Summary of Senate-Approved Nevada SB 420
On May 24, 2021, the Nevada Senate approved Senate Bill 420, which would establish a public option to be offered on the individual and small group markets. The public option would be a qualified health plan (QHP) that leverages components of existing state insurance programs – particularly, the insurance carriers that provide Medicaid managed care plans and providers that participate in the Medicaid and State Employees’ Benefit plan. The bill aims to provide consumers with an affordable coverage option that applies various cost-control measures directly targeting premiums and provider reimbursement rates. Nevada would be required to pursue a federal waiver to obtain pass-through funding to support implementation of the public option.
The bill would also amend the state’s Medicaid program to expand coverage, including expanded coverage for pregnant people, coverage of services provided from community health workers, and coverage of doula services and other maternal services. Additionally, the bill would require Nevada to apply for a federal waiver that permits certain labor, agricultural and horticultural organizations to offer health insurance to their “tradespersons” that may not meet all federal and state requirements. This new product would be offered as an alternative to the continuation of employer-sponsored coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA).
The bill now heads to the Assembly for consideration.
Public Option Plan
The bill would require the Director of the Department of Health and Human Services to establish a public option, to be offered by carriers in the individual market on and off the Exchange, by January 1, 2025. The Director would be permitted, but not required, to make the public option available in the small group market.
The public option would be a QHP and, therefore, compliant with the Affordable Care Act (ACA) (i.e., covers essential health benefits, meets other federal and state requirements). At a minimum, the public option would be offered at silver and gold tiers of coverage. Going beyond the ACA’s generosity requirements (related to actuarial value), the bill includes additional guardrails intended to lower premiums:
Reference Premium – The premiums for the public option would be set at least five percent lower than the reference premium for that zip code, which is defined as the lower of:
The premium for the second-lowest cost silver level plan available in the Exchange for plan year 2024 in the zip code, adjusted by the percentage change in the Medicare Economic Index (i.e., inflation adjusted clinician costs) between January 1, 2024 and January 1 of the applicable plan year; or
The premium for the second-lowest silver plan available through the Exchange in the zip code during the year immediately preceding the applicable plan year.
Inflation Cap – Premiums would also be prohibited from increasing greater than the increase in the Medicare Economic Index.
If premiums are not reduced by 15 percent over the first five years of the program, the Director would have the authority to amend the above requirements to achieve greater savings. Such changes may include increasing the extent to which the public option’s premium is lowered relative to the reference premium.
Plan Administration and Carrier Participation
The bill provides two options for administering the public option (i.e., claims processing). The Director could administer the public option plan or contract with insurance carriers to administer the plan. If the latter option is chosen, then the Director, along with the Commissioner of Insurance and the Executive Director of the Exchange, would contract with a carrier (or carriers) selected through a competitive bidding process. All Medicaid managed care plans would be required to submit a bid, as a condition of participation in the Medicaid program.
When selecting a carrier to administer the public option, the Director would be required to prioritize carriers whose applications:
Demonstrate alignment of networks of providers between the public option and the Medicaid managed care program;
Provide for the inclusion of critical access hospitals, rural health clinics, certified community behavioral health clinics, and federally-qualified health centers in the network of provider for the public option and Medicaid managed care program;
Include proposals for strengthening the workforce in the state, particularly in rural areas and in the fields of primary care, mental health care, and treatments for substance use disorders;
Use payment models for providers included in the networks of provider for the public option that increase value for person enrolled; and
Include proposals to contract with providers in a manner that decreases disparities among different population in the state with regard to access and health outcomes.
Provider Participation
Any provider that participates in the Medicaid program or the Public Employees’ Benefits Program would be required to participate in at least one network established for the public option. Notably, the bill would provide the Director and the Executive Officer of the Public Employees’ Benefits Program with broad authority to waive the provider participation requirement – specifically to ensure beneficiaries of Medicaid or the Public Employees’ Benefits Program “have sufficient access to covered services.”
Provider Reimbursement
Under the public option, provider reimbursement rates would have to “be, in the aggregate, comparable to or better than reimbursement rates available under Medicare.” The bill stipulates that the aggregate reimbursement “includes any add-on payments or other subsidies that a provider receives under Medicare” and “does not include payments under Medicare for a patient encounter or a cost-based payment rate under Medicare” (i.e., fee-for service payments). This language is likely intended to encourage providers to deliver value-based care. The bill applies a similar value-focused standard to reimbursement rates for federally qualified health centers (FQHC), rural health clinics, and certified community behavioral health clinics under the public option. The specific guardrails on provider reimbursement would likely be determined by the Director during the implementation phase.
Waiver Authority
The Director, along with the Commissioner and the Executive Director of the Exchange, would be required to apply for a federal waiver by January 1, 2024 to obtain pass-through funding to implement the public option. The bill provides a non-exhaustive list of waivers that may be pursued, including:
Single Risk Pool: Combine public option enrollees and Medicaid beneficiaries into a single risk pool in order to spread risk across plan types; or
Subsidies: “Obtain federal financial participation to subsidize the cost of health insurance for residents of this State with low incomes,” which could mean modifying income eligibility for advance premium tax credits at the federal level (e.g., making subsidies available for individuals with an income above 400 percent of federal poverty level).
Funding
The bill would establish the Public Option Trust Fund to implement the public option program (e.g., reimburse providers). The Trust Fund would hold federal pass-through funding received from a waiver and other funds received through the process of administering the public option (i.e.., premiums). The Director would have the authority to a portion of the Public Option Trust Fund “to increase the affordability of the public option,” provided the Nevada State Controller determines sufficient funding is available to carry out the required functions of the public option program. The bill does not specify such affordability measures, but they may include premium and cost-sharing subsidies.