Committee hears competing views on MCO rebalancing; substitute for House Bill 589 rolled for further work

Members of the House Health and Human Services Committee heard testimony on the committee substitute for House Bill 589, which would direct the Health Care Authority (HCA) to ensure a proportional distribution of Medicaid enrollees among the state’s managed care organizations (MCOs) when members do not select a plan.

Supporters argued rebalancing protects consumer access and maintains a competitive market. Witnesses for newer or smaller MCOs and consultants who have worked on similar rebalancing in other states said concentration of enrollment in two large plans risks diminished competition and that reassigning unenrolled or auto‑assigned members to under‑represented MCOs can stabilize the market and preserve provider networks.

Opponents — including the Health Care Authority, large MCOs and disability advocates — warned HB 589 would limit member choice, risk disrupting continuity of care and may conflict with federal rules requiring member choice in Medicaid. HCA witnesses said the agency is already pursuing auto‑assignment mechanisms tied to quality metrics and warned that the statute as drafted could force HCA to reopen federal waivers and agreements. Insurers said automatic reassignment of existing enrollees would undermine continuity of care and the long effort to inform members during the RFP/open‑enrollment rollout.

Committee members questioned how the bill would treat special populations — dual eligible (Medicare‑Medicaid) beneficiaries, tribal members, and those in Dual‑SNP or other carve‑outs — and asked whether caps or carve‑outs would be used to protect continuity for people already aligned across programs. Witnesses said it is common in other states to carve out certain populations from forced reassignment to preserve continuity.

Given the legal and operational concerns raised by HCA and carriers, and to allow technical fixes (for example, to explicitly protect existing enrollees and carve out special populations), the committee agreed to roll the substitute and continue work; no final vote on the substitute was taken in this hearing.

What’s next

Committee members said staff and stakeholders should draft clarifying language addressing consumer choice protections, treatment of dual‑eligible/D‑SNP populations, and whether rebalancing applies only to new or non‑choosing enrollees. The bill was rolled until Wednesday for further work.