To: Chief Executive Officers, Chief Financial Officers, Government Affairs Staff
Please share with staff involved with carrier contracting and patient outreach and enrollment.
From: Shirley S. Prasad, JD, Policy Director, Government Affairs | ShirleyP@wsha.org, (206) 216-2550
Subject: Public Option Health Plans (Cascade Care) on the Health Benefit Exchange
This bulletin is to inform hospitals and health systems about Senate Bill 5526, the newly enacted public option health insurance plan, also known as Cascade Care. Starting in 2021, the new law establishes a framework for interested health insurers, referred to as carriers, to offer low-costing public option health plans on the Health Benefit Exchange (the individual market). Carrier, hospital, and provider participation is voluntary, which was a key message WSHA delivered to legislators.
This legislation impacts carriers interested in offering public option health plans on the exchange, along with hospitals and providers choosing to participate in public option health plan networks.
Review this Bulletin and prepare for conversations with carriers for plan year 2021 about participating in public option health plan networks. This includes understanding how your current payment rates through exchange plans compare with Medicare rates. For Critical Access Hospitals (CAHs), understand how your payment rates compare to allowable costs.
- Attend WSHA’s webinar on Wednesday, June 19 from 12 pm – 1 pm to learn more about the public option and the state’s new balance billing law. You can register here.
The new law establishes criteria for interested carriers to offer lower-cost health plans at each metal level, in either single or multiple counties in the state, starting in plan year 2021. It is referred to as public option, since the plans will be offered through an arrangement with the Health Care Authority (HCA). However, the plans will be provided by private carriers. The legislation seeks to drive costs down by capping payment rates carriers can offer hospitals and providers for all covered benefits, excluding pharmacy. The rate cap is 160 percent of the statewide aggregate amount Medicare would pay for the array of services the plan provides. It is not yet clear how the HCA will calculate that cap, and it will need to be based on predicted service utilization by the insured group.
Throughout the legislative process, WSHA expressed significant concerns about any framework that caps hospital and provider payment rates. It sets a disturbing precedent that health care costs may only be reduced through reducing hospital and provider payment rates, rather than addressing the broad array of cost drivers. Early on in the debate, it also incorrectly assumed payments tied to Medicare rates sufficiently meet the cost of care.
Carriers cannot require providers or facilities participating in public option health plan networks to accept the lower public option payment rates for other health plan products offered by that carrier. Further, independent providers, not employed by hospitals, are not subject to the Business and Occupation (B&O) tax on payments received from public option plans. This includes any amounts these providers collect from patients through cost sharing.
The HCA may waive the 160 percent of Medicare aggregate rate cap if:
- Carriers are unable to establish a network of providers and facilities to meet network adequacy standards; or
- Carriers are able to establish actuarily sound premiums that are 10 percent lower than premiums from the previous plan year.
There are minimum payment levels for certain providers. Public option health plans must reimburse:
- CAHs or sole community hospitals at rates not less than 101 percent of allowable costs; and
- Primary care services (as provided by family medicine, general internal medicine, or pediatric medicine physicians) at rates not less than 135 percent of the amount Medicare would pay.
Public option health plans must also:
- Be standardized health plans;
- Be certified by the Office of the Insurance Commissioner (OIC), including meeting network adequacy criteria currently established for qualified health plans;
- Incorporate recommendations from the Robert Bree Collaborative and the state’s health technology assessment program;
- Comply with any HCA requirements to address pharmacy expenses, and
- Potentially meet additional and not yet specified requirements on improving health and value.
As the state moves to implement Cascade Care, other provisions include:
- Before 2021, the Health Benefit Exchange (HBE) will develop a plan to establish and implement premium subsidies to assist individuals who earn up to 500 percent of the federal poverty level and are seeking coverage on the exchange.
- Before 2023, the HCA is to address the impact on plan choice, market stability, affordability, and robust networks if hospital, provider, and carrier participation in public option plans is linked to participation in Public Employer Benefit Board (PEBB), School Employee Benefit Board (SEBB) or Medicaid. HCA must provide their recommendations to the Legislature.
In the ensuing months, carriers interested in offering public option health plans will be working to create products that meet the criteria established in this bill. A key part of their work will include building hospital and provider networks in their service area that meets the OIC’s network adequacy standards.
During this legislative session, Washington State policymakers sought to address the affordability of health care. Specifically, the affordability of health care coverage available on the exchange, our state’s individual insurance market. Against the background of national and state discussions about single payer, the Governor and key health care legislators chose to pursue a solution called public option.
Public option proposals in other states take different forms. Some proposals include allowing middle-income, working-age adults to pay a premium to buy a Medicare or Medicaid plan. Others would set up a new public plan, run by the state, that consumers could purchase. Cascade Care – the public option plan in Washington State – involves commercial or Medicare managed care carriers offering plans and competing for enrollment on the exchange.
The other alternative offered in this year’s legislative session was a single payer solution (see Senate Bill 5822, Senate Bill 5222, and House Bill 1104). Not surprisingly, this alternative did not gain wide support. An advantage of the adopted public option approach, at least politically, is it preserves more choice for individuals, who can stay with a private plan if they prefer. A downside is that keeping many different insurance options may undermine one of the goals of a single-payer system, a simpler approach with less administrative costs.
With Washington State becoming the first state to adopt a plan called public option, WSHA and others will be closely monitoring how Cascade Care is implemented. Are carriers able to put together adequate provider networks? Will costs decrease as expected? Will enrollment in health care coverage increase? Will there be any impact on health insurance markets outside the exchange, such as the small group market? What happens if no public option health plans are offered because carriers report they cannot get hospital or provider participation? Will carrier, hospital, and provider participation continue to be voluntary? These are among the numerous questions that will need to be addressed over the next few months and years.
- Washington pioneers public health care option, but controlling costs remains tricky,” Tami Luhby, CNN Politics, 5/18/19.
- 5 key questions about the country’s first public option,” Rachana Pradhan and Dan Goldberg, Politico, 5/14/19.
- Public Option 1.0: Washington State Takes an Important Step Forward,” Billy Wynne, Health Affairs Blog, 5/1/19.
WSHA’s 2019 New Law Implementation Guide
Please visit WSHA’s 2019 implementation guide online, where you will find a list of the high priority laws that WSHA is preparing resources and information on 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.