State Legislative Leaders Propose Medicaid Reimbursement Reforms

On Tuesday, January 28, Democratic leaders from the Connecticut House of Representatives and Senate, including the co-chairs of the Appropriations and Human Services Committees, unveiled a multi-year plan to increase Medicaid reimbursement rates for certain healthcare providers.

The proposal does not include increased reimbursements for general acute care hospitals or nursing homes.  According to a summary provided by Speaker of the House Matt Ritter, the proposal includes:

• Increasing reimbursement rates, up to current reimbursement levels under Medicare. The legislators note that many providers are still reimbursed using the 2007 fee schedule such as dental, school-based health centers, family planning, psychology, and other services
• Bringing providers up to at least a 75-80% reimbursement benchmark and filling in coverage gaps, such as raising reimbursements for certain provider groups excluded from the Department of Social Services’ (DSS) recent study on Medicaid rates, including home and behavioral health, dental, autism, naturopathy, and others
• Increasing formula grants under Medicaid to providers not currently covered in the Department of Social Services’ recent study on Medicaid rates, including community-based Federally Qualified Health Centers (FQHCs), substance abuse treatment, hospice, and home healthcare

It has been nearly two decades since Connecticut’s Medicaid reimbursement rates were broadly adjusted.

“It occurred to me that in the Medicaid program, we are still, in 2025, asking providers, doctors, nurses, hospitals, clinics to accept 57% of what Medicare got paid in 2007,” Human Services Committee Co-Chair Senator Matt Lesser remarked during a press conference to announce the proposal.  “I’m really happy that we are now able to make this historic investment in shoring up the Medicaid program.”

Lesser explained, to achieve the objective of indexing rates to 2025 prices, the plan will be implemented in phases over four years — starting with an immediate $75 million investment followed by a $150 million investment, then a final $200-$250 million investment.  Human Services Committee Co-Chair Representative Jillian Gilchrest added the plan establishes a system in which reimbursement rates are re-evaluated every two to three years, ensuring they are on par with Medicare rate increases.

CHA released a statement in response to the announcement, which reads:

“We look forward to being part of continuing conversations with lawmakers, the governor, state policymakers, and other advocates to ensure that solutions address pressures across healthcare and support patients, healthcare workers, and communities.  The ultimate goal should be to increase Medicaid rates across the healthcare continuum.  This includes hospitals where providers care for everyone who walks through their doors, regardless of their ability to pay, even as Medicaid underpayment—which totaled more than $1.4 billion in hospitals in 2023—creates staggering challenges.  The goal should also include payment reforms that enable investments in the community to ensure the Medicaid program is better able to address root cause drivers of chronic disease and poor health outcomes.  The need to include hospitals in immediate efforts is crucial and becomes even more so when the hospital tax settlement expires in the upcoming biennium.”

Legislative leaders said the proposal was informed by the Department of Social Services’ (DSS) two-part study on Connecticut Medicaid rates.  The report on Phase 1 of the study, released in February 2024, revealed Connecticut’s distressingly low Medicaid reimbursement rates, prompting state officials and lawmakers to sound the alarm on the detrimental impact of insufficient government payments.  The report on Phase 2 of the study, released earlier this month, confirmed that rates for healthcare providers across the continuum lag significantly behind peer states.