Most state legislatures have adjourned after busy sessions focused on addressing the COVID-19 public health emergency. Nonetheless, lawmakers introduced over 200 bills to curb health system costs. Eighteen states and DC enacted 28 laws in 2021, with different strategies and frameworks to reign in rising healthcare costs in the United States.

Consolidation 

This year, Oregon enacted a law that requires health care entities to obtain approval from the Oregon Health Authority (OHA) before any mergers, acquisitions, or affiliations of entities that:

• had $25 million or more in net patient revenue in the prior fiscal year; or
• will result in one entity having an increase in net patient revenue of $10 million or more.

Seven other states introduced bills targeting hospital consolidation and anticompetitive contracting. The National Academy for State Health Policy (NASHP) released model legislation earlier this year prohibiting anticompetitive clauses in contracts between health systems and insurers.

Certificate of Need

States expressed an unprecedented interest in limiting, repealing, and creating exemptions for their certificate of need (CON) programs early in the legislative session with sixteen states introducing 74 bills that repeal part or all of their CON requirements. Montana revised their CON requirements to only apply to long-term facilities and services, and Michigan exempted positron emission tomography (PET) scanner services from CON regulations.

Later in the session, several bills were introduced to strengthen or implement CON programs. For example, Minnesota, which has not maintained a formal CON program since 1984, introduced a bill to establish a Health Care Commission tasked with developing a state health care? plan for the issuance of CON, though this bill did not pass. Despite only a handful of bills relating to CON passing, the volume of legislation introduced is notable. NASHP will continue to track state interest in modifying their CON policies to identify potential trends that may emerge during the 2022 legislative session.

#NASHPCONF21 Explores State Strategies to Combat Rising Health System Costs

Join NASHP’s 34th Annual State Health Policy Conference, from Sept. 20-22, 2021, virtually. #NASHPCONF21: State Health Policy Unmuted will explore state efforts to curb health system costs, the challenges they face, and strategies to overcome them:

• State-Only Summit on Health Systems Costs (Preconference): 2:30-5pm (ET) Monday, Sept. 20, 2021

• Data and Policy: A Joint Session planned by NASHP and NAHDO (National Association of Health Data Organizations): 3:15-4:15pm (ET) Tuesday, Sept. 21, 2021

• Roundtable Discussion: The Public Option: 1:05-2:05pm (ET) Wednesday, Sept. 22, 2021

• Confronting the Hospital Cost Conundrum: Understanding the Problem and What States Can Do: 2:10-3:10pm (ET) Sept. 22, 2021

Cost Growth Benchmark

A growing number of states are exploring cost growth benchmarks, which establish specific limits for increases to a state’s total cost of care expenditures in a year. In May, Oregon added teeth to their existing cost growth target program by authorizing the Office of Health Services to impose financial penalties on providers and payers who exceed the cost growth target without reasonable cause for three out of five years, or who refuse to participate in the program.

Other states – including California, Connecticut, and Rhode Island – introduced bills to create or codify health care cost benchmark or target programs. Massachusetts, the first state to implement a health care cost growth benchmark, introduced several bills to create new targets including an aggregate primary care expenditure target as well as a health care consumer cost growth benchmark for the average aggregate growth in out-of-pocket health care cost growth and premium cost growth in the Commonwealth.

All-Payer Claims Databases

During this session, Indiana established their all-payer claims database (APCD), which is a large state database that collects health care claims data from payer sources. The law directs the Department of Insurance (DOI) to issue a request for proposal (RFP) by the end of 2021 for a vendor to create and maintain a free-to-use online web portal for the APCD and requires the DOI and the Family and Social Services Administration to adopt emergency rules requiring health payers to submit claims to the APCD vendor. The law also establishes an eight-member APCD Advisory Board to help ensure the integrity, security, and privacy of the APCD. Several other states sought to join the 21 states with existing APCDs, while others attempted to expand reporting requirements for their existing APCDs.

Public Option

During the 2021 legislative session, twelve states introduced public option legislation. These bills outlined multiple approaches, the most popular being Medicaid buy-ins, Medicare reference-based reimbursement, and standardized plans.

Washington first established their public option, known as “Cascade Care”, in May 2019, and residents had the option to enroll in participating Cascade plans through the state’s marketplace for coverage beginning of 2021. However, Cascade Care’s health plans were only available in 19 of the state’s 39 counties, so the state enacted “Cascade Care 2.0” this year to strengthen the public option program. The law requires hospitals that accept Medicaid or any public employee health plan to contract with at least one public option plan to provide in-network services to enrollees of Cascade Care. The bill also gives state regulators the authority to issue fines to implement this requirement, adding enforcement provisions to ensure the state’s public option has a statewide network of providers.

In June, Nevada became the second state to enact a public option, directing the state to design, establish, and operate a public option to be sold through the state’s health insurance exchange effective 2026. The plan aims to provide consumers with comprehensive health insurance at a lower cost by requiring premiums in each zip code to be at least five percent lower than the reference premium for that zip code, and the average premium to be at least 15 percent lower than the average reference premium in the state; premiums cannot increase by a percentage greater than the Medicare Economic Index. Colorado also enacted a bill requiring carriers to offer a standardized health care plan and achieve annual premium reductions of five, 10, and 15 percent in 2023, 2024, and 2025, respectively; for 2026 and beyond, carriers must limit annual premium increases at rates no greater than medical inflation. Additionally, Oregon approved a public option study bill directing the Oregon Health Authority and Department of Consumer and Business Services to develop an implementation plan for a public health plan available to individuals and families in the individual health insurance market and to small employers whose employees struggle with health care costs.

For more information on bills introduced during the 2021 legislative session, explore NASHP’s?Legislative Tracker.