4/26/2021

To: Interested Parties

From: United States of Care
Subject: The Nevada Option

The Case for the Nevada Option

Over the last several years, Nevada has made progress in

Figure 1: Nevada’s Uninsured Population by
improving its health system—from prescription drug Reported Coverage Barrier
transparency laws to protections from surprise medical
19%
bills. Nevada has also made gains in coverage by 27%
expanding its Medicaid program and establishing the
Nevada Health Link, resulting in 80,000 newly insured
residents. However, much work still needs to be done.
Even after embracing the Affordable Care Act, about
350,000 Nevadans remain without health insurance.1 17%
37%
Nevada ranks 49th among states for health system
performance and last for access to care, including Immigration Status is a Barrier
preventive services and mental health treatment. 2 Many Affordability Challenges in Nevada Health Link
Nevadans also remain overburdened by the cost of health Eligible for Medicaid but Unerolled
insurance or unaware that they qualify for free or reduced- Eligible for Nevada Health Link but Unenrolled
cost coverage options.3 About 37 percent of the
uninsured are considered eligible for Medicaid, but have Compiled using data from Guinn Center for Policy
not yet enrolled, and 27 percent of the uninsured report Priorities, Nevada’s Uninsured Population, 2019.
facing immigration-related barriers to accessing coverage.4
Although the Federal American Rescue Plan is bringing much-needed relief for Nevadans purchasing
health coverage through the Nevada Health Link and COBRA, the nature and extent of the state’s health
and coverage crisis goes beyond adding temporary new federal subsidies. A state-based solution can
give state officials new tools for lowering costs and improving coverage for a diverse set of populations.

1
Kaiser Family Foundation, State Health Facts: Uninsurance by Coverage Population, 2019.
2
Commonwealth Fund, 2020 State Report Card on Health Care. Available at:
https://2020scorecard.commonwealthfund.org/methodology
3
See, Bannow, Tara. Modern Healthcare, Rising Bad Debt Not Recognized in DSH formula for Years, 2019:
https://www.modernhealthcare.com/providers/rising-bad-debt-not-reflected-dsh-formula-years. Of the total uninsured
population in Nevada, about 37 percent of people are eligible for, but not yet enrolled in, Medicaid and 19 percent are
estimated to be eligible for premium tax credits to help reduce their cost of coverage through the Nevada Health Link and
17 percent cannot afford coverage through Nevada Health Link. See, The Guinn Center for Policy Priorities, Report:
Nevada’s Uninsured Population, 2019.
4
Guinn Center for Policy Priorities, Nevada’s Uninsured Population, 2019
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The Proposal
Under this proposal, state officials would establish a public health insurance option—the Nevada
Option—by January 1, 2025. To reduce premium costs, the proposal would leverage the state’s largest
form of purchasing power to get a better deal for Nevadans who shop in the state’s nongroup markets.
This power would come from the state’s Medicaid managed care contracts (which are worth nearly $2
billion today to insurers). This is not a new tool. It is similar to the buying power of a large employer who
purchases health insurance for its employees; the greater the number of employees an employer has the
greater the leverage for the employer when negotiating with insurers.
The Nevada Option would look and feel much like a silver or a gold qualified health plan, except that it
would be more affordable—through the state’s ability to negotiate a better deal in its contracts with
health insurers with a new statewide competitive procurement for the Nevada Option that would coincide
with the next procurement for Medicaid (which would also be statewide). Health insurers participating in
Nevada’s Medicaid managed care program would be required to also offer a good faith bid for the
Nevada Option.
The new option is designed to help most, if not all, of the populations who are uninsured today. For
example, the new option would be available for purchase from the Nevada Health Link or directly from
the state contracted health insurers. This makes the Nevada Option available to approximately 67
percent of the uninsured (i.e., all residents who are eligible for the exchange and those with immigration
barriers). The proposal also allows the state to offer the new option to small businesses. If this option is
paired with outreach and enrollment activities similar to those used for the Nevada Health Link, the
expectation is that more Nevadans would shop for coverage when the Nevada Option is released, and
that, through this process, more residents would learn of their eligibility for no-cost or low-cost coverage
in Medicaid or through the Nevada Health Link with premium tax credits, respectively.
The proposal also includes several key coverage items for Medicaid. It would expand the list of providers
eligible to use presumptive eligibility in Medicaid for pregnant women which allows people to gain
coverage quickly, increase income eligibility for pregnant women up to 200 percent of the federal
poverty level (closer to the national average) and would cover new services and supports in Medicaid to
promote healthier pregnancies and births.
Under this proposal, providers would negotiate their rates like they do today in the nongroup market
with the health insurers participating in the Nevada Option. The proposal, however, seeks to protect
providers from being negotiated down to lower Medicaid rates by insurers and establishes a floor for
reimbursement rates that are comparable to or better than Medicare. This would also create a new level
playing field for providers statewide, especially for those smaller, independent providers who often lack
leverage to negotiate a better deal with insurers. The proposal also recognizes the significant value of
Nevada’s safety-net system and would require payers to pay these providers (e.g., critical access
hospitals, federally qualified health centers and rural health clinics) reimbursement rates that are
comparable to or better than the higher cost-based or encounter rates that these providers receive today
in Medicare.
To ensure consumers have access to care, the proposal would require providers participating in other
state networks (Medicaid, the public employee benefit plan, and workers compensation) to also
participate in Nevada Option. However, this requirement should not impact a provider’s leverage with
health insurers with respect to negotiating a fair rate for the Nevada Option. Nothing would require
providers to accept all offers from insurers in their region to meet the proposal’s participation
2
requirements. Providers only need to participate in a network for the new option. Insurers would still
need to compete for the provider’s participation, as it is ultimately the health carrier's responsibility to
have a compliant network and meet all requirements of the proposal and the network adequacy
standards for the nongroup markets.
The Unique Market in Nevada
Unlike other states pursuing a public option, Nevada faces a unique coverage environment, with a much
higher uninsured rate. Nevada’s uninsured population of 350,000 nearly doubles the size of the
nongroup (individual) market (with 167,800 covered lives), and 95,000 people are estimated to make up
the state’s current small group portion of the employer market that may be able to purchase the product
under proposal.
Given the size of its uninsured population, a public option in Nevada is expected to attract more
residents who are uninsured than insured.5 This means most providers and hospitals should expect to
see some increases in revenue from services provided to this newly insured population—whose services
today go unpaid, resulting in bad medical debt and higher rates of uncompensated care. Nationally,
Nevada ranks in the top ten of states with highest median bad debt expense per adjusted discharge, with
Nevada being only one of two Medicaid expansion state in that group.6
Nevada’s Hospitals do not rely solely on the
Nevada Health Insurance Market
nongroup market (where the public option Employer Only
By Coverage Source (2019)
will be offered) for their revenues. In fact, Non-group Only
they also participate in Medicaid and 13%
Medicaid Only
Medicare and receive most of their revenue 2%
9% Medicare Only
from the large employer market. These
other markets provide significant value in Military
55%
revenue and profits to Nevada’s hospitals, 15% Uninsured
especially considering that these other
markets represent over 2 million people, 6%
over half of whom are covered by large Employer Non-group Medicaid Medicare Military Uninsured
employer products, which are known for 1,498,600 167,800 412,100 230,800 52,400 349,000
paying providers much higher rates. See Kaiser Family Foundation, State Health Facts, 2019.

Although hospital and provider financial

stability is important, their expectations for revenues and profits must be reasonable. In 2019, Nevada
acute care hospitals posted income of over half a billion with revenues of $6.8 billion7 and Nevada, ranks
at the very top, nationally, with the highest percentage of for-profit hospitals.8 This level of profit begs

5
See Manatt/Wakley, Senate Concurrent Resolution #10 Study: Evaluating Public Health Insurance Option Plans for
Nevada Residents, Jan. 2021.
6
See, Bannow, Tara. Modern Healthcare, Rising Bad Debt Not Recognized in DSH formula for Years, 2019:
https://www.modernhealthcare.com/providers/rising-bad-debt-not-reflected-dsh-formula-years
7
Nevada Business, Healthcare in Nevada: A look at hospitals in the Silver State, 2020. Available at:
https://www.nevadabusiness.com/2020/04/healthcare-in-
nevada/#:~:text=Nevada's%20acute%2Dcare%20hospitals%20posted,Health%20Care%20Financing%20and%20Policy
8
Kaiser Family Foundation, State Health Facts, Hospitals by Ownership Type, For-Profit Only, 2019.
https://www.kff.org/other/state-indicator/hospitals-by-
ownership/?dataView=0&currentTimeframe=0&selectedDistributions=for-profit&sortModel=%7B%22colId%22:%22For-
Profit%22,%22sort%22:%22desc%22%7D
3
the question as to why the state continues to rank in the bottom for health system performance and
quality. Maintaining a system with substantial profits for insurers and for-profit hospitals should not come
at the cost of improving access to coverage and care for 350,000 Nevadans. Improving access to
services through affordable health insurance helps connect people to primary care and chronic care
management (not just the hospital setting), which not only improves health outcomes and value, but also
leads to lower health care costs to the system overall.
Conclusion
The Nevada Option presents the state with an opportunity to address significant gaps in coverage and
care for its residents. With a higher proportion of uninsured individuals (and the likely pent-up demand
for affordable coverage), Nevada has greater potential to attract more uninsured individuals to its new
public option than individuals who are privately insured, today. By increasing the number of people
insured in Nevada, the public option should result in new revenue for most providers—replacing many of
the losses Nevada providers experience each year in unpaid medical debt and uncompensated care.
Moreover, with more affordable care comes better access to primary care and preventive services in
addition to treatment for people suffering with chronic health conditions, mental health illnesses, and
substance use disorders. A healthier population for Nevada will not only help lower avoidable hospital
costs and reduce the need for costlier services for having to address unmet chronic health needs, it will
also mean a healthier workforce and overall economy for the state.