OR Insurance Commissioner Laura Cali on network adequacy, transparency, drug costs

Oregon Insurance Commissioner Laura Cali

Oregon Insurance Commissioner Laura Cali

Oregon Insurance Commissioner Laura Cali recently joined us to discuss top issues surrounding Oregon’s health insurance market and legislation her office is monitoring or engaging with stakeholders on. As one of the Portland Business Journal’s Top 40 under 40, she’s one of the key people to watch in Oregon health care.

STOR: Thank you for joining us. Oregon House Bill 2605 may give your office ten days after public comment to approve / disapprove an insurer’s rate filing. In turn, insurers have thirty days to appeal. This also creates a gray area of accepting preliminary rates to participate in open enrollment but allows for significant increases or decreases. This has been a concern with plan’s actuaries, who are trusted to ensure financial viability, especially among Medicaid plans, and justify rate increases or decreases.

What is your view on House Bill 2605? Do you feel this gives adequate time for both your office and respondents?

Commissioner Laura Cali: The Insurance Division does not typically take a position on pending legislation other than agency-sponsored bills, but we have worked closely with other stakeholders on HB 2605. HB 2605 does a couple of things: (1) it codifies some procedural changes the division made to our existing rate review process that will enhance transparency and provide a better opportunity for discussion of the actual factors that affect our decision, and (2) it provides a more timely option for an insurance company or other aggrieved party to appeal the division’s decision. Existing law already provides for an opportunity to appeal, but, in practice, that process can take several months and could jeopardize an insurance company’s ability to have approved rates in time for open enrollment. HB 2605 preserves the existing appeal process, but introduces the option for expedited reconsideration by the director of the Department of Consumer and Business Services after the Insurance Division issues its final decision. While the bill doesn’t materially change the timeline for the division’s review process (about 60 days), it does give insurance companies or other aggrieved parties a more viable option to appeal before open enrollment.

That all being said, insurance companies are still required to justify their proposed rates and demonstrate that they are actuarially sound and comply with state and federal requirements, and the division’s final decisions will continue to reflect those requirements.

STOR: Creating a narrow network is one method carriers are using to reduce rates. This year, however, many plans are opting for higher rates — but not necessarily a broader range of providers. Likewise, some plans are increasing coinsurance, within federal actuarial guidelines. This could potentially leave consumers on the hook for out-of-network, high coinsurance, and higher premium plans.

In light of rate increases by as much as 43% for Pacific Source Health Plans, how is your office simultaneously addressing network adequacy this year?

Commissioner Laura Cali: As you note, there is a ongoing tension between broad networks and the cost of coverage. Because every consumer has different needs, broader networks with higher premiums may work better for some, but narrower networks with lower premiums might work better for others. The division wants to ensure that Oregonians understand their options and the trade-offs as they consider which health plan best meets their health and financial needs, and that, above all, they are able to access the care they need when they need it.

Just this session, the division proposed HB 2468, which will set minimum standards for network adequacy and require transparency of provider networks. The bill has passed both chambers, and once signed, we’ll begin a public rulemaking process to more clearly define network adequacy and transparency requirements. The bill has an effective date of Jan. 1, 2017, but in the mean time, we’re reviewing 2016 plans and rates to ensure that they comply with existing laws and rules.

STOR: Specialty drugs for conditions like Hepatitis C, HIV, and more have the potential to save lives. However, they come at significant costs, up to hundreds of thousands of dollars for a multi-month regimen. To be financially sustainable, insurers can address this, broadly, through two means: increasing cost-sharing or increasing out-of-pocket costs for those needing access to these top-tier formulary drugs.

In light of soaring drug costs, how is your office ensuring consumers are protected and that their plans are financially sustainable? What can the insurance division, payors, and providers, do to set fairer rates?

Commissioner Laura Cali: It’s a challenge to balance cost and coverage while addressing the public health needs of our state. Currently, the division is reviewing proposed health plans and rates for 2016 to ensure that prescription drug coverage is not unfairly discriminatory and to understand the rate impact of high-cost specialty drugs on consumers. Stability and affordability of health care costs (including pharmaceuticals) is not just an Oregon issue, but a national issue, and will require collaboration across many stakeholders across the country.

STOR: There have been large pushes in the legislative for more cost transparency and assessing quality. For example, HB 900 requires the OHA to post median pricing data for hospital services. SB 440, meanwhile, creates a committee to develop shared quality criteria and metrics. SEIU recently addressed the hospital costs in their recent report.

Where does your office stand on both these bills? Some proponents have argued both quality and costs transparency must pass at once, as cost may correlate with quality.

Commissioner Laura Cali: The division has a strong interest in transparency for consumers and is currently engaged in other work to support transparency of cost and quality metrics. Currently, the division requires insurance companies to submit cost and quality metrics with their rate filings for informational purposes. While the metrics will not be used in the rate review process, posting them to our public website will be beneficial for consumers to better understand the medical costs underlying rates and see the balance between cost containment and quality improvement. Examples of the cost and quality metrics are below:

–          Cost metrics: utilization and costs per member per month for outpatient visits, emergency department visits, primary care and specialty care physicians, and prescriptions.

–          Quality metrics: breast cancer screening, diabetes care, follow-up after hospitalization for mental illness, and development screening for children.

STOR: How has your office prepared to protect consumers in the event that a Supreme Court ruling in King vs. Burwell removes tax credits? This has posed significant questions into actuarial planning and forecasting in states for hybrid state-federal exchanges (as in Oregon) and fully, federally-managed exchanges.

Commissioner Laura Cali: Oregon has had, and continues to have, a state-based marketplace. We simply use the federal portal instead of a portal of our own. Senate Bill 1, which folded the marketplace functions into the Department of Consumer and Business Services (DCBS), was drafted specifically to reinforce that status. DCBS will continue to work to ensure Oregonians maintain access to tax credits through a state-based marketplace.

STOR: Lastly, Insurance Commissioners run a wide range of roles as regulators: Washington State Commissioner Mike Kreidler operates a regulatory-heavy office to protect consumers and is seen as the final say in Washington State health coverage. On the other end of the spectrum, my colleague JJ Lee interviewed California Commissioner Dave Jones who said his office is frequently in a recommendation-only position, even with their state-run exchange, due to statutes.

Where along that spectrum do you see the Oregon Insurance Division under your leadership? Are you satisfied with its position on the spectrum?

Commissioner Laura Cali: The Oregon Insurance Division – which is part of Oregon’s largest consumer protection and business regulatory agency, the Department of Consumer and Business Services, has generally broad regulatory authority over many aspects of Oregon’s commercial health insurance market. All individual and small group health benefit plans, even those offered through our state-based marketplace, must be approved by the division before they can be sold to consumers. In order to approve a health benefit plan, the division must ensure that all required benefits are covered, the policy language includes required consumer protections, and the rates are justified and reasonable in relation to the covered benefits. We generally work with insurance companies to get their plans into compliance, but if we have to disapprove a particular plan, the insurance company would not be able to sell it in Oregon – both on and off of the marketplace. In that respect, the Insurance Division has the final say as to whether a particular plan can be sold in the Oregon market.

Oregon’s state-based marketplace can, however, impose additional requirements in order for a health benefit plan to be “certified” as a qualified health plan. These requirements would be over and above any regulatory requirements that fall under the division’s authority. For example, the Insurance Division requires all insurance companies who sell individual or small group health benefit plans to offer a standard bronze plan and a standard silver plan. In addition, the marketplace requires all insurance companies who wish to be certified to sell qualified health plans to offer a standard gold plan in addition to the standard bronze and silver plans.