Summary of House Committee on Health & Insurance Markup of the Colorado Affordable Health Care Option Act
On Wednesday, March 11, 2020, the House Committee on Health & Insurance favorably referred the Colorado Affordable Health Care Option Act (House Bill 20-1349), as amended, to the House Committee on Appropriations by a vote of 7-4. A summary of the original bill is available here. Below is a summary of the substantive changes:
Colorado Option Plan Required Components
Requires the Advisory Board’s approval for the Colorado Division of Insurance (DOI) to require carriers to offer the Colorado Option in specific counties in order to ensure there are at least two carriers offering the Colorado Option in each county.
States that a licensed health care coverage cooperative that is operating in a county is considered one of the two required carriers for that county. Therefore, DOI is required to exempt a carrier from offering the Colorado Option in that specific county. A health care coverage cooperative is defined as “an entity that provides to its members health coverage and health care purchasing services, including but not limited to detailed information on comparative prices, usage, outcomes, quality, and member satisfaction with provider networks.”
Allows DOI to expand the Colorado Option to the small group market, contingent on the Advisory Board’s approval, beginning July 1, 2024 instead of January 1, 2023.
Requires DOI to report the findings of its evaluation of the effects of the Colorado Option on the individual market, among other aspects, at a public meeting of the Advisory Board, in addition to the House and Senate committees of jurisdiction.
Hospital Participation and Reimbursement
Eliminates DOI’s authority to deny carrier rate filings for a plan in any market that “reflect a cost shift” between the Colorado Option and that plan. This change takes away a critical tool from DOI to counter the potential that hospitals will increase their prices in other markets to recoup any losses they may experience due to the Colorado Option.
Clarifies the definition of “Medicare reimbursement rates” by adding the following: “For a hospital that is reimbursed through the Medicare prospective payment system, the Medicare reimbursement rate is based on the prospective payment system rates. For a critical access hospital, the Medicare reimbursement rate is based on allowable costs as reported in Medicare cost reports and the historical cost-to-charge ratios for the specific hospital.”
Requires DOI when implementing the hospital reimbursement rate formula to consult with “a statewide multi-specialty association representing physicians” instead of “hospital-based health care providers in Colorado.”
Allows DOI, in consultation with the Colorado Department of Health Care Policy and Financing (HCPF) and the Advisory Board, to exempt a hospital from or change the hospital reimbursement rate formula if the hospital: (1) demonstrates that the assigned hospital reimbursement rate will require the hospital to reduce its current level of services; or (2) is negotiating a contract in good faith with a licensed health care coverage cooperative to set reimbursement rates.
Allows, rather than requires, DOI to fine a hospital that refuses to participate in the Colorado Option.