ISPP 2015

Career Opportunities in Pharmacy
Department of Managed Health Care – Rate Review

Here at the California Department of
Managed Health Care we understand that health coverage could
be a very significant expense and many Californians have questions.
Questions like, – how do health plans decide how much
premium I should pay each month, where is this money going and how much
is spent on medical costs? Let’s start with the first question
about the rules health plans must follow when deciding how much premium you pay
each month. The first factor is the level of
benefits you choose such as bronze, silver, gold, or platinum. As the medal category increases in value
so does the percent of medical expenses that a health plan covers. This means the platinum plan covers the
highest percentage of health care expenses at ninety percent. By law the only
factors that can influence premium are your age, whether you purchase family or
individual coverage and where you live in California. Income may also affect how much help you
may receive purchasing coverage. Many individuals and families are
eligible for lower costs or premium assistance if coverage is purchased through Covered
California. Now, let’s talk about the rules health plans
must follow regarding how your premium dollar is spent. Health plans must use premium dollars to
pay for health care services or medical claims, fund efforts to improve the quality of
care and cover administrative costs and profits if any. Medical costs are where the biggest
part of your premium dollar must be spent. Health plans must spend at least 80 to
85 percent of every dollar on medical costs such as hospitals, doctors, prescription drugs and other
services for its members, as well as costs to improve the quality
of care. Under the law plans may use the remaining fifteen to
twenty percent of your premium dollar to pay administrative costs to keep health
plans running and to generate profit, unless the health
plan is not for profit. Administrative costs may include the
cost of employees, such as salaries and benefits as well as
office and marketing expenses, taxes and other fees. What does the
Department of Managed Health Care do to keep health coverage more affordable?
The Department of Managed Health Care reviews proposed health plan rates and asks health plans questions about
their rate increase to make sure health plans are providing detailed information
to the public to justify any rate increases. While the
Department of Managed Health Care does not have the authority to deny rate
increases it’s rate review efforts hold health
plans accountable, insure you get value for your premium
dollar and saves Californians money. The Department of Managed Health Care’s
premium rate review program has saved Californians millions of dollars by negotiating lower premium increases
or no premium increases when increased rates aren’t justified. To learn more about
premium rate review, please visit For other questions,
contact the California Department of Managed Health Care

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