Insurers not making the grade in California

Some of California’s top insurers, including Kaiser Permanente, are protesting the state’s plans to drop quality ratings from insurance listings when its exchange goes public on Oct. 1. Covered California executive director Peter Lee told the Los Angeles Times that the data behind existing quality ratings were too out of date. He also fears the plans sold on the exchanges will be very different from the individual policies that formed the basis for the star-based grades (this is movie-land).

That angered insurers that consistently ranked high on the state’s quality and patient satisfaction reviews. In a letter to Lee, Kaiser, Sharp Health Plan and Western Health Advantage called for prominent posting of the reviews. Kaiser is the only plan in the state to receive four stars from state insurance regulators while Sharp and Western received three stars. They’re hoping to parlay those high ratings into more sales when an estimated 5 million Californians go hunting for insurance on the exchange.

Under the Patient Protection and Affordable Care Act, all states must display quality ratings for their health plans by 2016. While the federal government is still developing its rating system, at least 10 states—California, Connecticut, Maryland, Minnesota, New York, Oregon, Rhode Island, Utah, Vermont and Washington—are developing their own state systems ahead of the federal guidance. Nine had planned to have them in place for the 2014 plans that go on sale on Oct. 1.

Given California’s leading-edge approach to regulation, it wouldn’t be surprising to see more states postpone listing their quality grades. The law also requires insurers to implement a quality improvement strategy for improving outcomes, and many may decide to wait until they have those in hand before publishing their reviews.