Quality Transformation Initiative


The Quality Transformation Initiative (QTI) is intended to set direct and substantial financial incentives for Covered California’s contracted Qualified Health Plan (QHP) issuers to improve the quality of healthcare and to reduce health disparities for Covered California Enrollees and all Californians. Specifically, the QTI focuses on improving care for a small number of clinically important conditions for which there are major opportunities for improvement and established measures in current use.

Measure Set

For Measurement Years 2023-2025, Covered California has identified four clinical areas of focus for improvement and related core measures that will be subject to Quality Transformation Fund payments.

QHP issuers will be assessed per product (HMO, PPO, etc.) on the following QTI core measures using reportable measure scores from the Centers for Medicare & Medicaid Services (CMS) Quality Rating System (QRS):

  1. Controlling High Blood Pressure (NQF #0018)
  2. Comprehensive Diabetes Care: Hemoglobin A1c (HbA1c) Control (<8.0%) (NQF #0575)
  3. Colorectal Cancer Screening (NQF #0034)
  4. Childhood Immunization Status (Combo 10) (NQF #0038)

In addition to the QTI core measure set, QHP issuers will report on the following National Committee for Quality Assurance (NCQA) Healthcare Effectiveness Data and Information Set (HEDIS) measures for each of its products: Depression Screening and Follow-Up for Adolescents and Adults (DSF) and Pharmacotherapy for Opioid Use Disorder (POD). Covered California intends to include these measures in the QTI core measure set after benchmarks have been established.

Benchmarks and Quality Transformation Fund Payments

QHP issuers that fail to meet specified measure benchmarks will be required to make payments to the Quality Transformation Fund. For Measurement Year 2023, 0.8% of each QHP issuer’s total gross premium per product is at risk for performance on the QTI core measures. The total amount of Quality Transformation Fund payment and other performance standards at risk would increase to 2% of total gross premium per product in Measurement Year 2024, increasing by 1% per year up to 3% in 2025.

QHP issuer performance per product on the QTI core measures will be compared against CMS QRS national percentile benchmarks for each measure. These benchmarks will remain fixed during the 2023-2025 contract period.

QHP issuers must contribute the full per measure amount to the Quality Transformation Fund if the measure score is below the 25th national percentile benchmark. For each measure score at or above the 25th and up to the 66th national percentile benchmark, the QHP issuer must contribute a per measure payment amount at a declining constant rate. If the measure is at or above the 66th percentile benchmark, the QHP issuer will not be required to make any payments. The full per measure payment amount is divided equally by each reportable measure in the QTI core measure set.

Covered California will track payments made to the Quality Transformation Fund by each QHP issuer and will report on expenditures from the fund as part of its annual budget.

Assessment Timeline

Covered California will assess QHP issuer performance annually in accordance with CMS’ release of QRS measure scores and percentiles. The following is an anticipated timeline for assessing Measurement Year 2023 performance:

  • September 2024: QRS final scores confirmed by CMS
  • October 2024: QRS final scores and percentiles released by CMS
  • November – December 2024: Covered California will draft QTI performance reports and release reports to QHP issuers
  • January 2025: QHP issuers have 60 days upon receipt of the QTI performance reports to remit payment to the Quality Transformation Fund or dispute the report; payment is due 30 days after resolution of dispute
  • Spring 2025: Covered California will publish QHP issuer performance on the QTI measure set and corresponding Quality Transformation Fund payments

Covered California will follow a similar timeline to assess Measurement Year 2024 and Measurement Year 2025 performance.