State exchange first to set quality, cost standards for health plans

Covered California, the state’s health insurance marketplace, is the first Affordable Care Act (ACA) health exchange to impose quality and cost standards on health plans and providers.

“It’s important to remember that the [ACA] is just the beginning of this new era of healthcare,” says James Scullary, Covered California spokesperson. “Now that the law is firmly rooted in the fabric of our society, Covered California is looking toward what’s next to fulfill the promise of a more equitable, sustainable and accessible healthcare system.” 

The new contract provisions- which will cover the years 2017 to 2019-reward quality over quantity, provide concrete ways to address future quality and costs, and provide consumers with the access and tools they need to make educated decisions about their health, according to Scullary.

The California health insurance exchange regulations will require participating health plans to penalize low-performing hospitals and reward high performers, drop some underperforming hospitals and healthcare providers from their networks, and disclose negotiated rates, according to Managed Healthcare Executive Editorial Advisor Joel Brill, chief medical office, Predictive Health LLC. In addition, new enrollees must be assigned a primary care provider within 30 days of coverage; carriers and providers must share data on patients with chronic health conditions; and plans must monitor and reduce health disparities, help enrollees afford expensive treatments, and help subscribers understand their diseases, treatment choices and costs.

“We believe that promoting these changes in delivery systems are critical to bringing down healthcare costs in the long term and essential to maintaining a good risk pool,” Scullary says.

The plan is set to go into effect over a seven-year course.

In addition, Covered California uses core levers to promote better quality and lower costs, such as requiring providers to meet quality standards without exception, to provide safe care for all, including various racial and ethnic groups, as well as adopting payment strategies that support quality performance. 


The contract provisions were developed over the past year in conjunction with consumer advocates, health plans, clinicians, and other stakeholders and subject matter experts.

“This is one step toward guiding patients to high-performing facilities and providers, helping patients to optimize their care- ‘right care, right amount, right setting, right provider, right time’,” says Brill. “Sharing data can help healthcare professionals and providers to recognize that their efforts should be aligned across multiple settings to provide person-centric, coordinated care.”