functionality aimed at streamlining California Healthcare Eligibility, Enrollment, and Retention System h eligibility determinations and consumers’ enrollment that it expects to launch by October 1, 2013, when enrollment starts. in qualified health plans. Must operate a toll‑free call center that addresses the Signed leases for two of the three service center locations and has h needs of consumers requesting assistance. begun hiring staff for the two state‑operated centers. Sources: 45 Code of Federal Regulations, sections 155.405 and 155.205 as well as the California State Auditor’s analysis of Covered California’s policies. = Completed h= Progressing as expected 5 = Yet to begin Covered California Has Engaged a Systems Developer to Design and Implement CalHEERS In June 2012, after a competitive bidding process, Covered California entered into a contract with a systems developer to provide design, development, and implementation services for CalHEERS. This IT system will serve as a centralized tool for determining consumers’ eligibility and for enrolling eligible 20 California State Auditor Report 2013-602 July 2013 Californians in Medi‑Cal or for federally authorized tax credits and subsidies. Further, CalHEERS will help individuals and small business employers to compare the different QHPs’ benefits, cost sharing, and quality and then to enroll in QHPs in their regions. To determine Medi‑Cal eligibility, CalHEERs must be able to communicate with existing eligibility data systems that Health Care Services and other agencies operate. On behalf of Covered California, OSI has agreed to provide project management services for the development, implementation, and maintenance of CalHEERS and the CalHEERS contracts. Covered California Has Ensured That Its CalHEERS Project Has Active Oversight To ensure the success of the CalHEERS project, Covered California and OSI receive advice and oversight from a federal and a state agency, and an independent systems expert. The federal Centers for Medicare and Medicaid Services closely monitor CalHEERS’ progress and require Covered California to monitor CalHEERS as well and to regularly submit reports detailing key milestones and tasks. Based on an agreement with California Health and Human Services, the California Department of Technology (technology department) will assist in the review of project documentation that the CalHEERS system developer creates and will provide advice and counsel to OSI and Health and Human Services regarding OSI’s management of the CalHEERS project. The technology department generally has oversight authority over the State’s information technology projects; however, according to the technology department’s senior counsel, Covered California is exempt from the technology department’s oversight authority. As such, the technology department’s role is limited to providing advice and consultation regarding CalHEERS. Covered California hired a Covered California also hired a systems expert to provide systems expert to provide independent verification and validation (IV&V) consulting services. independent verification and The IV&V service provider produces a structured, exception‑based validation consulting services monthly assessment report that illustrates the strengths and and to issue monthly reports that weaknesses of the project. The report also includes the IV&V discuss findings, observations, service provider’s recommendations for correcting the weaknesses and updates. that the monthly reports identify. We reviewed the latest IV&V report, which the consultant issued in May 2013 and which covered April 1, 2013, through May 1, 2013. The report discusses findings and observations, and it includes updates on the status of each open finding and observation. According to the report, the term finding points to the project’s deficiencies with respect to CalHEERS performing activities in accordance with industry standards or with best practices that California State Auditor Report 2013-602 21 July 2013 are appropriate for this phase of the project. The report applies the term observations to potential process improvements that the consultant believes will benefit the project or to areas in which the project complies only partially with industry standards that are appropriate for this phase of the project. Therefore, in the consultant’s report, findings have more importance and they call for greater attention than observations do. Further, the report prioritizes both findings and observations according to one of the following risk levels for CalHEERS: low, indicating that the IV&V service provider expects no apparent impacts to key milestones, deliverables, or operational processes; medium, indicating potential impacts to key milestones, deliverables, or operational processes; or high, indicating possibly significant impacts to key milestones, deliverables, or operational processes. The May 2013 IV&V report indicated that during the life of the project, the consultant has written three findings and 21 observations, and Covered California has corrected one of those findings and eight of the 21 observations. The remaining two open findings carry medium risk and relate to project management. Specifically, one finding notes that the schedule is not an effective project management tool because of discrepancies between the schedule and key release dates. The second finding is that current project management processes and tools do not extend to key data systems that must communicate with CalHEERS, such as the Medi‑Cal eligibility determination system. Of the 13 observations If Covered California staff and its that remain open, the consultant considers one low risk, 10 medium system developer cannot resolve risk, and two observations high risk. One high risk observation the concerns of its independent concerns the lack of detail surrounding the definition of the design verification and validation for CalHEERS interface with financial institutions, and the other consultant, schedule delays high risk observation concerns the backlog of open change requests. could result. According to the consultant, if left unresolved, the medium risk findings and high risk observations could lead to schedule delays. Covered California staff and its CalHEERS developer are currently implementing the corrective actions identified in the IV&V report. Covered California Has Developed a Robust Contingency Plan for CalHEERS In planning how to minimize risks and what to do in the event of a system failure, Covered California has developed a robust CalHEERS contingency plan that it indicated it shared with its federal partners in January 2013. The plan identifies overall risk, mitigation strategies, and contingency actions in the event CalHEERS or any of the data systems that must interact with CalHEERS cannot be delivered in time to meet the mandatory federal dates. Specifically, the overall risk was broken down into nine discrete risks, including the following three: If CalHEERS is 22 California State Auditor Report 2013-602 July 2013 not ready on January 1, 2014, the State may not be in compliance with the federal and state requirements; if the electronic access to certain federal data systems is not available, then real‑time verification of federal information may not occur; and if the data transfer between statewide welfare systems and CalHEERS is not available, certain Medi‑Cal eligibility determinations may need to be performed manually. For each of the nine discrete risks, Covered California identified specific mitigation steps to reduce the probability that the risk will occur. Some common mitigation strategies include using industry standard processes for project management, conducting joint planning with project sponsors and partners, and completing activities such as system development, testing, and training on schedule. In addition, for each discrete risk, Covered California has developed a contingency plan in the event the mitigation strategies fail. Some of the contingency approaches include reducing or deferring scope where reasonable or feasible, ensuring that the highest priority is on implementing individual By having a robust contingency eligibility and enrollment functionality, and deferring more plan in place, Covered complex automation and implementing manual work‑around California is better positioned to procedures. By having a robust contingency plan in place, Covered manage risk and recover from California is better positioned to manage risk and recover from unintended developments. unintended developments. Although Covered California’s Call Center Plan Apparently Will Meet Consumers’ Needs, the Program’s Hiring Effort Is Off to a Slow Start A project management plan for the service centers (service centers plan) indicates that as of May 2013 Covered California is on schedule to complete the key tasks related to call centers that will serve consumers; however, Covered California is facing some challenges that could slow implementation of the centers. The CalHEERS contract also includes the design, development, implementation, and support of the software and equipment necessary to operate the service centers, including call centers. To address the needs of individuals with disabilities and limited English proficiency, it will have personnel ready to assist consumers in several languages, including English, Spanish, Cantonese, Mandarin, and Vietnamese. In addition, Covered California plans to supplement its bilingual staff with on‑demand language services covering additional languages. According to the chief technology officer, the call centers will support telecommunications devices for the deaf and hearing impaired. Covered California has selected three locations for the service centers: Contra Costa, Fresno, and Sacramento counties. Covered California plans to manage and operate the service centers in California State Auditor Report 2013-602 23 July 2013 Fresno and Sacramento counties, and after a competitive selection, it chose to partner with Contra Costa County’s department of social services to manage a third service center. According to the chief technology officer, the two state‑operated service centers were to be located in Sacramento County and in Central or Southern California; the choice of Fresno County was based on availability of cost‑effective space and ready access to an adequate labor pool. Covered California estimates that operating the three service centers will require about 800 staff, including more than 600 state employees for the Sacramento and Fresno service centers and about 200 county employees for the Contra Costa service center. Although Contra Costa is responsible for hiring its own staff, Covered California will train them. Covered California plans to hire and train the employees in waves to be ready to open the centers for enrollment in fall 2013. Although the CalHEERS contract includes the design and development of the IT infrastructure of the service centers, Covered California is generally managing the service centers as a separate project. Therefore, Covered California has developed a service centers plan that displays the key tasks and milestones needing completion to successfully launch the centers on schedule. Covered California has made progress on these tasks and milestones; however, it faces challenges that could delay implementation of the centers. For example, according to the service centers plan, although Covered California plans to open Although Covered California plans the center in Fresno in November 2013, it has yet to sign a lease to open a service center in Fresno in agreement for the site. The chief technology officer explained November 2013, it has yet to sign a that, although Covered California is still in negotiation for the lease agreement for the site. Fresno service center site, it has a cooperation agreement with the current tenant that will allow Covered California to install data and telecommunications equipment while it finalizes its lease agreement. This recent development will apparently help Covered California stay on schedule with opening the Fresno service center. In addition, Covered California is facing possible delays in its hiring efforts. The service centers plan indicates that during its first and second hiring waves, Covered California should have hired 50 employees by March 2013 and another 304 employees by May 2013. However, in May 2013 the chief technology officer indicated that Covered California has actually hired very few staff for the centers. In fact, according to the chief technology officer, Covered California has made just 44 hiring offers, and it is waiting for authorization from the Legislature to perform background checks on its service center staff before extending further offers. 24 California State Auditor Report 2013-602 July 2013 In June 2013 Senate Bill 509 (SB 509) became law and gives Covered California the authority to require fingerprinting and background checks as a condition of employment for its contractors and employees, including service center staff whose duties will include access to certain personal, confidential information. Following the passage of SB 509, the chief technology officer stated that the hiring While Covered California has process for the centers will ramp up in the next several months and expressed confidence that it will if the process continues as planned, Covered California will have open the service centers in time sufficient staff to manage enrollment. While Covered California to support enrollment, there is a has expressed confidence that it will open the centers in time to risk that it may face significant support enrollment, there is a risk that Covered California may face challenges in adequately staffing its significant challenges in adequately staffing its call centers in time call centers in time to meet demand. to meet demand. Covered California Has Collaborated With Other California Agencies to Create a Single Application That Collects Necessary Enrollment Information Covered California has an inclusive process for developing a single streamlined application to collect information necessary to determine consumers’ eligibility for enrollment in a QHP, for advance payments of premium tax credit, for cost‑sharing reductions, and for Medi‑Cal. Thus far, the efforts of Covered California and Health Care Services, which oversees Medi‑Cal, to create a single application for consumers appear sufficient to reach Covered California’s goal to be ready by October 2013. The development process also includes participation from the insurance board and from stakeholders from state agencies, county governments, health care service plans, and consumer advocates. Collectively, these participating members are referred to as the eligibility expansion stakeholder workgroup (eligibility workgroup). In consultation with the eligibility workgroup, Covered California and Health Care Services chose to use the federal application as the model for its state‑developed application. This ensures that the application will capture all necessary questions to determine eligibility. In addition, Covered California and Health Care Services collaborated with the eligibility workgroup to ensure that its state‑developed application will meet the needs of the State’s diverse population and thereby minimize barriers to enrollment. The California‑based single streamlined application will be available in two versions: an online version within CalHEERS and a paper version. Based on the data elements the stakeholders identified, Covered California has developed the initial version of the online application form and is currently testing it for usability and accuracy. The online application is scheduled to be ready by October 2013. The paper version of the application is currently under development and will include the same data elements as the online version. California State Auditor Report 2013-602 25 July 2013 Covered California’s Planned Outreach Efforts Are Extensive and Appear to Satisfy Federal and State Requirements Although the effect of Covered California’s outreach activities will not be realized until after enrollment in October 2013 and in subsequent enrollment periods, its outreach plans appear more than adequate. The primary objective of Covered California’s outreach efforts is to promote and support enrollment. Covered California primarily plans to accomplish this objective in two ways: (1) by conducting education, outreach, and marketing activities to ensure that Californians are aware of the newly available coverage programs, and (2) by establishing an assister program to reach diverse populations and help them enroll in the exchange. In fiscal year 2012–13, Covered Covered California has allocated a substantial portion of its federal California’s marketing and outreach funds for these activities. For example, in fiscal year 2012–13, budget was roughly $89 million, Covered California’s marketing and outreach budget was roughly and it estimates that it will spend $89 million, representing about 24 percent of its total budget, and it $106 million—28 percent of its estimates that it will spend $106 million, or 28 percent, of its overall overall budget—on these efforts in budget on these efforts in fiscal year 2013–14. fiscal year 2013–14. Covered California is progressing as expected with the federal and state outreach requirements that we reviewed, as described in Table 6 on the following page. Specifically, in concert with Health Care Services and the insurance board, Covered California established a comprehensive outreach and marketing plan that outlines the goals, objectives, and strategies of the statewide marketing, outreach, and education and assister programs. According to the marketing plan, the overall goal is to maximize the enrollment of uninsured Californians by providing a one‑stop marketplace for affordable, quality health care options and health insurance information; by educating Californians to understand the benefits of health insurance coverage; by encouraging insured Californians to retain their coverage; and by continuing to ensure the availability of affordable coverage for all eligible Californians. To support its goal, Covered California and its partners have identified several marketing and communication objectives that are measurable and time‑specific. A key component of the marketing plan is identifying the target audiences of Covered California’s marketing and outreach efforts. According to the marketing plan, those audiences encompass more than 5.3 million California residents, of which 2.6 million may qualify for federal subsidies available through Covered California. The marketing plan further stratifies the target audience into groups based on a number of demographic factors, including age, gender, income level, and race or ethnicity. According to the marketing plan, members of target groups have different needs and motivations, and therefore they will need different messages and delivery systems to prompt them to seek health insurance coverage. 26 California State Auditor Report 2013-602 July 2013 Table 6 Covered California’s Compliance With Key Federal and State Outreach Requirements PROGRESS TOWARD FEDERAL REQUIREMENTS FOR COVERED CALIFORNIA COMPLETION STEPS THAT COVERED CALIFORNIA HAS TAKEN Must conduct outreach and education activities to Established an outreach and education program to ensure that educate consumers and encourage participation. h consumers know about the affordable health care options under the federal Patient Protection and Affordable Care Act. Must establish a navigator program to aid in public Developed an assister program that is composed of in‑person assisters awareness and enrollment in health plans. h and other navigators whose responsibilities include conducting public outreach activities. STATE REQUIREMENTS FOR COVERED CALIFORNIA Must publicize the availability of health care coverage Established a statewide marketing, outreach, and education campaign and federal subsidies. h consisting of seven phases that began in September 2012 and continues through December 2015. Must provide outreach and assistance to consumers Required the assister program to be culturally and linguistically appropriate h facing barriers to enrollment. for addressing the needs of consumers facing barriers to enrollment. Sources: 45 Code of Federal Regulations, sections 155.205‑155.210; California Government Code, Section 100503; and the California State Auditor’s analysis of Covered California’s outreach plans. = Completed h = Progressing as expected 5 = Yet to begin To reach all the targeted populations, Covered California is planning for a local and statewide outreach and marketing effort that focuses on partnerships with community‑based organizations as well as a paid media campaign. Covered California’s outreach campaign consists of seven phases, which began September 2012 and continues through December 2015. Covered California has recently completed Phase I, which, according to the marketing plan, was largely a build‑up phase to ensure that all aspects of the campaign—including research, media planning, creative development, partnerships, and social media—are ready for Phase II, when consumer outreach and education begins. Covered California is currently in Phase II, which began in January 2013 and will continue through July 2013. During this phase, Covered California developed a media plan and established partnerships with community‑based organizations to educate consumers about the new coverage options. An important aspect of Covered California’s Phase II activities is the Outreach and Education Grant Program (outreach and education program) during which grant recipients will promote public awareness among consumers and small businesses. According to the May 2013 grant funding announcement, by July 1, 2013, Covered California plans to award more than $36.3 million among 48 selected grant recipients, including community‑based organizations, clinics, and government agencies. The outreach and education program aims to target communities and populations at the local level and establishes trusted messengers in communities to help address barriers that prevent consumers and small businesses from purchasing coverage. California State Auditor Report 2013-602 27 July 2013 Covered California chose the grant recipients from nearly 200 applicants and indicated that it selected the grantees based on their abilities to target audiences. Covered California estimates that between July 2013 and December 2014 the grantees will reach nearly nine million individual consumers and 220,000 small businesses throughout the State through outreach and education activities. To ensure accountability and the proper use of outreach and education program grants, Covered California has established a monitoring and evaluation plan. According to the grant application, grantees must comply with monitoring and evaluation requirements that Covered California has established, which include completing required reports, cooperating with monthly site visits by grant monitors, and maintaining records of program expenditures and activities. The application further states that grantees that do not comply with the scope of work or by meeting preestablished deliverables will receive additional training and will be asked to correct deficiencies within 30 days or risk grant termination. We believe that these monitoring policies, if followed, should ensure that recipients spend grant dollars properly. Another way that Covered California plans to promote public awareness and enrollment is through the assister program, which will conduct outreach and education as well as provide one‑on‑one, in‑person assistance to help California’s diverse population learn about the health insurance options. Assistance will be provided in a culturally and linguistically appropriate manner to address the needs of consumers facing barriers to enrollment. The assister program consists of entities and individuals who provide guidance to consumers and who fall into one of the program’s two parts: in‑person assistance and navigators. The roles and responsibilities of these two groups are similar, although there are differences in funding, compensation, and timelines, as Table 7 describes. Table 7 Differences Between In‑Person Assistance and Navigators IN‑PERSON ASSISTANCE NAVIGATORS Funding source Federal grants initially and then Covered California’s operating funds. Covered California’s operating funds Compensation method* Flat fee of $58 per successful application and $25 per successful annual renewal. Grants awarded by Covered California Implementation time frame Begins before the initial October 2013 enrollment period. Starts after initial enrollment begins Source: Covered California’s Web seminar for its assister program given on February 7, 2013. * Certain assisters—such as insurance agents, hospitals, clinics, and county health departments—will not receive compensation. These types of entities may receive compensation from other sources, or they may have a business interest in enrolling consumers and in having them covered by insurance. 28 California State Auditor Report 2013-602 July 2013 Covered California anticipates that the assister program will have more than 3,600 assister entities and more than 21,000 individual assisters. To ensure that the assister program is successful and that it maintains geographic, cultural, and linguistic access to target markets, Covered California has developed recruitment strategies that began in January 2013. In addition, Covered California indicates that it intends to begin training and certifying in‑person assisters and navigators in August and November 2013, respectively. In addition to its outreach and education program and its assister program, Covered California has created a strong plan for a paid media campaign that is designed to reach both broad and targeted audiences in urban and rural markets across the State. Covered California’s paid media campaign, including print, radio, social media, and television, is expected to reinforce all aspects of the outreach and education program, improving performance in those areas. The first paid media efforts are expected to launch in summer 2013. According to the outreach and marketing plan, Covered California will use evaluation tools to assess the success of the outreach components and adjust messaging, tactics, and paid media as necessary. Covered California must closely Covered California appears to have engaged in a logical and monitor its outreach effort because deliberate process when developing its marketing plan. To ensure enrollment effects revenue the effectiveness and efficiency of its outreach, marketing, and generation and the overall success education campaign, we believe that it is important for Covered of the exchange. California to closely monitor its entire outreach effort because enrollment has a direct effect on revenue generation and the overall success of the exchange. Although Covered California Has a Thoughtful Funding Plan, Whether Funding Will Be Sufficient to Support Covered California’s Operations Remains to Be Seen Beginning in January 2015 the Affordable Care Act prohibits awarding federal grants for the continued operations of the exchange, and state law prohibits Covered California from using the State’s General Fund. Therefore, Covered California must have a sufficient funding source to support ongoing operations. Covered California anticipates that revenues from the participation fees assessed on QHPs that issuers offer through the individual and Small Employer Health Options Program (SHOP) exchange will pay for its operations. Recognizing that its financial condition depends on enrollment in the QHPs offered through the exchange, Covered California has developed a financial sustainability plan (financial plan) analyzing whether its operations can be sustained under a range of potential enrollment scenarios. Moreover, Covered California has included in its financial plan appropriate measures to ensure ongoing fiscal solvency, such as an annual minimum reserve target and an operating budget that is California State Auditor Report 2013-602 29 July 2013 flexible enough to accommodate differing enrollment levels. Within the limits of the information it currently has, Covered California appears to have engaged in a deliberate, thoughtful financial planning effort to anticipate the several contingencies it may face. To obtain federal approval to operate a state‑based exchange and secure additional federal implementation funding, Covered California had to demonstrate that it can be financially sustainable beginning in 2015. While a variety of potential financing options could support Covered California’s operations, state law requires it to charge fees that are reasonable and necessary on QHPs to support the development, operations, and prudent cash management of the exchange. Therefore, Covered California has decided to charge issuers a participation fee on the QHPs they offer through its exchange. As Table 8 indicates, in November 2012 Covered California developed and submitted a financial plan to the federal government that presented multiyear enrollment scenarios, revenue, and operating expense projections and that proposed premium assessment rates in both the individual and SHOP markets that generally would provide the revenue required to operate the exchange. Moreover, the financial plan showed that Covered California will adjust its expenses and fees to support its operations under a range of enrollment conditions. Table 8 Covered California’s Compliance With Key Federal and State Requirements for Funding Its Operations PROGRESS TOWARD FEDERAL REQUIREMENTS FOR COVERED CALIFORNIA COMPLETION STEPS THAT COVERED CALIFORNIA HAS TAKEN Must have sufficient funding to support its ongoing Created a financial sustainability plan (financial plan), which operations beginning January 1, 2015. it submitted to the federal government as a part of its grant h application and it intends to conduct annual reviews of enrollment, costs, and revenues and to refine the plan as necessary. STATE REQUIREMENTS FOR COVERED CALIFORNIA Assess a fee on the qualified health plans (QHPs) offered Established an initial fee of $13.95 assessed on a per‑member, by health insurance issuers through the exchange that is per‑month basis for individual QHPs sold through the exchange reasonable and necessary to support the operations of h and created a similar fee structure for QHPs offered to small the exchange. employers. However, the sufficiency of these fees to support Covered California’s operations remains to be seen. Maintain enrollment and expenditures to ensure that Developed a financial plan to cover operating costs and to expenditures do not exceed the amount of revenue, and h establish a prudent reserve under a range of enrollment scenarios. institute appropriate measures to ensure fiscal solvency. Sources: 42 United States Code, Section 18031; 45 Code of Federal Regulations, Section 155.160; California Government Code, Section 100503; and California State Auditor’s analysis of Covered California’s 2012 Financial Sustainability Plan, Qualified Health Plans Model Contract and June 2013 status report and budget presentation. = Completed h = Progressing as expected 5 = Yet to begin 30 California State Auditor Report 2013-602 July 2013 For the portion of the exchange available to individual purchasers (individual exchange), Covered California planned for three financial scenarios based on the California Simulation of Insurance Markets (CalSIM), an enrollment projection model created by the University of California, Los Angeles and the University of California, Berkeley. The CalSIM estimates included two potential levels of enrollment: base and enhanced. In planning for uncertainty and challenges, Covered California analyzed a third level of enrollment, which sets the enrollment at 20 percent below the base enrollment level. Covered California developed separate costs and revenue projections for each of these enrollment scenarios. Adopting the enhanced enrollment level as its goal, Covered California developed costs and revenue estimates related to its targeted enrollment numbers for the individual exchange. Specifically, in May 2013, it established an initial participation fee of $13.95 to be assessed monthly for each member in QHPs sold through the individual exchange beginning in January 2014. With respect to the SHOP, Covered California anticipated a similar funding model that includes a monthly participation fee of $18.60 per member in QHPs sold through the SHOP. Covered California’s financial plan indicates that the enhanced scenario would generate revenue of more than $64 million from January 2014 through June 2014. With federal grants covering the majority of its $384 million estimated operating costs for fiscal year 2013–14, Covered California expects a year‑end reserve of nearly $57 million. In the following fiscal year, even with a mid‑year reduction in participation fees from $13.95 for the individual exchange and $18.60 for the SHOP to $10.46 and $9.30, respectively, Covered California estimates that it would end the year with nearly $184.5 million in reserve—enough to cover more than seven months of its operating costs. Following the enhanced enrollment trend, Covered California further estimates that in the following years, its assessment revenue would continue to increase as enrollment increases. Therefore, Covered California anticipates that it will adjust the participation fee downward or upward according to enrollment and the goal of maintaining a three‑ to six‑month The financial plan shows that reserve of annual operating expenses. under all enrollment scenarios, the assessment revenue generated Under all enrollment scenarios, Covered California expects its would not be sufficient to cover financial condition in fiscal year 2015–16 to be more challenging Covered California’s operating than in earlier years because it will no longer have federal grants costs in fiscal year 2015–16 and it to support its operations. The financial plan shows that under all would have an average net loss enrollment scenarios, the assessment revenue generated would not of approximately $73 million— be sufficient to cover Covered California’s operating costs in fiscal requiring it to access its reserve. year 2015–16. Specifically, under all three enrollment scenarios, California State Auditor Report 2013-602 31 July 2013 Covered California would have an average net loss of approximately $73 million. To remain solvent, Covered California would need to access the reserve fund it accumulated for this purpose. Consequently, the size of the reserve at the beginning of fiscal The size of Covered California’s year 2015–16 is a critical factor for determining whether Covered financial reserve at the beginning California can withstand the financial pressures it anticipates in that of fiscal year 2015–16 is a critical first year in which enrollment fees must fully cover its operational factor in determining whether it can costs. If enrollment was 20 percent below the base enrollment withstand the financial pressures level, the financial plan estimates that Covered California would anticipated in this particular year. need to increase its participation fee for the individual exchange to $16.04 for the first half of fiscal year 2015–16, and then further increase the fee to $20.86 for the last half of that fiscal year to remain solvent and have a reserve representing three months of operating costs. Whether these increases in participation fees would further exacerbate the problem of low enrollment is not known at this time. According to the financial plan, should enrollment continue to be low, Covered California would take additional measures necessary to reduce the overall costs of its operations to better match its financial position. As previously noted, future participation fees will need to be adjusted to reflect the actual enrollment Covered California achieves and the annual review of its operational needs. Covered California indicates that it will begin to track enrollment starting in October 2013. As part of its established annual budget review and approval process, in January 2014 Covered California will evaluate its financial condition, including enrollment level, revenue collected, and operating expenses; and if necessary, it will reconsider the participation fee it charges issuers. If enrollment levels in either the individual exchange or SHOP are lower than the budgeted level, Covered California will need to increase future participation fees in order to ensure that it has enough revenue to cover operations. At the same time, Covered California expects that a reduced enrollment would result in a corresponding reduction in variable operating costs, such as assister payments and service center staffing. Given the limits of its current information, Covered California appears to have engaged in a thoughtful planning process to ensure that it will remain solvent in the future. Obviously, these financial plans depend greatly on patterns of enrollment in the exchange’s QHPs by individuals and small employers, and those enrollments can only be projected at this time. Consequently, financial sustainability will continue to be an area of risk that will need to be closely monitored. 32 California State Auditor Report 2013-602 July 2013 Recommendations To provide as much public transparency as possible, Covered California’s board should formally adopt a policy to retain confidentiality only for contracts, contract amendments, and payment rates that are necessary to protect Covered California’s interests in future contract negotiations. To comply with federal requirements, Covered California should develop a plan and procedures for monitoring, recertification, and decertification of qualified health plans. To ensure the success of its outreach effort, Covered California should track the effect on enrollment figures of its planned outreach and marketing activities and of its assister program. To ensure financial sustainability, Covered California should conduct regular reviews of enrollment, costs, and revenue and make prompt adjustments to its financial sustainability plan as necessary. We prepared this report under the authority vested in the California State Auditor by Section 8546.5 of the California Government Code. Respectfully submitted, ELAINE M. HOWLE, CPA State Auditor Date: July 18, 2013 Staff: Benjamin M. Belnap, CIA, Audit Principal Tram T. Truong Chuck Kocher, CIA, CFE Sara Noceto Legal Counsel: Scott A. Baxter, JD For questions regarding the contents of this report, please contact Margarita Fernández, Chief of Public Affairs, at 916.445.0255. California State Auditor Report 2013-602 33 July 2013 Appendix MONTHLY PREMIUMS FOR QUALIFIED HEALTH PLANS OFFERED THROUGH COVERED CALIFORNIA In June 2013 Covered California tentatively selected 13 health insurance issuers (issuers) to offer qualified health plans (QHPs) beginning in fall 2013 for health insurance coverage starting in January 2014. According to Covered California, the selected issuers represent a mix of small to large for‑profit and nonprofit companies that have regional and statewide provider networks to ensure access to doctors and hospitals in all areas of the State. As indicated in Table A, the QHPs offer different levels of health insurance coverage categorized as bronze, silver, gold, and platinum tiers. Table A Qualified Health Plans Offered by Coverage Level and Region for a 40‑Year‑Old Individual Enrollee QHP MONTHLY PREMIUM PER ENROLLEE FOR EACH COVERAGE TIER QUALIFIED HEALTH PLAN CALIFORNIA REGION AND THE COUNTIES IT INCLUDES HEALTH INSURANCE ISSUER (QHP) TYPE BRONZE SILVER GOLD PLATINUM Region 1: Alpine, Del Norte, Siskiyou, Anthem Preferred provider $234 $309 $376 $436 Modoc, Lassen, Shasta, Trinity, Humboldt, organization (PPO) Tehama, Plumas, Nevada, Sierra, Blue Shield Exclusive provider 266 318 379 434 Mendocino, Lake, Butte, Glenn, Sutter, Yuba, organization (EPO) Colusa, Amador, Calaveras, Tuolumne Kaiser Permanente Health maintenance 261 347 426 458 organization (HMO) Region 1 Average Premium 254 325 394 443 Region 2: Napa, Sonoma, Solano, Marin Anthem PPO 259 343 416 482 Blue Shield EPO 282 338 402 461 Health Net PPO 348 396 450 507 Kaiser Permanente HMO 275 365 448 482 Western Health Advantage HMO 257 369 434 471 Region 2 Average Premium 284 362 430 481 Region 3: Sacramento, Placer, El Dorado, Yolo Anthem HMO — 476 601 687 Anthem PPO 250 332 403 467 Blue Shield PPO 278 333 396 454 Kaiser Permanente HMO 261 347 426 458 Western Health Advantage HMO 282 406 477 518 Region 3 Average Premium 268 379 461 517 Region 4: San Francisco Anthem EPO 281 373 453 525 Blue Shield PPO 312 375 445 510 Chinese Community Health Plan HMO 246 325 431 478 Health Net PPO 344 392 445 501 Kaiser Permanente HMO 289 383 470 506 Region 4 Average Premium 295 370 449 504 continued on next page . . . 34 California State Auditor Report 2013-602 July 2013 QHP MONTHLY PREMIUM PER ENROLLEE FOR EACH COVERAGE TIER QUALIFIED HEALTH PLAN CALIFORNIA REGION AND THE COUNTIES IT INCLUDES HEALTH INSURANCE ISSUER (QHP) TYPE BRONZE SILVER GOLD PLATINUM Region 5: Contra Costa Anthem PPO $276 $366 $444 $515 Blue Shield PPO 273 328 390 447 Contra Costa Health Services HMO 301 352 398 448 Health Net PPO 317 362 411 463 Kaiser Permanente HMO 261 347 426 458 Region 5 Average Premium 286 351 414 466 Region 6: Alameda Alameda Alliance for Health HMO 329 384 458 550 Anthem PPO 270 357 433 503 Blue Shield EPO 265 317 378 433 Kaiser Permanente HMO 275 365 448 482 Region 6 Average Premium 285 356 429 492 Region 7: Santa Clara Anthem HMO — 340 430 491 Anthem PPO 254 336 409 474 Blue Shield PPO 305 366 435 498 Health Net PPO 312 356 404 456 Kaiser Permanente HMO 289 383 470 506 Valley Health Plan HMO 266 351 403 460 Region 7 Average Premium 285 355 425 481 Region 8: San Mateo Anthem PPO 298 395 479 556 Blue Shield PPO 327 391 465 533 Chinese Community Health Plan HMO 266 351 465 516 Health Net PPO 346 394 447 504 Kaiser Permanente HMO 289 383 470 506 Region 8 Average Premium 305 383 465 523 Region 9: Santa Cruz, Monterey, San Benito Anthem PPO 288 382 464 538 Blue Shield EPO 279 335 398 456 Health Net PPO 345 393 446 503 Region 9 Average Premium 304 370 436 499 Region 10: San Joaquin, Stanislaus, Merced, Anthem PPO 223 295 358 416 Mariposa, Tulare Blue Shield PPO 269 322 383 439 Health Net PPO 348 397 451 508 Kaiser Permanente HMO 247 328 403 434 Region 10 Average Premium 272 336 399 449 Region 11: Fresno, Kings, Madera Anthem HMO — 333 421 481 Anthem PPO 218 288 350 406 Blue Shield PPO 237 284 337 386 Kaiser Permanente HMO 247 328 403 434 Region 11 Average Premium 234 308 378 427 California State Auditor Report 2013-602 35 July 2013 QHP MONTHLY PREMIUM PER ENROLLEE FOR EACH COVERAGE TIER QUALIFIED HEALTH PLAN CALIFORNIA REGION AND THE COUNTIES IT INCLUDES HEALTH INSURANCE ISSUER (QHP) TYPE BRONZE SILVER GOLD PLATINUM Region 12: San Luis Obispo, Ventura, Anthem PPO $246 $326 $395 $458 Santa Barbara Blue Shield PPO 262 314 374 429 Kaiser Permanente HMO 250 332 408 439 Ventura County Health Plan HMO 253 336 376 430 Region 12 Average Premium 253 327 388 439 Region 13: Mono, Inyo, Imperial Anthem PPO 305 404 490 569 Blue Shield PPO 330 396 471 539 Kaiser Permanente HMO 238 316 388 417 Region 13 Average Premium 291 372 450 508 Region 14: Kern Anthem PPO 212 281 341 395 Blue Shield PPO 231 277 329 377 Health Net PPO 248 283 321 362 Kaiser Permanente HMO 238 316 388 417 Region 14 Average Premium 232 289 345 388 Region 15: Los Angeles (North) Anthem EPO 207 274 333 386 Anthem HMO — 254 322 368 Blue Shield PPO 210 252 300 344 Health Net HMO — 222 253 285 Health Net PPO 248 — — — Kaiser Permanente HMO 221 294 361 388 L.A. Care HMO 188 253 287 317 Molina Healthcare PPO 204 259 285 342 Region 15 Average Premium 213 258 306 347 Region 16: Los Angeles (South) Anthem EPO 225 299 363 420 Anthem HMO — 259 327 374 Blue Shield PPO 240 287 342 392 Health Net HMO — 242 276 311 Health Net PPO 301 — — — Kaiser Permanente HMO 245 325 399 429 L.A. Care HMO 196 265 301 332 Molina Healthcare PPO 204 259 285 342 Region 16 Average Premium 235 277 328 371 Region 17: San Bernardino, Riverside Anthem HMO — 265 335 382 Anthem PPO 219 290 352 408 Blue Shield PPO 220 264 314 360 Health Net HMO — 246 281 317 Health Net PPO 270 — — — Kaiser Permanente HMO 226 300 368 396 Molina Healthcare PPO 204 259 285 342 Region 17 Average Premium 228 271 323 368 continued on next page . . . 36 California State Auditor Report 2013-602 July 2013 QHP MONTHLY PREMIUM PER ENROLLEE FOR EACH COVERAGE TIER QUALIFIED HEALTH PLAN CALIFORNIA REGION AND THE COUNTIES IT INCLUDES HEALTH INSURANCE ISSUER (QHP) TYPE BRONZE SILVER GOLD PLATINUM Region 18: Orange Anthem EPO $217 $288 $350 $406 Anthem HMO — 286 361 413 Blue Shield PPO 242 290 345 395 Health Net HMO — 252 288 324 Health Net PPO 287 — — — Kaiser Permanente HMO 250 332 407 438 Region 18 Average Premium 249 290 350 395 Region 19: San Diego Anthem EPO 233 308 374 434 Anthem HMO — 336 424 485 Blue Shield PPO 267 320 381 436 Health Net HMO — 269 307 346 Health Net PPO 276 — — — Kaiser Permanente HMO 238 316 388 417 Molina Healthcare PPO 249 316 348 417 SHARP Health Plan HMO (coinsurance) 238 328 372 402 SHARP Health Plan HMO (co‑pay) — 317 364 389 Region 19 Average Premium 250 314 370 416 Source: Covered California’s Qualified Health Plan Booklet June 2013. California State Auditor Report 2013-602 37 July 2013 38 California State Auditor Report 2013-602 July 2013 California State Auditor Report 2013-602 39 July 2013 40 California State Auditor Report 2013-602 July 2013 California State Auditor Report 2013-602 41 July 2013 cc: Members of the Legislature Office of the Lieutenant Governor Little Hoover Commission Department of Finance Attorney General State Controller State Treasurer Legislative Analyst Senate Office of Research California Research Bureau Capitol Press