Covered California wants to grade hospitals on cost

One of the largest and most successful state insurance exchanges in the nation plans to judge hospitals and other providers on cost and quality and could wind up purging poor performers.

That's the intent of the Covered California insurance exchange. California Healthline has reported that the exchange intends to scrutinize providers and potentially exclude those that are subpar.

"The first few years were about getting people in the door for coverage," Covered California Executive Director Peter V. Lee told Healthline. "We are now shifting our attention to changing the underlying delivery system to make it more cost effective and higher quality. We don't want to throw anyone out, but we don't want to pay for bad quality care either."

Should the Covered California board of directors approve that approach, hospitals would be graded on cost and quality starting in 2018, and medical groups would be added the following year.

The plan could provide Californians some more more transparency regarding the costs of its providers. Price transparency is woefully low nationwide.

California is an odd market for providing healthcare services: The northern part of the state tends to be significantly more costly than the southern region. Sutter Health, which is a dominant provider in the Bay Area and Sacramento, has been blamed for driving up rates. Sutter's prices alone were about 40 percent higher than the statewide average in 2010.

However, that also raises the issue of whether Covered California can purge underperformers without threatening network adequacy. About 70 percent of the plans offered through the exchange are of the narrow network variety, according to the publication. The plan has also drawn criticism from the provider community. Covered California also drew fire last year for its plan to undertake elaborate data mining of both providers and enrollees.

To learn more:
- read the California Healthline article

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