Legislature Adopts Healthcare Cost Benchmarking

Issues & Policies

Expansion of the Office of Health Strategy’s duties to set annual healthcare cost growth and quality benchmarks and primary care spending targets were included in the state budget revisions.

CBIA supported the changes as a commonsense way to expose the true cost-drivers in healthcare, incentivize lowering costs across the board, and providing policymakers with data and analysis to craft public policy in the future to bring relief to small businesses.

Under the program, OHS must publish annual reports on total healthcare expenditures in Connecticut and quality benchmarks, including how payers and providers meet or exceed these metrics.

Payers and providers are required to provide OHS with specific healthcare cost and quality data, and this data must be reported to the Insurance and Public Health committees annually.

The benchmarking program, adopted by a number of other states, will incentivize healthcare entities to reign in costs by requiring OHS to identify payers and providers who exceed the cost growth and quality benchmarks, as well as drug manufacturers.

Primary Care, Wellness Programs

OHS also has the ability to requires those entities to participate in a public hearing and discuss ways to reduce their contribution to future health costs.

The bill also makes significant reforms to primary care. Under the measure, health carriers are now required to develop at least two health enhancement programs and offer it to insured individuals in a fully-insured plan. 

Wellness programs have become staples of large employer health plans for some time now.

Wellness programs reduce average healthcare costs by about $30 per member per month.

According to the Kaiser Family Foundation, 84% of large employers offering health benefits offered a workplace wellness program in 2019.

However, small employers have traditionally not followed suit. According to a survey conducted by the National Small Business Association, only 22% of small employers currently offer a wellness program.

The HEP requirement will equalize the playing field between large and small employers, and provide wellness programs that are not typically offers to small employers.

If employee uptake in the wellness programs is substantial, small businesses will benefit. According to a RAND report, wellness programs reduced average healthcare costs by about $30 per member per month.

Certificate of Need Reforms

In the budget, also includes a few measures that will increase Certificate of Need application fees, as well as close a loophole for service suspensions that was exposed during the COVID-19 pandemic.

CON is a regulatory program requiring certain types of healthcare providers to obtain state approval prior to making major change in the healthcare landscape such as mergers, substantial capital investments in new equipment or facilities, changing access to services, or discontinuing a medical service.

The budget includes provisions increasing the nonrefundable CON application fee from $500 to a range between $1,000 and $10,000 depending on the proposed project’s cost.

Application FeeProject Cost
$1,000Up to $50,000
$2,000>$50,000 and up to $100,000
$3,000>$100,000 and up to $500,000
$4,000>$500,000 and up to $1 million
$5,000>$1 million and up to $5 million
$8,000>$5 million and up to $10 million
$10,000>$10 million

The CON measures also include a new definition for “termination of services” which will require healthcare facilities to seek a CON when services cease for “a period greater than 180 days.”

Lawmakers approved this new definition following a number of service terminations that occurred during the height of the COVID-19 pandemic.

After Gov. Ned Lamont terminated the CON waiver in May 2021, some hospitals that suspended services did not resume those services, and OHS issued fines to these entities as a result of not applying for a CON.

Benefit Mandates

As is customary with any legislative session in Connecticut, a number of bills were raised that would have mandated small business insurance plans to cover certain benefits or change the way the plans are administered.

These bills, if enacted, would increase premiums.

Four health benefit mandates were raised by the Insurance and Real Estate Committee this year, and only one made it through both chambers to the governor’s desk. 

The legislature approved SB 358, which expands insurance coverage requirements for mammograms, ultrasounds, MRIs for breast screenings, and requires fully-insured policies to cover certain procedures related to breast cancer treatment, including breast biopsies; certain prophylactic mastectomies; and breast reconstruction surgery.

The bill also requires insurance coverage of a number of testing and treatments related to ovarian cancer.

The three benefit mandate bills that died include:

  • SB 377: Provides health insurance coverage for newborns
  • HB 5446: Provides equal coverage for medically necessary infertility treatments
  • HB 5386: Provides coverage for epinephrine cartridge injectors

Connecticut residents pay an additional $2,085 in premium costs because of the state’s 68 health benefit mandates.

Mandates drive up costs because with each new requirement, insurers must expand coverage to include additional services or devices.

This increases the cost of health insurance premiums, and those increases are passed directly onto enrollees.

Each year, Connecticut residents pay an additional $2,085.48 in premium costs because of the 68 health benefit mandates codified in law.

CBIA broadly opposes any healthcare mandate bill without a complete cost-benefit analysis being conducted prior to passage due to the enormous cost they impose in the aggregate.

High Deductible Health Plans

The Insurance Committee also raised two bills related to high deductible health plans.

The first, HB 5410, capped group high deductible health plan deductibles at the federal minimum of $1,400 for an individual and $2,800 for a family.

CBIA opposed this bill due to the drastic cost impact it would have on employers currently offering a HDHP. The committee did not act on the bill.

A second bill which CBIA supported was included in the final budget package and fixes a mistake as a result of the copay accumulator bill passed last year.

HDHPs were at risk this year of negative IRS tax consequences.

SB 357 specifies that certain cost-sharing requirements for manufacturer coupons for prescription drugs apply to high deductible health plans to the maximum extent permitted under federal law.

Because the legislature did not exempt HDHPs from legislation last year that required health insurance plans to apply manufacturer coupons to an individuals deductible, HDHPs were at risk this last year of negative IRS tax consequences.

HDHPs are forbidden from under federal law from crediting third-party discounts toward an individual or family’s coinsurance, copayment, deductible or other out-of-pocket limits.

Without this fix, Connecticut could have received enforcement guidance from the IRS resulting in all HSA-compatible HDHPs in the state not being permitted to advertise as a qualified HDHP and employees could lose access to contribute and spend HSA funds on qualified medical expenses. 

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


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