First Regular Session Sixty-eighth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 11-0611.02 Kristen Forrestal SENATE BILL 11-168 SENATE SPONSORSHIP Aguilar, Bacon, Carroll, Foster, Giron, Guzman, Heath, Johnston, Morse, Nicholson, Steadman, Tochtrop HOUSE SPONSORSHIP Kefalas, Court, Fields, Fischer, Gardner D., Hullinghorst, Jones, Kagan, Levy, McCann, Miklosi, Pace, Solano, Tyler Senate Committees House Committees Business, Labor and Technology A BILL FOR AN ACT Concerning the creation of the Colorado health care authority for the purpose of designing a health care cooperative. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) The bill creates the Colorado health care authority (authority). The mission of the authority is to design the Colorado health care cooperative (cooperative) to be the benefits administrator and payer for health care services. The authority shall recommend a cooperative to the general assembly and, if approved, it shall be referred to the voters by referred measure. The president of the senate, the speaker of the house, and the governor shall each appoint members to the board of directors (board) of the authority who shall employ an administrator and other officers to help design and develop the cooperative. The cooperative will be designed in collaboration with parties who may be affected by the cooperative. The bill requires that the board make recommendations concerning specific elements to become part of the cooperative, including: Election of board members to the cooperative; Health care services that will be part of the cooperative; Payment systems for the cooperative; Regulation and evaluation of health care services; Methods for coordinating alternate insurance plans with the cooperative; Benefit design and provider rates and reimbursement; Maintaining a marketplace with health care choices; Cooperative members' participation in their health care; Development of information technology for the cooperative; Data collection to determine best practices; Transparency of the financial operation of the cooperative; and Health and wellness maintenance and education. The board is required to include a financing recommendation to the general assembly based on projected costs and federal waivers and includes available state and local government revenues. The bill contains other specified options that the board may include in its recommended financing package. The board is required to design a method for refunding savings to members of the cooperative and to employers. The board is required to develop a plan to deal with budget shortfalls. The bill specifies services that must be included in a benefits package designed by the board. The bill specifies that the cooperative shall serve as secondary insurance to any other insurance. The board is authorized to seek gifts, grants, and donations to implement the authority and the board to design the cooperative and is required to seek federal funds and grants available for the cooperative. The board is required to seek input and collaborate with the department of public health and environment, the department of health care policy and financing, and the general assembly to seek waivers, exemptions, and agreements from the federal government for funding for the authority and the cooperative. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. Article 16 of title 10, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW PART to read: PART 11 COLORADO HEALTH CARE AUTHORITY 10-16-1101. Short title. This part 11 shall be known and may be cited as the "Colorado Health Care Authority Act". 10-16-1102. Legislative declaration. (1) The general assembly finds, determines, and declares that: (a) Colorado confronts urgent and interconnected challenges to provide affordable quality health care for its residents; (b) Health care is unavailable or unaffordable to an increasing number of Coloradans; (c) All Coloradans pay for the uninsured as health insurance premiums increase to cover the cost for those who cannot pay; (d) For an increasing number of Coloradans, health insurance does not provide enough financial assistance to make access to health care affordable; (e) The current fee-for-service model of payment encourages overutilization of services, not improvement of wellness and health; (f) The fundamental participant in health care transactions is the individual and the fundamental relationship is between the individual and his or her health care provider; (g) Health care services should be provided to an individual with limited and efficient outside intervention and maximum transparency; (h) The increasing costs to businesses of providing employee health insurance coverage are not economically sustainable under the current health care system unless an affordable solution is found for all Coloradans; (i) There should be no required connection between health care and employment; and (j) The implementation of the federal "Patient Protection and Affordable Care Act", Pub.L. 111-148, and "Health Care and Education Reconciliation Act of 2010", Pub.L. 111-152, will increase the number of Coloradans covered by health insurance but is unlikely to substantially ameliorate any of the other findings and determinations in this section. 10-16-1103. Definitions. As used in this part 11, unless the context otherwise requires: (1) "Administrator" means the executive director of the authority. (2) "Authority" means the Colorado health care authority created in section 10-16-1104. (3) "Base payment" means the first dollar payment determined by the authority based on either a percentage of medicare reimbursement or other means determined by the authority or independent provider. (4) "Board" means the board of directors of the authority. (5) "Cooperative" means the Colorado health care cooperative that is designed by the board pursuant to this part 11. (6) "Gap payment" means the difference between the actual independent provider charges and the base payment. (7) "Independent payment option" means the situation where a provider uses contracts with a patient for fees that are greater than those reimbursed by the cooperative. (8) "Independent provider" means a health care provider who receives payment for health care services with a base payment either from a member's integrated health care delivery system or from the cooperative and collects a gap payment from the member. Providers may either have a full independent practice or, if they are part of an integrated delivery system, provide services to those enrolled in a different integrated delivery system on an independent basis. (9) "Integrated delivery system" or "system" means a nonprofit corporation that: (a) Provides a medical home for its enrollees; (b) Is capable of contracting to provide all enrollees with all designated necessary health services in return for receiving actuarially adjusted per member per month payments from the cooperative; (c) Provides all designated services to enrollees through contracts with employees or other entities; (d) Agrees that its employees, providers, and contractors shall not be awarded any bonus payments based on system savings; and (e) Includes in its mission the delivery of quality health care services that increase value by seeking lower costs while making services readily available. The mission also must include the goal of returning surplus funds to the cooperative when possible and fairly compensating all employees and contractors. (10) "Medical home" means an appropriately qualified, community-based and culturally sensitive model of primary care that ensures that every Coloradan has a personal provider who coordinates the provision of accessible, coordinated, comprehensive, and continuous health care across all stages of life. A medical home must ensure, at a minimum, the following: (a) Health maintenance and preventive care; (b) Anticipatory guidance and health education; (c) Acute and chronic illness care; and (d) Coordination of medications, specialists, hospitalizations, and therapies. (11) "Member" means a member of the cooperative or any person who is a resident and has requested a membership card. 10-16-1104. Colorado health care authority. (1) There is hereby created the Colorado health care authority, which is a body corporate and political subdivision of the state, is not an agency of state government, and is not subject to administrative direction or control by any department, commission, board, bureau, or agency of the state. (2) The authority and its corporate existence continues until terminated by law; except that no such law shall take effect if the authority has notes or other obligations outstanding unless adequate provision has been made for the payment thereof. 10-16-1105. Mission of the authority - design the Colorado health care cooperative - approval by general assembly and voters. The mission of the authority is to design the Colorado health care cooperative, pursuant to part 10 of this article, which shall be the benefits administrator and payer for health care services as defined by the authority. The authority shall design a health care cooperative, which shall provide comprehensive medical benefits to all Colorado residents. The authority shall recommend the health care cooperative to the general assembly and, if approved by bill enacted by the general assembly, the general assembly shall refer the measure to create the cooperative to the voters for approval. The cooperative shall be established only if approved by a majority of voters voting on the measure 10-16-1106. Board of directors. (1) There is hereby created a board of directors of the authority. On or before September 1, 2011, the president of the senate, the speaker of the house of representatives, and the governor shall each appoint three members to the board. (2) In making appointments to the board, the appointing authorities shall make good faith efforts to ensure to the greatest extent possible that their appointments reflect the social, demographic, and geographic diversity of the state. The appropriate appointing authority shall fill any vacancy on the board within thirty days after the vacancy occurs. The appointing authorities shall make good faith efforts to ensure that each member will strive to represent the interests of all Coloradans and all stakeholders, including patients, providers, taxpayers, and employers. (3) No part of the revenues or assets of the authority inures to the benefit of, or may be distributed to, its board or officers or any other private person or entity; except that the authority may make reasonable payments for expenses incurred on its behalf relating to any of its lawful purposes, and the authority is authorized to pay reasonable compensation for services rendered relating to any of its lawful purposes, including payment to board members for each meeting attended. (4) Any member of the board who has an immediate personal or financial interest in any matter before the board shall disclose the fact to the board and shall not vote upon the matter. (5) The board may employ an administrator of the authority and any other officers the board finds necessary to design and develop the cooperative. (6) The board shall employ a primary consulting contractor that shall prepare the report to the general assembly under the supervision and direction of the board. The board may employ additional contractors as needed to carry out the provisions and purposes of this part 11, including contracts with appropriate administrative staff, consultants, and legal counsel. No contract entered into pursuant to this subsection (6) is subject to article 103 of title 24, C.R.S. (7) The board may appoint appropriate legal, actuarial, and other committees as necessary to provide technical assistance and other expertise and experience in the development of the cooperative. (8) The primary contractor and consultants employed by the board shall, in coordination with and under the supervision of the board: (a) Design methods for public comments and input from stakeholder groups and consider the comments and input throughout the development of the cooperative; (b) Develop and describe methods for quality improvement, increased accessibility, and cost reduction; (c) Project the costs for health care in Colorado with and without the cooperative for the implementation period and at least five years after the implementation period; (d) Develop a multi-year implementation plan describing full conversion to the desired ratio of independent payment and base payments; (e) Project the costs and savings for the implementation period and develop a strategy for managing costs during the implementation; (f) Project the impact of implementation on consumers, providers, employers, and economic growth; and (g) Provide at least one draft report for public comment and stakeholder input before the report is finalized. 10-16-1107. Creation of cooperative - required elements of cooperative. (1) The board shall design the cooperative for Colorado in collaboration with parties that may be affected by the design and implementation of the cooperative. In designing the cooperative, the board is not limited in making recommendations regarding the elements of the cooperative, but shall at least make recommendations concerning the following elements: (a) Guidelines for electing the governing board of the cooperative, composed of at least nine regionally elected members; (b) Contribution, fundraising, and campaign regulations that protect the election of the governing board of the cooperative from the influence of individuals or entities that would benefit financially from the operation of the cooperative; (c) The establishment of payment and health care delivery systems capable of providing payments to health care providers including: (I) Maintaining emergency room and trauma center services delivered through a planned statewide system consisting of varying levels of care; (II) Direct payment for high-cost and specialized care, including transplants delivered through specialty centers; (III) Direct payment for services as appropriate, including responding to an epidemic, providing health care during a regional disaster, providing experimental services, or providing other services when the cooperative determines that direct payment is beneficial; (IV) Direct payment for health care services provided out of state when members are traveling or temporarily residing out of state and are not enrolled in an integrated health care delivery system; (V) Payment to independent providers on a fee-for-service basis with copayments determined on a base and gap payment model if a member of the cooperative is not enrolled in an integrated health care delivery system; (VI) Payments to integrated health care delivery systems on an actuarially adjusted per member per month basis; (VII) Payment incentives to per member per month payments that may be needed to address local and regional shortages of services; (VIII) Payment adjustments on a per member per month basis for appropriate use and performance factors that include a member's use of emergency care; and (IX) Disproportionate share payments to the integrated health care delivery systems if those systems experience an unanticipated high incidence of expensive health care needs; (d) Provisions for regulating and evaluating health care services as deemed necessary and desirable for the delivery of quality and efficient health care; (e) Provisions for adopting other reimbursement and payment systems as deemed necessary and desirable in establishing the cooperative and its future operation; (f) Provisions for members, providers, the Colorado department of health care policy and financing, or any local government to appeal payment rules; (g) Methods for incorporating the medical portions of state liability insurance, workers' compensation insurance, and automobile insurance into the system through an analysis completed by the board; (h) Appropriate and cost-effective benefit design and eligibility requirements, standards and qualifications for health care providers, provider rates, integrated health care delivery systems, and any other provisions the board finds necessary to carry out the mission and purposes of this part 11; (i) Rules to prevent any integrated delivery system from achieving a monopoly or monopsony over the Colorado health care market; (j) Guidelines for reimbursement that maintain a balance between the independent payment option and organizational care provided through integrated health care delivery systems. In maintaining the balance, the board shall consider: (I) Maintaining a marketplace where providers and members make individual health care choices through an independent payment option, with targeted spending of up to twenty percent of the health care funds through an independent payment option. After analysis of the health care market, the board may recommend a different payment ratio or it may recommend that the ratio applies only to a limited range of services that are likely to attract independent providers and members. (II) Periodic adjustments in per member per month reimbursements to develop and maintain integrated health care delivery systems; and (III) Periodic adjustments in base payments for independent providers. (k) Approval of transparent independent payment option billing procedures that ensure that consumers using the independent payment option can compare costs of competing providers by either requiring providers to base their costs on a multiple of medicare reimbursements or some other system devised by the board; (l) Determining whether integrated health care delivery systems may use copayments or gap payments. An integrated health care delivery system may not require copayments for designated primary care appointments or United States preventive services task force-approved A or B recommendations for preventive care. (m) Methods for encouraging member participation in, responsibility for, and understanding of treatment options, treatment benefits, possible risks and side effects, decision-making, health care maintenance, and cost consideration; (n) Methods for using protocols, systems, and guidelines for improving patient safety and reducing medical errors; (o) Methods for ensuring that there are no unreasonable financial barriers to necessary medical services by establishing waivers, adjustments, and limits to copayments and gap payments within an integrated health care delivery system based on a member's low income or disease state; (p) Methods for promoting health maintenance and disease prevention; (q) The development of information technology specifications for: (I) Clearly defined standards for a confidential, electronic health records system and electronic personal health records to maintain accurate health records and to simplify the billing process, thereby reducing medical errors and administrative costs; (II) Evaluating the feasibility and cost of implementing an electronic health records system that includes memory cards that contain and record members' medical and billing history and would allow: (A) Members to access their own records; (B) Different electronic health systems to be recorded in one location; (C) Small and large providers to record and read information on the record; and (D) Consumers to review all billed services, thereby reducing the incidence of fraud; (III) An automated method for claims processing, billing, and payment; and (IV) Provisions for statewide and regional collection and analysis of clinical data including utilization, quality measures, outcomes, and errors; (r) Establishing mechanisms that allow the use of clinical data collected under subparagraph (IV) of paragraph (q) of this subsection (1) to contribute to establishing standards for best practices in accordance with the application of evidence-based medicine; (s) Establishing mechanisms and reports that ensure transparency of the financial operation of the cooperative and integrated health care delivery systems; (t) Improving the health of Coloradans with community health initiatives; the support of innovative, efficient, and coordinated care; wellness education; and end-of-life education; (u) Establishing a central purchasing authority responsible for negotiating favorable prices for prescription drugs and durable medical equipment where appropriate; (v) Including health care coverage for mental health care and substance abuse treatment on the same basis as the coverage for other conditions; (w) Developing a transition plan for retraining and job placement that considers extended unemployment benefits for those whose jobs have been impacted by the implementation of the system; (x) Providing support for health care provider education and training that effectively addresses primary care, nursing, and other provider shortages; (y) Establishing a system for filing and arbitrating all grievances regarding delay, denial, or modification of health care services; (z) Creating a Colorado health care cooperative quality and dispute resolution system to measure quality, investigate reports of poor quality, and develop an efficient and fair dispute resolution system; (aa) Collaborating with local governments, special districts, critical access hospitals, private sector foundations, and representatives of special populations to address special health care needs and establish education and outreach programs, research studies, grants, and financial incentives to meet the health care needs of localities and special populations; and (bb) Creating guidelines for a periodic independent audit and review of the cooperative, including recommendations for improvement, at least every three years. 10-16-1108. Financing. (1) As part of its report and recommendations to establish the cooperative, the board shall include a financing recommendation package based on projected costs and each possible federal waiver. The financing package must include currently available state and local government revenues that may be transferred to the cooperative. The board may present more than one package for the general assembly to refer to the voters pursuant to section 10-16-1105. The financing package may include: (a) Collecting a payroll contribution from employers and from employees; (b) A Colorado income tax contribution that would include nonpayroll income; (c) Determining the fee or premium structure and approval process, including a means-based fee or premium that ensures all income earners are contributing an amount that is affordable and fair; (d) Coordinating with existing, ongoing, and anticipated federal health care reform funding sources from federal and state programs; (e) Being consistent with state and federal requirements governing financial contributions for persons eligible for public programs; (f) Complying with federal requirements; and (g) Allowing for additional sources of revenue. (2) In addition to the duties described in subsection (1) of this section, the board may address other issues and implement other measures as necessary to create the cooperative. (3) The cooperative shall not be implemented unless the requirements of section 10-16-1115 (3) are met. (4) The board shall ensure that the health care benefits offered pursuant to the cooperative does not cause harm to persons eligible for benefits pursuant to the "Colorado Medical Assistance Act", articles 4, 5, and 6 of title 25.5, C.R.S. 10-16-1109. Refund savings to members. (1) The board shall design a method for refunding to members and employers accrued savings with the following considerations: (a) The amount an employer or member contributed; (b) The savings per member achieved by the member's integrated health care delivery system; (c) The need to invest savings in a reserve account to cover unanticipated or expanded health care needs and future increased costs of health care; (d) The savings achieved throughout the entire cooperative. 10-16-1110. Budget shortfalls. (1) The general assembly finds that, in spite of the cooperative's ability to introduce cost savings measures: (a) It is likely that health care costs will rise as scientific and technological advances lead to new ways to improve Coloradans' quality of life; (b) Coloradans will wish to take advantage of these advances; and (c) It is prudent to build into the cooperative the ability to increase funding and the ability of the cooperative to deal with budget shortfalls. (2) In order to allow the cooperative to address budget shortfalls, the board shall develop: (a) A short-term plan to deal with budget shortfalls; (b) A plan to increase revenues or decrease coverage if anticipated costs are greater than anticipated revenue; and (c) A procedure to refer to the voters if the long-term anticipated costs are greater than anticipated revenue. The procedure must include budget alternatives if revenue is not increased. 10-16-1111. Required covered benefits. (1) The board shall design a benefits package for the cooperative based upon medicare benefits and, as savings accrue, improve or add benefits that include: (a) Dental services; (b) Chiropractic services; (c) Vision care and correction; (d) Hearing services and hearing aids; and (e) Long-term care, including community-based and consumer-directed services. (2) The plan for the cooperative must include comprehensive medical benefits coverage for all members, must be coordinated with other public health efforts, and may be coordinated with public health officials, agencies, and organizations. 10-16-1112. Cooperative - secondary insurance. (1) The cooperative shall serve as a secondary insurance payer to any other health insurance coverage plan in which a member is enrolled. The cooperative shall make a payment to a provider only after other applicable insurance carriers have paid the full amount due under their plan. The total of a cooperative payment and all other insurance coverage plan payments must not exceed the amount that the cooperative would pay if it were the only insurance carrier making a payment. (2) If federal medicare waivers are not granted, the cooperative shall serve as a secondary payer to medicare. (3) The board shall establish rules for paying per member per month payments and base payments when a member has other health insurance or access to other health systems in the state. 10-16-1113. Gifts, grants, and donations - federal grant moneys. The board is authorized to seek gifts, grants, and donations and federal grant moneys to implement this part 11 and shall seek any additional federal funds or grants available for the cooperative or the state for innovations. Moneys received by the board must be transferred directly to the authority for the purposes of this part 11. The board shall deposit any moneys of the authority in a banking institution within or outside the state. Moneys from the general fund shall not be used for the implementation of this part 11. 10-16-1114. Duty to seek waivers, exemptions, and agreements. The board shall seek input from and collaborate with the department of public health and environment, the department of health care policy and financing, and the general assembly to seek all waivers, exemptions, and agreements from the federal government so that all current levels of funding from the federal government to the state, counties, or local governments for the provision and payment of health care services may be transferred to the authority once the cooperative is implemented in accordance with this part 11. 10-16-1115. Requirements for implementation of the cooperative - repeal. (1) Sections 10-16-1101 to 10-16-1106, 10-16-1113, and this section take effect upon the enactment of this part 11. (2) Sections 10-16-1107 to 10-16-1112 and 10-16-1114 do not take effect until the board identifies and guarantees that sufficient gifts, grants, and donations have been received to plan and develop the cooperative in accordance with said sections. Upon identification and guarantee that the board has received sufficient moneys to implement said sections, the board shall notify the revisor of statutes, in writing, of the effective date of said sections. If sufficient gifts, grants, and donations are not identified and guaranteed on or before July 1, 2012, said sections do not take effect, and this part 11 is repealed, effective July 1, 2012. (3) If sections 10-16-1107, 10-16-1111, and 10-16-1114 are implemented and the plan for the cooperative is developed and created, the cooperative shall not be implemented until: (a) Sufficient waivers, exemptions, and agreements are in place to effectively implement the cooperative; and (b) The general assembly approves the implementation of the cooperative by bill, refers the measure to the voters, and a majority of voters approve the measure. SECTION 2. Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.