HB 6864, An Act Concerning The State Budget For The Biennium Ending June 30, 2027, And Making Appropriations Therefor (Comptroller)

TESTIMONY OF CONNECTICUT HOSPITAL ASSOCIATION
SUBMITTED TO THE APPROPRIATIONS COMMITTEE

Thursday, February 13, 2025

The Connecticut Hospital Association (CHA) appreciates this opportunity to submit testimony concerning HB 6864, An Act Concerning The State Budget For The Biennium Ending June 30, 2027, And Making Appropriations Therefor. CHA opposes Section 32 (as proposed) of the bill dealing with reductions in hospital payments under the state employee health plan.

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.

Section 32 of HB 6864 requires the comptroller to negotiate with nongovernmental licensed short-term general hospitals to revise rates of reimbursement for inpatient and outpatient care provided at such hospitals for current state employees and non-Medicare retired state employees to achieve not less than $100 million dollars in savings for the fiscal year ending June 30, 2027. It also requires adjustments to Medicaid payments for these same hospitals to achieve a net increase in payments of $10 million during this same fiscal year.

On its own, this negotiated discount and Medicaid payment policy, as proposed, is unsound and harmful to hospitals and the patients they serve.

We believe there is a better way to use a variety of funding mechanisms, such as a discount program in combination with the hospital tax program, to address Medicaid underpayment, strengthen the care delivery system, and drive the achievement of health, quality, access, and affordability goals.

On its own, Section 32 as proposed fails to address the Medicaid shortfall and creates unpredictability and instability:

  • Medicaid Shortfall: Fails to make a material increase in Medicaid hospital reimbursement and address the accelerating growth in Medicaid underpayment, which in 2023 was a staggering $1.4 billion. This in turn jeopardizes access and increases the burden of hospital underpayment borne by private sector employers and their employees
  • Predictability and Stability: Fails to establish a process that ensures that individual hospitals will benefit from the arrangements, hindering hospitals’ ability to plan investments to increase access and enhance service delivery

Unfortunately, this bill adopts the narrow aim of using hospitals to generate general fund revenue and balance the state budget.

CHA welcomes the opportunity to engage further on a comprehensive solution that will better support the cost of care delivery, recognize improvements in near-term clinical and long-term prevention outcomes, and improve affordability for all.

Reduce the Medicaid Shortfall

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. All payers must contribute their fair share of the cost of our care delivery system, and today, Medicaid is not fulfilling that requirement.

Hospitals are reimbursed less than 60 cents on the dollar for the services provided to Medicaid beneficiaries after accounting for the taxes they pay to fund the state share of Medicaid services. Despite the modest annual rate increases required by the settlement agreement and discontinued in the governor’s biennial state budget, the hospital operating shortfall has grown sharply in recent years, reaching $1.4 billion in fiscal year 2023, partly as a result of unprecedented inflation.

The potential $10 million increase to hospitals proposed in Section 32, the only hospital increase proposed in the governor’s budget, amounts to an approximately 0.4% increase in Medicaid hospital payments overall. This investment is woefully short of what is required to make up for years of historic inflation and keep pace with projected increases in the cost of care.

Protect and Promote Medicaid Program Goals

We believe there is an opportunity to address Medicaid underpayment, strengthen the care delivery system, and drive the achievement of health, quality, access, and affordability goals developed with the administration and supported by the legislature in 2023.1 Of note, these goals:

  • Address Medicaid Hospital Underpayment
  • Engage Multi-Sector Partnerships
  • Create a Regional Investment and Accountability Model

We look forward to working with the committee to advance a more comprehensive proposal that addresses Medicaid underpayment for hospitals and other providers all while making substantial investments in improving the health of communities.

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