It has been months since the Board of Directors for Covered California, the state’s health benefit exchange, adopted standards for the selection for qualified health plans, yet one of the most troubling problems has yet to be addressed by exchange leadership.

The issue, allowing two-tiered networks for essentially all plans offered through the state’s new insurance marketplace, will almost certainly result in confusion and dissatisfaction on the part of both consumers and providers if it is not addressed before the exchange goes live in January 2014.

By allowing two-tiered networks, the exchange is inviting problems upon California’s already inadequate approach to monitoring and ensuring adequate provider networks.

As previously reported, the exchange is opting to allow existing state regulators – the Department of Managed Health Care (DMHC) and the Department of Insurance (DOI)– to be responsible for checking the adequacy of networks offered by plans in the exchange. Not only do DMHC and DOI have different network adequacy standards, but the regulators also rely largely upon self attestations from the plans that their directories are accurate and meet adequacy standards.

Cause for concern increases exponentially when two-tier networks are tossed into the mix, because regulators do not currently appear to have the capability of assessing adequacy of individual tiers within a broader provider network.

This is critical because the “high performance” tier will be the one with standard patient cost-sharing, while the “low performance” tier will be permitted to have higher co-pays, deductibles and other cost-sharing for patients.

With many consumer groups already saying that the exchange’s standard cost-sharing amounts will be unaffordable for many patients, there is a real concern that access to any “low performance” tier will be unrealistic for many enrollees.

Making matters worse, in reporting the value of the plan, insurers get to determine the projected use of each tier, giving them another way to protect their margins.

With insufficient regulation and the presence of two-tier networks, it’s possible that a plan could place all physicians practicing within a certain specialty within one tier, while leaving the second tier completely devoid of adequate provider networks. However, given that both tiers exist within the same network, plans would be able to attest that their network overall is adequate.

This scenario has been presented to exchange staff by several stakeholders, including the California Medical Association (CMA), yet the presence of two-tier networks remains in the plan solicitation standards.

CMA staff continues to advocate for changes to these standards and for enhanced staffing and other resources for state regulators to adequately monitor and enforce network requirements.