Out-of-Network Caps Harm Patients and Hospitals

Connecticut hospitals and health systems continue to urge lawmakers to oppose legislative proposals and initiatives in the governor’s biennial budget that would weaken healthcare in Connecticut, hurt patients, and make care less accessible.  One of the governor’s bills, HB 6871, An Act Limiting Out-Of-Network Health Care Costs, would cap out-of-network payment for hospital inpatient and outpatient services at 240% of Medicare or at a different amount determined by the Office of Health Strategy (OHS) through regulation.

The measures proposed in HB 6871:

• Could lead to more than $700 million in reductions to hospitals at a time when Connecticut hospitals continue to struggle with negative operating margins
• Jeopardize hospitals’ ability to maintain current levels of access to services for patients and undermines hospital efforts to rebuild and recover financially
• Unfairly favor insurance companies in payer/hospital negotiations
• Ignore the role of Medicaid underpayment on commercial costs

As described in the governor’s fact sheet accompanying the bill, the real intent of HB 6871 is not to protect patients — they are already protected by state and federal law.  Instead, the intent of HB 6871 is to favor national health insurance companies over Connecticut’s hospitals in commercial contract negotiations.  The legislation has everything to do with giving health insurance companies more leverage.  If insurers have no incentive to avoid going out of network, they are empowered to strong-arm hospitals into limiting reimbursements for in-network rates.  This is a bold attempt by the government to insert itself in rate negotiations in favor of one side — insurers that count profits in the billions.  At a time when hospitals are already struggling, this would jeopardize the ability to provide high-quality care.  This truly is not a patient-focused policy.  It is an insurer-focused policy.

The proposed caps do nothing to address the role that Medicaid underpayment plays in the cost of commercial insurance.  Medicaid underpayment in Connecticut has increased sharply, rising to $1.4 billion in 2023.  Because of the role commercial insurance plays in cross-subsidizing Medicaid underpayment, these losses put significant pressure on negotiations with commercial health insurance companies.  If the goal is to make care more affordable, this proposal fails, and reducing Medicaid underpayment must be part of the solution.

Click here to download and share a flyer with valuable information on the detrimental impact of out-of-network caps.

Click here to learn more about harmful policies in the governor’s proposed budget.

Click here to read the Connecticut Hospital Association’s (CHA) testimony opposing the bill.