File No. 315

House of Representatives, March 30, 2009

The Committee on Insurance and Real Estate reported through REP. FONTANA, S. of the 87th Dist., Chairperson of the Committee on the part of the House, that the substitute bill ought to pass.

AN ACT ESTABLISHING A CATASTROPHIC MEDICAL EXPENSES POOL.

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

Section 1. (NEW) (Effective July 1, 2009) As used in sections 1 to 8, inclusive, of this act:

(1) "Commission" means the Catastrophic Medical Expenses Commission established pursuant to section 3 of this act.

(2) "Family income" means all net income from all sources received by a family in a calendar year, excluding payments or reimbursements received from the pool.

(3) "Pool" means the catastrophic medical expenses pool established pursuant to section 2 of this act.

Sec. 2. (NEW) (Effective July 1, 2009) (a) There is established a catastrophic medical expenses pool to provide payment or reimbursement for medical and related expenses beginning January 1, 2010, that exceed the family income levels set forth in section 6 of this act. The Office of the Healthcare Advocate shall administer the pool in accordance with the provisions of sections 1 to 8, inclusive, of this act and with the advice of the Catastrophic Medical Expenses Commission.

(b) Services, equipment and other expenses eligible to be considered for payment or reimbursement from the pool, subject to the limitations and exclusions set forth in sections 5 and 6 of this act, include, but are not limited to: (1) Durable medical equipment, hearing aids, medical or surgical supplies, therapy services and prostheses or orthotics that are covered benefits but which were denied in whole or in part because policy or plan limitations have been reached; (2) health insurance (A) premiums, (B) copayments, (C) deductibles, (D) coinsurance, and (E) other out-of-pocket expenses paid by an applicant for a covered benefit; and (3) other items determined by the commission or persons designated by the commission pursuant to subdivision (14) of subsection (a) of section 4 of this act to be directly related to the medical condition of the applicant and necessary to maintain the health and independence of the applicant or permit such applicant to continue to remain at home.

(c) The commission shall make publicly available a list of medical and related expenses that are eligible to be considered for payment or reimbursement from the pool. The commission shall update such list at least annually.

(d) Nothing in sections 1 to 8, inclusive, of this act shall be construed to require the Office of the Healthcare Advocate or the commission to make any payment or reimbursement of medical or related expenses to an applicant.

Sec. 3. (NEW) (Effective July 1, 2009) (a) There is established a Catastrophic Medical Expenses Commission within the Office of the Healthcare Advocate. The commission shall consist of the Healthcare Advocate, the Commissioners of Social Services and Public Health, the Insurance Commissioner and the Comptroller, or their designees, and ten additional members as follows:

(1) Two appointed by the speaker of the House of Representatives, one of whom shall be a member of the joint standing committee of the General Assembly having cognizance of matters relating to insurance;

(2) Two appointed by the president pro tempore of the Senate, one of whom shall be a member of the joint standing committee of the General Assembly having cognizance of matters relating to insurance;

(3) One appointed by the minority leader of the House of Representatives, upon the recommendation of the president and chief executive officer of the Connecticut Business and Industry Association and who shall represent employers that are self-insured;

(4) One appointed by the minority leader of the Senate, who shall represent the health insurance industry;

(5) Two appointed by the Attorney General, who shall be licensed health care providers who currently provide health care services to residents of the state; and

(6) Two appointed by the Governor, one of whom shall be a senior manager or human resources director of a labor union that offers a Taft-Hartley plan.

(b) The members appointed under subdivisions (1) to (6), inclusive, of subsection (a) of this section shall serve for terms of five years, except that the initial two members appointed by the Governor shall serve for terms of three and four years, respectively. Any vacancy shall be filled by the appointing authority. Members may be reappointed to serve consecutive terms. Members shall serve without compensation for their services but shall be reimbursed for their expenses.

(c) Any member appointed under subdivisions (1) to (6), inclusive, of subsection (a) of this section may be removed for cause, after a public hearing, by the official who appointed such member and may be suspended by such official pending the completion of such hearing.

(d) The members shall elect a chairperson and a secretary of the commission, neither of whom shall be a member of the General Assembly. The commission shall, by rule, determine the term of office of the chairperson and the secretary.

(e) Eight members of the commission shall constitute a quorum at any meeting. A vacancy in the membership of the commission shall not impair the right of a quorum to exercise all the powers and perform all the duties of the commission.

(f) The members of the commission shall be appointed not later than November 1, 2009, and the committee shall organize as soon as may be practicable after such appointment.

Sec. 4. (NEW) (Effective July 1, 2009) (a) The Catastrophic Medical Expenses Commission shall have the following powers and duties:

(1) To develop an application and establish procedures for applying to the Office of the Healthcare Advocate for payment or reimbursement of medical and related expenses from the pool;

(2) To establish rules and procedures for determining the eligibility of applicants and the eligibility of requests for payment or reimbursement of medical and related expenses from the pool, including, but not limited to, (A) the documentation or information required from the applicant to substantiate the eligibility of the applicant or the request for payment or reimbursement, (B) methods to verify family income, (C) limits, if any, on the number of times an applicant may apply in a calendar year, (D) limits, if any, on the dollar amount that may be paid to an applicant in a calendar year, (E) whether an application submitted by a member of an applicant's family or payment made to such family member is aggregated in any such limits imposed on an applicant, (F) methods to verify previous payments to an applicant, if necessary, and (G) methods to verify other available sources of payment have been exhausted;

(3) To establish an approval process, including, but not limited to, any criteria to be used to prioritize payments or reimbursements made from the pool, except that in the event the moneys in the account established under section 8 of this act are inadequate to cover all the requests made for payment or reimbursement, any applicant who is transitioning to medically needy status under the Medicaid program and who otherwise meets the criteria under sections 5 and 6 of this act shall be given preference for payment of reimbursement from the pool;

(4) To establish procedures for an applicant notification process, including, but not limited to, the time frames for the Office of the Healthcare Advocate to approve or deny an application or request for payment or reimbursement and for applicants to submit additional information if a denial was based on incomplete information;

(5) To establish a list of services, programs, treatments, products and expenses excluded under subsection (c) of section 6 of this act;

(6) To develop payment rates in accordance with subdivision (1) of subsection (a) of section 7 of this act;

(7) To establish criteria for and procedures to (A) preapprove payments pursuant to section 7 of this act, and (B) make payments or reimbursements, including, but not limited to, the method of payment and time frame for the Office of the Healthcare Advocate to process such payment;

(8) To establish procedures for repayment by an applicant to the pool where such applicant, after receiving payment from the pool, recovers the costs of medical and related expenses pursuant to a settlement or judgment in a legal action;

(9) To establish procedures by which moneys in the account established under section 8 of this act shall be expended, taking into consideration payments that have been preapproved pursuant to section 7 of this act and administrative costs to be paid as set forth in section 8 of this act;

(10) To develop an asset test to be used if pool funds appear to be inadequate to cover requests for payment or reimbursement;

(11) To make publicly available and update at least annually a list of (A) medical and related expenses that are eligible to be considered for payment or reimbursement from the pool, subject to the limitations and exclusions under sections 5 and 6 of this act, and (B) exclusions established pursuant to this subsection;

(12) To establish and maintain a record, electronic or otherwise, of each applicant. Such records shall be maintained in a secure location, shall be confidential and shall not be disclosed except as required by law and to members of the commission, provided such members agree, in writing, to keep such records confidential;

(13) To disseminate information to the public concerning the pool, including, but not limited to, the benefits available from the pool, procedures to apply and contact information for the Office of the Healthcare Advocate;

(14) To enter into contracts, within the moneys available in the pool, to carry out the provisions of sections 1 to 8, inclusive, of this act, including, but not limited to, entering into contracts with licensed physicians and clinicians to assist the commission in performing its duties and to designate persons who have the appropriate expertise to assist the commission in performing its duties;

(15) To accept grants of private or federal funds to the pool, and to accept gifts, donations or bequests including donations of services; and

(16) To take any other action necessary to carry out the provisions of sections 1 to 8, inclusive, of this act.

(b) The commission shall adopt regulations, in accordance with chapter 54 of the general statutes, to implement the provisions of subdivisions (1) to (10), inclusive, of subsection (a) of this section. The commission may adopt regulations, in accordance with chapter 54 of the general statutes, to implement any other provision of sections 1 to 8, inclusive, of this act.

Sec. 5. (NEW) (Effective July 1, 2009) To be eligible to apply for payment or reimbursement from the pool, a person shall:

(1) Be covered by:

(A) An individual or group health insurance policy providing coverage of the type specified in subdivisions (1), (2), (4), (11) and (12) of section 38a-469 of the general statutes;

(B) A self-insured comprehensive group medical or health care benefit plan. The Catastrophic Medical Expenses Commission shall determine what constitutes a comprehensive plan for the purposes of this subparagraph;

(C) The Municipal Employee Health Insurance Plan set forth in section 5-259 of the general statutes;

(D) The Charter Oak Health Plan set forth in section 17b-311 of the general statutes;

(E) A comprehensive individual or group health care plan set forth in section 38a-552 or 38a-554 of the general statutes;

(F) Medicare and a Medicare supplement insurance policy; or

(G) A high deductible plan, as defined in Section 220(c)(2) or Section 223(c)(2) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, used to establish a "medical savings account" or "Archer MSA" pursuant to Section 220 of said Internal Revenue Code or a "health savings account" pursuant to Section 223 of said Internal Revenue Code, provided such medical savings account or health savings account has been exhausted and subsequent medical and related expenses exceed the limits established in section 6 of this act.

(2) Not be eligible for benefits under Medicaid, HUSKY Plan or state-administered general assistance on the date the medical or related expenses for which reimbursement is requested from the pool were incurred;

(3) Be a resident of this state;

(4) Be a citizen or resident alien of the United States; and

(5) Have exhausted other sources of payment for the requested payment or reimbursement.

Sec. 6. (NEW) (Effective July 1, 2009) (a) The amount of payment or reimbursement in a calendar year shall be limited to:

(1) For family income that is less than or equal to two hundred per cent of the federal poverty level, medical and related expenses paid by an applicant in a calendar year that are in excess of eight per cent of such family income;

(2) For family income that is greater than two hundred per cent but less than or equal to three hundred per cent of the federal poverty level, medical and related expenses paid by an applicant in a calendar year that are in excess of nine per cent of such family income;

(3) For family income that is greater than three hundred per cent but less than or equal to four hundred per cent of the federal poverty level, medical and related expenses paid by an applicant in a calendar year that are in excess of ten per cent of such family income;

(4) For family income that is greater than four hundred per cent but less than or equal to five hundred per cent of the federal poverty level, medical and related expenses paid by an applicant in a calendar year that are in excess of twelve and one-half per cent of such family income;

(5) For family income that is greater than five hundred per cent but less than or equal to one thousand per cent of the federal poverty level, medical and related expenses paid by an applicant in a calendar year that are in excess of fifteen per cent of such family income; and

(6) For family income that is greater than one thousand per cent but less than or equal to one thousand three hundred per cent of the federal poverty level, medical and related expenses paid by an applicant in a calendar year that are in excess of twenty-five per cent of such family income.

(b) An applicant with a family income that is greater than one thousand three hundred per cent of the federal poverty level shall not be eligible for payment or reimbursement from the pool.

(c) The following expenses shall be excluded from payment or reimbursement from the pool:

(1) Costs for services that would normally be provided by or available through (A) the birth-to-three program set forth in section 17a-248 of the general statutes, (B) the Department of Developmental Services, (C) the Department of Mental Health and Addiction Services, (D) the Department of Public Health, or (E) an individualized family service plan pursuant to section 17a-248e of the general statutes, an individualized education program pursuant to section 10-76d of the general statutes or any other individualized service plan. Such costs may be eligible for payment or reimbursement from the pool at the discretion of the Office of the Healthcare Advocate if the applicant was ineligible for such services due to the financial eligibility criteria of a program or agency or due to a limit on the number of clients served by such program or agency;

(2) Costs for long-term care provided in a nursing home facility, rehabilitation facility or at home that exceeds or is expected to exceed six months;

(3) Premiums, copayments, deductibles, coinsurance and other out-of-pocket expenses paid by an applicant for a long-term care policy;

(4) Items that were denied because the insured or enrollee failed to comply with the terms of the insurer such as network or prior authorization requirements;

(5) Items that are not cost-effective or appropriate for the applicant's medical condition, as determined by the commission or persons designated by the commission pursuant to subdivision (14) of subsection (a) of section 4 of this act. Such determination may be made separately from any decision made by an insurer, health care center or utilization review company concerning such items. If said commission disagrees with such decision made by an insurer, health care center or utilization review company, said commission may be a party to an appeal filed by the applicant with such insurer, health care center or utilization review company;

(6) Infertility diagnosis and treatments;

(7) Massage services, natureopathy and other alternative medicine treatments or services;

(8) Dental braces, dentures, cosmetic dental procedures and routine dental services including, but not limited to, fillings, cleanings and other prophylaxis measures;

(9) Eyeglass frames costing over fifty dollars, adjusted annually by the increase in the consumer price index for urban consumers during the preceding twelve-month period according to the United States Bureau of Labor Statistics data;

(10) Pharmaceutical products, biological products or any substance that may be lawfully sold over the counter without a prescription under the federal Food, Drug and Cosmetics Act, 21 USC 301 et seq., as amended from time to time;

(11) Vitamins or food supplements, unless prescribed for a diagnosed medical condition;

(12) Cosmetics;

(13) Services, treatments or products that are more expensive than equally effective alternatives, as determined by the commission or persons designated by the commission pursuant to subdivision (14) of subsection (a) of section 4 of this act; and

(14) Other programs, services or expenses the commission may choose to exclude pursuant to regulations adopted in accordance with chapter 54 of the general statutes.

(d) Payment or reimbursement from the pool for wheelchairs and hearing aids shall be limited to: (1) Once every biennium for persons under the age of eighteen years; and (2) once every ten years for persons over the age of eighteen years.

Sec. 7. (NEW) (Effective July 1, 2009) (a) If payment of a medical or related expense is preapproved by the Office of the Healthcare Advocate:

(1) Said office shall remit such payment to the insured's or enrollee's health care provider at the Medicare allowable rate for such medical or related expense. If there is no comparable Medicare allowable rate, said office, with the advice of the Catastrophic Medical Expenses Commission, shall develop a rate based on current Medicaid and insurer rates, or on rates negotiated by the Healthcare Advocate where no current Medicaid or insurer rate exists.

(2) Said office may preapprove a payment in accordance with the rules and procedures established by the commission, provided (A) the insured's or enrollee's health care or services provider has agreed, in writing, to accept such payment as payment in full on behalf of such insured or enrollee for such medical or related expense, (B) the insurer, health care center, self-insured employer, insured or enrollee, as applicable, provides any documentation or information required by said office to determine the eligibility of the applicant or the request for payment, and any previous payments made to such applicant from the pool, and (C) there are sufficient funds in the pool.

(3) Said office may preapprove payment of a related expense not typically considered medical if the commission or persons designated by the commission pursuant to subdivision (14) of subsection (a) of section 4 of this act deem such related expense necessary to maintaining the independence of the applicant or the ability of such applicant to remain at home.

(b) If reimbursement of a medical or related expense is approved by the Office of the Healthcare Advocate:

(1) The applicant shall submit the bill to said office with proof of payment.

(2) Said office may pay all or part of such bill, based on (A) the rate said office would have paid pursuant to subdivision (1) of subsection (a) of this section, (B) the appropriateness and necessity of the particular medical or related expense, and (C) the availability of funds in the pool.

(c) Notwithstanding the provisions of chapter 319v of the general statutes, any payment or reimbursement to an applicant from the pool shall not be counted as income or assets for the purposes of determining eligibility for medical assistance.

Sec. 8. (NEW) (Effective July 1, 2009) (a) There is established an account to be known as the "catastrophic medical expenses account", which shall be a separate, nonlapsing account within the Insurance Fund established under section 38a-52a of the general statutes. The account shall contain any moneys required by law to be deposited in the account. Moneys in the account shall be expended by the Office of the Healthcare Advocate for the purposes of paying or reimbursing medical and related expenses, paying administrative costs and paying licensed physicians and clinicians contracted by the Catastrophic Medical Expenses Commission, in accordance with sections 1 to 8, inclusive, of this act.

(b) (1) Each insurer or health care center that delivers, issues for delivery, renews, amends or continues in this state individual or group health insurance policies or plans and third party administrator that provides services in this state under an administrative services only contract shall collect one dollar per life covered on January first of each year and shall remit such moneys to the Office of the Healthcare Advocate not later than thirty days after collection. All such moneys shall be deposited in the account set forth in subsection (a) of this section.

(2) The Department of Revenue Services shall collect one dollar per life covered on January first of each year under the Charter Oak Health Plan set forth in section 17b-311 of the general statutes and shall remit such moneys to the Office of the Healthcare Advocate not later than thirty days after collection. All such moneys shall be deposited in the account set forth in subsection (a) of this section.

(c) The Office of the Healthcare Advocate shall pay all costs that do not exceed five per cent of the total amount transferred into the pool in a calendar year and are related to the management of the pool, including, but not limited to, costs for staff to manage the program and coordinate the work assigned by the commission, materials development, printing, postage and telephone expenses. Any such expenses that exceed five per cent of the total amount transferred into the pool in a calendar year shall require approval for payment by the commission.

(d) The Commissioner of Social Services shall seek any federal matching funds available for the pool.

(e) When the moneys in the account have been exhausted, no payments or reimbursements shall be made until moneys have been deposited in the succeeding calendar year pursuant to subsection (b) of this section.

Sec. 9. Section 38a-1041 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2009):

(a) There is established an Office of the Healthcare Advocate which shall be within the Insurance Department for administrative purposes only.

(b) The Office of the Healthcare Advocate may:

(1) Assist health insurance consumers with managed care plan selection by providing information, referral and assistance to individuals about means of obtaining health insurance coverage and services;

(2) Assist health insurance consumers to understand their rights and responsibilities under managed care plans;

(3) Provide information to the public, agencies, legislators and others regarding problems and concerns of health insurance consumers and make recommendations for resolving those problems and concerns;

(4) Assist consumers with the filing of complaints and appeals, including filing appeals with a managed care organization's internal appeal or grievance process and the external appeal process established under section 38a-478n;

(5) Analyze and monitor the development and implementation of federal, state and local laws, regulations and policies relating to health insurance consumers and recommend changes it deems necessary;

(6) Facilitate public comment on laws, regulations and policies, including policies and actions of health insurers;

(7) Ensure that health insurance consumers have timely access to the services provided by the office;

(8) Review the health insurance records of a consumer who has provided written consent for such review;

(9) Create and make available to employers a notice, suitable for posting in the workplace, concerning the services that the Healthcare Advocate provides;

(10) Establish a toll-free number, or any other free calling option, to allow customer access to the services provided by the Healthcare Advocate;

(11) Pursue administrative remedies on behalf of and with the consent of any health insurance consumers;

(12) Adopt regulations, pursuant to chapter 54, to carry out the provisions of sections 38a-1040 to 38a-1050, inclusive; and

(13) Take any other actions necessary to fulfill the purposes of sections 38a-1040 to 38a-1050, inclusive.

(c) The Office of the Healthcare Advocate shall make a referral to the Insurance Commissioner if the Healthcare Advocate finds that a preferred provider network may have engaged in a pattern or practice that may be in violation of sections 38a-226 to 38a-226d, inclusive, 38a-479aa to 38a-479gg, inclusive, or 38a-815 to 38a-819, inclusive.

(d) The Healthcare Advocate and the Insurance Commissioner shall jointly compile a list of complaints received against managed care organizations and preferred provider networks and the commissioner shall maintain the list, except the names of complainants shall not be disclosed if such disclosure would violate the provisions of section 4-61dd or 38a-1045.

(e) On or before October 1, 2005, the Managed Care Ombudsman, in consultation with the Community Mental Health Strategy Board, established under section 17a-485b, shall establish a process to provide ongoing communication among mental health care providers, patients, state-wide and regional business organizations, managed care companies and other health insurers to assure: (1) Best practices in mental health treatment and recovery; (2) compliance with the provisions of sections 38a-476a, 38a-476b, 38a-488a and 38a-489; and (3) the relative costs and benefits of providing effective mental health care coverage to employees and their families. On or before January 1, 2006, and annually thereafter, the Healthcare Advocate shall report, in accordance with the provisions of section 11-4a, on the implementation of this subsection to the joint standing committees of the General Assembly having cognizance of matters relating to public health and insurance.

(f) On or before October 1, 2008, the Office of the Healthcare Advocate shall, within available appropriations, establish and maintain a healthcare consumer information web site on the Internet for use by the public in obtaining healthcare information, including but not limited to: (1) The availability of wellness programs in various regions of Connecticut, such as disease prevention and health promotion programs; (2) quality and experience data from hospitals licensed in this state; and (3) a link to the consumer report card developed and distributed by the Insurance Commissioner pursuant to section 38a-478l.

(g) The Office of the Healthcare Advocate shall administer the catastrophic medical expenses pool established under section 2 of this act, and shall make payments and reimbursements in accordance with sections 1 to 8, inclusive, of this act. Said office may adopt regulations, in accordance with chapter 54, to implement the provisions of sections 1 to 8, inclusive, of this act.

Statement of Legislative Commissioners:

In sections 2(b), 6(c)(5), 6(c)(13) and 7(a)(3), "subdivision (14) of subsection (a) of" was inserted before "section 4" for clarity and accuracy.

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 House thereof for any purpose:

OFA Fiscal Note

State Impact:

Note: IF=Insurance Fund

Municipal Impact: None

Explanation

This bill creates a Catastrophic Medical Expenses Pool to be administered by the Office of the Healthcare Access (OHA), resulting in costs to OHA for a staff position, fringe benefits, and other expenses, totaling $138,000 in FY 10 and 140,080 in FY 11 since it is a new program (see below):

These costs could be paid out of the Catastrophic Medical Expenses Pool account, a separate, non-lapsing account within the Insurance Fund, established in the bill. The account would be funded through a new $1-per-life-covered assessment on all health insurance providers in the state. Sec. 8 (e) limits payments and cost reimbursement from this account not to exceed the money deposited into it in the succeeding calendar year. OHA estimates that $1.3 million will be collected in FY 10 and FY 11 from this assessment. After administrative costs, $1,162,000 in FY 10 and $1,616,360 in FY 11 would be available in the account for payments for qualifying individuals' medical and related expenses.

Sec. 8 (c) of the bill requires OHA to pay all costs related to the management of this pool that do not exceed 5% of the funds transferred into the pool account. Costs over 5% would require approval by the Catastrophic Medical Expenses Commission, created in the bill, before OHA may pay these costs. As $65,000 is 5% of the anticipated $1-per-life-covered assessment revenue in FY 10 and FY 11, additional costs to OHA of $73,000 in FY 10 and $73,640 in FY 11 would need approval by the Commission for payment.

The Out Years

Costs in the out-years will be paid through the account established in the bill, assuming the Catastrophic Medical Expenses Commission's approval of costs exceeding 5% of the money deposited into the account in the succeeding calendar year.

OLR Bill Analysis

sHB 6152

AN ACT ESTABLISHING A CATASTROPHIC MEDICAL EXPENSES POOL.

SUMMARY:

This bill establishes (1) the Catastrophic Medical Expenses Commission and (2) a catastrophic medical expenses pool to reimburse or pay for, beginning January 1, 2010, certain medical and related expenses that exceed a certain percentage of a person's family income. Under the bill, the healthcare advocate administers the pool with the commission's advice. The bill specifies that it must not be construed to require the healthcare advocate or commission to reimburse or pay for an applicant's medical or related expenses.

The bill establishes the catastrophic medical expenses account as a separate, nonlapsing account within the Insurance Fund. To fund the account, the bill requires Connecticut health insurers, HMOs, third party administrators, and Department of Revenue Services to collect a fee of $1 per person covered under health insurance policies and plans, including the Charter Oak Health Plan. It requires the social services commissioner to apply for any available federal matching funds.

(The bill does not specify from whom they collect the fee, e.g., policyholders or each person. And it appears the insurers, HMOs, and administrators collect the fee based on all people, not just Connecticut residents, covered under a plan.)

The bill authorizes the healthcare advocate and the commission, separately, to adopt implementing regulations. And it requires the commission to adopt regulations regarding application procedures and other implementing processes the commission must establish.

EFFECTIVE DATE: July 1, 2009

§§ 3 & 4 — CATASTROPHIC MEDICAL EXPENSES COMMISSION

Membership

The bill establishes a 15-member Catastrophic Medical Expenses Commission. The healthcare advocate; comptroller; and social services, public health, and insurance commissioners (or their designees) are members, as well as 10 appointees. Members must be appointed by November 1, 2009. The committee must organize as soon as practicable after members are appointed. Members serve without compensation, but must be reimbursed for expenses.

The 10 appointees are:

1. two members the House speaker appoints, one of whom must be an Insurance and Real Estate Committee member;

2. two members the Senate president pro tempore appoints, one of whom must be an Insurance and Real Estate Committee member;

3. one person representing self-insured employers that the House minority leader appoints upon the Connecticut Business and Industry Association's president and chief executive officer's recommendation;

4. one person representing the health insurance industry that the Senate minority leader appoints;

5. two licensed health care providers practicing in Connecticut that the attorney general appoints; and

6. two members the governor appoints, one of whom must be a senior manager or human resources director of a labor union offering a Taft-Hartley plan (i.e., a health insurance plan or arrangement issued in accordance with a trust established through collective bargaining under the federal Labor Management Relations Act).

Members (1) serve five-year terms, except that the initial two gubernatorial appointees must serve three- and four-year terms, respectively and (2) can be reappointed to serve consecutive terms. The appointing authority (1) fills vacancies and (2) may remove an appointee for cause, after a public hearing. The authority may suspend the appointee pending the hearing's completion.

The members must elect a commission chairperson and secretary, neither of whom can be a legislator. The commission must adopt rules to establish the chairperson's and secretary's office term.

The bill specifies that eight commission members constitutes a quorum at a meeting. A vacancy in the commission's membership does not impair a quorum's right to exercise the commission's powers and duties.

Powers and Duties

Under the bill, the commission must develop application procedures, and the application, for seeking reimbursement of or payment from the pool. It must establish rules and procedures for the pool, including:

1. how to determine if an applicant or his or her expenses are eligible for funding;

2. documentation or information the applicant must provide to substantiate his or her eligibility or request for payment or reimbursement;

3. methods to verify family income;

4. whether any calendar year limits apply to the (a) number of times a person may apply in a calendar year or (b) dollar amount a person may receive from the pool;

5. whether an application from, or payment to, an applicant's family member counts toward any limits imposed; and

6. methods to verify (a) previous payments to an applicant, if necessary, and (b) that other available sources of payment have been exhausted.

The bill requires the commission to establish an application approval process, including criteria to prioritize pool payments or reimbursements. It specifies that if the deposited fees are insufficient to cover all eligible pool payment requests, the pool must give preference to an applicant who meets the pool's criteria and is “transitioning to medically needy status under Medicaid.” (Presumably, this refers to a person who is “spending-down” to qualify for Medicaid (see BACKGROUND).)

The commission must establish:

1. procedures for an applicant notification process, including the time in which (a) the healthcare advocate must approve or deny an application or funding request and (b) an applicant must submit additional information if his or her application was denied because it was incomplete;

2. a list of services, programs, treatments, products, and expenses for which the pool will not pay or reimburse;

3. rates payable to a health care provider for services the commission pre-approves for payment;

4. criteria for, and procedures to, (a) pre-approve payments and (b) make payments or reimbursements, including payment method and time frames;

5. procedures for recouping from a person an amount that the pool paid the person, who subsequently recovers those costs through a settlement of, or judgment in, a legal action;

6. procedures for accessing and spending the account's funds, including for preapproved payments and administrative costs;

7. an asset test to be used if pool funds appear inadequate to cover eligible payment or reimbursement requests;

8. a publicly available list, updated at least annually, of medical and related expenses eligible for, and those excluded from, payment or reimbursement consideration; and

9. a record of each applicant, in electronic or other form.

The bill requires the pool to maintain the applicant records and keep them in a secure location. It makes the records confidential and not subject to disclosure, except (1) as the law requires and (2) to commission members, if the members agree, in writing, to keep them confidential.

The commission must:

1. disseminate information to the public about the pool, including benefits available, procedures to apply, and the healthcare advocate's contact information;

2. enter into contracts, within available pool funds, to implement the bill's provisions, including contracts with licensed physicians and clinicians and people with appropriate expertise to assist the commission in performing its duties;

3. accept private or federal grants for the pool and gifts, donations, or bequests, including donations of services;

4. take any other action necessary to implement the bill's provisions; and

5. adopt regulations to implement specified parts of the bill's provisions relating to the commission's powers and duties.

§ 5 — PEOPLE ELIGIBLE TO APPLY TO THE POOL

Under the bill, a person is eligible to apply for payment or reimbursement from the pool if he or she is:

1. covered under a health insurance policy or plan;

2. not eligible for Medicaid, HUSKY, or state-administered general assistance (SAGA) when he or she incurred the medical or related expenses for which he or she wants pool reimbursement;

3. be a Connecticut resident and a U.S. citizen or resident alien; and

4. have exhausted other payment sources for which he or she wants pool reimbursement.

A person is covered under a health insurance policy or plan if he or she is covered under:

1. an individual or group health insurance policy that covers (a) basic hospital expenses; (b) basic medical-surgical expenses; (c) major medical expenses; and (d) hospital or medical services, including coverage under an HMO plan;

2. a self-insured comprehensive group medical or health care benefit plan, as determined by the commission;

3. the Municipal Employee Health Insurance Plan (MEHIP);

4. the Charter Oak Health Plan;

5. a comprehensive individual or group health care plan as specified in state law;

6. Medicare and a Medicare supplement insurance policy; or

7. a high-deductible health plan designed to be compatible with a federally qualified medical or health savings account, if the person has exhausted the account and subsequent medical and related expenses exceed the bill's family income limits.

§ 6 — POOL REIMBURSEMENTS AND PAYMENTS

Limited Based on Family Income

The bill limits the amount the pool can pay or reimburse to a person (see Table 1). The limit is based on the amount the person paid in a calendar year for medical and related expenses and the person's family income, which is based on the federal poverty level (FPL). (In 2009, FPL for a family of three is $36,620).

The bill defines “family income” as all net income from all sources a family receives in a calendar year, excluding reimbursements or payments from the pool.

TABLE 1

Exclusions

Under the bill, the pool will not reimburse or pay for costs associated with services normally provided by, or available through:

1. Connecticut's Birth-to-Three program;

2. the departments of Developmental Services, Mental Health and Addiction Services, or Public Health; or

3. an individualized family service plan or education program, in accordance with state law, or any other individualized service plan.

The bill specifies that costs associated with these may be eligible for pool payment or reimbursement at the healthcare advocate's discretion if the applicant was ineligible for services because of (1) the program's or agency's financial eligibility criteria or (2) a limit on the number of clients the program or agency serves.

The pool will not reimburse or pay for:

1. more than six months of long-term care at home or in a nursing home or rehabilitation facility;

2. premiums, copayments, deductibles, coinsurance, and other out-of-pocket expenses an applicant paid for, or under, a long-term care policy;

3. items denied because the insured or enrollee failed to comply with an insurer's network or prior authorization requirements;

4. infertility diagnosis and treatment;

5. massage services, natureopathy, and other alternative medicine treatments or services;

6. dental braces, dentures, cosmetic dental procedures, and routine dental services, including fillings, cleanings, and other prophylaxis measures;

7. eyeglass frames costing more than $50, adjusted annually for any consumer price index for urban consumers increase in the preceding 12-month period, based on the U.S. Bureau of Labor Statistics data;

8. pharmaceutical or biological products or any substance that may be lawfully sold over the counter without a prescription according to federal law;

9. vitamins or food supplements, unless prescribed for a diagnosed medical condition;

10. cosmetics;

11. programs, services, or expenses the commission chooses to exclude under regulations it adopts;

12. services, treatments, or products that are more expensive than equally effective alternatives, as determined by the commission or its designees; and

13. items that are not cost-effective or appropriate for the applicant's medical condition, as determined by the commission or its designees.

According to the bill, the commission's determination relating to cost-effectiveness or appropriateness may be made separately from an insurer's, HMO's, or utilization review (UR) company's determination. If the commission disagrees with an entity's determination, the bill permits it to be a party to an appeal the applicant may file with the entity.

Limitation

The bill limits pool payment or reimbursement for wheelchairs and hearing aids to once every (1) two years for a child under age 18 and (2) 10 years for a person over the age of 18. (The bill does not establish a limit for a person who is age 18.)

§ 2 — EXPENSES ELIGIBLE FOR REIMBURSEMENT OF PAYMENT

Under the bill, the services, equipment, and other expenses eligible for payment or reimbursement consideration, subject to the bill's specified limitations and exclusions, include:

1. durable medical equipment, hearing aids, medical or surgical supplies, therapy services, and prostheses or orthotics that are covered benefits but were denied in whole or part because a policy or plan limitation was reached;

2. health insurance premiums, copayments, deductibles, coinsurance, and other out-of-pocket expenses an applicant paid for a covered benefit; and

3. other items the commission or its designees determine are (a) directly related to the applicant's medical condition and (b) necessary to maintain his or her health and independence or permit him or her to remain at home.

§ 7 — POOL PAYMENT AND REIMBURSEMENT

Pre-Approved Payments

The bill permits the healthcare advocate to pre-approve medical or related expenses for payment from the pool. The payments must be made directly to the healthcare provider, in accordance with the bill's provisions.

The healthcare advocate must remit payment to the provider in an amount that equals Medicare's allowable rate for that service or expense. If there is no comparable Medicare allowable rate, the healthcare advocate, with the commission's advice, must develop a rate based on (a) current Medicaid and insurer rates or (b) rates he negotiates if no current Medicaid or insurer rate exists.

The bill allows the healthcare advocate to pre-approve a payment in accordance with rules and procedures the commission establishes, if:

1. the insured's or enrollee's provider has agreed, in writing, to accept the payment as payment in full;

2. the insurer, health care center, self-insured employer, insured, or enrollee, provides documentation or information the healthcare advocate requests to determine the pool eligibility, including any previous pool payments to the applicant; and

3. the pool has sufficient funds.

Additionally, the healthcare advocate may pre-approve payment for a related expense not typically considered medical if the commission or its designees deem it necessary to maintaining the applicant's independence or ability to remain at home.

(It is unclear if these provisions, which appear to require the healthcare advocate to contract with providers to provide services in exchange for payment, makes him an unauthorized insurance company or subjects him to preferred provider network or other laws regarding provider contracts.)

Reimbursement of Paid Expenses

Under the bill, if the healthcare advocate approves reimbursement of a medical or related expense, the applicant must submit the bill to him with proof of payment. The bill permits the healthcare advocate to pay all or part of the bill, based on the:

1. rate he would have paid if he had pre-approved payment,

2. appropriateness and necessity of the expense, and

3. availability of pool funds.

The bill specifies that a pool payment or reimbursement to an applicant will not be counted as income or assets for purposes of determining his or her eligibility for state medical assistance.

§ 8 — ACCOUNT AND FEES

Account Established

The bill establishes the catastrophic medical expenses account as a separate, nonlapsing account within the Insurance Fund. The healthcare advocate must use the account, which will receive specified deposits, to pay or reimburse eligible, approved expenses as provided under the bill.

Covered Lives Fee

To fund the account, the bill requires Connecticut health insurers, HMOs, and third party administrators to collect on January 1^st of each year, a fee of $1 per life covered. (Presumably, they collect, from each policyholder or plan sponsor, $1 for each person covered under the policy or plan. It is unclear how they will collect the fee on January 1. Maybe they are supposed to collect the fee annually by January 1.) The bill also requires DRS to collect a fee of $1 per person covered under the Charter Oak Health Plan. (It is unclear from whom DRS collects the fee and by when.)

The bill requires the companies and DRS to remit the fees, within 30 days of collecting them, to the healthcare advocate for deposit into the account. It requires the healthcare advocate to pay pool administration expenses up to 5% of fees collected. The expenses must relate to the pool's management, including (1) costs for staff to manage the program and coordinate work the commission assigns; (2) developing program material; and (3) printing, postage, and telephone costs. The bill requires him to obtain the commission's approval to pay any expenses exceeding the 5% amount.

Federal Matching Funds

It requires the social services commissioner to apply for any available federal matching funds.

Pool Makes Payments Each Year Until Funds are Exhausted

The bill specifies that once account funds are exhausted in a given calendar year, no pool payments or reimbursements will be made for the remainder of the year. Pool payments and reimbursements resume after money is deposited in the next calendar year.

BACKGROUND

Spending Down

Federal law gives states the option of providing Medicaid to groups of individuals who do not qualify for benefits because they do not fit into a particular category (e.g., cash assistance recipient). One such group is the “medically needy,” comprised of people who do not qualify for cash assistance because their income exceeds a specified limit, even though they meet other categorical eligibility standards (such as disability).

In Connecticut, a person in this situation is permitted to “spend down” the excess income on certain medical or remedial services over a six-month period. Once they spend down to the income limit, the person receives Medicaid coverage for the rest of the six-month period.

COMMITTEE ACTION

Insurance and Real Estate Committee

Joint Favorable Substitute