Report 2013-602 All Recommendation Responses

Report 2013-602: New High Risk Entity: Covered California Appears Ready to Operate California's First Statewide Health Insurance Exchange, but Critical Work and Some Concerns Remain (Release Date: July 2013)

Recommendation #1 To: Covered California

To provide as much public transparency as possible, Covered California's board should formally adopt a policy to retain confidentiality only for contracts, contract amendments, and payment rates that are necessary to protect Covered California's interests in future contract negotiations.

6-Month Agency Response

Senate Bill 332 was approved by the Governor and filed with the Secretary of State on October 1, 2013. That bill amended Government Code section 100508 and requires Covered California to release, among other documents: (1) contracts upon request, except for those with participating carriers, which must be released upon request one year after execution; and (2) the portions of contracts with participating carriers that contain rates of payment three years after the contract was opened to inspection. Because SB 332 reflects Covered California's current informal policy and addresses the concerns raised in the BSA audit, a recommendation to the Board to adopt a formal contract confidentiality policy is not necessary.

  • Completion Date: October 2013
  • Response Date: January 2014

California State Auditor's Assessment of 6-Month Status: Fully Implemented


60-Day Agency Response

Currently, introduced by Senators Bill Emmerson and Mark DeSaulnier, Senate Bill 332 is enrolled before the California Legislature. If passed, that bill would require Covered California to release, among other documents,: (1) contracts upon request, except for those with participating carriers, which must be released upon request one year after execution; and (2) the portions of contracts with participating carriers that contain rates of payment three years after the contract was opened to inspection. Because SB 332 reflects Covered California's current informal policy and would address the concerns raised in the BSA audit, Covered California has not yet brought a recommendation to the Board to adopt a formal contract confidentiality policy. Covered California is closely monitoring this legislation and will bring a formal policy recommendation to the Board should the legislation fail to move forward this session.

  • Estimated Completion Date: December 18, 2013
  • Response Date: September 2013

California State Auditor's Assessment of 60-Day Status: Pending


Recommendation #2 To: Covered California

To comply with federal requirements, Covered California should develop a plan and procedures for monitoring, recertification, and decertification of qualified health plans.

Annual Follow-Up Agency Response From February 2016

See Auditor's Assessment below.

  • Completion Date: February 2016

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

We reviewed Covered California's implementation of this recommendation as part of our February 2016 report titled High Risk-Covered California: It Must Ensure Its Financial Sustainability Moving Forward, and Its Use of Sole-Source Contracts Needs Improvement, Report 2015-605. Based on our review, we assessed Covered California's implementation of this recommendation as fully implemented.


Annual Follow-Up Agency Response From October 2014

Covered California will be continuing its efforts as stated in the 1-year response submitted July 11, 2014 and provide additional supporting documents as they become available.

  • Estimated Completion Date: June 2015

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented


1-Year Agency Response

The Plan Management Division and the Qualified Health Plan team recognizes and understands that a robust portfolio of health and dental insurance issuers on the California Health Benefit Exchange is beneficial to California consumers. The California Health Benefit Exchange completed a comprehensive Solicitation process in 2013, and is utilizing the experience from that Solicitation in the design and implementation of the monitoring, certification and recertification processes going forward. As we have stated, this process will not be completed until the regulators have approved final rates in the late summer 2014 timeframe (at which point certification become official). However, we continue to adjust and perfect the plan, which remains on schedule.

As mentioned in our last update, while subject to potential modification due to unforeseen events, the Qualified Health Plan team has defined hard dates starting in January 2014 through 2015. These dates include Board approvals for accepting recertification criteria, renewal and new entrant application deadlines, issuer submission dates for rates and network updates, negotiation periods and regulatory approvals.

Covered California has included, and continues to apply, input from Qualified Health Plans and other stakeholders in the final design component of our renewal and new entrant processes. We continue to work collaboratively with our Qualified Health Plans and stakeholder groups to keep them informed on the progress of our process development.

  • Estimated Completion Date: June 30, 2015
  • Response Date: July 2014

California State Auditor's Assessment of 1-Year Status: Pending


6-Month Agency Response

The Qualified Health Plan team recognizes the importance of both building and maintaining a robust portfolio of health and dental insurance issuers on the California Health Benefit Exchange. Following our comprehensive Solicitation process completed in 2013, the team designed and is currently implementing the monitoring, certification and recertification processes required by law. While this process will not be completed until the regulators have approved final rates in the late summer 2014 timeframe (at which point certification become official), milestones in the plan have been accomplished.

Timetable Established

While subject to potential modification due to unforeseen events, the Qualified Health Plan team has defined hard dates starting in January 2014 through 2015. These dates include Board approvals for accepting recertification criteria, renewal and new entrant application deadlines, issuer submission dates for rates and network updates, negotiation periods and regulatory approvals.

Covered California has included input from Qualified Health Plans and other stakeholders in the design of our renewal and new entrant processes. Additionally, we have shared publically our timelines to ensure our Qualified Health Plans and stakeholder groups are informed about the process.

  • Estimated Completion Date: December 2015
  • Response Date: January 2014

California State Auditor's Assessment of 6-Month Status: Pending


60-Day Agency Response

The QHP team recognizes the importance of both building and maintaining a robust portfolio of health and dental insurance issuers on the California Health Benefit Exchange. Following our comprehensive Solicitation process completed in 2013, the team started building the monitoring, certification and recertification processes required by law. While this process has not been completed, certain milestones in the plan have been accomplished.

Timetable Established

While subject to potential modification due to unforeseen events, the QHP team has defined hard dates starting in January 2014 through 2015. These dates would include Board approvals for accepting recertification criteria, issuer submission dates for rates and network updates, negotiation periods and regulatory approvals.

Preliminary Process Established

The QHP team has defined a summary process that outlines the end-to-end process for recertification. The process would include initial plan performance analysis, setting recertification criteria, plan evaluation against these criteria, Board approval of recertification recommendations, and regulatory approvals.

By the end of October 2013, the QHP team anticipates that the process will be more comprehensively documented, reviewed and approved by the Board and then shared with the portfolio of plans currently on the exchange. Included in this process will be a consideration to include new plans via a scaled back initial solicitation process.

  • Estimated Completion Date: December 18, 2013
  • Response Date: September 2013

California State Auditor's Assessment of 60-Day Status: Pending


Recommendation #3 To: Covered California

To ensure the success of its outreach effort, Covered California should track the effect on enrollment figures of its planned outreach and marketing activities and of its assister program.

Annual Follow-Up Agency Response From February 2016

See Auditor's Assessment below.

  • Completion Date: February 2016

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

We reviewed Covered California's implementation of this recommendation as part of our February 2016 report titled High Risk-Covered California: It Must Ensure Its Financial Sustainability Moving Forward, and Its Use of Sole-Source Contracts Needs Improvement, Report 2015-605. Based on our review, we assessed Covered California's implementation of this recommendation as fully implemented.


Annual Follow-Up Agency Response From October 2014

Covered California will be continuing its efforts as stated in the 1-year response submitted July 11, 2014 and provide additional supporting documents as they become available.

  • Estimated Completion Date: June 2015

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented


1-Year Agency Response

To evaluate the success of our marketing efforts, weve used a measurement platform consisting of awareness/attitudinal research and marketing analytics.

We conducted a baseline survey in July 2013 and a tracking survey in January 2014, on uninsured and privately insured Californians, to assess brand awareness and consumer receptivity of our program. The survey results indicated that total Covered California awareness increased from 12% to 79%, ad-aware respondents were 50% more likely to have purchased a Covered California plan than those not aware, Covered California campaigns drove people to seek local help from certified agents and enrollment counselors, and the website worked well for 44% but not so well for 29% of respondents.

Marketing analytic tools have been developed to assess campaign performance. Covered California campaign, through broad-reach media outlets, reached more than 80% of our target audience. Our digital advertising, social media, and search engine marketing efforts generated 50% of the traffic directly to coveredca.com between September 2013 and March 2014. Our partnerships with other state agencies, health plan partners, and grantees/stakeholders resulted in 15% referral traffic. Traditional awareness advertising, collateral materials, community outreach, and public relations also led to 35% of the traffic.

The above insights are being factored into our plan for November 2014 Open Enrollment as we continue to optimize our Marketing and Communications efforts.

  • Estimated Completion Date: June 30, 2015
  • Response Date: July 2014

California State Auditor's Assessment of 1-Year Status: Partially Implemented


6-Month Agency Response

To evaluate the success of our marketing efforts, we are using a measurement platform consisting of awareness/attitudinal research and marketing analytics.

A survey was conducted, in July 2013, on uninsured and privately insured Californians to establish a baseline on consumer awareness and purchase intentions prior to open enrollment. The second wave of surveys is being conducted during January 2014, with results available in February enabling us to assess how we've moved the needle in terms of brand awareness and consumer receptivity of our program.

During November and December, we conducted two qualitative surveys, one with a sampling of our Service Center Representatives (SCR) and another with a sampling of our Certified Enrollment Counselors (CEC) to gain insights on consumer motivations and customer experience during the enrollment process. Insights and ideas from these surveys have been incorporated into our website, application and service processes as well our advertising campaign and outreach strategies to best help us reach enrollment goals.

Marketing analytic tools have been developed to track key metrics such as campaign awareness, number of website visits, number of fans/friends through social channels, number of calls to the Service Center, response rates, and number of enrollments. Complete analysis of the October-December 2013 campaign will be available in early February 2014. However, preliminary results are being used to optimize the January-March 2014 digital campaign for the millennial segment and to assure enrollment among Latinos.

  • Estimated Completion Date: March 2014
  • Response Date: January 2014

California State Auditor's Assessment of 6-Month Status: Partially Implemented

Covered California still needs to complete its analysis of the October-December 2013 data, which it indicated will be available in February 2014.


60-Day Agency Response

Covered California's marketing and outreach efforts began in September 2013 in selected cities to drive awareness, allowing us to test and learn before open enrollment begins. During the enrollment period from October 2013 to March 2014, we will bolster marketing activities statewide through various media channels such as TV, radio, print, out-of-home, digital, social media, and other marketing tactics. Our goals are to drive brand awareness, demand for our health plans and ultimately enrollments.

To evaluate the success of our marketing efforts, we are using a measurement platform consisting of two components: awareness/attitudinal research and marketing analytics. A survey was conducted on uninsured and privately insured Californians to provide us with a baseline on consumer awareness and purchase intentions prior to open enrollment. Three additional waves of the surveys will be conducted in 2013 and 2014 to gain more insights about consumer purchase behavior as our program progresses.

Marketing analytic tools are in development to track key metrics such as campaign awareness, number of website visits, number of application downloads, number of fans/friends through social channels, number of calls to the Service Center, response rates, cost per response, and number of enrollments. Weekly and monthly performance reports will be utilized to evaluate and enhance the effectiveness of the Service Center, website, and marketing campaigns throughout the enrollment period.

Implementation of this measurement platform will provide actionable insights to help optimize the efficacy of the investment and maximize enrollment, enabling affordable, quality health insurance to Californians.

  • Estimated Completion Date: December 18, 2013
  • Response Date: September 2013

California State Auditor's Assessment of 60-Day Status: Pending


Recommendation #4 To: Covered California

This recommendation has been superseded by a recommendation from a subsequent report. See 2015-605 #1 and #2.

To ensure financial sustainability, Covered California should conduct regular reviews of enrollment, costs, and revenue and make prompt adjustments to its financial sustainability plan as necessary.

1-Year Agency Response

Covered California updated this 1-year response (originally submitted on July 11, 2014) as designated by the California State Auditor's instructions.

  • Estimated Completion Date: March 2015
  • Response Date: October 2014

California State Auditor's Assessment of 1-Year Status: See 2015-605 #1 and #2 for the most current assessment

Covered California provided enrollment data but refused to provide information on costs and revenue. Therefore, we could not conclude that Covered California has fully implemented our recommendation. Given that we designated Covered California as high-risk, we will follow up on the financial sustainability issue in our upcoming update of this high risk issue.


Annual Follow-Up Agency Response From October 2014

Covered California has updated the 1-year response (originally submitted on July 11, 2014) as designated by the California State Auditor's instructions. Covered California will continue with its plans on implementing the enrollment and forecasting model as well as updating the sustainability plan as necessary. Additional supporting documents will be available during March 2015, after the end of the upcoming open enrollment period which runs from November 15, 2014 to February 15, 2015. The results of the second open enrollment will provide a better indication of how far Covered California is progressing toward implementing its sustainability plan.

  • Estimated Completion Date: March 2015

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented


6-Month Agency Response

Covered California's Economic Analysis and Sustainability Assistant Director has defined an analytical approach for developing enrollment and revenue projections, which included defining data needs and identifying subject matter experts who can lend their expertise to the revenue forecasting process. In addition to monitoring enrollment data, the Director is also part of Covered California's Analytics Work Group—an interdisciplinary group focused on evaluating health plan enrollment data from a variety of standpoints throughout the organization. The Director also works closely with Covered California budget staff on many budget issues and has developed a sustainability model that can evaluate the long run impact of enrollment, per member per month assessment rates, and expenditure plans. This model will be used in Covered California's 2014-15 budget development and approval process during which the PMPM fee rates will be established for 2015. Plan enrollment through December 2013 was consistent with the uppermost enrollment trend anticipated, which begins to mitigate to some degree, the risks associated with financial sustainability.

In addition, the Board adopted Financial Guiding Principles to steer its financial management policies and take a flexible financial planning approach which allows both adaptation of operational approaches and cost adjustments to match service demands. This approach includes monthly budget reporting and planning meetings involving all organizational units, monthly reconciliations of expenditures, and regular independent audits. Board meetings will include annual budget presentations, quarterly expenditure reports, midyear budget adjustments as needed, and audit results.

  • Estimated Completion Date: January 2015
  • Response Date: January 2014

California State Auditor's Assessment of 6-Month Status: Partially Implemented


60-Day Agency Response

Covered California established a position and in July 2013 hired an Assistant Director, Economic Analysis and Sustainability, within Financial Management devoted to developing fiscal models and research methodologies needed to ensure a sound basis for fiscal and financial sustainability. The Director will closely monitor, and develop projections of enrollment, premiums, and expenditures taking into account trends in the health insurance market, changes in Federal and/or State laws, and other regulations or policies impacting Exchange operations. This information will be used in Covered California's budget development and approval process during which changes to PMPM fee rates and program expenditures will be considered.

In addition, the Board adopted Financial Guiding Principles to steer its financial management policies and take a flexible financial planning approach which allows both adaptation of operational approaches and cost adjustments to match service demands. This approach includes monthly budget reporting and planning meetings involving all organizational units, monthly reconciliations of expenditures, and regular independent audits. Board meetings will include annual budget presentations, quarterly expenditure reports, and audit results.

  • Estimated Completion Date: December 18, 2013
  • Response Date: September 2013

California State Auditor's Assessment of 60-Day Status: Pending


All Recommendations in 2013-602

Agency responses received are posted verbatim.


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