Mandate for Hospitals to Participate in the Public Option Health Plans (Cascade Care Select) and New Premium Subsidies Available to Consumers

June 10, 2021

To: Chief Executive Officers, Chief Financial Officers, Legal Counsel, and Government Affairs staff
Please share with staff involved with payer contracting.
Subject: Mandate for Hospitals to Participate in the Public Option Health Plans (Cascade Care Select) and New Premium Subsidies Available to Consumers

This bulletin is to inform hospitals and health systems about Senate Bill 5377, which makes some key modifications to public option health plans (also known as “Cascade Care Select”). Specific to hospitals is section 5 – mandating hospital participation in at least one public option plan upon receiving an offer to contract from a public option health plan. This provision is effective if in 2022 or any subsequent year, there are any counties that a public option health plan is not available to consumers (bare counties).

Recognizing the political momentum for this bill by legislators, WSHA worked with the bill sponsors and our members to negotiate a framework that addressed their goal of statewide plan availability but was also workable for hospitals. The background section of this bulletin contains more information about the political process of this bill and WSHA’s work during the 2021 legislative session.

Of note, WSHA supported section 1, which in 2023, establishes state premium subsidies for low-income enrollees. These state subsidies are to complement the enhanced federal subsidies established in the American Rescue Plan Act of 2021 (ARPA) and available to a broader population for the next two years.

Plan Year 2022 Preliminary OIC Filings for Public Option Health Plans – Potentially 14 Bare Counties

The five health carriers that offer public option health plans have already submitted their 2022 preliminary filings to the Office of the Insurance Commissioner (OIC). This includes identifying which counties they want to serve next year.

Based on public filing information, potentially there may be at least 14 bare counties – Clark, Columbia, Cowlitz, Ferry, Garfield, Grays Harbor, Island, Pacific, Pend Oreille, San Juan, Skagit, Skamania, Wahkiakum, and Whatcom. Health carriers have through the summer to modify any of their plan filings so some of this may change before public option health plans are certified by the Health Benefit Exchange (HBE) Board in September.

Section 5 of this legislation impacts all acute care hospitals (those licensed under chapter 70.41 RCW) that receive payment for services provided to individuals who are enrolled in the public employees’ benefit board (PEBB) program, the school employees’ benefit board (SEBB) program, or Medicaid.

Recommendations/Next Steps
Review this Bulletin and share with your payer contracting and any other relevant departments. As hospitals are discussing or negotiating with health carriers for plan year 2022, we recommend that your analysis includes the impact of Senate Bill 5377, including the eventual imposition of a hospital mandate to participate for plan year 2023.

In 2019, the legislature created public option health plans, which in 2021, were first made available to consumers on the HBE. The goal of public option health plans is to provide consumers across the state with more affordable health plan choices on the HBE (the individual market). The primary way to achieve this is by reducing hospital and provider payment rates (at 160% of Medicare in the aggregate, not on a per service basis).

About 1,900 people enrolled in these plans in its inaugural year, which was offered by five health carriers and available in 19 of the state’s 39 counties. For reference, in 2021, almost 223,000 individuals purchased qualified health plans on the HBE.

Hospital Mandate to Participate in Public Option Health Plans

Legislators and other supporters of public option health plans were disappointed that these plans were not offered statewide. They felt that a key driver of this was the lack of uniform hospital participation in public option health plan provider networks. Thus, one of the bill’s primary aims was to increase hospital participation.

As originally introduced, Senate Bill 5377, section 5 called for all hospitals to contract with the public option plans and the payment rate would be lowered from 160% to 135% of Medicare (in the aggregate). It also directed the Health Care Authority (HCA) to establish enforcement actions related to this section. WSHA strongly objected to the initial drafts of the bill and considerably negotiated the outcome of the final bill, including a requirement that once public option health plan enrollment becomes substantial, that the state study the financial impact of public option payment rates on hospital finances.

As a result of our work, the final bill states,

  • Starting in plan year 2022 and in any subsequent year, if there is any county where a public option health plan is not available to consumers on the HBE, then for all subsequent years, upon an offer from a public option health plan, a hospital must contract with at least one health plan. Hospital payment rates remain at 160% of Medicare in the aggregate.
  • Health carriers and hospitals may not condition negotiations or a hospital’s participation in any health plan offered by the carrier on the negotiations or a hospital’s participation in a public option health plan.
  • Once statewide enrollment in public option health plans exceeds 10,000 covered lives, the HBE, along with the OIC and HCA will analyze the impact of public option payment rates on hospital financial sustainability and make recommendations to the legislature on how to address any issues.

Subsidies for Low-Income Individuals

As part of the 2019 legislation, the HBE was required to establish a premium subsidy plan to assist individuals up to 500% of the federal poverty level (FPL), who are seeking health insurance coverage on the HBE. With stakeholder input, this work began in 2020 and in 2021, was incorporated in section 1 of this bill.

However, during legislative session, Congress passed ARPA. Among the many provisions in the federal bill, it provides for premium assistance to individuals who purchase their health insurance on an online Exchange, which would include Washington’s HBE. These federal premiums are in effect for 2021 and 2022 and are retroactive the beginning of the year. Some highlights include,

  • Silver plans for $0 premiums and reduced deductibles for those who earn income up to 150% of FPL;
  • Increase premium subsidies for those who earn up to 400% of FPL;
  • New premium subsidies for those who earn more than 400% FPL; and
  • Enhanced subsidies and temporary COBRA premium assistance for 2021 for those who are recently unemployed.

The HBE has concluded making premium adjustments for new and existing purchasers of insurance coverage. Thus, these individuals should already see lower premiums due to ARPA. For existing purchasers, these premium subsidies should have been applied retroactively to January 1, 2021, or to when coverage was in effect in 2021.

As a result of these federal subsidies, section 1 of the bill is in effect as of 2023, when the federal subsidies end. These state subsidies will, however, be focused on those who earn up to 250% of FPL (and meet other considerations). In the 2021-23 operating budget, the legislature appropriated $50 million in state funds for these subsidies. The HBE will work to operationalize this new subsidy program.


WSHA anticipates that there will be ongoing political interest in public option health plans. As health carriers and providers prepare for the 2022 plan year, we will be closely monitoring issues such as the widespread availability of these plans, how affordable these plans are, the level of consumer interest especially given increased premium subsidies, and the financial impact on hospitals and health systems.

We will also be monitoring this issue in the federal arena. US Senator Patty Murray (D-WA) and US Representative Frank Pallone (D-NJ) recently expressed interest in how to structure federal legislation to develop a public option health insurance program. For state and federal updates on public option plans, please watch for articles in WSHA’s publications such as Weekly, Inside Olympia (during session only), and Inside DC.

For an overview of public option health plans, as established in Senate Bill 5526, please see our 2019 Bulletin “Public Option Health Plans (Cascade Care) on the Health Benefit Exchange.”


WSHA’s 2021 New Law Implementation Guide
Please visit WSHA’s new law implementation guide online. The Government Affairs team is hard at work preparing resources and information on the high priority bills that passed in 2021 to help members implement the new laws, as well as links to resources such as this bulletin. In addition, you will find the Government Affairs team’s schedule for the release of upcoming resources on other laws and additional resources for implementation.


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