New Bill Offers Alternative Path for Addressing Healthcare Costs

The state’s healthcare debate heated up this week after new legislation laying out alternative solutions for addressing costs was introduced at the General Assembly.

HB 1006, scheduled for a public hearing before the Insurance and Real Estate Committee Thursday, March 11, offers a different path than the controversial public option bill the legislature is also considering.

More than 20 pages of the 55-page bill deals with the establishment of a benchmarking program similar to that of Massachusetts and other states.

Sections 1-9 essentially codifies Gov. Ned Lamont’s executive order No. 5 by requiring the Office of Healthcare Strategy to develop quality benchmarks, monitor the development of accountable care organizations and patient-centered medical homes, enhance transparency of healthcare entities, and oversee delivery and payment models.

Under these sections, OHS  would establish an annual healthcare cost growth benchmark, as well as a primary care benchmark.

Costs

The latter target ensures that primary care spending as a percentage of total healthcare expenditures reaches a goal of 10% for the calendar year beginning January 1, 2026.

After collecting the data, OHS will be required to submit an annual report disclosing the health status adjusted total medical expenses for the preceding calendar year, including, but not limited to, a breakdown of such expense by: (a) major service category; (b) payment methodology; (c) relative price; (d) direct hospital inpatient cost; (e) indirect hospital inpatient cost; (f) direct hospital outpatient cost; (g) indirect hospital outpatient cost; and (h) primary care spending as a percentage of total healthcare expenditures, to the General Assembly.

OHS will also be authorized to require any healthcare entity or payer that is found to be a “significant contributor to healthcare cost growth in th[e] state during the preceding calendar year to participate in [an] informational hearing.”

Benchmarks

At this hearing, the healthcare entity or payer will be required to provide testimony and provide information on proposed actions to reduce future contribution to the state’s cost-growth benchmark.

After the hearing, OHS may take formal action and require the entity or payer to file a proposed performance improvement plan.

Major concerns with public option #healthcare bill, as @cthealthnotes points out: "A public option is backed by the state—meaning the liability falls on taxpayers as well as schoolchildren, nursing home residents, people with disabilities, and others." https://t.co/FKHVmuqTcr

— Chris DiPentima (@ChrisDipentima) March 2, 2021

OHS may approve the plan only if it is reasonably likely that (1) the plan addresses the cause of such entity’s or payer’s excessive cost growth; and (2) the entity or payer will successfully implement such proposed plan.

If approved, the entity or payer must immediately make good faith efforts to implement the plan and will be subject to additional reporting requirements deemed necessary to ensure successful implementation.

Drug Imports

Sections 10-14 of the bill tasks the state Department of Consumer Protection with establishing a “Canadian legend drug importation program.”

Under these sections, the commissioner shall (1) provide for the importation of safe and effective legend drugs from Canada that have the highest potential for cost savings in the state; and (2) designate one or more participating wholesalers to distribute legend drugs in the state.

The bill calls for establishing a program to important prescription drugs from Canada.

However, the bill conditions the implementation of the program on the approval of a request to the Secretary of the U.S. Department of Health and Human Services.

After approval, the department has 180 days to establish the drug importation program.

Section 12 requires that a participating wholesaler (1) is registered with HHS; and (2) holds a valid labeler code issued by the FDA.

Standards

This section also requires that legend drugs imported under this bill meet FDA standards for drug safety, effectiveness, misbranding and adulteration.

The section also explicitly prohibits the importation of controlled substances, biological products, infused drugs, intravenously injected drugs, drugs inhaled during surgery and parenteral drugs.

The bill explicitly prohibits the importation of controlled substances, biological products, and infused drugs.

Section 13 requires that each participating Canadian supplier (1) complies with track-and-trace requirements; (2) not distribute outside of the state; (3) maintain certain information and documentation for submission to the Department. 

Section 14 authorizes the commissioner to suspend importation and distribution of a legend drug if either the wholesaler or Candian supplier violates any of the provisions in the above sections.

Such suspensions may be subject to appeal by the putative violator.

Assessments, Transparency

Section 26 of the bill changes the way assessments on health carriers are approved.

Under this section, two new hurdles are adopted: (1) a public meeting of the exchange’s board of directors for the purpose of receiving public comment concerning a proposed assessment, fee, increase, method or change in method before the assessment is charged and; (2) approval by the Insurance Committee.

The bill improves transparency as it relates to the state-run municipal healthcare plan, which is the model for the public option legislation.

Section 24 of the bill improves transparency as it relates to the state-run municipal healthcare plan, which is the model for the public option legislation.

Under this section, the Auditors of Public Accounts are required to submit an annual report disclosing an audit to the Appropriations, Finance, Revenue and Bonding, and Human Services committees.

The section allows the auditors to engage the services of third-party actuaries, professionals and specialists to perform the audit.

Reinsurance

Section 23 of the bill requires OHS, in conjunction with the Office of Policy and Management, the Connecticut Insurance Department, and the Health Reinsurance Association to seek a 1332 state innovation waiver to establish a reinsurance program.

The section caps the annual state contribution for the fund at $21.21 million and will be used to establish a reinsurance program for the individual health insurance market designed to lower premiums on plans sold in the market.

One report shows a reinsurance program could cut health insurance premiums by 5%.

The program is made contingent on the federal government’s approval of the 1332 waiver. 

According to a Wakely report released in 2019, a $21.2 million state contribution could result in the state receiving $25.6 to 28.4 million in federal pass-through funding while cutting health insurance premiums by 5%.

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For more information, contact CBIA’s Wyatt Bosworth (860.244.1155) | @WyattBosworthCT