Exchange model contract lends both clarity and questions

January 31, 2013
Area(s) of Interest: Health Care Reform 

For months, those following Covered California, the state’s health benefit exchange, have thought that a draft of the qualified health plan (QHP) model contract would provide some clarity regarding what the new insurance marketplace would mean for physicians practicing in the Golden State.

In some ways, they were right.

Unfortunately, the release of the roughly 100-page document brings with it a host of new questions and concerns, ones that exchange staff will undoubtedly have to clarify before selection of QHPs begins in the coming months.

From the California Medical Association (CMA) perspective, one of the most troubling issues regarding the exchange has centered on a provision of the Affordable Care Act (ACA) that allows for a 90-day grace period for non-payment of premiums. For patients receiving federal subsidies and delinquent on their premiums, this federal grace period gives QHPs the option to withhold and potentially deny physicians’ claims submitted during the last 60 days of the 90-day grace period.

CMA views this as a conflict with California’s Knox-Keene Act and Insurance Code licensing requirements, which, among other things, generally requires the payment of claims authorized by the payor and provided by the physician in good faith.

Upon a first reading of the exchange’s model contract, it would appear that exchange staff was amenable to CMA’s concerns.

Within the draft contract is a provision entitled “Grace Period,” which requires QHP issuers to follow the Knox-Keene and Insurance Code requirements. However, only a few sections earlier, the contract appears to reference both Knox-Keene and the federal ACA requirements in the same breath, creating ambiguity as to which grace-period-related requirements QHP issuers would be expected to follow.

Legal counsel at Covered California and the regulators have also not complied with requests from CMA and other provider organizations to opine publicly on whether the federal grace period provisions override state law requirements such as those mentioned above.

Needless to say, the grace period provision will require clarification before the model contract is finalized.

Another subject area that presents a mixed bag to California’s physicians is the contract section discussing out-of-network services.

On a positive note, the draft contract specifies that QHP issuers must provide enrollees with the amount it will pay for “covered proposed non-emergent out-of-network services.” Since the draft was released, Covered California staff has explained that this is meant to prohibit plans from qualifying coverage amounts with limiting phrases, such as “up to” or other ambiguous language.

However, the contract also states that QHP issuers must require their network providers to inform enrollees when they propose “to use [or refer to] a non-network provider or facility...for proposed non-emergent covered services.”

Finally, the model contract looks to marginally tighten up the loose, and rather concerning, network adequacy provisions that were discussed when adopting QHP policies late last year. Covered California has also recently pledged staff resources to network verification activities, such as spot-checking.

CMA staff is working diligently to get clarification on these and other provisions of Covered California’s draft model QHP contract and submitted lengthy comments on the contract earlier this month.

For more information on model contract developments, please stay tuned to future issues of CMA Reform Essentials.


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