Summary of Colorado Option Health Benefit Plan Amendment
On April 27, 2021, the Colorado House Health and Insurance Committee adopted an amendment to the Colorado Option Health Benefit Plan that eliminates the establishment of a public option plan. While the initial bill would have created a state-administered public option if insurance carriers failed to meet premium reduction targets, the amendment instead requires carriers to offer the standardized plan with mandatory premium reductions.
Under the amendment, carriers must reduce premiums by six percent in each of the first three plan years in which the standardized plan is offered, resulting in an 18 percent premium reduction by 2025. If at any point carriers are unable to meet premium reduction requirements or network adequacy requirements, the Commissioner of Insurance is authorized to establish the necessary reimbursement rate for hospitals to achieve the desired savings through a public hearing process. The base rate will be set at no less than 155 percent of Medicare rates and increases in the base rate will be provided to certain critical access hospitals and efficient hospitals.
The bill now heads to the House Appropriations Committee for consideration.
Standardized Health Benefit Plan
The bill would require the Commissioner of Insurance to establish a standardized health plan, 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, 2023. The standardized plan is to be developed through a stakeholder engagement process and include, at a minimum, all the essential health benefits required by the Affordable Care Act.
The stakeholder engagement process must also address how the standardized plan will improve racial health equity and decrease racial health disparities. The bill dictates that the standardized plan 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.
Carrier Participation and Requirements
The bill requires individual health benefit plans and small group health benefit plans to offer the standardized plan in each county where the carrier currently operates in those markets, beginning January 1, 2023. Insurance carriers must meet a six percent premium reduction in each of the first three years of offering the standardized plan, resulting in an 18 percent premium reduction in plan year 2025 compared to plan year 2021.
Additionally, the standardized plan must have a network that is no narrower than the most restrictive network that the carrier is offering for non-standardized plans in the individual market for the metal tier for that rating area and is culturally responsive to the enrollees it serves. Carriers must also include a majority of essential community providers and a description of efforts to construct a diverse, culturally responsive network.
Failure to Meet Premium Requirements
If carriers believe they will not be able to meet network adequacy standards or the premium rate reductions due to a reimbursement dispute, the carrier or health care provider may enter into nonbinding arbitration prior to rate filing.
Public Hearing to Establish Reimbursement Rates
If carriers notify the Commissioner that they are unable to meet premium reductions, or if the Commissioner determines that the carrier has not met the premium or network adequacy requirements, the Division will hold a public hearing prior to approval of the carrier’s final rates. All involved parties, including carriers, hospitals, health care providers, consumer advocacy organizations, and individuals will present evidence regarding network adequacy and premium rate requirements.
Following the hearing and based on the evidence presented, the Commissioner may establish carrier reimbursement rates under the standardized plan for hospital services in order to meet the premium rate requirements or network adequacy standards. The base rate will be set at no less than 155 percent of Medicare rates and the following types of hospital receive an increase from the base:
20 percent increase for a hospital that is an essential access hospital or that is independent and not part of a health system;
40 percent increase for a hospital that is an essential access hospital and is not part of a health system;
30 percent increase for a hospital with a combined percentage of patients who receive Medicaid that exceeds the statewide average; and
40 percent increase for a hospital that is efficient in managing the underlying costs of care as determined by the hospital’s total margins, operating costs, and net patient revenue.
After the determination of reimbursement rates, the Commissioner may require a health care provider to participate in the standardized plan and accept the reimbursement rate. The Commissioner will first issue a warning to such providers that do not participate and then a fine not to exceed $5,000 if non-compliance persists.
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 standardized plan, referred to as pass-through funding.
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.
Prohibition on Cost-Shifting
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 standardized plan and the health benefit plan for which rate approval is being sought.
Reports
The Commissioner is directed to contract with a third party to prepare three reports that examine the implementation of the standardized plan. The first report is due July 1, 2023; the second by July 1, 2024; and the final report is due July 1, 205. The reports must examine how implementation affects staffing, wages, benefits, training, and work conditions of hospital workers.
With Support from Arnold Ventures