File No. 896

House of Representatives, May 31, 2007

The Committee on Finance, Revenue and Bonding reported through REP. STAPLES of the 96th Dist., Chairperson of the Committee on the part of the House, that the substitute bill ought to pass.

AN ACT ESTABLISHING THE CONNECTICUT HEALTHY STEPS PROGRAM.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) (Effective July 1, 2007) This act shall be known as the Connecticut Healthy Steps Program.

Sec. 2. (NEW) (Effective July 1, 2007) (a) There is established a permanent Health Care Reform Commission, which shall be an independent body within the Office of Health Care Access for administrative purposes only. The commission shall consist of the Commissioners of Social Services and Health Care Access, the Insurance Commissioner, or their designees, and nine additional members as follows: One member to be appointed by the Governor, two to be appointed by the president pro tempore of the Senate, two to be appointed by the speaker of the House of Representatives, one to be appointed by the majority leader of the Senate, one to be appointed by the majority leader of the House of Representatives, one to be appointed by the minority leader of the Senate, and one to be appointed by the minority leader of the House of Representatives.

(b) Notwithstanding the provisions of subsection (c) of section 4-9a of the general statutes, the members of the commission shall serve for staggered terms. The initial members selected shall serve as follows: (1) The members appointed by the Governor and the president pro tempore of the Senate shall serve for three years; (2) the members appointed by the speaker of the House of Representatives and the majority leader of the Senate shall serve for two years; and (3) the members appointed by the majority leader and the minority leader of the House of Representatives and the minority leader of the Senate shall serve for one year. Following the expiration of such initial terms, each subsequent appointee shall serve for a term of three years. Any vacancy shall be filled by the appointing authority for the unexpired portion of the term of the member replaced. The members shall serve without compensation for their services but shall be reimbursed for their expenses.

(c) The commission shall: (1) Not later than July 1, 2008, develop an affordable health care plan that may be sold to employers of fifty or fewer employees through the Connecticut Connector, (2) not later than July 1, 2008, develop a comprehensive health care plan, as described in section 38a-555 of the general statutes, that an employer of fifty or fewer employees shall make available to employees, (3) not later than January 1, 2009, submit a report to the joint standing committee of the General Assembly having cognizance of matters relating to insurance that identifies the effect of health insurance mandates under chapter 700c of the general statutes on health care premiums paid by private sector employers, (4) develop incentives to encourage individuals to use health insurance responsibly, (5) develop a proposed plan and timetable for the implementation of state-wide electronic prescribing, computerized physician order entry in every hospital, and a uniform electronic medical record system that will improve the quality of health care in the state, (6) plan for the implementation of a pharmaceutical purchasing pool to be administered by a third-party administrator to cover all public employees and public programs, (7) establish the Connecticut Health Quality Partnership under section 24 of this act, (8) perform the duties as required under section 26 of this act, and (9) not later than January 1, 2009, and annually thereafter, make recommendations to the General Assembly concerning the implementation of the Connecticut Healthy Steps Program and improvements to the health care system, including cost controls.

(d) The commission shall meet as often as necessary to complete its work, but not less than quarterly each year. The commission, within available appropriations, may hire consultants to provide assistance with its responsibilities.

Sec. 3. (NEW) (Effective July 1, 2007) (a) The Insurance Department, in consultation with the Health Care Reform Commission, shall develop and issue a request for proposals in accordance with the provisions of sections 4-212 to 4-219, inclusive, of the general statutes and award a five-year contract to administer the Connecticut Connector. Such contract shall be awarded to a private nonprofit organization which shall serve as a health insurance purchasing pool, through which previously uninsured individuals and uninsured employers may purchase health plans.

(b) Such organization administering the Connecticut Connector shall meet with the Health Care Reform Commission in accordance with a schedule the commission determines to be appropriate.

(c) Such organization shall perform the following duties:

(1) Solicit insurers to make products available for sale through the Connecticut Connector;

(2) Review the products for compliance with benefit and other standards as established by the Health Care Reform Commission;

(3) Publish easy to understand materials for prospective purchasers, comparing the costs and benefits of all plans and providing counseling to assist in plan selection;

(4) Screen applicants consisting of individuals and employers for eligibility to purchase through the pool;

(5) Work with the insurers selling products through the Connecticut Connector to develop a uniform tool for collecting necessary applicant or enrollee data for any appropriate underwriting, enrollment and other purposes;

(6) Collect premium contributions from employers and individuals, as well as subsidies from the state, and remit them to the enrollees' health plans;

(7) Collect fees from each insurer that sells products through the Connecticut Connector, in accordance with rules adopted by the Health Care Reform Commission, to support the costs of administration;

(8) Notify insureds when their premiums are late and disenroll them or levy late penalties as appropriate;

(9) Provide notices as required under the Health Insurance Portability and Accountability Act of 1996, (P.L. 104-191) (HIPAA), as from time to time amended, regarding creditable coverage;

(10) Market the health plans available though the Connecticut Connector to potential purchasers of the health plans;

(11) Receive moneys from the Comptroller and make payments to eligible individuals and employers in accordance with sections 6 and 7 of this act;

(12) Not later than July 1, 2009, and annually thereafter, provide data and reports to the Health Care Reform Commission and the General Assembly, which shall include, but not be limited to (A) the number and demographics of previously uninsured persons covered through the Connecticut Connector by type of policy, (B) the per capita administrative costs of the Connecticut Connector, (C) any recommendations for improving service, health insurance policy offerings and costs, and (D) any other information as required by said commission.

Sec. 4. (NEW) (Effective July 1, 2007) (a) The organization that administers the Connecticut Connector shall make available to each applicant seeking enrollment in the program a choice of three health insurance plan types as follows: (1) An affordable health care plan established in accordance with standards established by the Health Care Reform Commission; (2) a comprehensive health care plan currently available from insurers at the option of such insurers; and (3) a health savings account plus high deductible plan currently available from insurers at the option of such insurers.

(b) The affordable health care plan shall include, but not be limited to:

(1) Coverage of any physician, clinic, ambulatory surgery, laboratory and diagnostic services, in-patient and out-patient hospital care and prescription drugs that are medically necessary for physical or mental health;

(2) Coinsurance that shall reflect family income brackets;

(3) A copayment not to exceed seventy-five dollars for inappropriate use of the emergency department of a hospital;

(4) A lifetime benefits maximum in the amount of five hundred thousand dollars, contingent upon the availability of an excess cost reinsurance program through the Department of Social Services for which an individual or family would become eligible without spending down all of their resources upon exhaustion of their insurance benefit; and

(5) A minimum loss ratio of not less than eighty-five per cent over any three-year moving average period.

(c) Each health care plan offered shall:

(1) Be community-rated based on the individual's age, sex, county of residence and tobacco use; and

(2) Have a medical loss ratio of at least eighty-five per cent.

(d) Coverage under each of the health care plans shall be deemed to be creditable coverage, as defined in 42 USC 300gg(c) and shall preclude any exclusions for preexisting conditions in any subsequent health care plan an individual may obtain.

(e) Each health care plan offered may elect not to cover the preexisting conditions of any individual who has been uninsured for a period exceeding twelve months.

(f) Any employer that purchases coverage through the program may offer its employees any of the plans described in subsection (a) of this section.

Sec. 5. (NEW) (Effective July 1, 2007) (a) An application by an individual to purchase coverage through the Connecticut Connector may be approved in cases in which an individual has no access to employer-sponsored coverage under which the employer pays a minimum of fifty per cent of the cost of such coverage for an individual and their dependents and an individual has been:

(1) Uninsured for a period of at least six months; or

(2) Uninsured for a period of less than six months due to the occurrence of a major life event that has resulted in such uninsured status, including, but not limited to:

(A) Loss of coverage through the employer, due to termination of employment;

(B) Death of, or abandonment by, a family member who previously provided coverage;

(C) Loss of dependent coverage due to spouse attaining the age of sixty-five years and becoming eligible for Medicare;

(D) Disqualification as a dependent under a group comprehensive health care plan;

(E) Expiration of the coverage periods established by the Consolidated Omnibus Budget Reconciliation Act of 1985, (COBRA) (P.L. 99-272) as amended from time to time;

(F) Extreme economic hardship on the part of either the employee or the employer, as determined by the organization that administers the Connecticut Connector; and

(G) Any other events that may be specified by the Health Care Reform Commission.

(b) An application by an employer to purchase coverage through the pool may be approved if such employer:

(1) Has fifty or fewer employees;

(2) Has not offered a comprehensive health insurance plan to any employee for a period of at least six months; and

(3) Will contribute a minimum of seventy per cent of the cost of such coverage for an employee and a minimum of fifty per cent of the cost of dependent coverage for any dependent of such employee.

Sec. 6. (NEW) (Effective July 1, 2007) (a) There is established the health savings account incentive program. To be eligible for payment pursuant to this section, an individual's family income may not exceed four hundred per cent of the federal poverty level. The Connecticut Connector shall annually contribute to the health savings account of any individual who resides in the state and who has a health savings account and high deductible health plan pursuant to section 223 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, an amount determined by a sliding scale as follows:

(1) For a family income equal to or less than two hundred per cent of the federal poverty level, five hundred dollars for an individual who has contributed or received contributions of at least two thousand five hundred dollars in his or her health savings account in the previous year, one thousand dollars for a family of two who has contributed or received contributions of at least three thousand seven hundred fifty dollars in their health savings account in the previous year, or one thousand five hundred dollars for a family of three or more who has contributed or received contributions of at least five thousand dollars in their health savings account in the previous year.

(2) For a family income greater than two hundred per cent but less than three hundred per cent of the federal poverty level, four hundred dollars for an individual who has contributed or received contributions of at least two thousand five hundred dollars in his or her health savings account in the previous year, eight hundred dollars for a family of two who has contributed or received contributions of at least three thousand seven hundred fifty dollars in their health savings account in the previous year, or one thousand two hundred dollars for a family of three or more who has contributed or received contributions of at least five thousand dollars in their health savings account in the previous year.

(3) For a family income equal to or greater than three hundred per cent but less than four hundred per cent of the federal poverty level, three hundred dollars for an individual who has contributed or received contributions of at least two thousand five hundred dollars in his or her health savings account in the previous year, six hundred dollars for a family of two who has contributed or received contributions of at least three thousand seven hundred fifty dollars in their health savings account in the previous year, or nine hundred dollars for a family of three or more who has contributed or received contributions of at least five thousand dollars in their health savings account in the previous year.

(b) The amounts specified in subdivisions (2) and (3) of subsection (a) of this section shall be annually indexed to the consumer price index for medical care.

(c) The Connecticut Connector shall make payments, in accordance with this section, by January thirtieth of any year for health savings account contributions in the prior calendar year. The Connecticut Connector shall establish procedures by which individuals may claim payment pursuant to this section.

Sec. 7. (NEW) (Effective July 1, 2007) (a) There is established the premium subsidy program. To be eligible for payment pursuant to this section, an individual (1) shall not have family income exceeding four hundred per cent of the federal poverty level, (2) shall not individually or as part of a family own a health savings account pursuant to section 223 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, and (3) shall have health care coverage under an employer-sponsored plan for which the employee pays at least five hundred dollars in premiums annually to the employee's employer if single and at least one thousand dollars in premiums annually to the employee's employer if the employee is covered by a family plan or has a nonemployer-based plan purchased through the individual market or the Connecticut Connector. The Connecticut Connector shall quarterly reimburse an individual who is eligible pursuant to this section for premiums paid in the preceding quarter as follows:

(A) For a family with income equal to or less than two hundred per cent of the federal poverty level, eighty per cent of their share of the premium, not to exceed one hundred twenty-five dollars per quarter for an individual, two hundred fifty dollars per quarter for an individual plus one dependent, or three hundred seventy-five dollars per quarter for a family.

(B) For a family with income greater than two hundred per cent but less than three hundred per cent of the federal poverty level, sixty per cent of their share of the premium, not to exceed one hundred dollars per quarter for an individual, two hundred dollars per quarter for an individual plus one dependent, or three hundred dollars per quarter for a family.

(C) For a family with income greater than three hundred per cent but less than four hundred per cent of the federal poverty level, forty per cent of their share of the premium, not to exceed seventy-five dollars per quarter for an individual, one hundred fifty dollars per quarter for an individual plus one dependent, or two hundred twenty-five dollars per quarter for a family.

(b) The Connecticut Connector shall establish procedures by which individuals may claim payment pursuant to this section.

Sec. 8. (NEW) (Effective July 1, 2007) The Commissioner of Social Services shall seek a federal waiver for the purpose of (1) obtaining any available federal reimbursement for state expenditures related to the health savings account incentive program established under section 6 of this act and the subsidized premium program established under section 7 of this act, and (2) establishing a state excess cost reinsurance program for enrollees in the Connecticut Connector's affordable health care plan to allow such enrollees to obtain coverage through the Medicaid program once their insurance benefits are exhausted without having to spend down their assets.

Sec. 9. (NEW) (Effective July 1, 2007) No employer in this state may offer health benefit plans of lesser value to lower-paid employees than to higher-paid employees.

Sec. 10. (NEW) (Effective July 1, 2007) The Commissioner of Social Services shall develop a plan to implement a system of primary care case management for the delivery of health care services to all or a substantial subset of the aged, blind and disabled Medicaid beneficiaries. Said commissioner may contract with an administrative services organization to effectuate the implementation of such primary care case management system. Such plan shall include programs to improve coordination of and access to medical services, chronic disease management programs, predictive modeling to identify high risk, complex and high-cost Medicaid beneficiaries and to provide them with intensive care coordination.

Sec. 11. (NEW) (Effective July 1, 2007) On and after January 1, 2008, the Commissioner of Social Services shall allow aged, blind or disabled Medicaid beneficiaries to voluntarily enroll in the managed care plans available to HUSKY Plan, Part A and HUSKY Plan, Part B beneficiaries.

Sec. 12. Section 17b-267 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2007):

(a) If any group or association of providers of medical assistance services wishes to have payments as provided for under sections 17b-260 to 17b-262, inclusive, 17b-264 to 17b-285, inclusive, and 17b-357 to 17b-361, inclusive, to such providers made through a national, state or other public or private agency or organization and nominates such agency or organization for this purpose, the Commissioner of Social Services is authorized to enter into an agreement with such agency or organization providing for the determination by such agency or organization, subject to such review by the Commissioner of Social Services as may be provided for by the agreement, of the payments required to be made to such providers at the rates set by the hospital cost commission, and for the making of such payments by such agency or organization to such providers. Such agreement may also include provision for the agency or organization to do all or any part of the following: With respect to the providers of services which are to receive payments through it, (1) to serve as a center for, and to communicate to providers, any information or instructions furnished to it by the Commissioner of Social Services, and to serve as a channel of communication from providers to the Commissioner of Social Services; (2) to make such audits of the records of providers as may be necessary to insure that proper payments are made under this section; and (3) to perform such other functions as are necessary to carry out the provisions of sections 17b-267 to 17b-271, inclusive.

(b) The Commissioner of Social Services shall not enter into an agreement with any agency or organization under subsection (a) of this section unless (1) he finds (A) that to do so is consistent with the effective and efficient administration of the medical assistance program, and (B) that such agency or organization is willing and able to assist the providers to which payments are made through it in the application of safeguards against unnecessary utilization of services furnished by them to individuals entitled to hospital insurance benefits under section 17b-261 and the agreement provides for such assistance, and (2) such agency or organization agrees to furnish to the Commissioner of Social Services such of the information acquired by it in carrying out its agreement under sections 17b-267 to 17b-271, inclusive, as the Commissioner of Social Services may find necessary in performing his functions under said sections.

(c) An agreement with any agency or organization under subsection (a) of this section may contain such terms and conditions as the Commissioner of Social Services finds necessary or appropriate, may provide for advances of funds to the agency or organization for the making of payments by it under said subsection (a), and shall provide for payment by the Commissioner of Social Services of so much of the cost of administration of the agency or organization as is determined by the Commissioner of Social Services to be necessary and proper for carrying out the functions covered by the agreement.

(d) On or after July 1, 2007, each managed care plan that enters into, renews or amends a contract with the Department of Social Services pursuant to this section shall limit its administrative costs to ten per cent of payments made pursuant to such contracts. The Commissioner of Social Services shall implement policies and procedures to effectuate the purposes of this subsection while in the process of adopting such policies or procedures in regulation form, provided notice of intention to adopt the regulations is printed in the Connecticut Law Journal not later than twenty days after implementation of such policies and procedures and any such policies and procedures shall be valid until the time the regulations are effective. The Commissioner of Social Services may define administrative costs to exclude disease management or other value-added clinical programs administered by the managed care plans, but not to exclude utilization management, claims, member services or other nonclinical functions.

Sec. 13. (NEW) (Effective July 1, 2007) (a) On July 1, 2007, the Commissioner of Social Services shall increase the fee-for-service Medicaid reimbursement rates for (1) dental services by sixty per cent, (2) physician services to a level equivalent to at least eighty per cent of Medicare rates in aggregate, and (3) hospital services to a level equivalent to at least ninety per cent of Medicare rates in aggregate. The rates of reimbursement to be paid to dentists under the fee-for-service program shall be annually increased to reflect increases in the consumer price index for medical care. The rates of reimbursement to be paid to physicians and hospitals shall be annually increased to remain at such percentage of Medicare rates.

(b) On July 1, 2007, the Commissioner of Social Services shall amend each contract with a managed care plan entered into pursuant to section 17b-266 of the general statutes, upon renewal, to require each managed care plan to increase reimbursement to dentists, physicians, and hospitals to at least the same levels specified in subsection (a) of this section.

Sec. 14. Section 17b-297 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2007):

(a) The commissioner, in consultation with the Children's Health Council, the Medicaid Managed Care Council and Infoline of Connecticut, shall develop mechanisms for outreach for the HUSKY Plan, Part A and Part B, including, but not limited to, development of mail-in applications and appropriate outreach materials through the Department of Revenue Services, the Labor Department, the Department of Social Services, the Department of Public Health, the Department of Children and Families and the Office of Protection and Advocacy for Persons with Disabilities.

(b) The commissioner shall include in such outreach efforts information on the Medicaid program for the purpose of maximizing enrollment of eligible children and the use of federal funds.

(c) The commissioner shall, within available appropriations, contract with severe need schools and community-based organizations for purposes of public education, outreach and recruitment of eligible children, including the distribution of applications and information regarding enrollment in the HUSKY Plan, Part A and Part B. In awarding such contracts, the commissioner shall consider the marketing, outreach and recruitment efforts of organizations. For the purposes of this subsection, (1) "community-based organizations" shall include, but not be limited to, day care centers, schools, school-based health clinics, community-based diagnostic and treatment centers and hospitals, and (2) "severe need school" means a school in which forty per cent or more of the lunches served are served to students who are eligible for free or reduced price lunches.

(d) All outreach materials shall be approved by the commissioner pursuant to Subtitle J of Public Law 105-33.

(e) Not later than October 1, 2007, the commissioner shall award fifty grants in an amount not to exceed ten thousand dollars to community-based organizations for the purposes of public education, outreach and recruitment of eligible children, including the distribution of applications and information regarding enrollment in the HUSKY Plan, Part A and Part B.

[(e)] (f) Not later than January 1, 1999, and annually thereafter, the commissioner shall submit a report to the Governor and the General Assembly on the implementation of and the results of the community-based outreach program specified in subsections (a) to (c), inclusive, of this section.

Sec. 15. Subsection (a) of section 17b-261 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2007):

(a) Medical assistance shall be provided for any otherwise eligible person whose income, including any available support from legally liable relatives and the income of the person's spouse or dependent child, is not more than one hundred forty-three per cent, pending approval of a federal waiver applied for pursuant to subsection (d) of this section, of the benefit amount paid to a person with no income under the temporary family assistance program in the appropriate region of residence and if such person is an institutionalized individual as defined in Section 1917(c) of the Social Security Act, 42 USC 1396p(c), and has not made an assignment or transfer or other disposition of property for less than fair market value for the purpose of establishing eligibility for benefits or assistance under this section. Any such disposition shall be treated in accordance with Section 1917(c) of the Social Security Act, 42 USC 1396p(c). Any disposition of property made on behalf of an applicant or recipient or the spouse of an applicant or recipient by a guardian, conservator, person authorized to make such disposition pursuant to a power of attorney or other person so authorized by law shall be attributed to such applicant, recipient or spouse. A disposition of property ordered by a court shall be evaluated in accordance with the standards applied to any other such disposition for the purpose of determining eligibility. The commissioner shall establish the standards for eligibility for medical assistance at one hundred forty-three per cent of the benefit amount paid to a family unit of equal size with no income under the temporary family assistance program in the appropriate region of residence, pending federal approval, except that the medical assistance program shall provide coverage to persons under the age of nineteen up to one hundred eighty-five per cent of the federal poverty level without an asset limit. Said medical assistance program shall also provide coverage to persons under the age of nineteen and their parents and needy caretaker relatives who qualify for coverage under Section 1931 of the Social Security Act with family income up to one hundred [fifty] eighty-five per cent of the federal poverty level without an asset limit, upon the request of such a person or upon a redetermination of eligibility. Such levels shall be based on the regional differences in such benefit amount, if applicable, unless such levels based on regional differences are not in conformance with federal law. Any income in excess of the applicable amounts shall be applied as may be required by said federal law, and assistance shall be granted for the balance of the cost of authorized medical assistance. All contracts entered into on and after July 1, 1997, pursuant to this section shall include provisions for collaboration of managed care organizations with the Nurturing Families Network established pursuant to section 17a-56. The Commissioner of Social Services shall provide applicants for assistance under this section, at the time of application, with a written statement advising them of (1) the effect of an assignment or transfer or other disposition of property on eligibility for benefits or assistance, and (2) the availability of, and eligibility for, services provided by the Nurturing Families Network established pursuant to section 17a-56.

Sec. 16. Section 17b-261 of the general statutes is amended by adding subsection (k) as follows (Effective July 1, 2007):

(NEW) (k) The Commissioner of Social Services, pursuant to 42 USC 1396a(r)(2), shall file an amendment to the Medicaid state plan to allow the commissioner, when making Medicaid eligibility determinations, to raise the medically needy income limit for persons who are aged, blind or disabled to an amount not to exceed one hundred fifty per cent of the federal poverty level.

Sec. 17. Section 17b-292 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2007):

(a) A child who resides in a household with a family income which exceeds one hundred eighty-five per cent of the federal poverty level and does not exceed three hundred per cent of the federal poverty level may be eligible for subsidized benefits under the HUSKY Plan, Part B.

(b) A child who resides in a household with a family income over three hundred per cent of the federal poverty level may be eligible for unsubsidized benefits under the HUSKY Plan, Part B.

(c) Whenever a court or family support magistrate orders a noncustodial parent to provide health insurance for a child, such parent may provide for coverage under the HUSKY Plan, Part B.

(d) A child or adult who has been determined to be eligible for benefits under either the HUSKY Plan, Part A or Part B shall remain eligible for such plan for a period of twelve months from such child's determination of eligibility unless the child attains the age of nineteen or is no longer a resident of the state. During the twelve-month period following the date that a child is determined eligible for the HUSKY Plan, Part A or Part B, the family of such child shall comply with federal requirements concerning the reporting of information to the department, including, but not limited to, change of address information.

[(d)] (e) To the extent allowed under federal law, the commissioner shall not pay for services or durable medical equipment under the HUSKY Plan, Part B if the enrollee has other insurance coverage for the services or such equipment.

[(e)] (f) A newborn child who otherwise meets the eligibility criteria for the HUSKY Plan, Part B shall be eligible for benefits retroactive to his date of birth, provided an application is filed on behalf of the child [within] not later than thirty days [of] after such date. Any uninsured child born in a hospital in this state or in an eligible border state hospital shall be enrolled by an expedited process in the HUSKY Plan, Part B provided (1) the child's family resides in this state, and (2) a parent of such child authorizes enrollment in the program. The commissioner shall pay any premium cost such family would otherwise incur for the first two months of coverage to the managed care organization selected by the family to provide coverage for such child.

[(f)] (g) The commissioner shall implement presumptive eligibility for children applying for Medicaid. Such presumptive eligibility determinations shall be in accordance with applicable federal law and regulations. The commissioner shall adopt regulations, in accordance with chapter 54, to establish standards and procedures for the designation of organizations as qualified entities to grant presumptive eligibility. Qualified entities shall ensure that, at the time a presumptive eligibility determination is made, a completed application for Medicaid is submitted to the department for a full eligibility determination. In establishing such standards and procedures, the commissioner shall ensure the representation of state-wide and local organizations that provide services to children of all ages in each region of the state.

[(g)] (h) The commissioner shall enter into a contract with an entity to be a single point of entry servicer for applicants and enrollees under the HUSKY Plan, Part A and Part B. The servicer shall jointly market both Part A and Part B together as the HUSKY Plan. Such servicer shall develop and implement public information and outreach activities with community programs. Such servicer shall electronically transmit data with respect to enrollment and disenrollment in the HUSKY Plan, Part B to the commissioner.

[(h)] (i) Upon the expiration of any contractual provisions entered into pursuant to subsection [(g)] (h) of this section, the commissioner shall develop a new contract for single point of entry services and managed care enrollment brokerage services. The commissioner may enter into one or more contractual arrangements for such services for a contract period not to exceed seven years. Such contracts shall include performance measures, including, but not limited to, specified time limits for the processing of applications, parameters setting forth the requirements for a completed and reviewable application and the percentage of applications forwarded to the department in a complete and timely fashion. Such contracts shall also include a process for identifying and correcting noncompliance with established performance measures, including sanctions applicable for instances of continued noncompliance with performance measures.

[(i)] (j) The single point of entry servicer shall send an application and supporting documents to the commissioner for determination of eligibility of a child who resides in a household with a family income of one hundred eighty-five per cent or less of the federal poverty level. The servicer shall enroll eligible beneficiaries in the applicant's choice of managed care plan. Upon enrollment in a managed care plan, an eligible HUSKY Plan, Part A or Part B beneficiary shall remain enrolled in such managed care plan for twelve months from the date of such enrollment unless (1) an eligible beneficiary demonstrates good cause to the satisfaction of the commissioner of the need to enroll in a different managed care plan, or (2) the beneficiary no longer meets program eligibility requirements.

[(j)] (k) Not more than twelve months after the determination of eligibility for benefits under the HUSKY Plan, Part A and Part B and annually thereafter, the commissioner or the servicer, as the case may be, shall determine if the child continues to be eligible for the plan. The commissioner or the servicer shall mail an application form to each participant in the plan for the purposes of obtaining information to make a determination on eligibility. To the extent permitted by federal law, in determining eligibility for benefits under the HUSKY Plan, Part A or Part B with respect to family income, the commissioner or the servicer shall rely upon information provided in such form by the participant unless the commissioner or the servicer has reason to believe that such information is inaccurate or incomplete. The Department of Social Services shall annually review a random sample of cases to confirm that, based on the statistical sample, relying on such information is not resulting in ineligible clients receiving benefits under HUSKY Plan, Part A or Part B. The determination of eligibility shall be coordinated with health plan open enrollment periods.

[(k)] (l) The commissioner shall implement the HUSKY Plan, Part B while in the process of adopting necessary policies and procedures in regulation form in accordance with the provisions of section 17b-10.

[(l)] (m) The commissioner shall adopt regulations, in accordance with chapter 54, to establish residency requirements and income eligibility for participation in the HUSKY Plan, Part B and procedures for a simplified mail-in application process. Notwithstanding the provisions of section 17b-257b, such regulations shall provide that any child adopted from another country by an individual who is a citizen of the United States and a resident of this state shall be eligible for benefits under the HUSKY Plan, Part B upon arrival in this state.

Sec. 18. Section 38a-567 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2007):

Health insurance plans and insurance arrangements covering small employers and insurers and producers marketing such plans and arrangements shall be subject to the following provisions:

(1) (A) Any such plan or arrangement shall be renewable with respect to all eligible employees or dependents at the option of the small employer, policyholder or contract-holder, as the case may be, except: (i) For nonpayment of the required premiums by the small employer, policyholder or contract-holder; (ii) for fraud or misrepresentation of the small employer, policyholder or contractholder or, with respect to coverage of individual insured, the insureds or their representatives; (iii) for noncompliance with plan or arrangement provisions; (iv) when the number of insureds covered under the plan or arrangement is less than the number of insureds or percentage of insureds required by participation requirements under the plan or arrangement; or (v) when the small employer, policyholder or contractholder is no longer actively engaged in the business in which it was engaged on the effective date of the plan or arrangement.

(B) Renewability of coverage may be effected by either continuing in effect a plan or arrangement covering a small employer or by substituting upon renewal for the prior plan or arrangement the plan or arrangement then offered by the carrier that most closely corresponds to the prior plan or arrangement and is available to other small employers. Such substitution shall only be made under conditions approved by the commissioner. A carrier may substitute a plan or arrangement as stated above only if the carrier effects the same substitution upon renewal for all small employers previously covered under the particular plan or arrangement, unless otherwise approved by the commissioner. The substitute plan or arrangement shall be subject to the rating restrictions specified in this section on the same basis as if no substitution had occurred, except for an adjustment based on coverage differences.

(C) Notwithstanding the provisions of this subdivision, any such plan or arrangement, or any coverage provided under such plan or arrangement may be rescinded for fraud, material misrepresentation or concealment by an applicant, employee, dependent or small employer.

(D) Any individual who was not a late enrollee at the time of his or her enrollment and whose coverage is subsequently rescinded shall be allowed to reenroll as of a current date in such plan or arrangement subject to any preexisting condition or other provisions applicable to new enrollees without previous coverage. On and after the effective date of such individual's reenrollment, the small employer carrier may modify the premium rates charged to the small employer for the balance of the current rating period and for future rating periods, to the level determined by the carrier as applicable under the carrier's established rating practices had full, accurate and timely underwriting information been supplied when such individual initially enrolled in the plan. The increase in premium rates allowed by this provision for the balance of the current rating period shall not exceed twenty-five per cent of the small employer's current premium rates. Any such increase for the balance of said current rating period shall not be subject to the rate limitation specified in subdivision (6) of this section. The rate limitation specified in this section shall otherwise be fully applicable for the current and future rating periods. The modification of premium rates allowed by this subdivision shall cease to be permitted for all plans and arrangements on the first rating period commencing on or after July 1, 1995.

(2) Except in the case of a late enrollee who has failed to provide evidence of insurability satisfactory to the insurer, the plan or arrangement may not exclude any eligible employee or dependent who would otherwise be covered under such plan or arrangement on the basis of an actual or expected health condition of such person. No plan or arrangement may exclude an eligible employee or eligible dependent who, on the day prior to the initial effective date of the plan or arrangement, was covered under the small employer's prior health insurance plan or arrangement pursuant to workers' compensation, continuation of benefits pursuant to federal extension requirements established by the Consolidated Omnibus Budget Reconciliation Act of 1985 (P.L. 99-2721, as amended) or other applicable laws. The employee or dependent must request coverage under the new plan or arrangement on a timely basis and such coverage shall terminate in accordance with the provisions of the applicable law.

(3) (A) For rating periods commencing on or after October 1, 1993, and prior to July 1, 1994, the premium rates charged or offered for a rating period for all plans and arrangements may not exceed one hundred thirty-five per cent of the base premium rate for all plans or arrangements.

(B) For rating periods commencing on or after July 1, 1994, and prior to July 1, 1995, the premium rates charged or offered for a rating period for all plans or arrangements may not exceed one hundred twenty per cent of the base premium rate for such rating period. The provisions of this subdivision shall not apply to any small employer who employs more than twenty-five eligible employees.

(4) For rating periods commencing on or after October 1, 1993, and prior to July 1, 1995, the percentage increase in the premium rate charged to a small employer, who employs not more than twenty-five eligible employees, for a new rating period may not exceed the sum of:

(A) The percentage change in the base premium rate measured from the first day of the prior rating period to the first day of the new rating period;

(B) An adjustment of the small employer's premium rates for the prior rating period, and adjusted pro rata for rating periods of less than one year, due to the claim experience, health status or duration of coverage of the employees or dependents of the small employer, such adjustment (i) not to exceed ten per cent annually for the rating periods commencing on or after October 1, 1993, and prior to July 1, 1994, and (ii) not to exceed five per cent annually for the rating periods commencing on or after July 1, 1994, and prior to July 1, 1995; and

(C) Any adjustments due to change in coverage or change in the case characteristics of the small employer, as determined from the small employer carrier's applicable rate manual.

(5) (A) With respect to plans or arrangements issued on or after July 1, [1995] 2008, the premium rates charged or offered to small employers shall be established on the basis of a community rate, adjusted to reflect one or more of the following classifications:

(i) Age, provided age brackets of less than five years shall not be utilized;

(ii) Gender;

(iii) Geographic area, provided an area smaller than a county shall not be utilized;

(iv) Industry, provided the rate factor associated with any industry classification shall not vary from the arithmetic average of the highest and lowest rate factors associated with all industry classifications by greater than fifteen per cent of such average, and provided further, the rate factors associated with any industry shall not be increased by more than five per cent per year;

(v) Group size, provided the highest rate factor associated with group size shall not vary from the lowest rate factor associated with group size by a ratio of greater than 1.25 to 1.0;

(vi) Administrative cost savings resulting from the administration of an association group plan or a plan written pursuant to section 5-259, provided the savings reflect a reduction to the small employer carrier's overall retention that is measurable and specifically realized on items such as marketing, billing or claims paying functions taken on directly by the plan administrator or association, except that such savings may not reflect a reduction realized on commissions;

(vii) Savings resulting from a reduction in the profit of a carrier who writes small business plans or arrangements for an association group plan or a plan written pursuant to section 5-259 provided any loss in overall revenue due to a reduction in profit is not shifted to other small employers; [and]

(viii) Family composition, provided the small employer carrier shall utilize only one or more of the following billing classifications: (I) Employee; (II) employee plus family; (III) employee and spouse; (IV) employee and child; (V) employee plus one dependent; and (VI) employee plus two or more dependents; and

(ix) Status as smoker or nonsmoker.

(B) The small employer carrier shall quote premium rates to small employers after receipt of all demographic rating classifications of the small employer group. No small employer carrier may inquire regarding health status or claims experience of the small employer or its employees or dependents prior to the quoting of a premium rate.

(C) The provisions of subparagraphs (A) and (B) of this subdivision shall apply to plans or arrangements issued on or after July 1, 1995. The provisions of subparagraphs (A) and (B) of this subdivision shall apply to plans or arrangements issued prior to July 1, 1995, as of the date of the first rating period commencing on or after that date, but no later than July 1, 1996.

(6) For any small employer plan or arrangement on which the premium rates for employee and dependent coverage or both, vary among employees, such variations shall be based solely on age and other demographic factors permitted under subparagraph (A) of subdivision (5) of this section and such variations may not be based on health status, claim experience, or duration of coverage of specific enrollees. Except as otherwise provided in subdivision (1) of this section, any adjustment in premium rates charged for a small employer plan or arrangement to reflect changes in case characteristics prior to the end of a rating period shall not include any adjustment to reflect the health status, medical history or medical underwriting classification of any new enrollee for whom coverage begins during the rating period.

(7) For rating periods commencing prior to July 1, 1995, in any case where a small employer carrier utilized industry classification as a case characteristic in establishing premium rates, the rate factor associated with any industry classification shall not vary from the arithmetical average of the highest and lowest rate factors associated with all industry classifications by greater than fifteen per cent of such average.

(8) Differences in base premium rates charged for health benefit plans by a small employer carrier shall be reasonable and reflect objective differences in plan design, not including differences due to the nature of the groups assumed to select particular health benefit plans.

(9) For rating periods commencing prior to July 1, 1995, in any case where an insurer issues or offers a policy or contract under which premium rates for a specific small employer are established or adjusted in part based upon the actual or expected variation in claim costs or actual or expected variation in health conditions of the employees or dependents of such small employer, the insurer shall make reasonable disclosure of such rating practices in solicitation and sales materials utilized with respect to such policy or contract.

(10) If a small employer carrier denies coverage to a small employer, the small employer carrier shall promptly offer the small employer the opportunity to purchase a special health care plan or a small employer health care plan, as appropriate. If a small employer carrier or any producer representing that carrier fails, for any reason, to offer such coverage as requested by a small employer, that small employer carrier shall promptly offer the small employer an opportunity to purchase a special health care plan or a small employer health care plan, as appropriate.

(11) No small employer carrier or producer shall, directly or indirectly, engage in the following activities:

(A) Encouraging or directing small employers to refrain from filing an application for coverage with the small employer carrier because of the health status, claims experience, industry, occupation or geographic location of the small employer, except the provisions of this subparagraph shall not apply to information provided by a small employer carrier or producer to a small employer regarding the carrier's established geographic service area or a restricted network provision of a small employer carrier; or

(B) Encouraging or directing small employers to seek coverage from another carrier because of the health status, claims experience, industry, occupation or geographic location of the small employer.

(12) No small employer carrier shall, directly or indirectly, enter into any contract, agreement or arrangement with a producer that provides for or results in the compensation paid to a producer for the sale of a health benefit plan to be varied because of the health status, claims experience, industry, occupation or geographic area of the small employer. A small employer carrier shall provide reasonable compensation, as provided under the plan of operation of the program, to a producer, if any, for the sale of a special or a small employer health care plan. No small employer carrier shall terminate, fail to renew or limit its contract or agreement of representation with a producer for any reason related to the health status, claims experience, occupation, or geographic location of the small employers placed by the producer with the small employer carrier.

(13) No small employer carrier or producer shall induce or otherwise encourage a small employer to separate or otherwise exclude an employee from health coverage or benefits provided in connection with the employee's employment.

(14) Denial by a small employer carrier of an application for coverage from a small employer shall be in writing and shall state the reasons for the denial.

(15) No small employer carrier or producer shall disclose (A) to a small employer the fact that any or all of the eligible employees of such small employer have been or will be reinsured with the pool, or (B) to any eligible employee or dependent the fact that he has been or will be reinsured with the pool.

(16) If a small employer carrier enters into a contract, agreement or other arrangement with another party to provide administrative, marketing or other services related to the offering of health benefit plans to small employers in this state, the other party shall be subject to the provisions of this section.

(17) The commissioner may adopt regulations in accordance with the provisions of chapter 54 setting forth additional standards to provide for the fair marketing and broad availability of health benefit plans to small employers.

(18) Each small employer carrier shall maintain at its principle place of business a complete and detailed description of its rating practices and renewal underwriting practices, including information and documentation that demonstrates that its rating methods and practices are based upon commonly accepted actuarial assumptions and are in accordance with sound actuarial principles. Each small employer carrier shall file with the commissioner annually, on or before March fifteenth, an actuarial certification certifying that the carrier is in compliance with this part and that the rating methods have been derived using recognized actuarial principles consistent with the provisions of sections 38a-564 to 38a-573, inclusive. Such certification shall be in a form and manner and shall contain such information, as determined by the commissioner. A copy of the certification shall be retained by the small employer carrier at its principle place of business. Any information and documentation described in this subdivision but not subject to the filing requirement shall be made available to the commissioner upon his request. Except in cases of violations of sections 38a-564 to 38a-573, inclusive, the information shall be considered proprietary and trade secret information and shall not be subject to disclosure by the commissioner to persons outside of the department except as agreed to by the small employer carrier or as ordered by a court of competent jurisdiction.

(19) The commissioner may suspend all or any part of this section relating to the premium rates applicable to one or more small employers for one or more rating periods upon a filing by the small employer carrier and a finding by the commissioner that either the suspension is reasonable in light of the financial condition of the carrier or that the suspension would enhance the efficiency and fairness of the marketplace for small employer health insurance.

(20) For rating periods commencing prior to July 1, 1995, a small employer carrier shall quote premium rates to any small employer within thirty days after receipt by the carrier of such employer's completed application.

(21) Any violation of subdivisions (10) to (16), inclusive, and any regulations established under subdivision (17) of this section shall be an unfair and prohibited practice under sections 38a-815 to 38a-830, inclusive.

(22) With respect to plans or arrangements issued pursuant to subsection (i) of section 5-259, or by an association group plan, at the option of the Comptroller or the administrator of the association group plan, the premium rates charged or offered to small employers purchasing health insurance shall not be subject to this section, provided (A) the plan or plans offered or issued cover such small employers as a single entity and cover not less than ten thousand eligible individuals on the date issued, (B) each small employer is charged or offered the same premium rate with respect to each eligible individual and dependent, and (C) the plan or plans are written on a guaranteed issue basis.

Sec. 19. (NEW) (Effective July 1, 2007) There is established, within existing appropriations, a Quit for Good program, which shall be a smoking cessation program administered by the Department of Public Health. The department shall contract with one or more entities to implement the program, which shall (1) promote smoking cessation among unserved or underserved populations, (2) educate the public regarding the health complications relating to smoking, (3) educate the public regarding methods to quit smoking, (4) provide counseling and referral services for treatment, and (5) establish a system to track and monitor all individuals receiving smoking cessation assistance in the program. For purposes of this section, "unserved or underserved populations" means individuals who are at or below two hundred per cent of the federal poverty level and without health insurance that comprehensively covers smoking cessation.

Sec. 20. Section 38a-497 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2007):

Every individual health insurance policy providing coverage of the type specified in subdivisions (1), (2), (4), (6), (10), (11) and (12) of section 38a-469 delivered, issued for delivery, amended or renewed in this state on or after [October 1, 1982] July 1, 2007, shall provide that coverage of a child shall terminate no earlier than the policy anniversary date on or after whichever of the following occurs first, the date on which the child marries [, ceases to be a dependent of the policyholder, attains the age of nineteen if the child is not a full-time student at an accredited institution,] or attains the age of [twenty-three if the child is a full-time student at an accredited institution] twenty-six.

Sec. 21. (NEW) (Effective July 1, 2007) (a) No insurer, health care center, hospital and medical service corporation or other entity delivering, issuing for delivery, renewing, continuing or amending any individual health insurance policy in this state on or after October 1, 2007, shall deliver or issue for delivery in this state any policy providing limited benefit coverage unless the applicant for such coverage signs a statement on the application form that confirms that such applicant is covered under another health benefits plan contract or policy.

(b) Each individual health insurance policy, subscriber contract or certificate of coverage delivered or issued for delivery in this state on or after October 1, 2007, that provides limited benefit coverage shall include the following statement printed in capital letters not less than twelve-point bold face type and located in a conspicuous manner on such policy, contract or certificate:

"THIS LIMITED HEALTH BENEFITS PLAN DOES NOT PROVIDE COMPREHENSIVE MEDICAL COVERAGE. IT IS A BASIC OR LIMITED BENEFITS POLICY AND CONTAINS SPECIFIC DOLLAR LIMITS THAT WILL BE PAID FOR MEDICAL SERVICES WHICH MAY NOT BE EXCEEDED. IF THE COST OF SERVICES EXCEEDS THOSE LIMITS, THE BENEFICIARY AND NOT THE INSURER IS RESPONSIBLE FOR PAYMENT OF THE EXCESS AMOUNTS."

(c) For the purposes of this section, "limited benefit coverage" means an insurance policy that is designed, advertised and marketed to supplement major medical insurance and that includes accident only, dental only, vision only, disability income only, fixed or hospital indemnity, specified disease insurance, credit insurance, Taft-Hartley trusts or that covers more than a single disease or service but has an aggregate limit less than one hundred thousand dollars or a per service or per condition limit of less than twenty thousand dollars.

Sec. 22. (NEW) (Effective July 1, 2007) (a) No insurer, health care center, hospital and medical service corporation or other entity delivering, issuing for delivery, renewing, continuing or amending any group health insurance policy in this state on or after October 1, 2007, shall deliver or issue for delivery in this state any policy providing limited benefit coverage unless each employee electing such coverage confirms, in writing, that such employee is covered under another health benefits plan contract or policy. Each employer that offers a group health insurance policy that provides limited benefit coverage to its employees shall (1) have each employee electing such coverage sign a statement that confirms that such employee is covered under another health benefits plan contract or policy, and (2) submit such statement to such insurer, health care center, hospital and medical service corporation or other entity.

(b) Each group health insurance policy, subscriber contract or certificate of coverage delivered or issued for delivery in this state on or after October 1, 2007, that provides limited benefit coverage shall include the following statement printed in capital letters not less than twelve-point bold face type and located in a conspicuous manner on such policy, contract or certificate:

"THIS LIMITED HEALTH BENEFITS PLAN DOES NOT PROVIDE COMPREHENSIVE MEDICAL COVERAGE. IT IS A BASIC OR LIMITED BENEFITS POLICY AND CONTAINS SPECIFIC DOLLAR LIMITS THAT WILL BE PAID FOR MEDICAL SERVICES WHICH MAY NOT BE EXCEEDED. IF THE COST OF SERVICES EXCEEDS THOSE LIMITS, THE BENEFICIARY AND NOT THE INSURER IS RESPONSIBLE FOR PAYMENT OF THE EXCESS AMOUNTS."

(c) For the purposes of this section, "limited benefit coverage" means an insurance policy that is designed, advertised and marketed to supplement major medical insurance and that includes accident only, dental only, vision only, disability income only, fixed or hospital indemnity, specified disease insurance, credit insurance, Taft-Hartley trusts or that covers more than a single disease or service but has an aggregate limit less than one hundred thousand dollars or a per service or per condition limit of less than twenty thousand dollars.

Sec. 23. (NEW) (Effective July 1, 2007) (a) There is established a permanent Commission on Healthy Lifestyles, which shall be an independent body within the Office of Health Care Access for administrative purposes only. Said commission shall: (1) By October 1, 2007, develop a marketing campaign to educate the public regarding consequences of poor health and basic measures individuals should take to ensure good health; and (2) make recommendations to the General Assembly concerning incentives to encourage personal responsibility in making healthy lifestyle choices.

(b) The commission shall consist of the Commissioners of Public Health, Education, Social Services and Health Care Access, the Insurance Commissioner, or their designees, and nine additional members as follows: One member to be appointed by the Governor, two to be appointed by the president pro tempore of the Senate, two to be appointed by the speaker of the House of Representatives, one to be appointed by the majority leader of the Senate, one to be appointed by the majority leader of the House of Representatives, one to be appointed by the minority leader of the Senate, and one to be appointed by the minority leader of the House of Representatives.

(c) Notwithstanding the provisions of subsection (c) of section 4-9a of the general statutes, the members of the commission shall serve for staggered terms. The initial members selected shall serve as follows: (1) The members appointed by the Governor and the president pro tempore of the Senate shall serve for three years; (2) the members appointed by the speaker of the House of Representatives and the majority leader of the Senate shall serve for two years; and (3) the members appointed by the majority leader and the minority leader of the House of Representatives and the minority leader of the Senate shall serve for one year. Following the expiration of such initial terms, each subsequent appointee shall serve for a term of three years. Any vacancy shall be filled by the appointing authority for the unexpired portion of the term of the member replaced. The members shall serve without compensation for their services but shall be reimbursed for their duties.

(d) The commission shall meet at least quarterly each year. The commission, within available appropriations, may hire consultants to provide assistance with its responsibilities.

(e) The Office of Health Care Access shall, within available appropriations, contract with one or more entities to implement the marketing campaign recommended by the Commission on Healthy Lifestyles.

Sec. 24. (NEW) (Effective July 1, 2007) Not later than July 1, 2009, the Health Care Reform Commission, established under section 2 of this act, shall establish a nonprofit organization to be known as the Connecticut Health Quality Partnership. The Connecticut Health Quality Partnership shall: (1) Be responsible for collecting and reporting insurance claims data and other data concerning the quality of care and services provided by health plans, hospitals and health care providers for the purpose of supporting quality improvement initiatives and enabling consumers to make informed choices with respect to such providers, (2) be composed of representatives from both the private and public sectors, including, but not limited to, health insurers, hospital associations, medical societies, the Commissioners of Public Health and Social Services and consumer advocates who are not otherwise affiliated with any other members, and (3) seek funding from private and federal funding sources.

Sec. 25. Subsection (d) of section 17b-192 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2007):

(d) The Commissioner of Social Services shall contract with federally qualified health centers or other primary care providers as necessary to provide medical services to eligible state-administered general assistance recipients pursuant to this section. The commissioner shall [, within available appropriations,] make payments to such centers based on their pro rata share of the cost of services provided or the number of clients served, or both. The Commissioner of Social Services shall [, within available appropriations,] make payments to other providers based on a methodology determined by the commissioner. The Commissioner of Social Services may reimburse for extraordinary medical services, provided such services are documented to the satisfaction of the commissioner. For purposes of this section, the commissioner may contract with a managed care organization or other entity to perform administrative functions, including a grievance process for recipients to access review of a denial of coverage for a specific medical service, and to operate the program in whole or in part. Provisions of a contract for medical services entered into by the commissioner pursuant to this section shall supersede any inconsistent provision in the regulations of Connecticut state agencies. A recipient who has exhausted the grievance process established through such contract and wishes to seek further review of the denial of coverage for a specific medical service may request a hearing in accordance with the provisions of section 17b-60. On July 1, 2007, the amount paid pursuant to this section to each federally qualified health center or other primary care provider shall be increased by not less than five per cent. On July 1, 2008, and annually thereafter, such payments shall increase by not less than the percentage increase in the consumer price index.

Sec. 26. (NEW) (Effective July 1, 2007) (a) On October 1, 2007, and every five years thereafter, the Office of Health Care Access shall determine the number of Connecticut residents who are not covered by a health insurance plan. If the number of uninsured residents has not decreased by fifty per cent by October 1, 2012, the Health Care Reform Commission shall determine whether it is advisable to require residents to have health insurance. Not later than January 1, 2013, the commission shall report its findings to the joint standing committee of the General Assembly having cognizance of matters relating to insurance.

(b) Not later than December 31, 2007, and annually thereafter, the Office of Health Care Access shall conduct a survey to determine the number of Connecticut employers that are providing health care benefits to employees who reside in this state. Not later than January 1, 2008, and annually thereafter, said office shall submit a report of its findings to the joint standing committee of the General Assembly having cognizance of matters relating to insurance.

Sec. 27. (Effective July 1, 2007) Notwithstanding the provisions of section 4-28e of the general statutes, the sum remaining in the Tobacco and Health Trust Fund shall be transferred from said fund to the General Fund, of which twenty million dollars shall be used by the Department of Public Health for the Smoke-Free Connecticut Program.

Sec. 28. (Effective July 1, 2007) The sum of one million six hundred thousand dollars is appropriated to the Department of Public Health, from the General Fund, for the fiscal year ending June 30, 2008, for the purpose of providing grants in the amount of two hundred thousand dollars to eight different groups representing the interests of Connecticut employers. Such grants shall be used to train employers to effectively educate employees concerning the financial and health benefits of making lifestyle choices that promote good health, including maintaining a healthy weight and regularly exercising.

Sec. 29. (Effective July 1, 2007) An amount is appropriated to the Department of Social Services, from the General Fund, for the fiscal year ending June 30, 2008, for the purposes of section 13 of this act.

Sec. 30. (Effective July 1, 2007) The sum of five hundred thousand dollars is appropriated to the Department of Social Services, from the General Fund, for the fiscal year ending June 30, 2008, for the purpose of providing grants to community-based organizations under subsection (e) of section 17b-297 of the general statutes, as amended by this act.

Sec. 31. (Effective July 1, 2007) The sum of one million dollars is appropriated to the Insurance Department, from the General Fund, for the fiscal year ending June 30, 2008, for the purpose of providing start-up costs for the Connecticut Connector.

Sec. 32. Section 17b-261c of the general statutes is repealed. (Effective July 1, 2007)

The following fiscal impact statement and bill analysis are prepared for the benefit of members of the General Assembly, solely for the purpose of information, summarization, and explanation, and do not represent the intent of the General Assembly or either chamber thereof for any purpose:

OFA Fiscal Note

State Impact:

Municipal Impact: None

Explanation

This bill makes various changes to the health care system in Connecticut, as detailed below.

Sections 1 and 2 establish a twelve member Health Care Reform Commission, and places it within the Office of Health Care Access (OHCA) for administrative purposes only. As members are entitled to reimbursement for expenses, associated minimal costs will be incurred by the Office.

Costs of consultant services needed to assist the Commission cannot be determined in advance. However, they would be anticipated to be significant in magnitude. For comparison purposes, the Governor has recommended $500,000 in FY 08 under OHCA's budget to support research and planning efforts to be undertaken by a proposed Electronic Health Information Technology Task Force. It is assumed that a comparable expense would be incurred by the Commission to comply with subdivision 5 of Section 2(c). Additional indeterminate costs would be associated with accomplishing other mandates within this subsection.

Should no appropriation be included within the enacted FY 08-09 Biennial Budget for consultant services, the requirement that associated costs be accommodated within available appropriations will likely result in one of four outcomes: (1) The Commission will proceed, and OHCA will require a deficiency appropriation; (2) the Commission will delay implementation pending the approval of additional appropriations in future fiscal years to OHCA; (3) OHCA will shift resources from other departmental priorities, thereby impacting existing departmental programs; or (4) the Commission will be unable to proceed.

It should be noted that administrative services are currently provided to OHCA by the Department of Administrative Services (DAS). Therefore, a workload increase will be experienced by DAS to the extent that additional services are required.

It is anticipated that the Commissioners of Social Services, Health Care Access, and Insurance, or their designees, will participate in the activities of the Commission within each agency's normally budgeted resources.

Sections 3 of the bill requires the Insurance Department to develop, issue a request for proposals (RFP) and award a five-year contract to administer the Connecticut Connector. Section 41 of the bill appropriates $1,000,000 to the department for the process.

The Connector will serve as a health insurance purchasing pool, through which previously uninsured individuals and employers who previously did not offer health insurance may purchase health plans. The administrator of the Connector must solicit insurers to sell product through the Connector, review and publicize plan benefits and costs, screen applicants, among other duties. The administrator must collect premium contributions from employers and individuals, as well as any subsidies from the state. The bill allows the administrator to collect fees from each insurer selling products through the Connector in order to support administrative costs. It thus appears that beyond the $1,000,000 provided to develop and issue the RFP, the state does not incur any direct costs from the operation of the Connector.

Sections 4 and 5 of the bill specify what types of health plans will be provided under the Connector as well as what individuals and employers will be eligible to purchase insurance through the Connector. There is no fiscal impact to the state from these provisions.

Section 6 of the bill establishes a health savings account program for families with incomes under 400% of the Federal Poverty Level (FPL) and who are enrolled in a high deductible insurance plan. The Connector must make payments to these accounts annually on a sliding fee scale specified in the bill. These payments range from $300 to $1,500. It is not known how many eligible health savings accounts may be established. However, given the subsidy levels specified in the bill, the Connector will incur a significant annual cost. The bill specifies that the administrator of the Connector will receive funds from the Comptroller to make these payments. Therefore, the General Fund would bear these costs.

Section 7 establishes a premium subsidy program for families with incomes under 400% FPL and who currently have private insurance. The Connector must eligible families quarterly on a sliding fee scale specified in the bill. These payments range from $300 to $1,500 annually depending in income and family size.

The Office of Fiscal Analysis (OFA) estimates that there are approximately 950,000 individuals (365,000 households) under 400% FPL who are covered by private insurance. The family size and income distribution is not known. It is also not known how many of these households have private insurance that meets the terms specified in the bill. However, assuming that half of the households are enrolled in the required insurance, and receive an average premium subsidy ($900), the Connector would incur an annual cost of approximately $164,300,000. The bill specifies that the administrator of the Connector will receive funds from the Comptroller to make these payments. Therefore, the General Fund would bear these costs.

Section 8 requires the Department of Social Services (DSS) to seek a federal waiver to receive reimbursement for costs incurred under sections 6 and 7 and to establish a Medicaid funded excess cost reinsurance program. Should the waiver be granted, the state would receive 50% reimbursement for the costs incurred by the Connector under sections 6 and 7. The state cost for the excess cost reinsurance program will be dependent upon the structure of the waiver submitted to the federal government, which is not now known.

Section 9 specifies that no employer may offer health benefits of a lesser value to lower-paid employees than higher-paid employee.

Section 10 requires DSS to develop a plan to implement a system of primary care case management (PCCM) for some or all of the aged blind or disabled Medicaid beneficiaries. These individuals currently receive unmanaged, fee-for-service benefits, with an estimated FY08 cost of $1,300,000,000 (for approximately 74,000 clients). A PCCM system may be able to provide more coordinated care as well as reduce the annual $17,500 cost per client. The potential savings will be dependent upon the system developed. For purposes of illustration, each 5% savings achieved would result in annual savings of approximately $65,000,000.

Section 11 requires DSS to allow Medicaid fee-for-service beneficiaries to enroll in the managed care plans available under the HUSKY plans. The impact of this provision is uncertain. Integrating these higher cost individuals ($17,500 per client annually as compared to $2,600 annually for HUSKY A enrollees) will likely drive up the capitated rate paid by DSS to the managed care organizations (MCO's). However, as noted in the previous section, more coordinated care may reduce the annual medical costs for these clients.

Section 12 limits the administrative costs of HUSKY MCO's to 10%. DSS may exclude from this cap disease management or value added clinical programs, but specifically may not exclude utilization management, claims, member services or other non-clinical functions. The impact of this change is uncertain. Although the cap may reduce what the state reimburses the MCO's for administrative costs, limiting the MCO's ability to conduct utilization review may increase the medical service costs. The administrative cap may also reduce the MCO's ability to meet state and federally required reporting mandates.

Section 13 requires DSS to increase certain hospital, dental and physician rates under the Medicaid fee for service program. OFA estimates that these changes will cost $127,100,000 in FY08 and $133,500,000 in FY09. This section also requires that DSS amend the contracts with the HUSKY MCO's in order to implement similar rate increases under the HUSKY program. OFA estimates that this will cost $126,400,000 in FY08 and $132,800,000 in FY09. The increased costs in this section would be eligible for reimbursement under the federal Medicaid and SCHIP programs.

Section 14 requires DSS to award 50 grants of up to $10,000 to community based organizations for public education, outreach and recruitment of HUSKY eligible children. Section 40 appropriates $500,000 in FY08 for this purpose.

Section 15 expands eligibility for parents of children enrolled in the HUSKY A program from 150% of the federal poverty level (FPL) to 185% FPL. OFA estimates that this will add an additional 9,700 clients to the program when fully annualized, at a cost of $21,200,000 in FY08 and $28,200,000 in FY09. This estimate includes the rate increases implemented in section 13 of the bill. These costs would be reimbursed 50% by the federal government under the Medicaid program.

Section 16 requires DSS to increase the Medicaid medically needy income limit to 150% FPL. This change is expected increase Medicaid eligibility by 31,080 individuals, at a cost of $111,900,000 in FY08 and $117,500,000 in FY09. These costs would be reimbursed 50% by the federal government under the Medicaid program.

Section 17 re-establishes the continuous eligibility policy for children in the HUSKY plan. Assuming the rate increases included in section 13, this change is estimated to cost $2,500,000 annually. These costs would be reimbursed 50% by the federal government under the Medicaid program.

Section 17 also requires expedited HUSKY B enrollment of uninsured newborns and requires DSS to pay any premium costs for the first two months of coverage. There are approximately 90 uninsured births monthly in Connecticut. Enrolling these children in HUSKY B and paying full premiums for the first two months is expected to cost $2,400,000 in FY08 and $5,100,000 in FY09 (assuming the rate increases in section 17 of the bill). These costs would be 65% reimbursable under the federal SCHIP program.

Section 18 makes changes to the small employer group community rating system. These changes are not anticipated to have a direct fiscal impact on the state.

Section 19 requires the Department of Public Health to establish a Quit for Good program. It is assumed for purposes of this fiscal note that the Quit for Good program is the same as the Smoke Free Connecticut Program referenced in Section 27. If these programs are not one and the same, significant costs would be added to those discussed below.

Of the $20,000,000 transferred to the DPH by Section 27, approximately $164,000 would be needed in FY 08 ($160,500 commencing in FY 09, after adjusting for one-time costs) to support the salaries of 2.5 positions and related ancillary costs needed to implement this program.

Additional fringe benefits costs of $51,230 in FY 08 and $89,650 in FY 09 would also be incurred.¹

To the extent that effective smoking cessation programming reduces the incidence of tobacco related adverse medical consequences, future reductions in expenditures under public health care programs may ensue.

Section 20, by requiring insurance policies that cover dependent children to provide coverage until the age of 26 (regardless of educational status), will result in increased health service costs to the state as an employer beginning in FY 09. Under the bill, certain employees will maintain the more costly family coverage for longer than currently permitted. Data related to coverage of adult children to age 26 is not readily available from the Office of the State Comptroller (OSC), so a cost estimate cannot be determined at this time. To the extent that the dependent coverage required under the bill is not currently provided under a municipality's employee health insurance policy, there would be increased costs to provide it that cannot be determined.

Sections 21 and 22 concern requirements of insurers who offer limited benefit coverage. These changes are not anticipated to have a direct fiscal impact on the state.

Section 23 establishes a fourteen member Commission on Healthy Lifestyles, and places it within OHCA for administrative purposes only. As members are eligible for expense reimbursements, associated minimal costs will be incurred by the Office. Should the Commission decide to retain consultant services to assist it in the development of a marketing campaign and formulation of recommended incentives encouraging personal responsibility, additional indeterminate costs will be incurred.

A cost, which may be significant in magnitude, will be incurred by OHCA to contract for the marketing campaign recommended by the Commission. Actual costs would depend upon the scope of the campaign, which cannot be determined in advance. For comparison purposes, a 2003 counter marketing campaign was implemented at a cost of $350,000, pursuant to a recommendation of the Tobacco and Health Trust Fund Board of Trustees.²

It should be noted that administrative services are currently provided to OHCA by the Department of Administrative Services (DAS). Therefore, a workload increase will be experienced by DAS to the extent that additional services are required.

Should no appropriation be included within the enacted FY 08-09 Biennial Budget for the marketing campaign, the requirement that associated costs be accommodated within available appropriations will likely result in one of four outcomes detailed in section 2 above.

It is anticipated that the Commissioners of Public Health, Education, Social Services, Health Care Access, and Insurance, or their designees, will participate in the activities of the Commission within each agency's normally budgeted resources.

Section 24 requires the Health Care Reform Commission to establish a nonprofit organization, the Connecticut Health Quality Partnership (CHQP), by 7/1/09.

While the CHQP would be required to seek funding from private and federal sources, presumably to support its mandated activities, no funding sources are identified at this time. It is unclear whether the absence of such financial support would result in an obligation on the state to pay costs associated with the creation or operation of the organization. Associated potential costs, which would be anticipated to be significant in magnitude, cannot be quantified at this time.

It is anticipated that the Commissioners of Public Health and Social Services, or their designees, will participate in the activities of the Commission within each agency's normally budgeted resources.

Section 25 requires DSS to increase the rates paid to federally required health center under the State Administered General Assistance (SAGA) program by 5% in FY08 and by the consumer price index increase is subsequent years. OFA estimates that this change will cost $4,800,000 in FY08 and $7,300,000 in FY09. This section further eliminates the provision that DSS make payments to SAGA providers within available appropriations. OFA estimates that this would increase SAGA payments by approximately $16,000,000 annually.

Section 26 requires the Office of Health Care Access to determine the number of uninsured Connecticut residents, by 10/1/07 and every five years thereafter. It also requires the Office to conduct a survey to determine the number of Connecticut employers providing health care benefits, by 12/31/07 and annually thereafter.

A cost, which may be significant in magnitude, will be incurred by the Office to comply with these requirements. Actual costs would depend upon the scope of the surveys conducted in any given year, but would be expected to exceed $150,000 in years when both household and employer data is collected. (For comparison purposes, in 2006 the Office paid $175,600 for consultant services to conduct surveys of 4,200 households and 800 employers.)

Should no appropriation be included within the enacted FY 08-09 Biennial Budget for the purposes of Section 26 the requirement that associated costs be accommodated within available appropriations will likely result in one of four outcomes detailed in section 2 above.

Section 27 transfers the sum remaining in the Tobacco and Health Trust Fund on 7/1/07 to the General Fund, of which $20,000,000 must be used by the Department of Public Health for a Smoke Free Connecticut Program. This will reduce the principal in the THTF by an estimated $20,800,000, and correspondingly increase the resources of the General Fund.

Section 28 appropriates $1,600,000 to the DPH in FY 08 to allow the agency to provide eight $200,000 grants to train employers to educate employees about the financial and health benefits of making lifestyle choices that promote good health.

Approximately $158,200 would be needed in FY 08 ($154,300 commencing in FY 09, after adjusting for one-time costs) to support the salaries of 2.5 positions and related ancillary costs needed to implement this program.

Additional fringe benefits costs of $51,540 in FY 08 and $90,190 in FY 09 would also be incurred.

To the extent that promotion of healthy lifestyle choices reduces the incidence of obesity and related adverse medical consequences, future reductions in expenditures under public health care programs may ensue.

Section 29 makes an unspecified appropriation to DSS. As no funds are actually appropriated, these sections have no fiscal impact.

Sections 30 and 31 make appropriations as noted in the above narrative.

Section 32 repeals the section of statute that prohibits guaranteed eligibility in the Medicaid program. It is not clear that by repealing the prohibition the bill restores the guaranteed eligibility policy. Should this policy be restored, it is estimated that the Medicaid program will incur additional expenses of approximately $2,000,000 annually.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation.



OLR Bill Analysis

sHB 6652

AN ACT ESTABLISHING THE CONNECTICUT HEALTHY STEPS PROGRAM.

SUMMARY:

This bill establishes the Connecticut Healthy Steps Program, which consists of numerous health insurance requirements, HUSKY program changes, and public health initiatives. It establishes a Health Care Reform Commission, the Connecticut Connector, a Healthy Lifestyles Commission, a health savings account incentive program, and a premium subsidy program. It also makes several appropriations.

EFFECTIVE DATE: July 1, 2007

§§ 2 & 24 – HEALTH CARE REFORM COMMISSION

The bill establishes a permanent 12–member Health Care Reform Commission as an independent body in the Office of Health Care Access (OHCA) for administrative purposes only. By July 1, 2008, the commission must develop (1) an affordable health care plan available for sale to small employers (50 or fewer employees) through the Connecticut Connector, which the bill establishes, and (2) a comprehensive health care plan that meets current statutory requirements.

By January 1, 2009, the commission must report to the Insurance and Real Estate Committee identifying the effect of statutorily required health insurance benefits on health care premiums that private sector employers pay. Beginning January 1, 2009, it must annually make recommendations to the General Assembly about the Connecticut Healthy Steps Program and improvements to the health care system, including cost controls.

The bill requires the commission to:

1. develop incentives to encourage people to use health insurance responsibly;

2. develop a proposed plan and timetable for implementing statewide electronic prescribing, computerized physician order entry in hospitals, and a uniform electronic medical record system to improve the state's health care quality;

3. develop a plan for implementing a third-party administered pharmaceutical purchasing pool to cover all public employees and public programs;

4. establish the Connecticut Health Quality Partnership by July 1, 2009; and

5. determine whether residents should be required to have health insurance if the number of uninsured people has not decreased 50% by October 1, 2012.

Membership

Commission members include the Department of Social Services (DSS), OHCA, and insurance commissioners, or their designees, and nine appointed members. The Senate president pro tempore and House speaker each appoint two and the governor, House and Senate majority leaders, and House and Senate minority leaders each appoint one.

The initial members serve staggered terms with (1) the governor's and Senate president pro tempore's appointees serving for three years, (2) the House speaker's and Senate majority leader's appointees for two years, and (3) the remaining members for one year. After the initial terms expire, subsequent appointees serve three-year terms. The appointing authority must fill any vacancy for the unexpired term. Members are not compensated but are reimbursed for their expenses.

The bill requires the commission to meet as often as necessary to complete its work, but at least quarterly, and it can hire consultants within available appropriations.

Connecticut Health Quality Partnership

The bill requires the Health Care Reform Commission to establish a nonprofit organization called the “Connecticut Health Quality Partnership” by July 1, 2009. The partnership must collect and report insurance claims and other data on the quality of care and services provided by health plans, hospitals, and health care providers to support quality improvement initiatives and help consumers make informed provider choices. It must include representatives from the public and private sectors, including health insurers, hospital associations, medical societies, consumer advocates not affiliated with any other members, and the Department of Public Health (DPH) and DSS commissioners. The partnership must seek private and public funding.

§§ 3-5 & 31 – CONNECTICUT CONNECTOR

The bill requires the Insurance Department, in consultation with the Health Care Reform Commission, to develop, issue a request for proposals, and award a five-year contract to administer the Connecticut Connector (“Connector”). The contract must be awarded to a private nonprofit organization to serve as a health insurance purchasing pool, through which previously uninsured individuals and uninsured employers may purchase health plans. (Presumably “uninsured employers” means employers who do not offer employees health insurance.)

Administrator

The bill requires the Connector's administrator to meet with the Health Care Reform Commission as the commission determines appropriate. The administrator must:

1. solicit insurers to sell products through the Connector;

2. review the products for compliance with Health Care Reform Commission-established benefits and standards;

3. provide plan selection assistance to, and publish easy-to-understand material that, compares plan costs and benefits for prospective purchasers;

4. screen applicants for eligibility to purchase through the pool;

5. work with the insurers selling products through the Connector to develop a uniform tool for collecting applicant or enrollee data needed for underwriting, enrollment, and other purposes;

6. collect premium contributions from employers and individuals and subsidies from the state and remit the funds to the enrollees' health plans;

7. collect fees from each insurer selling products through the Connector, based on rules the Health Care Reform Commission adopts, to support administration costs;

8. notify insureds when premiums are late and disenroll them or charge late penalties as appropriate;

9. provide creditable coverage notices as required under the federal Health Insurance Portability and Accountability Act (HIPAA);

10. market the health plans available though the Connector to potential purchasers;

11. receive money from the comptroller and make payments to individuals and employers eligible under the health savings account incentive and premium assistance programs the bill establishes; and

12. beginning July 1, 2009, provide data and reports annually to the Health Care Reform Commission and the General Assembly that include (a) the number and demographics of previously uninsured people covered through the Connector, by type of policy, (b) the Connector's per capita administrative costs, (c) any recommendations for improving service, health insurance policy offerings, and costs, and (d) any other information the commission requires.

Health Care Plans

The bill requires the Connector's administrator to offer the following three health insurance plans to each applicant: (1) an affordable health care plan; (2) a comprehensive health care plan currently available from insurers; and (3) a health savings account plus high deductible plan currently available from insurers. An employer purchasing coverage through the Connector may offer its employees any, but not necessarily a choice, of these plans.

The affordable health care plan must include:

1. coverage of physicians, clinics, ambulatory surgery, laboratory and diagnostic services, in-patient and out-patient hospital care, and medically necessary prescription drugs for physical or mental health;

2. coinsurance that reflects family income;

3. a copayment of up to $75 for inappropriate use of a hospital emergency department;

4. a minimum loss ratio (the percent of each premium dollar collected that must be used to pay claims) of 85% over any three-year moving average period; and

5. a lifetime benefits maximum of $500,000, contingent on the availability of an excess cost reinsurance program through DSS for which an individual or family would become eligible without spending all of their resources after exhausting their lifetime benefit. (It is unclear if this means that a lifetime benefit maximum is not permitted if DSS does not establish a reinsurance program.)

All Connector health care plans offered must be community-rated. The community rate is to be adjusted based on the individual's age, sex, county, and tobacco use. Each plan must also have a medical loss ratio of at least 85%.

The bill specifies that Connector health plan coverage is creditable coverage, as defined in HIPAA. (Creditable coverage is the time a person was covered under a prior plan that counts toward any preexisting condition coverage exclusion in a policy currently covering the person.) Any health plan that next covers a person who was insured through the Connector is prohibited from excluding coverage for that person's preexisting conditions. But each Connector health care plan offered may exclude coverage for preexisting conditions of anyone who has been uninsured for more than 12 months (presumably the 12 months immediately preceding the effective date of the Connector plan).

Individual Eligibility

The bill establishes the eligibility criteria for a person applying for individual coverage through the Connector. An eligible person (1) does not have access to employer-sponsored coverage for which the employer pays at least 50% of the employee's and dependents' coverage costs; (2) has been uninsured for at least six months; or (3) has been uninsured for less than six months and lost coverage due to a major life event. Major life events include:

1. loss of coverage due to job loss;

2. death of, or abandonment by, a family member who had provided coverage;

3. loss of dependent coverage because a spouse turned age 65 and became eligible for Medicare (but loss of dependent coverage because a spouse became Medicare-eligible before age 65 because of disability is apparently not included);

4. losing coverage as a dependent under a group comprehensive health care plan;

5. exhausting coverage under the federal Consolidated Omnibus Budget Reconciliation Act (COBRA);

6. extreme economic hardship on the part of either the employee or the employer, as determined by the Connector's administrator; and

7. any other events the Health Care Reform Commission may specify.

Employer Eligibility

The bill establishes the eligibility criteria for an employer applying for group coverage through the Connector. An eligible employer is one that (1) has 50 or fewer employees, (2) has not offered a comprehensive health insurance plan to any employee for at least six months, and (3) will contribute at least 70% of the employee coverage cost and 50% of the dependent coverage cost.

Appropriation

The bill appropriates $1 million to the Insurance Department for Connecticut Connector start-up costs.

§ 6 – HEALTH SAVINGS ACCOUNT INCENTIVE PROGRAM

The bill establishes a health savings account (HSA) incentive program. To be eligible, a person must have a family income of up to 400% of the federal poverty level (FPL), a HSA, and a high-deductible plan. (FPL for 2007, as published in the Federal Register January 24, 2007, is $10,210 for an individual. Thus, 400% is $40,840.) The bill requires the Connector to (1) contribute to a resident's HSA an amount based on a sliding scale by January 30 of any year for which the person made certain minimum HSA contributions in the prior calendar year and (2) establish procedures for people to claim payments. The table below provides the contributions required, by family income.

The bill requires the amounts specified for family income (1) between 200% and 300% of FPL and (2) between 300% and 400% FPL to be indexed annually to the consumer price index for medical care. It does not index the amounts specified for family income of 200% of FPL or less.

§ 7 – PREMIUM SUBSIDY PROGRAM

The bill establishes a premium subsidy program. To be eligible, a person must:

1. have family income of up to 400% of FPL;

2. not own an HSA either individually or as part of a family; and

3. have health care coverage through (a) an employer-sponsored plan for which the person annually pays at least $500 in premiums if single and at least $1,000 if covered by a family plan or (b) a nonemployer-based plan purchased through the individual market or the Connector. (A person could be both single and covered under a family plan if covering dependent children. Perhaps “single” means covered under an employee-only plan.)

The bill requires the Connector to (1) reimburse eligible people quarterly for premiums paid in the preceding quarter based on a sliding scale and (2) establish procedures by which eligible people may claim a premium subsidy.

For a family with income of 200% of FPL or less, the Connector must reimburse 80% of their premium share, up to $125 per quarter for an individual, $250 for an individual plus one dependent, or $375 for a family.

For a family with income between 200% and 300% of FPL, the Connector must reimburse 60% of their premium share, up to $100 per quarter for an individual, $200 for an individual plus one dependent, or $300 for a family.

For a family with income between 300% and 400% of FPL, the Connector must reimburse 40% of their premium share, up to $75 per quarter for an individual, $150 for an individual plus one dependent, or $225 for a family.

§ 8 – FEDERAL WAIVER TO OFFSET COSTS

The bill directs the DSS commissioner to request a federal waiver (presumably of Medicaid rules) to obtain federal reimbursement for (1) state expenditures related to the HSA incentive and premium assistance programs and (2) establishing a Medicaid-funded state excess cost reinsurance program for residents enrolled in the Connector's affordable health plan who exhaust their plan's coverage to ensure that they do not have to spend all their assets on health care once this occurs.

§§ 9, 18, 20-22 – HEALTH INSURANCE CHANGES

Employer Plans for Low-Income Workers

The bill prohibits employers from offering health benefit plans to lower-paid employees that are of less value than those offered to higher-paid employees. It does not define “lower-paid” or “higher-paid.”

Small Employer Case Characteristic for Rates

Under current law, insurers and HMOs must use adjusted community rating when developing premium rates for small employer groups. Community rating is the process of developing a uniform rate for all enrollees. An adjusted community rate is one that modifies the community rate by one or more classifications specified in statute.

The classifications allowed by law are age, gender, location, industry classification, group size, family composition, and administrative cost and profit reduction savings resulting from administering or writing an association group plan or a Municipal Employee Health Insurance Plan (MEHIP).

The bill changes the effective date of the adjusted community rating law to July 1, 2008 and adds smoking status as a classification that insurers and HMOs may consider when developing a small employer's policy rates. In effect, the bill eliminates the rating requirement as of July 1, 2007 (the bill's effective date) and reinstates it July 1, 2008. (It is unclear what rating requirements insurers and HMOs are to follow until July 1, 2008.)

Dependent Age

The bill requires individual health insurance and HMO policies that cover dependent unmarried children to cover a child until he or she turns age 26. Current law requires coverage until age 19, or age 23 if the child is a full-time student at an accredited institution.

The dependent age provision applies to individual health insurance and HMO policies that cover (1) basic hospital expenses, (2) basic medical-surgical expenses, (3) major medical expenses, (4) accidents, (5) limited benefits, and (6) hospital or medical services.

The bill does not change the dependent age for group comprehensive health care plans and plans continuing coverage after an employee's layoff, reduction of hours, leave of absence, or termination. For those plans, dependent age remains age 19, or age 23 if the child is a full-time student at an accredited institution.

Limited Health Benefit Plans

Supplemental Coverage. The bill prohibits an insurer, HMO, or other entity issuing, renewing, continuing, or amending a health insurance policy beginning October 1, 2007 from issuing a limited benefit coverage policy (1) on an individual basis to any person unless the person signs a statement on the coverage application form confirming that he or she is covered under another health benefit plan or (2) on a group basis unless each employee electing the coverage confirms in writing that he or she is covered under another health benefit contract.

It requires the employer offering the limited benefit plan to (1) have each employee electing the coverage sign a statement confirming coverage under another plan and (2) submit the signed statements to the insurer, HMO, or other entity issuing the policy.

Conspicuous Statement. The bill requires each individual and group limited benefit coverage policy, contract, and certificate to include a conspicuous statement printed in capital letters and at least 12-point bold face type that says:

THIS LIMITED HEALTH BENEFITS PLAN DOES NOT PROVIDE COMPREHENSIVE MEDICAL COVERAGE. IT IS A BASIC OR LIMITED BENEFITS POLICY AND CONTAINS SPECIFIC DOLLAR LIMITS THAT WILL BE PAID FOR MEDICAL SERVICES WHICH MAY NOT BE EXCEEDED. IF THE COST OF SERVICES EXCEEDS THOSE LIMITS, THE BENEFICIARY AND NOT THE INSURER IS RESPONSIBLE FOR PAYMENT OF THE EXCESS AMOUNTS.

Definition. The bill defines “limited benefit coverage” as an insurance policy designed, advertised, and marketed to supplement major medical insurance. It includes the following types of policies:

1. accident only;

2. dental only;

3. vision only;

4. disability income only;

5. fixed or hospital indemnity coverage;

6. specified disease insurance;

7. credit insurance;

8. Taft-Hartley trusts; and

9. those covering more than one disease or service but with a total coverage limit less than $100,000 or a per service or condition coverage limit less than $20,000.

§§ 10-17, 29-30, & 32 – HUSKY AND MEDICAID CHANGES

Increase in Income Limit for Adult Caretaker Relatives

The bill increases the HUSKY A income limit for adult caretaker relatives of children enrolled in HUSKY A from 150% to 185% of FPL. Children are already covered at 185% of FPL.

Increase in Income Limit for Medically Needy

The bill requires the DSS commissioner to file a Medicaid state plan amendment to increase the income limit for medically needy coverage from 143% of cash welfare benefits to 150% of the FPL. (The medically needy include aged, blind, and disabled individuals and certain others not covered under other Medicaid categories.) For a one-person household, this would increase the limit from $476 per month to $1,276 per month. (As the income limit is set in federal law, it appears that DSS cannot increase it with a state plan amendment, but it can use an amendment to increase the amount of unearned income it disregards in determining eligibility, which would have the same effect.)

Increasing the income limit for the medically needy program will reduce, if not eliminate, the amount of excess income applicants must spend on medical bills before qualifying for assistance.

Continuous Eligibility in HUSKY

The bill restores continuous eligibility (CE) for children enrolled in HUSKY A or B and extends it to adults eligible for HUSKY A. (PA 03-2 eliminated it.) Under the bill, CE allows enrollees to receive ongoing assistance for 12 months even if the parent's or caretaker's financial circumstances change during that time. The CE of both is contingent on the child being under age 19 and a state resident. During this period of CE, the family must comply with federal requirements for reporting information to DSS, such as a change of address.

The bill makes a corollary change by repealing a separate provision that prohibits adults enrolled in Medicaid from being guaranteed eligibility for six months without regard to changes in circumstances that would otherwise render them ineligible. (It does not appear that federal law allows CE for adults, so federal reimbursement may not be possible in these cases.)

Automatic HUSKY B Enrollment of Uninsured Newborns

The bill requires that any uninsured child born in a Connecticut hospital or an “eligible border state hospital” be enrolled in HUSKY B under an expedited process when (1) the child's family lives in Connecticut and (2) at least one parent authorizes the enrollment. It requires the DSS commissioner to pay to the HUSKY B managed care organization (MCO) the family chooses the first two month's premium the family would otherwise have to pay. Currently, families with incomes between 235% and 300% of FPL pay $30 per month ($50 family maximum) in premiums. Lower income families do not pay premiums.

10% Limit on MCO Administrative Costs

Starting July 1, 2007, the bill requires any MCO entering into, renewing, or amending a HUSKY contract to limit its administrative costs to 10% or less of its capitated payments (amount state pays MCO to serve HUSKY clients).

In defining the administrative costs, the bill allows the commissioner to exclude disease management or other value-added clinical programs that the MCOs administer. But he may not exclude any utilization management, claims, member services, or other nonclinical functions.

The DSS commissioner must implement this change while in the process of adopting it in regulation, provided he publishes notice of intent to adopt the regulations in the Connecticut Law Journal within 20 days after implementing it. The policies and procedures are valid until the regulations become effective.

Increases in Reimbursements to Providers

The bill requires the DSS commissioner to increase the fee-for-service (FFS) Medicaid reimbursement rates for physicians, dentists, and hospitals starting July 1, 2007. The following table shows the rate increases and inflationary adjustments.

The bill also requires the commissioner, on July 1, 2007, to amend each managed care contract it maintains, on renewal, to require the MCOs to increase reimbursements to at least the levels required for the FFS providers. (It is unclear whether July 1, 2007 is the same as the MCO renewal date.)

The bill appropriates an unspecified amount to DSS from the General Fund for FY 08 to carry out this section.

Outreach

The bill requires the DSS commissioner to award 50 grants of up to $10,000 each to community-based organizations for public education, outreach, and recruitment of HUSKY-eligible children, including distributing applications and enrollment information. It appropriates $500,000 to DSS from the General Fund for FY 08 for the grants.

Primary Care Case Management

The bill requires the DSS commissioner to develop a plan to implement a primary care case management (PCCM) program for some or all Medicaid recipients who are aged, blind, or disabled. The commissioner can contract with an administrative services organization to run the program. The plan must include programs to improve medical service coordination and chronic disease management. It must also include predictive modeling for identifying high-risk, complex, and high-cost Medicaid beneficiaries and providing them with intensive care coordination.

Under the PCCM model, a beneficiary chooses a primary care provider who is responsible for coordinating the person's care. The provider is paid a separate fee above the regular fees paid for providing direct medical service.

Allowing Aged, Blind, and Disabled Beneficiaries to Voluntarily Enroll in Managed Care

Beginning January 1, 2008, the bill requires the DSS commissioner to allow aged, blind, or disabled Medicaid beneficiaries to enroll in the MCOs available to HUSKY beneficiaries. (Presumably, beneficiaries would choose between PCCM- or MCO-based care.)

§ 25 – STATE-ADMINISTERED GENERAL ASSISTANCE (SAGA)

On July 1, 2007, the bill increases by at least 5% the amount that DSS (or the MCO contracting with it to administer the program) must pay federally qualified health centers (FQHC) and other primary care providers serving SAGA medical assistance recipients. In subsequent fiscal years, this amount must increase by at least the percentage increase in the consumer price index.

The bill also eliminates the requirement that DSS make payments to these providers within available appropriations. In practice, FQHCs and other primary care providers (used when an FQHC is not feasible) must currently take any SAGA patients referred to them, regardless of whether state funding for them is sufficient.

§§ 19, 23, & 26-28 – PUBLIC HEALTH PROGRAMS

Smoking Cessation Program

The bill establishes, within existing appropriations, a smoking cessation program known as “Quit for Good.” It is administered by the Department of Public Health (DPH), which must contract with one or more entities for implementation. The program must (1) promote smoking cessation among unserved and underserved people, (2) educate the public on the health complications of smoking and ways of quitting, (3) provide counseling and treatment referral services, and (4) establish a system for tracking and monitoring those receiving program smoking cessation assistance.

The bill defines “unserved or underserved populations” as those at or below 200% of FPL who do not have health insurance that comprehensively covers smoking cessation.

Commission on Healthy Lifestyles

The bill establishes a 14-member permanent Commission on Healthy Lifestyles as an independent body in OHCA for administrative purposes only. By October 1, 2007, it must (1) develop a marketing campaign educating the public on basic ways to ensure good health and the consequences of poor health and (2) make recommendations to the General Assembly on incentives encouraging personal responsibility in making healthy lifestyle choices.

Commission members include the DPH, DSS, OHCA, education, and insurance commissioners and nine appointed members. The Senate president pro tempore and the House speaker each appoint two and the governor, House and Senate majority leaders, and House and Senate minority leaders each appoint one.

The initial members serve staggered terms with (1) the governor's and Senate president pro tempore's appointees serving for three years, (2) the House speaker's and Senate majority leader's appointees for two years, and (3) the remaining members for one year. After the initial terms expire, subsequent appointees serve three-year terms. Any vacancy must be filled by the appointing authority for the unexpired term. Members are not compensated but are reimbursed for their duties. (This creates a conflict since “reimbursed for duties” is compensation.)

The bill requires the commission to meet at least quarterly and allows it to hire consultants within available appropriations. OHCA must, within available appropriations, contract with one or more entities to implement the required marketing campaign.

Connecticut's Uninsured

Beginning October 1, 2007 and every five years afterward, OHCA must determine the number of uninsured Connecticut residents. The bill requires the Health Care Reform Commission to determine whether residents should be required to have health insurance if the number of uninsured has not decreased by 50% by October 1, 2012. By January 1, 2013, the commission must report its findings to the Insurance and Real Estate Committee.

By December 31, 2007 and annually afterwards, OHCA must conduct a survey to determine the number of Connecticut employers providing health insurance to their employees residing in Connecticut. OHCA must annually report its findings to the Insurance and Real Estate Committee beginning January 1, 2008.

Tobacco and Health Trust Fund

The bill requires the remaining Tobacco and Health Trust Fund money to be transferred to the General Fund. It requires DPH to use $20 million of that amount for the Smoke-Free Connecticut Program (which is presumably the “Quit for Good” program discussed above).

DPH Appropriation

The bill appropriates $1.6 million to DPH from the General Fund for FY 08 to provide grants of $200,000 to each of eight different groups representing employers. These grants must be used to train employers to educate employees on the financial and health benefits of making lifestyle choices promoting good health, including regular exercise and maintaining a healthy weight.

BACKGROUND

Legislative History

On April 11, the House referred the bill (File 219) to the Public Health Committee, which reported it favorably.

On April 25, the House referred the bill to the Appropriations Committee, which reported a substitute bill deleting the requirement that providers accept and provide services to anyone enrolled in HUSKY and Medicaid.

On May 22, the House referred the bill (File 831) to the Finance, Revenue and Bonding Committee, which reported this substitute, deleting:

1. refundable tax credits for small employers offering employees health insurance,

2. a reduction in HMO premium taxes,

3. a repeal of the sales tax on health clubs,

4. a tax on cosmetic medical procedures,

5. an increase in the cigarette tax, and

6. a limit on how much physicians and hospitals can charge uninsured people.

Related Bills

Several legislative committees have reported bills favorably broadly addressing health care access. They are:

In addition, several committees have reported bills that have provisions similar or related to specific sections of sHB 6652. They are:

COMMITTEE ACTION

Insurance and Real Estate Committee

Joint Favorable Substitute

Public Health Committee

Joint Favorable

Appropriations Committee

Joint Favorable Substitute

Finance, Revenue and Bonding Committee

Joint Favorable Substitute

¹ The fringe benefit costs for state employees are budgeted centrally in the Miscellaneous Accounts administered by the Comptroller. The estimated first year fringe benefit rate for a new employee as a percentage of average salary is 25.8%, effective July 1, 2006. The first year fringe benefit costs for new positions do not include pension costs. The state's pension contribution is based upon the prior year's certification by the actuary for the State Employees Retirement System (SERS). The SERS 2006-07 fringe benefit rate is 34.4%, which when combined with the non pension fringe benefit rate totals 60.2%.

² The counter marketing campaign utilized 409 television spots, 1,546 radio spots, thirteen bus panels, two highway billboards, a full-page magazine print ad, and promotions involving sports events at the Hartford Civic Center.