HB 6836, An Act Concerning The Department Of Social Services’ Recommendations Regarding The Implementation Of The States Advancing All-Payer Health Equity Approaches And Development Federal Innovation Model Hospital Global Payment Methodology
TESTIMONY OF CONNECTICUT HOSPITAL ASSOCIATION
SUBMITTED TO THE PUBLIC HEALTH COMMITTEE
Monday, February 3, 2025
The Connecticut Hospital Association (CHA) appreciates this opportunity to submit testimony concerning HB 6836, An Act Concerning The Department Of Social Services’ Recommendations Regarding The Implementation Of The States Advancing All-Payer Health Equity Approaches And Development Federal Innovation Model Hospital Global Payment Methodology. CHA has concerns about the Advancing All-Payer Health Equity Approaches and Development (AHEAD), which are summarized below, and recommends significant legislative oversight and involvement in this initiative.
Connecticut hospitals and health systems care for patients, strengthen the state’s economy, and support vulnerable communities across the state. Every day, they work to improve healthcare access, affordability, and health equity. Even as they face ongoing challenges, hospitals provide world-class care to everyone who walks through their doors, regardless of their ability to pay. Hospitals also support an exemplary workforce as the largest collective employer in the state, contribute significantly to the state’s economy, and invest in their communities addressing social drivers of health.
We support the goals of the AHEAD model, which include advancing health equity and affordability in healthcare. However, we believe there are serious flaws in the design of the voluntary hospital global budgets, which are a central feature of the AHEAD model, and we believe these flaws, if not corrected, threaten to diminish access and affordability over the course of this ten-year demonstration. We believe that substantial modifications will be required of the Medicare global budget methodology in order for the model to achieve its care delivery and affordability objectives and for Connecticut hospitals to consider participation. Importantly, defects in the federally-designed Medicare global budget methodology should not be repeated when the state design’s the model’s voluntary Medicaid global budget.
For these reasons, we have asked the state to engage the federal Center for Medicare and Medicaid Innovation (CMMI) and advocate for modifications and have expressed our concern to the state in developing a Medicaid global budget methodology based on a Medicaid system that is woefully under reimbursing hospitals today.
Fair and Sustainable Medicare Reimbursement
AHEAD has been presented as an opportunity to enhance Medicare’s support for the cost of sustaining access to a high quality healthcare delivery system and promoting affordability for all. Today, Connecticut’s healthcare system comprises a complex network of hospital, professional, behavioral health, home care, pharmacy, transportation, and nursing home services that meet the healthcare needs of Medicaid, Medicare, and commercially insured individuals alike. We believe that all payers must contribute their fair share of the cost of our care delivery system, and today, at 74% of cost, according to the most recent calculation for Connecticut hospitals from the Office of Health Strategy (OHS), Medicare is not fulfilling that requirement. Instead, the AHEAD model appears to lock in the existing Medicare shortfall by using historical revenue to establish the baseline budget.
In addition, the various adjustments fail to reduce the shortfall over the period of the demonstration, even if hospitals are successful in reducing avoidable use. We recommend that the model design be modified to ensure that success in improving healthcare outcomes results in a reduction in the Medicare shortfall over time.
Medicaid Global Budgets
The Department of Social Services (DSS) has not yet established the global budget methodology required under the AHEAD demonstration for the reimbursement of hospitals in the Medicaid program. However, the concerns noted above are equally relevant to Medicaid. Our foremost concern in the setting of Medicaid global budgets is to ensure that the initial budgets cover 100% of the cost of care, after accounting for the full value of the taxes hospitals pay to support the Medicaid program. Today, in Connecticut, the Medicaid program is covering just than 62% of cost.
Social, Economic, and Environmental Drivers of Health
An important opportunity in AHEAD is addressing the upstream social, economic, and environmental drivers of health and the root causes of health inequities. Multi-sector health partnerships, which include hospitals, exist in many communities across the state. These partnerships should be enlisted to achieve near-term healthcare outcomes and long-term prevention outcomes such as reductions in the incidence and prevalence of avoidable chronic illness, behavioral health conditions, maternal/child health outcomes, and life expectancy at birth. Doing so will improve health, healthcare, and equity outcomes, attenuate cost growth, and drive affordability for all.
In order to achieve the maximum financial and economic benefits of addressing health inequities we must extend our focus to the problems of place that limit what can be achieved in clinical settings alone. Connecticut’s State Innovation Model (SIM) funded actuarial studies conducted by the Office of Health Strategy (OHS) estimated billions in savings to Medicare, commercial, and Medicaid over a ten-year period solely as a result of achieving prevention-related outcomes.1
In order to achieve the AHEAD model’s goals for advancing health, healthcare, and equity outcomes, attenuating cost growth, and driving affordability for all, we believe the model must provide sustained funding for new investments in hospitals and their multi-sector community partnerships to address the root cause drivers of poor health. The model design should be modified to provide for the reinvestment of savings including savings that result from improvements in community health and well-being.
We welcome the opportunity to engage further on the above recommendations and to support your efforts in advocating for changes to the model that will better support the cost of care delivery, reward the achievement of near term clinical outcomes and long term prevention outcomes, and improve affordability for all.
Thank you for your consideration of our position. For additional information, contact CHA Government Relations at (203) 294-7301.