State Public Option Implementation Update

State Public Option Implementation Update

Three states – Colorado, Nevada, and Washington – have enacted state public option programs. While public option plans in Washington and Colorado have been available since 2021 and 2023, respectively, Nevada is preparing to offer its public option in 2026. In this memo, we provide a status update on implementation activity in each state.

Colorado

In conjunction with implementation of the Colorado Option, Colorado seeks to understand the impact of premium rate reduction targets for carriers on the hospital workforce, which is a key hospital cost driver. Carriers are required to reduce premiums offered in plan year (PY) 2021 by 5 percent in PY 2023, 10 percent in PY 2024, and 15 percent in PY 2025. Earlier this year, Colorado released the 2023 Hospital Workforce Trends Report – the first of three annual analyses on the state’s hospital workforce as required by House Bill 21-1232. This report establishes the baseline on wages, benefits, staffing, training, and working conditions leading up to implementation of the Colorado Option.

Labor costs for workers employed directly by hospitals and contract workers are a major component of hospital’s operating expenses. In 2021, salaries, wages, and benefits of hospital workers represented 44.1 percent of Colorado hospitals costs and 42.5 percent of revenue derived from patient services. Increasing reliance on staffing agencies to address workforce shortages has put further pressure on total hospital costs. Between 2020 and 2021, contracted labor costs increased by 115 percent. During that same period, salaries, wages, and benefits for workers directly employed by employees rose by 8.4 percent.

Future reports will delve into the impact of the Colorado Option on the state’s hospital workforce, including the impact of the Insurance Commissioner’s increased authority starting in PY 2024 to require hospitals to accept state-established rates in order for carriers to meet premium reduction targets and enhanced network adequacy standards. The next report intends to gather input directly from employed and contracted workers to increase understanding of the interactions between workforce experiences, hospital costs, and the Colorado Option.

Additionally, the Colorado Division of Insurance received $245 million in pass-through funding for Colorado’s Reinsurance Program and the Colorado Option, authorized through a Section 1332 waiver. Federal funding will be used to lower premiums and out-of-pocket costs for Connect for Health Colorado and support the OmniSalud program, which provides financial assistance for health insurance to Coloradans without documentation (including DACA recipients). With the federal funding, the OmniSalud program will provide $0 premium health plans to 11,000 qualified individuals in 2024, a 10 percent increase from 2023.

Nevada

The Nevada Public Option will be available January 1, 2026 in the state’s individual market, Nevada Health Link. In preparation for the launch, the Nevada Department of Health and Human Services (DHHS) is seeking public comments on its Section 1332 waiver application, which must be submitted to the Centers for Medicare and Medicaid Services by January 1, 2024. The federal waiver would allow Nevada to implement the premium reduction targets and general federal pass-through funds to pay for the Nevada Public Option’s operational costs. Remaining funds could be used to improve consumer affordability.

In an effort to address concerns that the public option will destabilize Nevada’s individual market, Republican Governor Joe Lombardo announced in October 2023 his plan to “transform” the public option into a Market Stabilization Program. Governor Lombardo’s “new approach” does not structurally change the public option, as it is established by Nevada Senate Bill 420, and instead specifies how remaining federal pass-through funds from the Section 1332 waiver will be used to establish a three-part Market Stabilization Program:

• A new state reinsurance program for health insurance issuers operating in Nevada Health Link. The new program seeks to limit financial losses for health insurers, mitigate the risk of cost shifting by insurers due to premium reduction targets, and lower health care costs.

• A new annual quality incentive program for health insurance issuers offering the Nevada Public Option. Like the quality bonus payment program used in the State’s Medicaid managed care program, the new program would reward issuers that meet or achieve certain quality targets or other program goals. Governor Lombardo is particularly interested in new incentives to increase the use of value-based payment models.

• State loan repayment and full-ride scholarships for health care providers willing to work in Nevada for at least four years after training. Financial assistance could cover tuition and some portion of housing costs. Individuals who do not complete four years of in-state service would be required to pay back financial assistance.

Participating health carriers selected through a competitive bidding process will be required to meet an annual premium reduction target, starting with a 4 percent reduction in year 1 relative to the average second lowest-cost silver plan (i.e., benchmark against which premium tax credits are calculated) by county available on Nevada Health Link in plan year 2024 until it reaches at least 16 percent in year 4. In subsequent years, the premium cannot increase by a percentage greater than the increase in medical inflation plus any adjustments necessary to reflect local changes to utilization and morbidity. The requirements for the public option premiums expire on December 31, 2029.

Actuarial analysis conducted by Milliman, Inc. estimates potential for federal savings of $341 million to $464 million in the first five years and nearly $1 billion in the first 10 years. Because the estimated annual state operations budget for the public option is $3.75 million, a significant portion of federal funds could be used to implement the Market Stabilization Program. How the funds will be allocated across its three components is yet to be determined.

Regarding next steps, Nevada DHHS will update its Section 1332 waiver application with Governor Lombardo’s Market Stabilization Program. The current draft released in December 2022 proposes two discretionary uses of remaining pass-through funds: a quality incentive program, which will remain, and state-based premium subsidies, which will be replaced with the reinsurance program and financial assistance for health care providers. Provided the application is submitted by the end of the year, a final decision could be issued in summer or fall 2024.

Washington

Washington’s public option plan, Cascade Select, has been available on the state’s individual market, Washington Health Benefit Exchange, since plan year 2021. During the first three years, the Exchange made minimal changes to the standard benefit design of Cascade Select plans. In plan year 2024, the Exchange incorporated new value-based insurance design (VBID) features – two $1 primary care and mental health visits to bronze and silver plans.

Continuing in the VBID direction, the Exchange is considering ways to reduce spending in plan year 2025 on low-clinical value care and to reallocate spending to high-clinical value services without increasing premiums or deductibles. Additionally, the Exchange seeks to promote equity when considering what services to incentivize or disincentivize.

Specifically, the Exchange is considering two options at each metal level outlined in the draft 2025 standard plan designs on pp. 11-16:

• Option A: Keeps plan design at each metal level as similar as possible to 2024 plans, with adjustments only as necessary to keep the plan within the actuarial value (AV) range for the metal level. Such adjustments entail increases to the deductible or maximum out-of-pocket to offset increases in actuarial value (AV). 

• Option B: At Silver and Gold metal level, incorporates high-value generic tier ($10 silver, $5 gold). It is not possible to add high-value generics tier to Bronze and stay within the AV range. For both options A and B, it is necessary to subject preferred brand drugs to a deductible in the silver level.

The Exchange requests comments on stakeholder preference for each metal level, whether one set of options better accomplishes Exchange goals of balancing higher cost shares and promoting equity, potential premium impacts of the proposed options, feasibility of administering plan designs, and other feedback. Public comments are due November 27.

Washington State: Draft 2024 Cascade Care Savings Policy

Washington State: Draft 2024 Cascade Care Savings Policy

The Washington Health Benefit Exchange released the draft 2024 Cascade Care Savings policy for public comments, due April 17, 2023. Cascade Care Savings is a state-funded premium assistance program for individuals with income up to 250 percent of the federal poverty level enrolling in coverage on the Exchange.

The draft 2024 policy mostly mirrors the 2023 policy, with the exception of some key policy changes. In PY 2024, the Exchange plans to carry out new practices intended to streamline processes for making and updating eligibility determination. Washington State received 1332 waiver approval to extend state premium assistance to eligible enrollees, regardless of their immigration status, in PY 2024.

Cascade Care Savings is funded at $55 million per year. The state premium assistance amount will be determined in actuarial analysis. In PY 2023, the fixed-dollar maximum per-enrollee Cascade Care Savings amount for plan year 2023 was $155 per month per member (PMPM).

Eligibility and Enrollment

• Eligibility Criteria. As required by statute, eligible enrollees are Washington State residents with income up to 250 percent of the federal poverty level and who are eligible for Marketplace coverage (i.e., U.S. citizen or lawfully present, not incarcerated, ineligible for Medicare). Eligible enrollees are not eligible for existing state and federal coverage programs, such as Medicaid, and are not enrolled in Medicare. Lastly, individuals must apply for and access all available federal tax credits (i.e., Advanced Premium Tax Credits).

• Eligibility Determinations. The Exchange generally determines eligibility for the State Premium Assistance Program on a prospective basis for the next month’s coverage. In PY 2024, the Exchange intends to extend state premium assistance to individuals enrolled in retroactive coverage (e.g., in the case of special enrollment due to a birth or loss of Medicaid coverage) and individuals enrolled in partial month coverage (e.g., death of enrollees), which would provide a prorated premium adjustment. Additionally, beginning in PY 2024, the Exchange intends to perform “periodic data matching” throughout the year to determine if an enrollee may be enrolled in Medicare or is deceased, and therefore ineligible for state premium assistance. Enrollees would have 30 days of the data match to dispute the eligibility determination before program eligibility is terminated at the end of that month of coverage.

• Notice and Appeals. Individuals may use the existing appeals process to appeal eligibility decisions made by the Exchange on ineligibility and state premium assistance amount.

• Special Enrollment Period. Eligible individuals with an income up to 250 percent who are not enrolled in a Cascade Care Silver or Gold plan are eligible for a monthly Special Enrollment Period in order to enroll in these types of plans. Coverage will be effective the first day of the month after plan selection.

Premium Assistance Amount

• Funding. The Washington State Legislature funded the program at $55 million, including $5 million that is specifically allocated for individuals who do not receive federal subsidies (e.g., immigrants without proper documentation). Washington State received 1332 waiver approval to allow Washington residents, regardless of immigration status, to receive state premium assistance beginning PY 2024.

• Premium Assistance Amount. The premium assistance amount will be calculated in an actuarial analysis based on 2024 premium rate filing, enrollment data, and other information. In PY 2023, the fixed-dollar maximum per-enrollee Cascade Care Savings amount for plan year 2023 was $155 per month per member (PMPM). The final PY 2023 Cascade Care Savings Amount Methodology performed by Wakely is available here.

• Contingency for Low Funds. If the Exchange determines that program spending is at risk of exceeding available funds, then the Exchange may not distribute assistance to newly eligible households for the remainder of the year or until funds are replenished. The Exchange tries to prevent this scenario by reserving up to 10 percent of appropriated funds to account for enrollment uncertainty.

Administration

• Premium Assistance Payments. The Exchange transmits payments to issuers who accept payments for enrollee premiums. Issuers must also comply with other requirements regarding data transmission, invoicing, and other matters. Notably, issuers are required to provide a three-month consecutive grace period to enrollees who fail to timely pay premiums and receive state premium assistance. Federal grace period rules apply to enrollees receiving APTC.

• Premium Assistance Audit. The Exchange is required to annually contract with an independent Certified Public Account firm to audit the financial statements of the Program, which must be shared to the Washington State Legislature and other governing bodies.

Washington Announces 2023 Apparently Success Bidders for Cascade Care Public Option

Washington Announces 2023 Apparently Success Bidders for Cascade Care Public Option

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Upshot

•  Washington selected three “apparently successful bidders” to offer the Cascade Select public option plan for plan year 2023. The three carriers are Community Health Plan of Washington, Coordinated Care Corporation, and LifeWise Health Plan of Washington. Regarding next steps, the Office of the Insurance Commissioner (OIC) will review and approve the health plan filings, the Washington Health Care Authority (HCA) will execute contract negotiations and final review, and the Washington Health Benefit Exchange Board of Directors will certify the plan offerings by September.

• The three ASBs would offer Cascade Select public option plans across 34 of the state’s 39 counties. Ninety-eight percent of Exchange customers would have access to at one least public option plan offering. The new policy, effective for plan year 2023, requiring large hospital systems to contract with Cascade Select public option plans if a public option plan was not available in the county in the previous year, is a driving factor for the increased reach of Cascade Select.  The five counties where Cascade Select will not be available are exempted from the new requirement, because carriers offered Cascade Select in these counties in 2022.

• Overall, in the third year of offering public option plans, the Cascade Select public option silver plan is the lowest available silver option for each of the insurance carriers.   Beginning 2023, a subsidy program will be available to individuals with incomes up to 250 percent of the federal poverty level and enrolled in silver or gold plan.

Analysis

 Public Option Apparently Successful Bidders

 On July 1, 2022, the Washington Health Care Authority (HCA) selected three “apparently successful bidders” (ASB) to offer the Cascade Select public option plan for plan year 2023. The ASBs are Community Health Plan of Washington, Coordinated Care Corporation, and LifeWise Health Plan of Washington.

Geographic Availability

The HCA details that through this competitive procurement process, the Cascade Select public option plan will now be available in 34 counties, which is an increase from the 25 counties in 2022, pending final approval. Additionally, 98 percent of Exchange customers would have access to a Cascade Select plan and the public option rates will be the lowest-premium silver plan in 25 counties.  There are no Cascade Select public option plans available in Clallam, Columbia, Garfield, Grays Harbor, and Lincoln counties for the 2023 plan year, but the public option has been offered in these counties in previous plan years. This expansion of public option availability is attributable to the 2021 legislation that requires hospitals system to contract with public option plans in counties that did not have a public option plan available in the previous plan year, beginning in 2023.

Premiums

In the third year of offering public option plans in Washington, the standardized public option plans (SP) are the least expensive silver plan option compared to standardized non-public option silver plans (SN) and non-standardized silver plans (NS).  The 2021 legislation also established a state-funded premium assistance program, beginning in 2023, that would provide premium subsidies to individuals with incomes up to 250 percent of the federal poverty level and are enrolled in a silver or gold standard plan, of which public option plans are. The table below details the average monthly silver premiums provided in the proposed rate filings for 2023.

Next Steps

 The Office of the Insurance Commissioner (OIC) will review and approve all health plan filings. Following the approval of the plans, the HCA will conduct contract negotiations with each plan issuer and conduct a final review. Finally, the Health Benefit Exchange Board will certify plan offerings. Final certification typically occurs sometime in September.

With Support From Arnold Ventures

Summary of Washington’s Draft Premium Assistance Policy

Summary of Washington’s Draft Premium Assistance Policy

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On October 13, 2021, the Washington Health Benefit Exchange released the preliminary draft policy for the new State Premium Assistance Program (Program), one of the reforms enacted in Engrossed Second Substitute Senate Bill 5377 intended to lower premiums for consumers enrolled in Cascade plans (i.e., standard plans) or Cascade Select plans (i.e., public option plans). In conjunction with the release, the Exchange hosted a stakeholder webinar to discuss the draft policy and alternative proposals.

The preliminary policy establishes the rules governing the Program, such as eligibility, premium assistance amount, and Exchange and issuer responsibilities. Senate Bill 5377 also made major policy changes to provider participation and reimbursement aimed at increasing the availability of public option plans and reducing health care costs (full summary available here).

The Program is effective for plan year 2023, and Engrossed Substitute Senate Bill 5092 appropriated $50 million to implement the program in its first year. State legislators will need to provide new funds for plan year 2024 and beyond. Notably, Senate Bill 5377 directs the state to “explore all opportunities” to apply for a federal waiver to garner pass-through funding to help pay for the Program.

Regarding the rulemaking process, the Exchange seeks comments on the preliminary draft policy through November 12, 2021. Additional key dates:

•  June 2022: Exchange publishes draft premium assistance policy and seeks public comments through July.

• July 2022: Exchange holds a public hearing on the draft premium assistance policy.

• August 2022: Exchange finalizes the premium assistance policy.

• September 2022: Exchange finalizes premium assistance amount based on final 2023 health plan filings data. Concurrently, beginning in December 2021, the Washington Health Care Authority (HCA) will undergo procurement of public options planned offered under Cascade Care.

• November 2022: Open enrollment begins.

A summary of key provisions follows:

Eligibility and Special Enrollment Period (Sections 4 and 9)

Consistent with the eligibility criteria in Senate Bill 5377, an individual is eligible for state premium assistance if the individual is a Washington State resident, enrolls in a silver or gold Cascade plan, applies for and accepts all federal premium tax credits, and is ineligible for Medicare or Medicaid. The Exchange states that in households with individuals in multiple enrollment groups, only individuals enrolled in a silver or gold Cascade plan are eligible for state premium assistance. Senate Bill 5092 limits eligibility to individuals with an income at or below 250 percent of the federal poverty level (FPL).

Under current federal law, there is no upper income limit for federal premium tax credits through 2022. Absent congressional action to make changes from the American Rescue Plan Act of 2021 (P.L. 117-2) permanent, the upper income limit will return to 400 percent of FPL in 2023. The lower income threshold for state premium assistance accounts for the availability of appropriated funds, $50 million for 2023. See below for more details on the Exchange’s contingency plan if the projected premium assistance distribution exceeded the total amount of appropriated funds.

Roughly 44 percent (about 95,000) of total qualified health plan (QHP) enrollees (about 217,000) have a household income at or below 250 percent FPL, according to the Exchange. Within this group, about 3,500 do not receive any federal subsidies due to the “family glitch” or other reasons. Among the estimated 465,000 residents who are uninsured, roughly 52 percent (242,000) have a household income at or below 250 percent FPL. Within this group, nearly 70,000 are estimated to not have a federally recognized immigration status and, therefore, are ineligible for federal premium tax credits. In fall 2023, Washington intends to pursue a federal 1332 waiver aimed at providing access to QHP plans for people without federally recognized immigration status.

An eligible enrollee would remain eligible for state premium assistance for the duration of the plan year unless the enrollee reports a change in circumstances that no longer makes the individual eligible. Additional details about the eligibility determination and verification processes are on p. 3.

The Exchange would provide an Exceptional Circumstances Special Enrollment Period (SEP) to an individual that becomes newly eligible for the state premium assistance or ineligible for state premium assistance. Of note, the Exchange is considering alternative policy proposals: (1) restricting customers newly eligible for the state premium assistance to an assistance-eligible plan within the same carrier; or not offering an SEP for change in state premium assistance eligibility.

Premium Assistance Amount (Section 5)

The Exchange proposes to calculate the state premium assistance amount using the following formula – a base fixed-dollar premium assistance amount capped at the lesser of a household cap or benchmark plan cap.

• Base fixed-dollar premium assistance amount – Based on an actuarial analysis of annual program funding, the projected eligible enrollee population for that plan year, and the qualified health plan rates.

• Household cap – Calculated by multiplying the base fixed-dollar amount by the number of eligible enrollees in the eligible household, not to exceed the number of applicants aged 21 or up, plus up to three depends under the age of 21.

• Benchmark plan cap – The net premium all eligible enrollees in the household would pay if each eligible enrollee in the household were enrolled in the lowest cost standard silver plan in the household’s county of residence. Alternatively, the Exchange is considering using the second lowest cost silver plan, second lowest cost standard silver plan, or another plan as the benchmark.

If an eligible household has multiple enrollment groups, the household’s premium assistance amount will be allocated across the enrollment groups. The Exchange proposes allowing state premium assistance to cover portions of the household’s premium that are not attributable to essential health benefits. Federal premium tax credits can only be applied to an individual’s premium that is for essential health benefits.

Payment Procedures (Sections 6,7, 8, and 10)

Like federal premium tax credits, state premium assistance will be paid to issuers on a monthly basis. The Exchange also proposes to use an appeals process that mirrors the federal process (e.g., written notice, hearing). Issuers are required to accept state premium assistance in order to be certified to offer qualified health plans on the Exchange. The Exchange proposes that issuers distribute Medical Loss Ratio (MLR) rebates on behalf of enrollees receiving state premium assistance directly to the Exchange. Additionally, the Exchange plans to contract with an independent firm to audit the Program.

Contingency for Low Funds (Section 11)

If the projected total amount for premium assistance exceeds the total amount of appropriated funds ($50 million for plan year 2023), the Exchange proposes to decline providing assistance to newly eligible households not already receiving assistance. Priority would be given to enrollees receiving assistance for that plan year to maintain access to health care. The Exchange may only modify eligibility determinations “if enrollments in the Program jeopardize the ability of the Exchange to operate the program within available state funding appropriated for the Program.” If the projected total amount for premium assistance is less than the total amount of appropriated funds, the Exchange may increase the amounts distributed to enrollees.

The Exchange is considering alternative contingency plan proposals: (1) establishing and operating a program waitlist; or (2) reducing premium assistance amounts for existing recipients.

With Support from Arnold Ventures

Washington Certifies Plan Offerings for the 2021 Marketplace

Washington Certifies Plan Offerings for the 2021 Marketplace

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On Thursday, September 24, 2020, the Office of the Insurance Commissioner (OIC) and the Washington Health Benefit Exchange Board (HBE) certified 2021 Qualified Health Plans (QHPs). These plans include new Cascade Care products (i.e., public option plans and standardized non-public option plans) that will be offered through Washington Healthplanfinder during the upcoming open enrollment period from November 1, 2020 through January 15, 2021.

Although public option plans for each of the five insurance carriers previously identified as apparently successful bidders (ASBs) were certified, the announcement notes that the Washington State Health Care Authority (HCA) is still working to sign procurement contracts for the plans.

Certified public option offerings differ from those proposed in that there are more counties with no public option plans available, public option plans are offered in fewer counties overall, and monthly premiums are lower.

Analysis

Geographic Availability

There is an overall decline in geographic availability of public option plans between carriers’ proposed offerings and those that have been certified. A public option plan will not be offered in Garfield county, increasing the number of counties with no public option from 19 to 20.  Additionally, now only four counties (Adams, Kittitas, Pierce, and Yakima) are able to choose a public option plan from multiple carriers, down from six prior to certification. Kittitas has three carriers offering a public option, while Pierce, Yakima, and Adams each have two carriers.

Three out of the five public option plan sponsors are certified to offer public option plans in two fewer counties than originally proposed. Only LifeWise Health Plan of Washington and UnitedHealthcare of Oregon will offer public option plans in each county they filed rates for. Among those carriers serving fewer counties, Coordinated Care Corporation will not offer its public option plan in Garfield or Whitman counties; Community Health Network of Washington will not offer its public option plan in Cowlitz or Lewis counties; and BridgeSpan Health Company will not offer its public option plan in Adams or Garfield counties.

Premiums

Premium differences between standardized public option plans, standardized non-public option plans, and non-standardized plans narrowed from the time of plan submission to certification, with premiums decreasing an average of $185.57 across all on-exchange silver plans. Monthly premiums for silver-level public option plans, on average, ranged from $558.23 to $680.42 at submission, but are subsequently certified between $392.07 and $490.28. Silver non-standardized plans are certified between an average of $376.27 and $500.02, while non-public option standardized plans are offered, on average, between $385.20 and $528.00 per month.

The range of average monthly premiums is narrowest for silver-level public option plans (difference between high and low is $98.21), followed by non-standardized silver plans ($123.75), with silver standardized non-public option plans having the widest range ($142.80). The table below details the average monthly premiums in the certified rate filings for 2021.

Affordability implications of public option plans vary at the county level. In Cowlitz County where only one standardized non-public option plan will be offered, the monthly premium is certified at $510.16. This stands in contrast to Kittitas County where two standardized non-public option plans and three public option plans will be offered. There, premiums range from $400 to $490 for the public option plans and from $413 to $469 for the standardized non-public option plans.

Public option plans have either the lowest (see, e.g., Chelan, Douglas, Grant, Okanogan, Klickitat, in Appendix A) or second lowest premium when two standardized non-public option plans and one public option plan is offered (see, e.g., Jefferson, Kitsap, Lincoln, Mason). When more than one public option plan and more than one standardized non-public option plan are offered, a public option plan has the lowest premium (see, e.g., Pierce, Kittitas, Yakima). Public option plans are not the most expensive option in any county.

Certification centers on whether or not consumers have access to covered health care services and if the rates are reasonable in relation to the benefits for a particular plan offered in a particular county. In general, it appears the OIC’s certification process for 2021 served to reduce access to the public option geographically, but has improved the affordability of available plans. This means that public option plans may have been unable to satisfy provider access requirements in certain counties, and therefore had to be dropped. Additionally, the OIC’s review of plans’ financial information related to medical claims, administrative expenses, and profit or loss, could have uncovered miscalculations related to risk adjustment or other assumptions in the proposed rate filings. If such errors were identified, correcting them may have contributed to the rate reductions seen in the final rate filings. We want to emphasize that we do not have direct information about the reason for the substantial reductions in the rates certified so we are speculating regarding the cause of these changes.

Please find Appendix A in the PDF version here.

With the Support of Arnold Ventures

Payor Participation in Washington’s Public Option Plan and Impact on Premiums

Payor Participation in Washington’s Public Option Plan and Impact on Premiums

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On Thursday, July 2, 2020, the Washington Health Care Authority (HCA) announced that five insurance carriers (of the 15 health insurers that filed 2021 rates for individual health plans) are apparently successful bidders (ASBs) for the Cascade Care public option:

• Bridgespan Health Company

• Community Health Network of Washington

• Coordinated Care Corporation

• LifeWise Health Plan

• UnitedHealthcare of Oregon

Notably, Community Health Network of Washington and United Healthcare of Oregon did not participate in 2020 and will only offer the public option.

HCA notes that the ASB’s proposed coverage plan includes “nearly every Washington county.” In the coming months, the Office of the Insurance Commissioner (OIC) will review and approve the health plan filings and the HCA will execute contract negotiations and final review. The Washington Health Benefit Exchange (HBE) Board of Directors is also expected to certify the plan offerings by September.

Background

As required by Senate Bill 5526 (Cascade Care), the Washington State Health Care Authority (HCA) must contract with at least one carrier to offer a public option plan at each of bronze, silver, and gold tiers of coverage in at least county in 2021. While the law states a goal of ensuring at least one of the public option plans is available in each county, HCA is only obligated to stand up one plan (available at each of the metal levels) in a single county.

SB 5526 also established standardized plans, which are statutorily required to adhere to plan designs finalized by the HBE.  These plans offer lower deductibles, more services available before the deductible, and more transparent cost-sharing. Standardized plans must also allow consumers to easily compare plans by premium, network, quality, and customer service. Public option plans are required to be standardized plans and must comply with additional standards that include increasing transparency, reducing administrative burden, and aligning with state value-based purchasing models.

Analysis

Geographic Availability

As illustrated in the table below, the ASBs are offering the public option plan in select counties – leaving out 19 counties, including all five counties in rating area 8. Whereas, six counties (Adams, Garfield, Kittitas, Pierce, Whitman, and Yakima) will be able to choose a public option plan from multiple carriers, pending HCA approval. Adams and Kittitas will each have three carriers offering Cascade Care, while Garfield, Pierce, and Whitman will each have two carriers. One public option plan will be available in King County, which includes Seattle.

The absence of public option plans in 19 counties indicates that Washington State may fall short of its vision of widely offering Cascade Care across the state, at least in its first year – a possible scenario alluded to by Governor Jay Inslee on May 19. 

In a letter to Sue Birch, Director of the HCA, and Pam MacEwan, CEO of the Washington State Health Benefit Exchange (HBE), Governor Inslee lowered expectations for the anticipated rollout of the nation’s first public option program, due largely to the impact of the ongoing COVID-19 pandemic. He stated, “While Cascade Care may take a preliminary approach in its initial year, we fully expect it to flourish in future years.” Governor Inslee’s announcement came days before the Phase 2 response deadline (May 22, 2020) of the Cascade Care request for applications (RFA).

Premiums

Overall, standardized public option plans (SP) are not necessarily the least expensive plan option in comparison to standardized non-public option plans (SN) and non-standardized plans (NS). Non-standardized plans were generally the least expensive options with carriers’ average silver-level premiums ranging from $532.78 to $681.24.

Monthly premiums for silver-level public option plans, on average, range from $558.23 to $680.42. The table below details the average monthly premiums provided in the proposed rate filings for 2021.

The variation in plan premiums may indicate a convergence of several factors, including competition at the county level, the coverage mandates that apply to SP and SN plans (but not NS plans), and provider participation. The required cost controls on provider reimbursement, coupled with the lack of a provider mandate, appear to limit provider participation in public option plans. 

Affordability implications of public option plans vary at the county level. In counties where there is only one other standardized plan available in addition to a public option plan, public option plan premiums are the lowest available (see, e.g., Clallam and Cowlitz County in Appendix A). This remains true in some counties where plan competition is only slightly less limited (i.e., only three plans including a public option plan; see, e.g., Douglas and Okanogan County).

However, in counties where there is greater plan competition, or where carriers offer standardized plans at competitive rates, public option plan premiums are often neither the most expensive nor most affordable (e.g., Asotin, Garfield, and Whitman County). In rare cases (e.g., King County) the public option plan offered is the most expensive of the five total plans available. In general, it appears that public option plans will provide the most cost relief in counties where competition is currently limited and where, perhaps as a result, premium prices are higher. 

Please note we examined plan rates for 40-year-old non-smokers at the silver level among standardized plans. This is in alignment with the Washington State Cascade Care RFA, which required carriers to provide the planned premium rates for this enrollee demographic.

Please find Appendix A here.

With the support of Arnold Ventures

Summary of Washington State Gov. Inslee’s Letter on Implementation of Cascade Care

Summary of Washington State Gov. Inslee’s Letter on Implementation of Cascade Care

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On Tuesday, May 19, Washington State Governor Jay Inslee sent a letter to Sue Birch, Director of the Washington State Health Care Authority (HCA), and Pam MacEwan, CEO of the Washington State Health Benefit Exchange (HBE), recognizing the impact of the COVID-19 pandemic on the rollout of the state’s public option program, Cascade Care. Specifically, Gov. Inslee states, “While Cascade Care may take a preliminary approach in its initial year, we fully expect it to flourish in future years.”

The announcement comes days before the Phase 2 response deadline (May 22, 2020) of the request for applications (RFA) for carriers interested in offering public option plans on the individual market for coverage beginning January 1, 2021. The potentially scaled-back approach may indicate a lower than expected response rate for Phase 1 responses, which were due on April 17, 2020, in light of the pandemic. Of note, HCA released the RFA for public option procurement on February 27, 2020 – just two days before Gov. Inslee issued a COVID-19 emergency proclamation on February 29, 2020.

In the Phase 1 response, applicants were required to submit proposed service areas and projected enrollment for each county, among other details.

In the Phase 2 response, applicants must provide the following:

• Planned premium rates for a 40-year old, non-smoker for plan year 2021 public option plans at the gold, silver, and bronze metal levels for each county the applicant intends to participate in. Applicants must describe how their premium rates meet one or more of the following affordability options:

  • A proposed premium rate that is at least 5 percent lower than the applicant’s lowest-cost plan of the same metal level plan in play year 2020;

  • A proposed premium rate that is at least 10 percent lower than the proposed rate of the applicant’s standard plan of the same metal level for plan year 2021; or

  • For an applicant that did not participate in the individual market in plan year 2020, and does not propose a non-public option plan, the applicant must have a premium rate that is at least equal to, or lower than, the new carrier benchmark premium rate established by HCA (see Appendix 3).

• Sample provider contracts from the current 2021 public option plan year and include an explanation of how they demonstrate value-based payment arrangements and unit cost reductions in contracting with providers. Applicants must also confirm that at least 30 percent of provider contracts for the public option plans include value-based payment arrangements as defined by the Centers for Medicare and Medicaid Services (CMS) Health Care Payment Learning and Action Network.

Details on the scale of Cascade Care for its initial year may be clarified in the summer, potentially following the announcement of successful applicants on July 7, 2020. 

Summary of Washington’s Request for Applications for Public Option Procurement

Summary of Washington’s Request for Applications for Public Option Procurement

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On Thursday, February 27, the Washington Health Care Authority (HCA) released a request for applications (RFA) for carriers interested in offering public option plans on the individual market for coverage beginning January 1, 2021.

Washington defines public option plans as qualified health plans (QHPs) that have a standard benefit design and meet additional quality, value, and affordability standards. Interested carriers must offer at least one bronze, one silver, and one gold public option plan in a single county or in multiple counties. HCA intends to award one or more contracts for public option plans in each county.

Application

Phase 1 Response (Due April 17, 2020)

• Applicant’s proposed service areas and projected enrollment for each county (extra points are awarded for plans participating in rural areas, see Exhibit C);

• Quality and value strategies, including steps taken to implement Bree Collaborative recommendations; evidence-based coverage decision process, value-based payment and integrated care strategies, and use of a common measure set;

• Description of how applicants will work with Indian Health Care Providers;

• Plan to assist providers in identifying payments that will be exempted from the state-business and occupation (B&O) tax;

• Attestation of standards to value, quality, and affordability requirements (the methodology for calculating Medicare-equivalent payment rates are provided in Appendix 4; most major supplemental payments, such as those for indirect medical education (IME) and disproportionate share hospitals (DSH), are included; and

• Health Technology Clinical Committee (HTCC) decision matrix in order to establish baseline levels of coverage compliance for selected health technologies.

Phase 2 Response (Due May 22, 2020)

• Planned premium rates for a 40-year old, non-smoker for plan year 2021 public option plans at the gold, silver, and bronze metal levels for each county the applicant intends to participate in. Applicants must describe how their premium rates meet one or more of the following affordability options:

  • A proposed premium rate that is at least 5 percent lower than the applicant’s lowest-cost plan of the same metal level plan in play year 2020;

  • A proposed premium rate that is at least 10 percent lower than the proposed rate of the applicant’s standard plan of the same metal level for plan year 2021; or

  • For an applicant that did not participate in the individual market in plan year 2020, and does not propose a non-public option plan, the applicant must have a premium rate that is at least equal to, or lower than, the new carrier benchmark premium rate established by HCA (see Appendix 3).

• Sample contracts from the current 2021 public option plan year and include an explanation of how they demonstrate value-based payment arrangements and unit cost reductions in contracting with providers. Applicants must also confirm that at least 30 percent of provider contracts for the public option plans include value-based payment arrangements as defined by the Centers for Medicare and Medicaid Services (CMS) Health Care Payment Learning and Action Network.

Incentives and Flexibilities

Washington State is providing several incentives and flexibilities intended to increase provider and carrier participation. Payments received by providers (from QHPs or through cost-sharing) for treating public option plan enrollees will be exempt from the B&O tax. The exemption is intended to help dull the impact of the reimbursement cap set at 160 percent of Medicare.

Applicants will have the option to participate in a safe harbor that allows them to conduct a retrospective review of actual provider reimbursement without facing a penalty. HCA will provide applicants with alternative reimbursement targets, by designated geographic rating areas, based on 2018 market averages that meet the reimbursement cap. Participating applicants will receive additional flexibility through adjusted safe harbor reimbursement targets, provided at least 30 percent of provider contracts include value-based payment arrangements. 

Evaluation and Contract Award

Applications that meet an initial review for completeness by the RFA Coordinator will be given to evaluation teams made of up representatives of HCA and the Health Benefit Exchange (HBE). These teams will review and score applications using a two-phase weighted scoring system. After the evaluation of Phase 1 criteria, the RFA Coordinator will communicate individually in writing to applicants whether their application passed Phase 1. Those who pass Phase 1 will then be required to submit their Phase 2 response.

Total scores will consist of an applicant’s scores for Phase 1, Phase 2, and their response to Executive Order 18-03 (points will be awarded to carriers who do not require its employees, as a condition of employment, to sign mandatory arbitration clauses or a class or collective action waiver). The maximum points possible across all three elements is 360. Unsuccessful applicants who attend a debriefing conference are able to protest awards on the basis of: bias, discrimination, or conflict of interest on the part of an evaluator; errors in computing the score; or non-compliance with procedures described in the RFA or HCA requirements.

Next Steps

• March 13, 2020 – Letters of intent to apply and non-disclosure agreements due

• April 17, 2020 – Phase 1 responses due

• May 22, 2020 – Phase 2 responses due

• July 7, 2020 – HCA announces apparent successful applicants (subject to completion of contract negotiations and execution of a written contract)

• July-September 2020 – Contract negotiations

• November 1-December 15, 2020 – Open enrollment

• January 1, 2021 – Coverage start date

With support from Arnold Ventures

Summary of Washington’s Draft Procurement Standards for a Public Option Plan

Summary of Washington’s Draft Procurement Standards for a Public Option

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Background

Senate Bill 5526 (see our legislative summary here) passed the Washington State Legislature in May 2019, authorizing the Washington Health Care Authority (the Authority), which administers Medicaid and other programs in the state, to procure public option plans in partnership with the Health Benefit Exchange (HBE) and the Washington Office of the Insurance Commissioner (OIC). The legislation specifies that the state must contract with at least one insurer to offer a public option plan at each metal level in at least one county in 2021. Here we summarize Washington’s draft procurement standards for its public option program, also known as “Cascade Care.” The state intends to use the finalized procurement standards in its request for proposal (RFP), which it plans to release in February 2020. 

Washington’s Public Option

Affordability. Per the authorizing legislation, Washington’s procurement standards for affordability require reimbursement for health care services (excluding pharmacy benefits) be capped at an aggregate 160 percent of Medicare for each plan, with primary care services reimbursed at no less than 135 percent of Medicare, and critical access hospitals and sole community hospitals reimbursed at no less than 101 percent of Medicare. The state estimates premiums will decline by 5 to 10 percent due to the difference between the current market rate (174 percent) and the reimbursement cap (160 percent). Notably, Washington can choose to waive the reimbursement cap under certain scenarios, for example, if doing so, by 2023 or later, would not increase premiums, or if the insurer can achieve premiums that are 10 percent less than the previous plan year through other means. The legislation also indicates that plans may be required to meet standards for promoting generic drug utilization and using evidence-based formularies; however, the draft procurement standards do not directly require this.

In addition to seeking an overall premium reduction through the reimbursement cap, HBE is developing and submitting a plan for implementing state premium subsidies for Washington Healthplanfinder consumers with income up to 500 percent Federal Poverty Level (FPL). The report is due to the legislature on November 15, 2020.

Coverage and Access. Washington defines public option plans as qualified health plans (QHPs) that have a standard benefit design and meet additional quality and value requirements. Carriers interested in offering public option plans must offer at least one bronze, one silver, and one gold public option plan in a single county or in multiple counties. Enrollment is open to everyone who is eligible for the individual market, including those purchasing plans off of the state’s exchange. The HBE Board approved the standard plan designs for 2021 plans on December 5, 2019.

For the most part, Washington’s approach assumes providers, hospitals, and insurers will choose to participate in its public option program. It does not mandate participation by any party, nor does it allow insurers to require provider participation at the rate (160 percent of Medicare) set by the state. The authorizing legislation does, however, permit the state to waive the reimbursement cap on health services under several scenarios, including if an insurer is unable to form a provider network. State officials have also floated the possibility of passing new legislation to encourage or mandate participation if initial provider or plan participation is inadequate.

Quality and Value. While affordability standards are specified in the authorizing legislation, quality and value requirements were outlined only generally. The state has proposed several standards for quality and value, which include mandatory reporting of key clinical and technology metrics, as well as efforts to reduce barriers to care, improve health, and align value-based purchasing with state priorities. The specific quality and value requirements detailed below could change after the Authority receives feedback on its draft procurement standards from stakeholders.

Participating public option plans must implement Bree Collaborative value-based purchasing (VBP) recommendations. All carriers will be required to report on 8 out of the 22 total Bree recommendations for year one, including, elective total knee and total hip replacement bundle and warranty, hospital readmissions, and opioid use disorder treatment.

Public option plans must also report on alignment with Health Technology Clinical Committee (HTCC) decisions. Carriers are required to provide a baseline report describing alignment of their coverage criteria HTCC decisions in their procurement response. Alignment of at least 50 percent is expected for year one, and carriers must submit a plan for achieving full alignment.

In addition to the Quality Rating System (QRS) measures required for all QHPs, public option carriers are required to report on a set of additional quality metrics from the Washington State Common Measure Set, reporting each metric by region, sex, and age group, and, by race, ethnicity, and language to the extent possible. Carriers must also submit and implement a plan to collect race, ethnicity, and language data if they are not in possession of it.

Public option carriers must meet added participation requirements to lower barriers to sustaining and improving health and align to state agency value-based purchasing, which may include any number of strategies, including standards for utilization management, population health management, primary care, etc. For year one, carriers will meet these requirements by taking HCA’s annual Paying for Value Survey and completing the Authority’s Primary Care Expenditure template for enrolled population. Carriers will also be required to submit a report describing use or enactment of nine specific strategies to reduce administrative burden and increase transparency and clinical effectiveness.  

With support from Arnold Ventures