How Covered California is Transforming ACA Performance


More than a decade ago, California made history as the first state to sign legislation under the Affordable Care Act (ACA) to establish its own health insurance marketplace: Covered California. California’s vision for ACA plans was to establish a consumer-centric marketplace that focused on improving “the health of all Californians by assuring their access to affordable, high-quality care.”

Since its inception, Covered California has focused efforts on increasing marketing and community outreach, reducing premium rates, expanding enrollment periods and improving the ability for consumers to pick their insurance directly from Qualified Health Plan issuers. From 2013 to 2019, these efforts reduced uninsured rates within the state from 17.2% to 7.7%, resulting in more than five million Californians receiving insurance through Covered California and four-and-a-half million through Medi-Cal, California’s Medicaid program.

Alongside initiatives to expand insurance coverage to disenfranchised groups, Covered California consistently collects healthcare effectiveness data. This reporting is done at a contract level per state guidelines and at a measure level according to the Centers for Medicare & Medicaid Services (CMS) Quality Rating System. In addition, claims and utilization data is monitored through the Healthcare Evidence Initiative. Together, these metrics allow the state to hold ACA plans accountable for ensuring Californians get the right care at the right time.

Amidst changes in administrations and federal policies, California has made several modifications to the program to ensure members can continuously access affordable care. As the state looks back at the program’s accomplishments and challenges over the past decade, the state now wishes to bolster Covered California with new initiatives designed to improve quality of care for all Californians through the Quality Transformation Initiative.

What is the Quality Transformation Initiative?

The Quality Transformation Initiative (QTI) is a clinically driven program within Covered California designed to improve healthcare quality and reduce health disparities for all Californians. Under QTI, ACA plans will target a handful of clinically important conditions to have the strongest impact on health outcomes and chronic conditions. These conditions were selected based on established measures that are currently being reported on by ACA plans.

Changes to Performance Tracking

For measurement years 2023-2025, Covered California will evaluate ACA plan performance based on four QTI core measures according to the CMS Quality Rating Systems:

  • Controlling High Blood Pressure
  • Comprehensive Diabetes Care: Hemoglobin A1c (HbA1c) Control
  • Colorectal Cancer Screening
  • Childhood Immunization Status

In addition, ACA plans are also required to report performance in two National Committee for Quality Assurance (NCQA) Healthcare Effectiveness Data and Information Set (HEDIS) measures:

  • Depression Screening and Follow-Up for Adolescents and Adults (DSF)
  • Pharmacotherapy for Opioid Use Disorder (POD)

Benchmarks for the two HEDIS measures are still being established, but will be rolled into the QTI core measures once complete to incorporate quality measurements for mental health and substance abuse into QTI’s mission. 

Financial Impact of QTI Core Measures

Altogether, these six measures will determine whether plans are required to make payments to the Quality Transformation Fund. This fund will be used to manage Covered California’s internal quality-related operations and activities as part of its annual budget.

Payment contributions are based on national benchmarks for each measure and will decline at a constant rate the higher a plan scores:

  • Full penalty payments: Scores below the 25th percentile
  • Partial penalty payments: Scores between the 25th-66th percentile
  • No penalty payments: Scores at or above the 66th percentile

Penalty payments are calculated according to a percentage of the ACA plan’s total gross premium per contract and will change depending on the year. For 2023, ACA plans risk losing 0.8% of total gross premium due to low quality scores, and this will increase to 2% in 2024 and 3% in 2025.

Not only are low-performing plans at risk of losing significant revenue because of six core measures, but plans that score below the 25th percentile will also be required to submit a Quality Improvement Plan to Covered California for review and approval. This plan must demonstrate how a contract will work towards achieving compliance with QTI’s benchmarks and improving quality scores.

How QTI is Changing Healthcare

QTI is a targeted push to mobilize California’s ACA plans through a strict incentive system to improve healthcare quality for measures that have traditionally underperformed within the state. Each of the QTI core measures has a significant impact on health outcomes, healthcare costs and utilization rates. Driving ACA plans to improve quality performance in these areas sets the stage for an overall reduction in costs and longer life expectancies for millions of Californians.

Almost 30% of Californians have been diagnosed with hypertension, and the state has the second highest mortality rate in the country. Low performance in this quality measure contributes to over half a million deaths in the United States, an annual cost of $131 billion and over a million emergency room visits. By incentivizing ACA plans to accelerate performance with the Controlling High Blood Pressure QTI core measure, Covered California seeks to drastically improve health outcomes and chronic disease management for millions of Californians.

The same can be said for the other QTI core measures. Focusing on these measures allows ACA plans to test their ability to develop targeted and impactful interventions that have long-term impacts on health plan effectiveness and members’ lives. Engaging members with hypertension or diabetes to better understand, self-manage and improve their health sets the stage for continuous improvements throughout their lives.

Covered California also intends to incorporate health disparities reductions into the QTI core measures as early as the 2025 contract year. This requirement would incentivize plans to develop a richer understanding of health outcomes based on race and ethnicity to inform meaningful health equity initiatives.

What Can Health Plans Do Now to Prepare?

The challenges set forth by Covered California require a significant shift in how ACA plans address quality scores.

Plans will need to account for the financial impact that the six QTI core measures will have on penalty payments. While poor performance in measurement year 2023 will only result in a loss of 0.8% of premium payments per contract, the gradual increase to 2% and 3% in 2024 and 2025 respectfully. Establishing strong quality scores early on ensures that ACA plans will have the necessary revenue growth to support continuous improvements down the line and avoid higher penalty payments down the line.

Whether a plan is above or below the 66th percentile, there are always opportunities to amplify your quality improvement efforts to engage more members in their care and boost plan performance. To ensure your contracts are ready for the impact of the QTI, you should:

  • Understand the demands of QTI: Carefully review and discuss all QTI documentation published by Covered California with stakeholders to ensure all team members understand the impact of QTI on plan performance.
  • Know where your contracts rank: Review and analyze contract-level performance data in the six core QTI metrics to understand where each contract ranks against national metrics reported by the QRS. Use this data to drill down into the specific contracts that need improvements to cross the 66th percentile benchmark.
  • Stratify care gaps at a member level: Refine your outreach lists based on the QTI core metrics to determine how many members need to be engaged to boost quality scores.
  • Target, engage and active members: Based on performance data and targeted outreach lists, initiate meaningful engagement strategies that empower members to self-manage their health and improve their well-being.
  • Capture member sentiments to refine strategies: Continuously monitor member experiences at each interaction to identify roadblocks, SDOH, health disparities and barriers to care. Use these insights to optimize your engagement strategies to ensure every member has access to quality care. 

Charting a Path to Accreditation

Alongside these new performance benchmarks, QTI is working to advance equity in healthcare and reduce disparities for diverse communities within California. To ensure the 11 California ACA plans are aligned with reducing health disparities for all members, all plans have until the end of 2023 to receive NCQA Health Equity Accreditation.

Achieving Health Equity Accreditation demonstrates that an ACA plan has established an internal culture and framework that supports external initiatives that expand equitable care and improves quality of care for underserved populations. This accreditation enables ACA plans to better understand member challenges based on social determinants of health, stratify care gaps based on demographic data and initiate meaningful interventions.

The path to Health Equity Accreditation is a year-long process that requires a significant investment in time, staffing, funding and resources. Plans can begin by accessing NCQA’s standards, guidelines and survey tool to understand what is expected of them during the evaluation period. In addition, consulting with the right health equity experts is vital for evaluating organizational readiness and identifying opportunities to make improvements.

Healthmine Can Help Put You Ahead of the Curve

With measurement year well under way, the time is now to begin addressing the QTI core measures and implementing internal initiatives to achieve Health Equity Accreditation. Implementing the types of targeted quality improvement tactics that QTI is asking for from ACA plans requires powerful tools for monitoring, analyzing and closing care gaps.

Healthmine’s member-centric solutions enable ACA plans from across the country to implement personalized outreach to address conditions that have the most impact on health outcomes, cost savings and quality scores. Through Opportunity Manager, our quality measurement platform, ACA plans can drill down into care gaps at a contract and member level to surface insights into health disparities and identify opportunities for improvement. From here, plans can implement personalized engagement campaigns through members’ preferred channels to educate, engage and reward members for completing appointments.

Discover how to use Healthmine’s digital tools to improve quality scores in the QTI core measures and set your organization on the path to strong performance in measurement year 2023 and beyond. Contact us for a demo.

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