As we have previously written on, Connecticut Governor Ned Lamont recently signed into law the state’s budget as Public Act 22-118 (Act), which makes various changes to the Connecticut statutes. Among the changes, the Act expands the authority of Connecticut’s Office of Health Strategy (OHS).
The Act requires OHS to develop and adopt annual health care cost growth and primary care spending targets. OHS is required to publish on its website the benchmarks and spending targets by July 1, 2022. The cost growth benchmarks and primary care spending targets must be published as a percentage of total medical expenses for the years 2021 through 2025. The term “total medical expenses” is defined in the Act and includes the total cost of care of a patient population of a provider entity (described below) or payer calculated by totaling the claims-based spending, non-claims payments (such as incentive and care coordination payments), and patient cost-sharing amounts. A provider entity is “an organized group of clinicians that (1) come together for contracting purposes or (2) is an established billing unit with enough attributed lives (i.e., patients), collectively, to participate in total cost of care contracts during any given calendar year, even if it is not participating in these contracts.” The term “total cost of care contract” is not defined. At a minimum, a provider entity must include primary care providers. The quality benchmarks must be published for the years 2022 through 2025. Thereafter, OHS must develop and adopt the foregoing benchmarks and spending targets for every succeeding five years. The Act includes a process for public input and approval by the legislature of the benchmarks.
Beginning August 15, 2022, the Act requires each payer to report data to OHS as necessary for OHS to calculate “total health care expenditures,” as well as primary care spending as a percentage of total medical expenses and the “net cost of private health insurance.” Under the Act, total health care expenditures means the sum of all health care expenses in Connecticut from public and private sources in a single year. Net cost of private health insurance is defined under the Act to mean “the difference between the premiums earned and benefits incurred, including the insurers’ cost of paying bills; advertising; sales commissions and other administrative costs; net additions or subtractions from reserves; rate credits and dividends; premium taxes; and profits or losses.”
On or before August 15, 2023, provider entities and payers must report annually to OHS on the health care quality benchmarks adopted by OHS for that particular year and prior years, if requested by OHS.
Additionally, OHS must post an annual report on total health care expenditures beginning by March 31, 2023. The report must break down aggregate medical expenses by payer and provider entities and include information on service category trends, primary care spending, insurance costs by policy type, and any information relevant to inflation, access to care, and response to emergencies.
The Act gives OHS the authority to identify provider entities who exceed the cost growth and quality benchmarks or fail to meet the primary care spending target. Prior to identifying provider entities that do not meet cost growth and quality benchmarks or fail to meet primary care spending targets, OHS must meet with provider entities upon their request to review and validate collected data.
Notably, the Act also permits OHS to require provider entities identified as significantly contributing to exceeding the aforementioned benchmarks to participate in a public hearing to discuss ways to reduce their contribution to the growth of health care costs.
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