PA 07-149—SB 1145

Public Health Committee

Human Services Committee

AN ACT CONCERNING REVISIONS TO OFFICE OF HEALTH CARE ACCESS STATUTES

SUMMARY: This act redefines several terms the Office of Health Care Access (OHCA) uses in calculating uncompensated care for the disproportionate share hospital (UCC/DSH) payment system. It applies the law governing hospitals' negotiated rate discounts to John Dempsey Hospital. It substitutes the term “charity care” for “free care” in laws governing DSH calculations and hospital reporting requirements. And it redefines “primary payer” for purposes of annual hospital audits.

The act also deletes obsolete references and makes minor and technical changes.

EFFECTIVE DATE: October 1, 2007, except provisions (1) concerning charity care policy reporting, (2) making technical changes to the nursing home transfer law, (3) concerning negotiated agreements, and (4) redefining UCC/DSH terms, are effective July 1, 2007.

UNCOMPENSATED CARE

The Department of Social Services (DSS) determines the amount of UCC/DSH payments to short-term general hospitals based on information OHCA provides. OHCA's calculation is based on each hospital's ratio of its net and gross revenues and the amount of uncompensated care it provides. The act changes the definitions of several of the terms used in OHCA's UCC/DSH calculations. It redefines:

1. “medical assistance” specifically to include HUSKY B;

2. “medical assistance underpayment” to reflect the way the OHCA currently calculates this figure;

3. “contractual allowances” (i. e. , discounts) to make clear how the figure is calculated (the difference between a hospital's published charges and the amount it receives from payers with which it negotiates discounts), not just how it is reported (the discounts it provided);

4. “uncompensated care” to (a) exclude emergency assistance to families authorized by DSS that is not otherwise funded and (b) specify that it is based on the difference between hospitals' published and filed charges and the charity care they provide and bad debt they write off, not the actual costs of their free care and bad debt;

5. “hospital” to include the Connecticut Children's Medical Center (CCMC) and specify that the term refers only to acute care hospitals (the effect of adding CCMC is unclear since UCC/DSH payments go only to short-term general hospitals (CGS 19a-670), but it might require CCMC to submit its admission, billing, and collection protocols and procedures to OHCA for approval (CGS 19a-662));

6. “case mix index” as the average of Medicare diagnosis-related groups case weights for each inpatient discharge for a specific hospital for a given fiscal year, but it does not change the way the index is calculated; and

7. several other terms to add clarity and eliminate obsolete language.

NEGOTIATED DISCOUNTS

The law permits hospitals to negotiate agreements for rate discounts and reimbursement methods with insurers, HMOs, and other payers. These agreements are not effective until they are filed at the hospital. They must also be available for OHCA inspection. The hospital must total each payer's charges and payments and report it as OHCA requires. OHCA can also require the hospital's independent auditor to review these figures. The act applies these requirements to UConn's John Dempsey Hospital.

FREE CARE AND CHARITY CARE

The law requires each hospital that maintains or administers bed funds (donations dedicated to helping patients pay for hospital services) to make available to patients a one-page summary in English and Spanish that tells them how they can access these funds and about the hospital's policy concerning any other free or reduced cost care it provides. It also requires hospitals annually to file their free care policies with OHCA and makes free care one of the factors OHCA uses in calculating hospitals' uncompensated care for DSH purposes.

The act substitutes the term “charity care” for free care, but does not define the term. OHCA regulations define “free care” as the difference between the hospital's published charges and the amount of expected reimbursement for charity patients, as defined in the hospital's approved free care policy, for the services rendered.

PRIMARY PAYER

The act redefines the term “primary payer” as it relates to the independent audits hospitals must conduct and annually file with OHCA. Under prior law, this term meant the payer (e. g. , HMO or insurer) responsible for 50% or more of the charges, or if no payer is responsible for this amount, then the payer responsible for the highest percentage of charges. The act drops the 50% component. This conforms the definition to the one used in UCC/DSH calculations. It also specifies that the term includes payers of both inpatient and outpatient services

OLR Tracking: SS: JR: JL: RO