HB 7191, An Act Concerning Medicaid Rate Increases, Planning And Sustainability

TESTIMONY OF THE CONNECTICUT HOSPITAL ASSOCIATION
SUBMITTED TO THE HUMAN SERVICES COMMITTEE

Tuesday, March 11, 2025

The Connecticut Hospital Association (CHA) appreciates this opportunity to submit testimony concerning HB 7191, An Act Concerning Medicaid Rate Increases, Planning And Sustainability. CHA supports the intent of the bill to address significant Medicaid underfunding across the healthcare continuum. However, we recommend that hospital underpayment also be addressed through a more comprehensive approach to ensure the state’s Medicaid program best meets the needs of Connecticut’s residents and communities.

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.

HB 7191 proposes to phase in reimbursement increases for a broad range of Medicaid providers in order to address the substantial underpayment identified in the Medicaid rate study commissioned by the Department of Social Services (DSS) pursuant to public act 23-186.

We support the phased investment strategy proposed in this bill and, in particular, applaud provisions that require annual updates. However, we are concerned that the Medicaid rate study failed to identify the substantial Medicaid underpayment for hospital inpatient and outpatient services and that such underpayment is not considered in this bill.

We encourage the legislature to provide for hospital increases, and that such increases could be enabled by a comprehensive redesign of the Medicaid program. Such redesign should consider a better way to use Connecticut’s hospital tax program, and other sources of funds, to benefit the state, taxpayers, patients, and the hospital and other Medicaid providers on whom they depend for care.

Medicaid Underpayment for Hospital Services

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 this bill, the hospital operating shortfall has grown sharply in recent years, reaching $1.4 billion in FY 2023, partly as a result of unprecedented inflation.

Because of the role commercial insurance plays in cross-subsidizing governmental underpayment, these losses put significant pressure on negotiations with commercial health insurance companies. Reducing or eliminating Medicaid hospital underpayment and providing for annual updates that keep pace with the rising cost of care will help reduce this pressure.

Protecting and Promoting Medicaid Program Goals

We believe that Medicaid redesign also presents an opportunity to strengthen the care delivery system and drive the achievement of health, quality, access, and affordability goals consistent with those established for the Medicaid program in Section 17 of Public Act 23-171. We have outlined our ideas in our comments on Section 17 to the Department of Social Services (DSS). In addition to addressing Medicaid hospital underpayment, we believe that such reforms should:

  • Support and strengthen the role of multi-sector health partnerships, which are essential community assets with the means to address root cause issues and promote health and health equity in their communities and in the Medicaid population
  • Establish a regional financing and accountability framework that provides substantial and sustained new investment funding for the work of hospitals and the multi-sector partnerships in which they participate. Return for reinvestment 100% of the savings that result from achieving long-term prevention, healthcare, and equity outcomes

CHA welcomes the opportunity to engage further on a comprehensive solution that will support the cost of care delivery and drive better health and affordability for all.

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