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May 30, 2018

California may cut hospitals that fail to meet quality metrics from ACA plans

Daily Briefing

    Covered California—the state's insurance exchange created under the Affordable Care Act—has announced that, beginning in 2020, it will exclude hospitals that do not meet certain safety and quality targets from exchange plans' provider networks.

    Plan details

    Under Covered California's plan, hospitals will be evaluated on targets related to:

    • Opioid prescribing;
    • Unnecessary cesarean sections (C-sections); and
    • Use of imaging—such as CT scans, MRIs, and X-rays—to treat back pain.

    Health care analysts say research has shown that hospitals tend to overuse those procedures and services in a way that can harm patients. For instance, data show that several California hospitals are completing 40% of low-risk deliveries via C-section, even though performing the procedure when not needed exposes patients to unnecessary risks, WBUR reports.

    Covered California CMO Lance Lang said that data does not reflect quality health care, adding that the exchange wants to see hospitals reduce their C-section rates to at least 23.9% for low-risk deliveries.

    According to WBUR, health plans can request permission from Covered California to exempt hospitals that do not meet the targets if they document their reasoning for the request. Charles Bacchi, CEO of the California Association of Health Plans, said, "That is flexibility that we asked for to ensure that we maintain adequate access to providers." He added, "Any major changes to health plan networks must be filed with regulators. And health plans have to ensure that patients continue to receive services in a timely manner."


    Lang said, "We're saying 'time's up,'" adding, "We've told health plans that by the end of 2019, we want networks to only include hospitals that have achieved that target." Lang said he expects that all hospitals either will have met or made progress on meeting the targets by 2020.

    Experts say Covered California's plan could have significant effects, particularly for maternity care. Leah Binder, CEO of the Leapfrog Group, said, "It's probably the boldest move we've seen in maternity care ever."

    Binder said the move could have national implications, noting that business groups and insurers throughout the country are watching the effort to see whether they could implement similar policies (Dembosky, WBUR, 5/23; Haefner, Becker's Hospital Review, 5/24).

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