HHS Approves Colorado's Public Option Waiver

On June 23, the U.S. Department of Health and Human Services (HHS) announced approval of Colorado's Section 1332 State Innovation Waiver amendment request to create the "Colorado Option," a state-specific public option health coverage plan.  Colorado’s waiver application indicated that 6.6% residents were uninsured and the waiver approval indicates that the plan is projected to increase health coverage enrollment for nearly 10,000 Coloradans.

Beginning in 2023, the “Colorado Option” will be available to all Coloradans who enroll in health insurance plans on the individual market (i.e., not through an employer) and small employers with less than 100 employees. The plan is required to offer the essential benefits provided in the Affordable Care Act.  Insurers will be required to include Colorado Option plans in every county they operate and meet premium reduction targets by 2025. If insurers fail to reduce the cost of premiums during that period, Colorado’s insurance commissioner can direct healthcare providers to join Colorado Option plans at set rates, following a public hearing.  The “Colorado Option” will operate in tandem with Colorado's existing section 1332 waiver, a state-based reinsurance program, which is authorized to continue under the amended waiver to redirect program savings into premium subsidies. The State of Colorado estimates that 32,000 residents will gain health insurance under the amended waiver by 2027, which would be an increase of approximately 15% in the individual market.

While ASA supports efforts to increase access to health care, it remains concerned for the impact of the expanded federal payment rates on anesthesiologist practices.  In 2020, ASA retained Milliman, an independent actuarial firm, to review the history of federal Medicare payment to anesthesiologists and to assess the impact of expanding those payments through a federal public option under the Affordable Care Act (ACA) on anesthesiologists’ practices.

The Milliman review confirmed ASA’s findings---that because anesthesia practices have limited ability to offset payment rate reductions, a public option based on Medicare payment rates, rather than commercial market payment rates, would have significant, deleterious impacts on anesthesia practices that would be difficult to overcome.  ASA requests that CMS and Congress address the Medicare system’s historic undervaluation of anesthesia services and align Medicare payment for anesthesia services with those provided by other physicians relative to commercial market rates.