HB 5377, An Act Concerning Return Of Health Care Provider Payments And Site Of Service Billing Requirements

TESTIMONY OF THE CONNECTICUT HOSPITAL ASSOCIATION
SUBMITTED TO THE INSURANCE AND REAL ESTATE COMMITTEE

Tuesday, March 3, 2026

The Connecticut Hospital Association (CHA) appreciates this opportunity to submit testimony concerning HB 5377, An Act Concerning Return Of Health Care Provider Payments And Site Of Service Billing Requirements.  CHA supports Section 1 of the bill and opposes Section 2 the bill.

Connecticut hospitals make our state stronger by delivering nationally recognized, world-class care, supporting jobs and economic growth, and serving communities across Connecticut.  Every day, hospitals improve access, affordability, and health equity — providing care to all patients regardless of ability to pay.  At the same time, hospitals invest in their workforce and local communities, even as they navigate significant financial and federal challenges.

Section 1 of the bill would shorten the period from 18 months to 15 months by which a health insurance company is allowed to cancel, deny, or claw back previously made payments for covered services.  Additionally, the bill would require an electronic appeals process for payment cancellations, denials, or clawbacks.  These are welcome improvements.    

Hospitals operate on narrow margins and rely on predictable reimbursement for services already rendered.  When insurers recoup payments months after a claim is paid, it creates revenue volatility, administrative burden, and financial uncertainty.  While we appreciate the bill’s 15-month timeframe, we respectfully suggest that timeframe be reduced to 12 months.  There is similar, pending legislation before this committee and the Human Services Committee that adopts a 12-month standard, which is preferred by providers.  A clear 12-month limit would improve financial predictability, support responsible budgeting, and reduce costly disputes over aged claims.

Importantly, the bill maintains appropriate safeguards for payers in cases involving fraud or improper billing.  It strikes a fair balance — protecting legitimate oversight while preventing prolonged retroactive clawbacks that destabilize providers.

Section 2 of the bill imposes an unnecessary and onerous administrative burden on care providers and needlessly increases administrative costs by requiring billing changes related to the location of care delivery.  Hospitals already follow transparent billing rules.  What may seem to be a benign requirement in this bill would not actually increase transparency but would provide commercial health insurance companies with information they can use to reduce payments to hospitals.

Connecticut residents rely on hospitals to provide access to care 24-hours-a-day, to serve as a safety net provider for vulnerable populations, and to have the resources needed to respond to medical and public health emergencies and disasters.  Many of these roles are not generally funded explicitly; instead, they are built into a hospital’s overall cost structure and supported by revenues received from providing direct patient care.

Connecticut hospitals are already operating under significant financial strain, with the Office of Health Strategy recently issuing a report showing statewide operating margins at only 0.2%.  Reimbursement from government payers remains well below the cost of care.  Connecticut hospitals incur nearly $3 billion in Medicaid and Medicare losses annually.  Workforce shortages, supply inflation, and pharmaceutical costs continue to challenge the healthcare delivery system.

Policies that aim to decrease reimbursement to Connecticut hospitals would only add to these staggering challenges and further threaten access to critical healthcare services, especially in underserved communities.  Now more than ever, hospitals need stable and adequate reimbursements in what is a highly challenging environment.

Connecticut hospitals cannot withstand policies intended to erode the ability to care for patients and undermine the financial health of the sector.

Thank you for your consideration of our position.  For additional information, contact CHA Government Relations at (203) 294-7301.