Sen. Ed Hernandez | Balance billing | United & Centene?

This month’s market intelligence newsletter tracks both the the closing days of the legislative session, and pending questions about the sustainability of the insurance marketplace.

Two huge topics to keep an eye on – but it’s what we’re watching in California health care this month.

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1. Video: Senator Ed Hernandez

State of Reform joined Senator Ed Hernandez inside the Capitol building to talk about what he is watching in health care reform, and pending topics in the legislative session. The Senator has his eye on the rising cost of pharmaceuticals which he believes could impact the sustainability of the whole industry. Check out our complete “What They’re Watching” series for commentary from other thought leaders in California and the west coast.

2. Paradoxical trends among risk bearing orgs

The Financial Solvency Review Board meeting yesterday had all sorts of interesting tidbits. DMHC said
they will be approving plans for the commercial and exchange markets by the end of the month, with requested rate increases ranging from -13% to +44%. But DMHC also highlighted paradoxical trends among risk bearing entities.

On the one hand, for the first time since 2012, no plans are deficient in their “tangible net equity,” the term for reserves and overall balance sheet health. On the other, an increasing number of “risk bearing organizations” (RBOs) are now under a “corrective action plan” or in “monitor closely” status. There are 9 RBOs total under watch with more than 500,000 Medi-Cal lives in the balance. It’s a noteworthy share of the 3.6m lives managed by RBOs.

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3. Molina moves; Centene & United in talks?

Two important MCO topics to watch. First, Molina announced an acquisition of Providence Behavioral and Mental Health Services (meaning NASDAQ: PRSC, not the Catholic hospital system on the move). This should bring significant behavioral health talent to Molina as it gears up for integration in California and Washington State, where most of its covered lives are. It should also buttress its ability to take on the national plans, which are getting increasingly active in the western managed Medicaid markets.

Speaking of which, consultant Grant Cattaneo is reporting the “new rumor” that United Healthcare and Centene are in M&A talks. His comments came during a presentation on the effects of carrier consolidation, drawing on analysis he completed in August. “Rumors” are one thing. However, when Cattaneo – a very well respected voice in CA health care – highlights it, and does so before the Financial Solvency Standards Board, it’s probably worth noting.

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4. Video: Peter V. Lee, Covered California

We visited Peter V. Lee, Covered California’s Executive Director, in his Sacramento office to talk about the continuing evolution of the state exchange’s identity. With Open Enrollment 3 coming up in November, Lee talks about the work ahead which is not just about getting more lives covered but about focusing efforts on system-wide changes to ensure provider access and quality care.


5. “Balance billing” still active in session

The legislature wraps up on Friday, and AB 533 is one of the last big remaining health care policy bills in play. It is on its way back to the Senate floor after an amended version won approval yesterday in committee. The bill seeks to protect consumers from balance billing by out-of-network providers which were otherwise identified as in-network by plans or RBOs. The mechanism would be a binding dispute resolution process set up by DMHC and CDI where 22m impacted consumers could air their concerns.

Assembly Health Committee Chair Bonta’s bill has significant support among advocacy groups, Health Access being primary among them. But the opposition from provider voices is significant, too, with the California Medical Association saying the bill will artificially lower existing payments to providers.

The bill would appear to be set for final passage, but time is getting short.