CT debates Medicaid reimbursement hikes as advocates plead to reform ‘inconsistent, broken’ system

Stamford Advocate – Friday, April 4, 2025
By Cris Villalonga-Vivoni

Health care professionals and advocates have sounded the alarm on the historically low Medicaid reimbursement for over a decade, but state lawmakers, on both sides of the political divide, have been unable to get a bill off the ground that would raise it for one reason or another.

With the possibility of federal Medicaid cuts as part of an effort to support major tax cuts still looms and cost of care increases, advocates at a public hearing on Thursday for a Medicaid reporting bill say drastically raising the state reimbursement is needed more than ever between the uncertainty and the completion of an upcoming study.

The state commissioned a study on the Medicaid rates, which haven’t been broadly adjusted since 2007, through the Department of Social Services, with the final half of the report only released in December. Analyzing rates for services across the board, the study found that Connecticut paid significantly less for services than comparable states.

A few Medicaid bills are currently inching their way through the legislative process. The first, introduced by the Public Health Committee, proposes to increase reimbursement in phases to address the underpayment found. Already on the House floor calendar, the bill would require that all Medicaid reimbursement rates are at least 75% of the most recent Medicare rate or a percentage based on the Medicaid study five-state benchmark, resulting in a similar rate increase by June 2028.

It would also require the Department of Social Services to adjust rates annually, rebase federally qualified health centers encounter rates, and give equal reimbursement for a given healthcare service regardless of whether it is provided to an adult or pediatric patient. If passed, the estimated cost to the state is approximately $150 million when annualized, with extra annual increases, according to the fiscal note. Still, the actual price depends on the methodology ultimately used.

Thursday’s public hearing was dedicated to a companion house bill introduced by the Appropriations Committee that creates an annual report with the Department of Social Services to study the reimbursement rise rollout. The commissioner would also review the reimbursement rates once every five years to determine if increases or rebases are necessary.

Although the bill focuses on setting up a reporting system, many providers and advocates took the opportunity to share concerns about the system. Professionals reminded legislators of the results of the commissioned study while also introducing their collected data points.

The Community Health Center Association of Connecticut, for example, found that health centers in Connecticut lose $85 on every Medicaid medical visit and $121 on every Medicaid dental visit on average, after reaching out to peer associations in multiple states, said Deb Polun, the group’s chief strategy officer, at the hearing.

She said rates for community health centers were set in 2002, seeing “minimal” annual adjustments through federal law.

Some health centers also received rate raises through the Department of Social Services Change in Scope process, which would allow for rate adjustments based on changes to services. However, Polun said the system is “inconsistent, broken, and out of compliance with federal law,” where adjustment requests are denied on “reasons that appear arbitrary.”

In early March, the association sent a declaratory ruling request to the Department of Social Services, stating the agency hasn’t complied with state and federal laws with the periodic Medicaid adjustments for federally qualified health centers.

Although she said that she appreciates the need to rebase rates on a regular basis, Polun emphasized that it needs to be looked at now. Polun said some health centers have reduced services and hours while others are “seriously considering doing so.”

“The main way that we’ve been able to reduce the gap between cost and rates is actually by reducing services. We used to have a gap of about $10 million in rates for dental. That new gap is about $6.4 million and how that happened was, unfortunately, health centers reduced their dental services last year,” she said, noting a 23% reduction in Medicaid dental visits at health centers over the past year.

Connecticut hospitals, on the other hand, are reimbursed less than 60 cents on the dollar for Medicaid patients after taxes, with the hospital operating shortfall continuing to grow, reaching $1.4 billion in the fiscal year 2023, according to testimony submitted by the Connecticut Hospital Association. It cites an Office of Health Strategy 2022 report that found the shortfall is 79% higher than the national average.

This “chronic underinvestment,” as described in the testimony, also ripples out to place pressures on the negotiations between commercial health insurance.

“We encourage the legislature to provide for hospital increases, and that such increases could be enabled by a comprehensive redesign of the Medicaid program,” the association wrote. “Such redesign should consider a better way to use Connecticut’s hospital tax program and other sources of funds, to benefit the state, taxpayers, patients, and the hospital and other Medicaid providers on whom they depend for care.”

Despite the numerous advocates and lawmakers clamoring for the increase, raising Medicaid reimbursement faces the uphill fiscal battle against Gov. Ned Lamont’s proposed budget and hesitancy in the past to support a broad reimbursement raise.

His budget proposes increasing hospital taxes and $35.4 million to raise Medicaid reimbursement over the next two years. Lamont’s proposed changes would save the state $150 million by shifting some Medicaid costs to hospitals, but advocates say that it’s still not enough.

“The plan is short on details and insufficient to meet the urgent needs of the Medicaid program,” said Ben Shaiken, director of government relations for the CT Community Nonprofit Alliance.

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