Think Tank

How Can California Exchange Minimize ‘Churning’?

Veterans of the Medi-Cal system in California — providers, counselors, state officials and beneficiaries — have said for years that one of the keys to making the Medicaid program work is continuity of care. But in most lives –and perhaps especially in low-income lives — things change. People move, they change or lose jobs, their family situations evolve. When change happens, eligibility for subsidized coverage shifts and health care is often interrupted.

Health care officials who work with large Medi-Cal populations say fluctuations in eligibility cause quality of care to decline and the cost of care to increase because of added administrative expenses. Medi-Cal beneficiaries moving in and out of coverage — known as “churning” — is not a new phenomenon, but it may become more prevalent under health care reform.

The Affordable Care Act’s two primary weapons aimed at reducing the number of uninsured — expanded Medicaid eligibility and subsidies for buying private coverage through state health insurance exchanges — could produce considerable churning if they’re not carefully implemented.

According to a study published last month in Health Affairs, income fluctuations in the first year of expanded coverage under the new law could produce eligibility shifts for as many as 28 million people who will become newly eligible for subsidized health insurance. According to researchers’ predictions, after four years of expanded coverage under ACA, 19% of adults initially eligible for Medicaid will have been continuously eligible. About 31% of adults eligible for insurance subsidies will have remained continuously eligible, researchers predict.

In California, nearly five million uninsured Californians will gain access to health insurance in 2014. State officials and the board of the newly formed health benefits exchange are working on constructing a system to get ready for them as well as the millions of low-and middle-income Californians who will be eligible to participate in the exchange.

We asked stakeholders and experts: What strategies should state officials  employ in the building and operation of the exchange to minimize churning and promote quality and continuity of care?

We got responses from:

Simplify, Stabilize, Standardize Eligibility

There are certain elements of eligibility that critically impact a plan’s ability to minimize churning and manage the quality and continuity of a member’s care. Currently a Medi-Cal member can elect to change plans in a two plan model county at any time. In the commercial world, annual election creates a compact between the member and the plan that encourages cooperation and dialogue to provide a quality experience throughout the year.

In Medi-Cal, a member’s moving in and out of a plan truly hinders any ability to coordinate care. Complex redetermination requirements also present a roadblock to continuing eligibility. A Medi-Cal member is often faced with the chore of redetermination that includes a trip to social services, assembly of documents and time. If that person does not currently need medical services, there is little motivation to complete redetermination.

As we have seen, the more often redetermination is required (quarterly, semi-annually, annually), the less likely it is to be pursued. So, an important component of the exchange will be its ability to simplify, stabilize and standardize eligibility across the state.

Santa Clara Family Health Plan helps members maintain their eligibility in one of our three products as seamlessly as possible every day. We assist families as their income changes to move between Medi-Cal and Healthy Families so that care is not interrupted.

On a small scale, with lots of staff support, local health plans can ease members’ transitions. But with the advent of health care reform and the establishment of the exchange, the landscape will change for these members who move in and out of eligibility between government programs and the exchange plans.

Streamline, Make Eligibility Last a Year

To ensure that the health exchange succeeds, we need to implement strategies that will help mitigate churning due to income changes and protect patients’ continuity of care.

As a result of frequent income fluctuations, people could move from one government-subsidized insurance program to another. For example, they could move from a health exchange product to Medi-Cal or Healthy Families. As the churning occurs, their ability to keep the same provider network will likely be limited because not all health plans offer a complete continuum of government-subsidized products. Therefore, it is vital to include Medi-Cal managed care health plans in the health exchange. These plans have more than 15 years of experience in serving millions of Medi-Cal and Healthy Families enrollees. By incorporating them into the health exchange, you secure continuity of care. This would give individuals who have income the ability to stay with their health plan and keep their same doctor, specialists and care management teams.

Another strategy that can efficiently manage churning and keep people covered is to streamline the eligibility determination process. This must be done both at the initial application and transition points. First, eligibility should be processed by a system whereby people could apply for any insurance program, such as the health exchange, Medi-Cal and Healthy Families. Whether people are looking for health coverage online or at a local office, they could apply for any program. Currently, California has multiple eligibility systems that fail to communicate and exchange data. This should not happen with the health exchange. It must seamlessly communicate with the Medi-Cal and Healthy Families systems.

When an individual reports an income change, the system should seamlessly move this individual from his or her current program to a new qualified program without requiring the individual to resubmit base application information.

Furthermore, when an individual applies for coverage, the health exchange, Medi-Cal and Healthy Families should use the same documentation requirements for all programs. These agencies could also maximize existing federal and state databases to verify eligibility information like an applicant’s income or citizenship requirement, helping the health exchange run more efficiently.

Once an individual is enrolled in a program, coverage should be guaranteed for at least one year without any status report requirements during that period. This would remedy the problem of people losing coverage because of administrative issues.

By including health plans that serve all low-income programs in the exchange and using a streamlined eligibility process, we will ensure individuals not only stay covered, but maintain their provider relationships and continuity of care.

Eliminate Churn Through Continuous Coverage

In an ideal world, Medi-Cal beneficiaries would appropriately inform the state of any changes in their lives that impact income or family status. In that world, beneficiaries would be transitioned immediately into an alternative, equally effective health care program, while retaining their current provider and circumventing any interruption of care. In that world, state resources, finances, and maybe even a few trees would not be squandered on needless paperwork.

We don’t live in that world.

Our reality is that redetermination and the unintended consequence of “churn” are a sinkhole for budgets, but more importantly compromise the health and safety of the beneficiaries our system is designed to protect. According to a June 2007 study by the Center on Budget and Policy Priorities, even temporary lapses in health care coverage can cause beneficiaries to delay needed care or worse, shun it altogether. 

People who continue with a full-year of uninterrupted health care coverage have lower rates of unmet health care needs and stable access to quality care.

It’s no secret that state Medi-Cal renewal mandates unintentionally disenroll many beneficiaries due to the required frequency of redeterminations. Complicated renewal forms and sometimes incomprehensible verification requirements also serve to discourage the pursuit of coverage by those  who are most in need.

Adopting a process of continuous eligibility for one year would help create an exchange in which the delivery of stable access to preventive and chronic care programs are paramount. Beneficiaries would see a doctor more often, which in turn would lead to reduced hospitalization and emergency department visits.

From a pure cost-saving standpoint, should California’s exchange opt to adopt a strategy of continuous coverage, it would very likely discern a significantly reduced number of disenrollments and reenrollments due to the elimination of gaps in coverage. A recent study of Medi-Cal beneficiaries showed that more than 600,000 children were disenrolled from the program within three years, only to be re-enrolled (“churned”) at a later date. The cost to California in re-processing fees alone was $120 million.

Surely there are more advantageous ways for California to spend $120 million.

The Association for Community Affiliated Plans (ACAP) is working with Congress and other key stakeholders to write legislation that would standardize continuity of care and eradicate churn through a proposal called the Medicaid Continuous Quality Act (MCQA). As the exchange board begins its process to establish our state’s exchange, I strongly recommend continuous Medi-Cal coverage as a systemic approach to delivering consistent, quality care.

Basic Health Program May Be Best Bet

The Basic Health Program, one of the options given to states in the health care reform law, is a great opportunity to ensure continuity of coverage and care for individuals and families that will shift between the exchange and Medicaid. The Affordable Care Act gives states flexibility to create a dedicated Basic Health Program for exchange-eligible consumers with incomes between 133% and 200% of the federal poverty level. Based on the limited information available so far, the Basic Health Program appears to be a better option than the exchange in dealing with continuity issues for three reasons:

  1. Initial estimates indicate that consumers would have lower out-of-pocket costs in the Basic Health Program, compared with the exchange. So when individuals and families lose eligibility for Medicaid because of gains in income, the Basic Health Program would present a less dramatic transition as opposed to a potential cliff with the exchange. We know that those at or around 133% FPL are much more sensitive to costs than their higher income counterparts, so any reductions in out-of-pocket costs — no matter how small the difference – will reduce the number of times consumers forgo needed services because of high out-of-pocket costs.
  2. A Basic Health Program would likely attract existing Medi-Cal managed care plans to participate. This would give consumers who flex between Medi-Cal and the Basic Health Program an opportunity to remain in their existing health plan, which means the ability to see the same doctor, have similar benefits, use the same insurance card, be helped by the same care coordinator and call the same phone number for assistance. So with a Basic Health Program in place, income changes that move consumers above and below 133% FPL can mean coverage AND care will be continuous and seamless for consumers and providers.
  3. The Basic Health Program is focused only on the exchange population that is most vulnerable to churning and gaps in care. As research by Sara Rosenbaum and Benjamin Sommers verified, income changes are more prevalent for consumers at 133% FPL than at 200% FPL. If the lower-income group is part of the full exchange, issues of quality and continuity unique to this lower-income group must be balanced with issues that impact other populations in the exchange, such as unsubsidized consumers and small businesses. Coverage alone does not equal access, and disruptions in care will persist if we don’t address the transition process. I believe the Basic Health Program is an attractive option to mitigate the negative outcomes from churning.

Fulfilling Promise of Health Care Security

The promise of the Affordable Care Act is to provide greater health care security, filling in gaps in a system that has left millions without coverage. But to fulfill that promise, we must ensure that those served by the cornerstone of reform — Medicaid and the state health insurance exchanges — enjoy the same continuity of care most of us take for granted.

The problem of “churning” has long plagued Medicaid, as millions of individuals cycle on and off the rolls, even though they remain eligible, because of inefficient administrative practices and cumbersome paperwork requirements. As a George Washington University report put it, “Medicaid enrollment is like a leaky sieve.” Churning will adversely impact millions more when Medicaid expands and the exchanges start operating. Income fluctuations will push people on and off Medicaid and will alter eligibility for premium tax credits for coverage in the exchange, causing people to move back and forth between the two programs — potentially triggering changes in health plans and financial uncertainty for enrollees and government.

Movement between health plans, even without gaps in coverage, can have negative health consequences and increase administrative costs. Having Medicaid safety-net health plans participate in the exchange, the federal Children’s Health Insurance Program (Healthy Families in California) and Medicaid will allow more people to remain with the same plan if they move across the Medicaid-exchange divide. So, we must avoid erecting barriers for safety-net health plan participation in the exchanges.

The most rational policy for addressing Medicaid churning is to make all beneficiaries continuously eligible for 12 months. Congress should harmonize the coverage periods for public and private health coverage by making 12-month continuous eligibility the standard for Medicaid. In the interim, the secretary of Health and Human Services can facilitate remedies. ACA authorizes the secretary to streamline eligibility practices, reduce barriers to enrollment, and improve the interaction between Medicaid and exchange-based coverage, including through waivers for state innovation.

The interplay between Medicaid and the exchanges makes developing a strategy for curtailing churning complex. But we must act before the problem becomes more complicated and widespread. Patients pay too high a price when they forgo needed medical care. Keeping the promise of reform requires making health care security a reality for those who need it most.