New Covered California contracts push insurers to embrace value-based care

In a move that has drawn praise from federal officials, Covered California has made changes to its plan contracts that require health plans and providers to adopt initiatives aimed at improving care quality in the state.

The contract provisions, which will go into effect for 2017 to 2019, were developed over the past year in conjunction with consumer advocates, health plans, clinicians and subject matter experts, the state exchange said in its announcement.

"We are insisting on the best care and value for our consumers," Covered California Executive Director Peter Lee said. "In the near term, keeping costs low is about making sure Covered California has a good mix of enrollees, but over the long term there must be system-wide efforts to lower costs and improve quality for all Californians."

Among other aspects of the new contract provisions, Covered California will require that insurers:

  • Adopt a new payment system for hospitals, which "over time,' puts 6 percent of plan reimbursement at risk or subject to a bonus based on the quality of care. 
  • Encourage enrollment in patient-centered medical homes or other forms of integrated care.
  • Be more active in members' care by tracking and reducing health disparities and creating programs to find and manage at-risk enrollees.
  • Exchange data with providers to notify them when patients are hospitalized and allow them to track trends and improve performance on chronic conditions.

The improvements were hailed by a wide variety of stakeholders, including the Centers for Medicare & Medicaid Services and the American Academy of Family Physicians, the announcement said. But insurers and providers alike have already pushed back against Covered California's plan to require health insurers to eject low-performing providers from their networks--a proposal reiterated in the exchange's newly finalized contract provisions.

To learn more:
- read the Covered California announcement

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