Summary of Colorado Option Health Benefit Plan
On March 18, 2021, the Colorado General Assembly introduced the Colorado Option Health Benefit Plan, which would require health insurance carriers in the Exchange market to meet aggressive cost reduction targets. If carriers fail to meet those targets, the legislation authorizes creation of a state-run health insurance option in which providers are required to participate at administered prices. This approach reflects a significant shift from the approach outlined in the previous iteration of the bill, the Colorado Affordable Health Care Option Act, which relied on commercial insurance carriers.
More specifically, the bill initially requires insurance carriers to achieve a 20 percent premium reduction rate by plan year 2024 and have at least two carriers offer the Colorado Option in every zip code. However, if these performance thresholds are not met, the state will establish the Colorado Option Authority to administer the public option state-wide. This phase of the bill permits the state to mandate provider participation at government set rates in order to achieve the desired health care cost savings. To support the financing of such a program, the bill also directs the state to pursue a federal section 1332 waiver for pass through funding.
While insurance carriers have two years to achieve the necessary premiums reductions, it is more likely that Colorado will be administering its own public option in 2025. Under a state-affiliated public option plan, Colorado can more directly improve consumer affordability by imposing provider rates that reduce premiums and out-of-pocket spending, as well as improve access to care in rural areas.
Standardized Health Benefit Plan
10-16-1304 – Authority –The bill would require the Commissioner of Insurance to establish a standardized health plan, known as the Colorado Option, to be offered by carriers in the individual and small group markets and include coverage at the gold, silver, and bronze levels, by January 1, 2022. The Colorado Option is to be developed through a stakeholder engagement process and include, at a minimum, all the essential health benefits.
The stakeholder engagement process must also address how the Colorado Option will improve racial health equity and decrease racial health disparities. The bill dictates that the Colorado Option must provide first-dollar, pre-deductible coverage for certain high-value services that are identified collaboratively with consumer stakeholders that reduce disparities in health outcomes.
The Commissioner is to offer the Colorado Option in manner that allows consumers to easily compare the standardized plans offer by each carrier. The Commissioner is also permitted to update the Colorado Option annually through the stakeholder process outlined below.
10-16-1305 – Carrier requirements – The bill details that beginning January 1, 2023, all carriers who offer an individual health benefit plan or small group health benefit plan in Colorado are encouraged, not required, to offer a standardized plan in each of the zip codes where the carriers offer individual and small group plans.
By January 1, 2024, at least two carriers must offer the Colorado Option in the individual and small group markets in each zip code in the state. The bill states that a health care coverage cooperative could be considered one of the two carriers for that zip code.
For plan year 2024, carriers who offer the Colorado Option are directed to offer a premium rate that is at least 10 percent less than the premium offered for the 2021 calendar year for the individual market. For plan year 2025, carriers should aim to offer a premium rate that is at least 20 percent less than the premiums offered in 2021. The Commissioner is directed to calculate the premium rate reduction based on the rates charged in the same county in which the carrier offered the individual plans in 2021, prior to the application of the state reinsurance program.
For plan years 2025 and beyond, carriers offering the Colorado Option are encouraged to limit annual premium rate increase by a rate that is no more than the maximum of the consumer price index for all urban consumers plus one percent.
Colorado Option Authority
The bill establishes the Colorado Option Authority, a nonprofit, unincorporated public entity. The purpose of the Authority is to operate as a carrier of the standardized plan for individuals and small employers if carriers of the state fail to meet the premium reduction goals of 10 and 20 percent by 2023 and 2023, respectively, or in the event that there are not two carriers offering the standardized plan in every zip code by 2025. The Authority would be required to implement provider reimbursement fee schedule established by the act for services covered by the standardized option.
The bill also establishes the Colorado Option Authority Board, which is to consist of nine members and is directed to determine the development, governance, and operation of the Authority. Members would be appointed by the Governor.
Provider Fee Schedule
The bill directs the Commissioner to establish a provider reimbursement fee schedule for health care services that are covered by the Colorado Option. The fee schedule would apply to hospitals, health care providers, pharmacies, and all other providers provides services to Colorado Option enrollees.
The bill dictates that the reimbursement rates should be set to achieve at least a 20 percent premium reduction in 2025 plan year and ensure that the premiums do not increase past the rate of inflation for plan years 2026 and beyond.
Under the act, providers are required to accept all enrollees of the Colorado Option. Additionally, providers are not permitted to balance bill enrollees and are required to accept the feed specified in the fee schedule established by the Commissioner.
In the event that the Colorado Option Authority is established, the bill also requires the establishment of an Advisory Committee to make recommendations to the Authority Board concerning the development, implementation, and operation of the Colorado Option. The Committee is directed to give special consideration to Coloradans with low incomes and to communities of color.
Waiver Authority
The bill directs the Commissioner to submit an application to waive certain requirements of Section 1332 of the Affordable Care Act (ACA) to secure the applicable savings as a result of implementing the Colorado Option.
Upon Centers for Medicare and Medicaid Services (CMS) waiver approval, the bill specifies that the Commissioner may use the savings for: 1) the establishment of the Colorado Option Authority; and 2) to increase the value, affordability, quality, and equity of health care coverage for all Coloradans. The bill notes that the implementation of the Authority is contingent upon Section 1332 waiver approval.
Rate Filing Regulation
The bill details that the Commissioner is permitted to disapprove a requested rate increase if the rate filing is incomplete or the rate filing reflects a cost shift between the Colorado Option and the health benefit plan for which rate approval is being sought.
Power and Duties of the Board
The board is granted the authority to consider the affordability and cost in purchasing health care, as well as investigate the requirements to ensure that the best interests of Coloradans are protected. Additionally, the Bord is to conduct a survey of those individuals who enrolled in the public option to assess the purchasing experience and whether the Colorado Option addresses health equity and health disparity issues.
Grounds for Disciplinary Action
The bill also adds that following providers are subject to disciplinary action if they: 1) do not accept consumers who are enrolled in any health plan offered by the authority; or 2) balance bill consumers enrolled in the Colorado option or refuse to accept the fee schedule established by the Commissioner:
Acupuncturists,
Athletic trainers,
Audiologists,
Chiropractors,
Midwives,
Hearing aid providers,
Massage therapists,
Medical practice providers,
Mental health providers,
Nurses and nurse aides,
Nursing home administrators,
Occupational therapist and occupational therapy assistants,
Optometrists,
Physical therapists and physical therapist assistants, and
Podiatrists.
The bill also requires that all health facilities that provide services covered under the Colorado Option are to accept consumers who are enrolled in the option, shall not balance bill such consumers, and must accept the fee specified in the fee schedule. The Department may suspend, revoke, or impose conditions on a facility’s license for noncompliance of these requirements.
Safety Clause
The general assembly deems that this act is necessary for the immediate preservation of public peace, health, or safety.