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The Rockefeller Public Option Amendment

September 29, 2009 - by Donny Shaw

Here’s the full text of the amendment from Sen. Jay Rockefeller [D, WV] to add a public option to the Baucus health care bill that is being debated right now:

Rockefeller Amendment #C7 to Title I, Subtitle C (Making Coverage Affordable)

Short Title: Establishment and administration of a public health insurance option as an exchange-qualified health benefits plan (Sections 221, 222, 223, 224, 225, and 226 of H.R. 3200, America‘s Affordable Health Choices Act of 2009)

Description of Amendment: Sec. 221. Establishment and administration of a public health insurance option as an Exchange-qualified health benefits plan. Requires the Secretary of Health and Human Services to develop a public health insurance option to be offered starting in 2013 as a plan choice within the Health Insurance Exchange. It participates on a level playing field with private plan choices. Like private plans, it must offer the same benefits, abide by the same insurance market reforms, and follow provider network requirements and other consumer protections.

Sec. 222. Premiums and financing. Premiums for the public option are geographically-adjusted and are required to be set so as to fully cover the cost of coverage as well as administrative costs of the plan. This includes a requirement that the public option, like private plans, include a contingency margin in its premium to cover unexpected cost variations. In order to establish the public option, there is an initial appropriation of $2 billion for administrative costs and in order to provide for initial claims reserves before the collection of premiums such sums as necessary to cover 90 days worth of claims reserves based on projected enrollment. These start up funds are amortized into the premiums for the public option to be recouped over the first 10 years of operation. The plan must be self-sustaining after that initial funding.

Sec. 223. Payment rates for items and services. The Secretary of HHS establishes geographically-adjusted provider payment rates for the public option. For the first three years, those rates are based on Medicare rates with a 5% add-on for practitioners who also participate in the Medicare program. This increase also applies to practitioners, like pediatricians, who do not typically participate in Medicare. After the first three years, the Secretary is granted greater flexibility in setting rates, but the general rule is that overall spending should remain consistent with the initial levels. Flexibility is provided to the Secretary to create payment rates for services not covered by Medicare, pursue delivery system reforms, make adjustments to offset geographic variations and adjust rates as necessary to assure competitiveness with Exchange-participating plans or for excessive or deficient payments. Medicare providers are presumed to also be participating in the public option unless they opt out. There are no penalties for opting out. The Secretary also has authority to negotiate prescription drug prices for the public option.

Sec. 224. Modernized payment initiatives and delivery system reform. The Secretary is empowered to move forward with delivery system reforms to change the way the public option pays for medical services to promote better quality and more efficient use of medical care. Such payment changes must seek to reduce cost for enrollees, improve health outcomes, reduce health disparities, address geographic variation in the provision of medical services, prevent or manage chronic illnesses, and r promote integrated patient-centered care.

Sec. 225. Provider participation. Provides the Secretary of HHS with the authority to develop conditions of participation for the public health insurance option. Providers must be licensed in the state in which they do business. Physician participation comes in two types: preferred physicians are those physicians who agree to accept the public option‘s payment rate (without regard to cost-sharing) as payment in full; participating non-preferred physicians are those who agree not to impose charges in excess of the balance billing limitations in Medicare. Providers must be excluded from participating in the public option if they are excluded from other federal health programs.

Sec. 226. Application of fraud and abuse provisions. Applies Medicare‘s anti-fraud and abuse protections to the public health insurance option.

UPDATE: The amendment was defeated 8-15. The eight “yeses” were all Democrats – Rockefeller, Schumer, Bingaman, Wyden, Stabenow, Menendez, Kerry, Cantwel.

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