HB 7116, An Act Concerning Insurance Accountability And Transparency

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

Tuesday, March 4, 2025

The Connecticut Hospital Association (CHA) appreciates this opportunity to submit testimony concerning HB 7116, An Act Concerning Insurance Accountability And Transparency. CHA opposes Section 1 of the legislation.

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 1 of HB 7116 amends existing state law to prohibit the inclusion of a “revenue neutrality clause” in contracts between healthcare providers and health insurance companies. The bill defines a “revenue neutrality clause” as “any provision in a health care contract that requires a health carrier or health plan administrator to indemnify or hold harmless a health care provider.”

We appreciate the interest of the committee in advancing policy affecting the negotiations between commercial health insurance companies and healthcare providers. CHA has been an active participant in those policy discussions. Just two years ago, CHA worked closely with members of this committee when it advanced legislation prohibiting “anti-steering,” “anti-tiering,” “all-or-nothing,” and “gag clauses” in commercial health insurance contracts.

Section 1 of HB 7116 will irreparably harm hospitals and health systems as they negotiate with commercial health insurance companies for fair reimbursement. It will embolden commercial health insurance companies to make unilateral, mid-term changes to contracts and will discourage the use of novel or new payment models and terms. Contracts with commercial health insurance companies are almost always negotiated and agreed to on a multi-year basis. Unsurprisingly, the terms of these contracts play a significant role in how hospitals plan for the future.

Unfortunately, hospitals’ experience shows us that throughout the life of a contract, health insurers make unilateral changes to contract terms that very frequently impact the negotiated payment rate for services.

Should this legislation be adopted, it will inoculate commercial health insurance companies from any liability for these mid-term changes and will encourage more and more of them over time. As hospitals and health systems plan for the future, the inability to rely on the terms of the contracts that have been negotiated with payers is a significant risk to healthcare delivery in Connecticut.

Agreements with commercial payers are also often used to implement new and novel approaches to payment models and terms. Implementing these new models and terms is not without financial risk to providers, and there is often mutual agreement between payers and providers to lessen the unintended financial impact of new terms, methodologies, and policies. Again, if enacted, this policy would have the unintended consequence of slowing the adoption of alternative payment models, which have been encouraged by state policymakers.

For these reasons, we discourage you from moving forward with Section 1 of the legislation.

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