OLR Bill Analysis

SB 492

Emergency Certification

AN ACT CONCERNING DEFICIT MITIGATION FOR THE BIENNIUM ENDING JUNE 30, 2011.

SUMMARY:

This bill reduces appropriations for state programs and purposes for FY 10 and FY 11; transfers funds from various special funds and accounts to the General Fund for FY 10; and reduces and adjusts several state medical assistance and other social services programs.

The bill reverses reductions in estate and gift tax rates that took effect on January 1, 2010; establishes a gross earnings tax on hospitals; increases fines for motor vehicles violations; reduces hunting and fishing license fees; and appropriates additional amounts from the Budget Reserve (“Rainy Day” Fund) for FY 10.

For most nonunionized state employees, the bill eliminates longevity pay, requires an additional unpaid furlough day in FY 10 and FY 11, eliminates the meal allowance for state police personnel, and eliminates mileage reimbursements for workers' compensation commissioners for FY 10 and FY 11. It suspends the employment and appointment of deputy commissioners in the executive branch from July 1, 2010 until July 1, 2011.

The bill requires state economic development agencies to be consolidated and the Department of Motor Vehicles (DMV) to submit a reorganization plan by July 1, 2010.

EFFECTIVE DATE: Upon passage unless otherwise noted below.

1-8 — REDUCED APPROPRIATIONS FOR FY 10 AND FY 11

The bill reduces total FY 10 and FY 11 appropriations as shown in Table 1. Please refer to the Office of Fiscal Analysis fiscal note for a detailed explanation of the reductions.

Table 1: Reductions in Total Appropriations for FYs 10 and 11

Fund

FY 10

FY 11

1,4

General Fund – Various agencies

$ 86,775,972

$ 59,835,738

2, 7

Consumer Counsel and Public Utility Control Fund

1,100,000

1,100,000

3, 8

General Fund – Dept of Children & Families

100,000

450,000

5

Special Transportation Fund

0

370,000

6

Insurance Fund

0

963,000

The bill transfers the FY 10 and FY 11 reductions in the Consumer Counsel and Public Utility Control Fund and the FY 11 reductions in the Insurance Fund to General Fund resources for FY 10.

9 — TRANSFERS TO THE GENERAL FUND

The bill transfers money from various special funds and accounts to General Fund revenue for FY 10 as shown in Table 2.

Table 2: Transfers to the General Fund for FY 10

From

Amount

Tobacco and Heath Trust Fund

$ 5,000,000

Biomedical Research Fund

3,500,000

Citizens' Election Fund

6,000,000

Public, Educational, and Governmental Programming and Education Technology Investment Account

2,300,000

Emissions Enterprise Fund

1,000,000

Conservation Fund, Environmental Quality Fund, & Clean Air Act account

Any balances remaining after completing transfers required in the budget act

Community Investment account

5,000,000 (see below)

Federal Emergency Management Administration (FEMA) account administered by OPM

Balance remaining

Collection Commissaries Account

1,200,000

The Community Investment account is funded by a $ 40 fee for each document recorded in municipal land records. Municipalities retain $ 4 of the fee and send the balance to the state for deposit in the account. Money from the account is distributed quarterly to the Commission on Culture and Tourism, the Connecticut Housing Finance Authority, and the departments of Environmental Protection and Agriculture. They must use the funds for purposes specified in the law.

For the quarter ending June 30, 2010, the bill requires $ 5 million from the account to go to the General Fund before the reminder is distributed.

10 — OPERATION FUEL ENERGY ASSISTANCE PROGRAM

The bill reduces, by $ 1 million, an appropriation to the Office of Policy and Management (OPM) for an emergency energy assistance program for Connecticut households with incomes between 200% of the federal poverty level and 100% of the state median household income that cannot make timely payments on deliverable fuel, electricity, or natural gas bills. Under the program, Operation Fuel, Incorporated pays the assistance directly to the fuel vendor, electric or gas company, or municipal electric or gas utility.

Operation Fuel is a nonprofit organization that serves people who are not eligible for publicly funded energy assistance.

11 — SMALL BUSINESS INCUBATOR ACCOUNT

The bill transfers $ 850,000 from the Small Business Incubator account to the General Fund for FY 10.

12 — HOUSING INCENTIVE ZONE PROGRAM FUNDS

The bill bars expenditure of the following amounts currently earmarked for the housing incentive zone program: (1) $ 380,000 appropriated to the Department of Economic and Community Development (DECD) for Home CT and (2) $ 397,602 in a separate account held by OPM. It transfers these funds to the General Fund for FY 10.

The housing incentive zone program provides grants to towns that choose to zone land for developing housing mainly where transit facilities, infrastructure, and complementary uses already exist or have been planned or proposed. Towns receive the incentives only after establishing an incentive housing zone and approving incentive housing developments in the zone.

13 — RETIRED TEACHERS' HEALTH SERVICES

The bill reduces an appropriation to the Teachers' Retirement Board for retired teachers' health services costs by $ 179,228, from $ 188,661 to $ 9,433. The funds were appropriated to cover a deficiency for FY 09 and were carried over for expenditure for the same purpose in FY 10.

14 — NEXT STEPS INITIATIVE FUNDING DELAY

The bill delays until FY 11 funding for (1) rental assistance and services for the Next Steps Initiative's Round 3 development projects and (2) debt service on the bonds issued to finance the projects.

Specifically, the bill eliminates:

1. a $ 264,000 allocation from funds appropriated to DSS for Homeless/Housing Services for FY 10 (the bill retains the $ 264,000 allocation for FY 11);

2. a $ 510,000 allocation from the funds appropriated to the Department of Mental Health and Addiction Services (DMHAS) for Housing Supports and Services for FY 10 (the bill retains the $ 1 million allocation for FY 11); and

3. $ 1 million of the funds appropriated to the treasurer to pay debt service for FY 10 (the bill retains the $ 1 million allocation for FY 11).

The bill also eliminates a requirement that any of the authorized funds not used for Round 3 be used for other rental assistance and services for new scattered site supportive housing.

By law, the Next Steps Initiative provides affordable housing and support services for people and families affected by psychiatric disabilities and chemical dependency who are homeless or risk homelessness, and for supervised ex-offenders with serious mental health needs, among others. The law allows the state to provide state funds to the Connecticut Housing Finance Authority to pay debt service on bonds it issued for mortgage loans under the Next Steps Initiative. Round 3 was authorized under PA 08-123.

15 — HUSKY B COST SHARING

The bill requires co-payments under HUSKY B to be the same as those in effect for active state employees enrolled in a point of enrollment (POE) health care plan. Currently, HUSKY B enrollees pay $ 5 co-payments for certain services, $ 25 for nonemergency emergency room visits, and none for others (e. g. , preventive care, hospital stays, and dental services). It is not clear whether these exemptions remain under the bill.

Most co-payments under the state employees POE plan are $ 10. Well-child visits and immunizations require no co-payments.

The bill limits the combined co-payments and premiums to no more than the family's annual aggregate cost-sharing requirement in law, which is 5% of a family's gross income in both state and federal law.

Currently, families in HUSKY B, Band 2 (incomes between 236% and 300% of the federal poverty level (FPL) pay a maximum of $ 1,360 per year, regardless of where they are on the income continuum. This includes $ 760 for co-payments and $ 600 for premiums. Families with incomes between 185% and 235% of the FPL pay only co-payments, with a maximum of $ 760 annually.

16 — ELIMINATION OF PAYMENT OF ATTORNEY FEES FOR SUPPLEMENTAL SECURITY INCOME (SSI) APPEALS

Under current law, when SAGA cash assistance recipients and individuals eligible for both the State Supplement to SSI and Social Security Disability Income (SSDI) have been denied SSI benefits or have been notified that their SSI benefits will be terminated, they can appeal these decisions. The DSS commissioner must advise SAGA recipients of their right to appeal and the availability of local legal counsel to help with the appeal. DSS reimburses the attorney's fees for both the SAGA recipients and Social Security benefit recipients, on a contingency basis, within limits DSS approves and the amount the Social Security Administration approves. The fees are not recoverable from the client or his estate.

The bill eliminates DSS' payment of the attorney fees. Instead, it allows attorneys to be directly reimbursed from the retroactive benefits to which their clients are entitled, when an appeal is successful and as allowed by federal law. The bill also eliminates the prohibition on attorneys' fees being recoverable from the client or his or her estate. And it requires DSS to also notify the Social Security beneficiaries of their right to appeal and the availability of legal counsel.

The payment of attorney fees for successful appeals can reduce the state's expenditures in the SAGA program since SSI replaces SAGA and is fully federally funded. SAGA is entirely state-funded.

17 — CAPITATION PAYMENT DEADLINES

Under current law, DSS must pay all capitation claims under the HUSKY program that would otherwise be reimbursed to the managed care organizations (MCOs) in June 2011 no later than July 30, 2011. The bill instead provides that any payments due to the MCOs in April 2010 be paid by May 31, 2010. And each subsequent payment the commissioner makes is due in the second month following the month to which the capitation applies.

DSS pays the three MCOs serving HUSKY and Charter Oak recipients a per-member, per-month capitation amount which is supposed to cover all of the costs associated with providing medical care to program enrollees.

18 — CHARTER OAK HEALTH PLAN; FREEZE IN PREMIUM ASSISTANCE

For FYs 10 and 11, the bill limits premium assistance in the Charter Oak program to those individuals enrolled in the program on March 31, 2010.

19 — LIMITS ON PROVIDER BILLING

The bill limits what a provider enrolled in any medical assistance program DSS administers can bill the department for goods and services. The limit is the lowest amount the provider accepts from any member of the general public for a similar item or service.

20 — ELIMINATION OF COVERAGE FOR OVER-THE-COUNTER (OTC) DRUGS

The bill provides that, regardless of any other law to the contrary, beginning May 1, 2010, DSS will stop paying for OTC drugs in any of its medical assistance programs, except for insulin and insulin syringes and anything else federal law requires.

Federal Medicaid law requires states to pay for OTC drugs for children under age 21, so HUSKY A children can still get these drugs.

Currently, DSS pays for selected OTC drugs in the Medicaid, HUSKY, SAGA, and Charter Oak Health Plan. It does not pay for them for ConnPACE recipients, except for insulin and insulin syringes. The drugs must be prescribed for a specific illness or condition by a licensed, authorized practitioner.

EFFECTIVE DATE: May 1, 2010

21 — TUBERCULOSIS COVERAGE

The bill requires the DSS commissioner to amend the state Medicaid plan to provide coverage for tuberculosis (TB) treatment to anyone eligible, to the extent federal law permits. Currently, DPH's state-funded program provides anti-tuberculosis medications to clinicians; reimburses clinicians for TB diagnostic treatment and prevention services for the uninsured, regardless of their income or assets; and consults on TB case management and screening with local health departments, prisons, convalescent and nursing homes, schools, universities, and hospitals.

22 — DSS AUTHORIZED TO IMPLEMENT PROGRAMS BEFORE REGULATIONS ADOPTED

The bill permits DSS to implement policies and procedures necessary to administer various functions while in the process of adopting them in regulation. The DSS commissioner must print notice of intent to adopt the regulations in the Connecticut Law Journal within 20 days of implementing the provisions. The policies and procedures are valid until final regulations are adopted.

The bill authorizes DSS to do this for the following functions:

1. contracting with federally qualified health centers to provide medical care for SAGA beneficiaries (it already has the authority the bill provides);

2. reimbursing attorneys who appeal on behalf of SAGA beneficiaries a denial of Supplemental Security Income or a termination of benefits (it already has the authority the bill provides);

3. paying Medicare Part D prescription drug copayments on behalf of full-benefit, dually eligible (Medicare and Medicaid) beneficiaries (it is not clear whether DSS is authorized to adopt regulations governing this function);

4. paying, by July 31, 1997, capitation claims that would otherwise have been reimbursed to managed care companies;

5. HUSKY B cost-sharing requirements (DSS has general authority to do this to implement HUSKY B, but not specific to cost-sharing);

6. licensing and certifying emergency medical services organizations (this is a DPH function, DSS is not authorized to adopt regulations in this area);

7. specifying that providers enrolled in any DSS-administered medical assistance program cannot bill DSS more than the lowest amount they accept from the public for the same item or service;

8. stretcher van rates;

9. eliminating most over-the-counter drug coverage under DSS pharmacy program;

10. determining medical necessity; and

11. covering tuberculosis treatment under Medicaid.

23 — PURCHASING CONTRACTS

The bill authorizes the Department of Administrative Services (DAS) commissioner, on the state's behalf, to purchase equipment, supplies, materials, and services by joining existing purchasing contracts in other states, Connecticut political subdivisions, nonprofit organizations, or public consortia. The state would be subject to the same contract terms and conditions.

By law, the DAS commissioner can join with other governmental entities and nonprofit organizations to make cooperative purchases when doing so is in the best interest of the state but lacks the express authority to join an existing purchasing contract.

24 — GENERAL FUND TRANSFERS TO THE SPECIAL TRANSPORTATION FUND

The bill reduces the required FY 10 and FY 11 revenue transfers from the General Fund to the Special Transportation Fund. It reduces the FY 10 transfer by $ 10 million, from $ 81. 2 million to $ 71. 2 million, and the FY 11 and FY 12 transfers by $ 1. 095 million from $ 126 million to $ 124. 905 million.

25 — TRANSFERS TO GENERAL FUND FROM UCONN AND CSU OPERATING RESERVE FUNDS

The bill increases required transfers from the University of Connecticut's operating reserve account to the General Fund by $ 5 million for FY 10 and by $ 10 million FY 11. It increases the FY 10 transfer from $ 3 million to $ 8 million and the FY 11 transfer from $ 5 million to $ 15 million.

The bill also transfers the following amounts from Connecticut State University's operating reserve account to the General Fund: $ 1 million for FY 10 and $ 2 million for FY 11.

26 — BUDGET RESERVE FUND TRANSFERS TO THE GENERAL FUND

The bill changes the required transfers from the Budget Reserve (“Rainy Day”) Fund to the General Fund for FY 10 and FY 11. It (1) increases the FY 10 transfer by $ 262,747,172, from $ 1,039,700,000 to $ 1,302,447,172 million and (2) makes a corresponding reduction in the FY 11 transfer, reducing it from $ 342 million to $ 79,252,828.

27 — HOSPITAL GROSS EARNINGS TAX

The bill imposes a 5. 45% tax on hospital gross earnings. The tax applies to short-term, acute care hospitals licensed by the DPH. Hospitals licensed as children's general hospitals and those operated exclusively by the state are exempt, unless the state is operating the hospital as a receiver.

For tax purposes, a hospital's “gross earnings” are its net revenue minus the amount of federal payments it is projected to receive for Medicare patients and the amount it expects to receive from the DSS. In each case, the projections must be based on its budget authorization.

The tax is payable quarterly on the last day of January, April, July, and October, starting with calendar quarters beginning on and after July 1, 2010.

28 — STATE POLICE MEAL ALLOWANCE

The bill eliminates a statutory requirement that the state pay a meal allowance for state police personnel. It does not affect state meal allowances payable to personnel covered by a collective bargaining agreement requiring the allowance.

29-30 — ENVIRONMENTAL PROTECTION MAINTENANCE, REPAIR, AND IMPROVEMENT ACCOUNT

The bill establishes a separate, nonlapsing General Fund account that the DEP commissioner must use to maintain, repair, and improve property at the Harkness Memorial State Park property in Waterford, including the mansion and other buildings. The commissioner can also use the money to build new structures. It transfers $ 2,315,365 from the Conservation Fund to the new account for FY 10.

Unless the DEP commissioner makes a written agreement, signs an instrument, or issues a license stating otherwise, the bill requires all rents and fees the commissioner receives from users and occupants of the property, mansion, or other buildings at Harkness Park, to be deposited in the account. It also allows the account to receive other private and public funds, including federal and municipal funds. The bill does not prevent the commissioner from obtaining and using money from sources outside the account to maintain and improve Harkness Park property and buildings.

31 — DEPARTMENT OF MOTOR VEHICLES REORGANIZATION PLAN

The bill requires the Department of Motor Vehicles (DMV) commissioner to report, by July 1, 2010, to the Transportation and Appropriations committees on recommendations for:

1. expanding technological options for, streamlining, and decentralizing the delivery of services DMV offers the public;

2. increasing public access to routine DMV services;

3. merging DMV's administrative services with those of other state agencies;

4. maintaining licensing security measures as federal law requires; and

5. reducing DMV's costs by other measures the commissioner suggests.

Starting July 1, 2010, the bill requires DMV to consolidate full-service and satellite officers to save $ 370,000 per year.

32 — ADDITIONAL FURLOUGH DAYS

The bill imposes two mandatory unpaid furloughs on most nonunion, full-time state employees. One day must be taken before June 30, 2010 and the other before June 30, 2011. By law, these employees have already taken three furlough days in FY 10 and must take three more in FY 11. The bill requires part-time employees to take furlough days on a pro rata basis, based on each employee's biweekly work schedule.

The bill's provisions cover nonunion state employees including managers, confidential employees, unclassified employees, appointed officials and employees, and employees of boards and commissions. They do not apply to nonunion or exempt from civil service employees of the state's constituent units of higher education or unclassified employees of any of their boards of trustees (these employees must still take the furlough days already required by law). The bill uses the same statutory procedures for implementing furlough days as included in SA 09-6.

The value of each furlough day will be 1/10 of the base biweekly pay for an employee on an annual 26 pay-period schedule. The employee's pay will be reduced accordingly as a voluntary day off under the existing voluntary schedule reduction law (CGS 5-248c). That law allows for a voluntary schedule reduction, with an accompanying loss of pay, but without loss of seniority, benefits, longevity, retirement credit, sick leave, vacation, or earned overtime accumulation.

Fixed Furlough Days and Alternate Days

For employees who work in assignments or operations where the appointing authority (i. e. , department or commission) has determined that they may be scheduled to take a fixed day off or the office can close, the following days must be taken as an unpaid furlough day:

May 28, 2010

Friday before Memorial Day

May 27, 2011

Friday before Memorial Day

For an employee who cannot be assigned the fixed schedule furlough days due to the unique and varied nature of the services he or she provides, the bill permits the appointing authority to vary the assignment of personnel and grant alternate dates as furlough days, as long as one additional furlough day is taken by June 30, 2010 and one additional day is taken by June 30, 2011.

Appointing authorities must work cooperatively with employees who are unable to take any of the fixed furlough days to agree on alternative day or days. For each such furlough day, the employee must take one day off, or equivalent hours, without pay. Days off must be scheduled with the goal of avoiding (1) any additional costs to the employer and (2) replacement coverage.

Judges

The bill allows the chief justice of the Supreme Court to order Superior Court judges to take furlough days according to the bill.

33 — DEPUTY COMMISSIONERS

The bill suspends the employment and appointment of deputy commissioners in the executive branch from July 1, 2010 until July 1, 2011. The bill supersedes statutory requirements for the appointment of deputy commissioners in:

1. the Department of Revenue Services (CGS 12-3);

2. the Department of Children and Families, one for program services and a second for administrative services (CGS 17a-9);

3. the Department of Mental Health and Addiction Services, one for mental health services and a second for addiction services (CGS 17a-452);

4. the Department of Public Safety, Division of State Police to serve on the State-Wide Cooperative Crime Control Task Force Policy Board (CGS 29-179i); and

5. the Department of Economic and Community Development (CGS 32-1d).

It transfers to the General Fund for FY 10 any savings that would otherwise accrue to other appropriated funds.

The statutes give other commissioners the discretion to appoint deputy commissioners and authorize deputies to perform certain duties, but the appointments are not required and other officials are listed who can perform the specified functions.

34-51 — LONGEVITY PAYMENTS

Payments Eliminated

This bill eliminates longevity payments for nonunionized state employees, except those of the constituent units of higher education, starting April 1, 2010. Longevity pay is given twice a year to state employees who have served the state for at least 10 years. Longevity pay increases for each five years of state service until 25 years of service, where it reaches the maximum.

The bill makes statutory changes to also remove longevity pay for the following state positions whose compensation is specified in statute:

1. judges of Superior Court, the Appellate Court, the Supreme Court, and any combination of these courts (CGS 51-47);

2. workers' compensation commissioners (CGS 31-277);

3. family support magistrates (CGS 46b-233);

4. chief state's attorney, deputy chief, and state's attorneys (CGS 51-287a); and

5. chief public defender, deputy chief public defender, and public defenders (CGS 51-295b).

It transfers to the General Fund for FYs 10 and 11, as appropriate, any savings that would otherwise accrue to other appropriated funds.

Retirement Benefits

The bill changes how “salary” is defined for Tier I and Tier II retirement benefit calculations to include longevity (1) received before April 1, 2010 or (2) that would have been received, or was due and payable, before April 1, 2010, to be counted as salary solely for purposes of calculating retirement or other benefits, such as disability benefits. (State employee pensions are based, in part, on the employee's average highest salary for a three-year period. Longevity pay can increase that average, which increases the retirement benefit. )

This change affects only non-union employee retirement calculations. Unionized employees receive longevity pay under collective bargaining contracts, and pension benefits are also controlled by the union coalition agreement known as SEBAC (see below).

The bill makes conforming changes. It removes longevity pay from retirement benefit calculations for the various positions that have statutory salaries, as listed above. Except it allows longevity that would have been received, or was due and payable, before April 1, 2010, to still be counted as salary solely for purposes of calculating retirement benefits.

Non-Union Employees of Higher Education Constituent Units

The bill specifies that nonunionized or exempt from civil service employees of higher education constituent units will continue to receive longevity pay.

State Employees Called to Active Service in the Military

By law, when a state employee is called to active duty, the state pays the difference between his or her military pay and his or her state pay if the state pay exceeds the military pay. Under the bill, longevity pay will no longer count as part of the employee's state pay.

This section does not provide a specific date, as the other sections do, for this change. It is unclear if it applies to longevity pay received prior to April 1, 2010.

Background

Longevity Payments. State employees who have more than 10 years of state service receive longevity payments twice a year. The payments increase at 15, 20, and 25 years of service until the employee reaches the maximum for his or her position. Longevity pay can be calculated according to a schedule determined by the administrative services commissioner, as is done for state managers, or it can be a percentage of the employee's pay. For example, Table 2 shows the longevity progression for judges.

Table 3: Semi-annual Longevity Payments for Judges

Years of State Service

% of Salary Paid

10 to 15

0. 75%

15 to 20

1. 50%

20 to 25

2. 25%

25 or more

3. 0%

Longevity Pay Under Union Contracts. The State Employee Bargaining Agent Coalition (SEBAC) agreement governs retirement and health insurance benefits for unionized employees. SEBAC requires longevity payments to be included unionized employees' pension calculations. Union contracts for individual collective bargaining units (clerical, corrections officers, state police, etc. ) require longevity payments at varying levels depending on the specific contract.

The state employee collective bargaining law states that when there is a conflict between a union contract and a state statute or regulation, the union contract prevails as long as the issue is appropriate to collective bargaining. Therefore, the bill's removal of longevity from nonunionized employees' pension benefit calculations does not apply to unionized employees.

52 — RIVERVIEW HOSPITAL

The bill requires the Department of Children and Families (DCF) commissioner, in consultation with the Child Advocate and by April 15, 2011, to submit a plan to the Children's, Human Services, and Appropriations committees concerning the future of Riverview Hospital for Children and Youth.

According to DCF's website, Riverview is the only state-administered psychiatric hospital for Connecticut's children and youth. It provides comprehensive care to children and adolescents with severe mental illness and related behavioral and emotional problems who cannot be safely assessed or treated in a less restrictive setting.

53 — MEDICAL NECESSITY

New Definition

The bill statutorily establishes a definition of “medically necessary” and “medical necessity” in DSS' medical assistance programs. The definition is:

Those health services required to prevent, identify, diagnose, treat, rehabilitate, or ameliorate an individual's medical condition, including mental illness, or its effect, in order to attain or maintain the individual's achievable health and independent functioning, provided such services are (1) consistent with generally accepted standards of medical practice that are defined as standards that are based on (a) credible scientific peer-reviewed medical literature that is generally recognized by the relevant medical community, (b) recommendations of a physician-specialty society, (c) the view of physicians practicing in relevant clinical areas, and (d) any other relevant factors; (2) clinically appropriate in terms of type, frequency, timing, sites, extent, and duration and considered effective for the individual's illness, injury, or disease; (3) not primarily for the convenience of the individual, the individual's health care provider, or other health care providers; (4) not more costly than an alternative service or sequence of services at least as likely to produce equivalent therapeutic or diagnostic results as to the diagnosis or treatment of the individual's illness, injury, or disease; and (5) based on an assessment of the individual and his or her medical condition.

DSS currently uses two medical necessity and medically necessary definitions in its medical assistance programs, neither of which is in statute. The State-Administered General Assistance (SAGA) medical assistance program regulations use the following definition:

Health services required to prevent, identify, diagnose, treat, rehabilitate, or ameliorate a health problem or its effects, or to maintain health and functioning, provided such services are:

1. consistent with generally accepted standards of medical practice;

2. clinically appropriate in terms of type, frequency, timing, site, and duration;

3. demonstrated through scientific evidence to be safe and effective and the least costly among similarly effective alternatives, where adequate scientific evidence exists; and

4. efficient in regard to the avoidance of waste and refraining from provision of services that, on the basis of the best available scientific evidence, are not likely to produce benefit.

DSS uses the following definition of medical necessity (also “medically necessary”) in the Medicaid fee-for-service, HUSKY, and Charter Oak Health Plan:

Health care provided to correct or diminish the adverse effects of a medical condition or mental illness; to assist an individual in attaining or maintaining an optimal level of health; to diagnose a condition or prevent a medical condition or prevent a medical condition from occurring.

Use of Clinical Guidelines

Under the bill, clinical and medical policies, clinical criteria, or any other generally accepted clinical practice guidelines used to assist in evaluating the medical necessity of a requested health services may be used solely as a guideline and cannot be the basis for a final medical necessity determination.

When Service Denied Based on Medical Necessity

The bill provides that if a request for authorization of services is denied based on medical necessity, the individual must be notified that, upon request, DSS will provide a copy of the specific guideline or criteria, or portion thereof, other than the medical necessity definition that DSS or any other entity acting for it considered when making a medical necessity determination.

Repealing Existing Regulations and Implementing Change While in Process of Adopting New Regulations

The bill permits DSS to amend or repeal any regulatory definition of medical necessity, including the definitions of medical appropriateness and medically appropriate, used in administering the “medical assistance program,” (presumably Medicaid, which is sometimes referred to as medical assistance in statute).

The bill requires the commissioner to implement policies and procedures to carry out the definition change while in the process of adopting them in regulation. He must publish notice of intent to adopt the regulations in the Connecticut Law Journal within 20 days of implementation. These policies and procedures are valid until the final regulations are adopted.

54 — SAGA POPULATION COVERED BY MEDICAID

The bill requires the DSS commissioner to submit a Medicaid state plan amendment to extend Medicaid coverage to individuals currently enrolled in the state-funded SAGA medical assistance program. If the amendment is approved, the commissioner must, by April 1, 2010, implement the coverage expansion.

The federal Patient Protection and Affordable Health Care Act permits states to extend Medicaid coverage to childless adults with incomes up to 133% of the federal poverty level (FPL, $ 14,403 annually for a single person), and states may begin this coverage as early as April 1, 2010. Currently, the SAGA medical assistance program covers individuals with income up to about 70% of the FPL.

The bill repeals language related to DSS obtaining a federal waiver to cover the SAGA population under Medicaid.

55 — DISPROPORTIONATE SHARE (DSH) PAYMENTS

Beginning in FY 10 and for each subsequent fiscal year, the bill requires that funds appropriated to hospitals in the DSH-Medical Emergency Assistance, DSH-Urban Hospitals in Distressed Municipalities, and the Connecticut Children's Medical Center (state match for drawing down federal DSH money) accounts be transferred to the Medicaid Rates-Hospitals account. (All of these are line items in DSS' budget. )

The purpose of the transfer is for the state to obtain federal matching funds (an enhanced federal match (61. 9% versus 50%) is available until December 30, 2010, under the American Recovery and Reinvestment Act). State DSH payments are eligible for only a 50% federal match. By moving these funds to the Medicaid Rate line item, the state qualifies for the enhanced match.

The bill requires that the transferred funds be used to increase each hospital's Medicaid (presumably fee-for-service) rate by an amount that fully offsets the loss of DSH payments resulting from the transfer.

The bill also requires the DSS commissioner to require each managed care organizations (MCO) participating in HUSKY to pay hospitals with which they contract at least the rate established by the DSS commissioner for hospitals participating in the Medicaid fee-for-service program. Currently, the MCOs use the FFS rates as a base rate.

56-57 — SCHOOL-BASED HEALTH CENTERS

This bill requires certain individual and group health insurance policies to cover services provided at a school-based health center if such services are a covered benefit under the policy. The school-based health center must be a comprehensive primary health care facility licensed by the Department of Public Health as an outpatient clinic.

The bill applies to individual and group health insurance policies delivered, issued, renewed, amended, or continued in Connecticut that cover (1) basic hospital expenses; (2) basic medical –surgical expenses; (3) major medical expenses; and (4) hospital or medical services, including coverage under an HMO plan.

Due to federal law (ERISA), state insurance benefit mandates do not apply to self-insured benefit plans.

EFFECTIVE DATE: January 1, 2011

Background - School-Based Health Centers.

School-based health centers (SBHCs) are free-standing medical clinics located within or on school grounds serving students in grades pre-kindergarten through 12. Centers are staffed by a multi-disciplinary team of professionals with particular expertise in pediatric and adolescent health including advanced practice registered nurses, physician assistants, social workers, physicians, and in some cases, dentists and dental hygienists. They provide primary medical and mental health services to students at the site school regardless of insurance coverage. There are currently 66 state-funded SBHCs located in 19 communities statewide.

58-59 — ESTATE AND GIFT TAX CHANGES

Tax Threshold, Rates, and “Cliff

Under current law, the following changes in the estate and gift taxes took effect starting with deaths occurring and gifts made on or after January 1, 2010: (1) an increase, from $ 2 million to $ 3. 5 million, in the threshold value of an estate or gift subject to the estate and gift tax and (2) a 25% reduction in marginal tax rates on estates and gifts valued at $ 3. 5 million or more. This bill eliminates the 25% reduction in rates.

Under prior law, in effect from January 1, 2005 to January 1, 2010, the estate and gift tax contained a so-called “cliff. ” The cliff was produced because, under the pre-January 1, 2010 tax, an estate or gift valued at $ 2 million or less was not taxed at all, while the full value of an estate or gift of more than $ 2 million was taxed. Thus, a $ 1 increase in value from $ 2,000,000 to $ 2,000,001 increased the tax liability for a gift or estate over $ 2 million by $ 101,700 (the “cliff”). The current law eliminates the cliff by applying the tax only to the portion of the estate or gift that exceeds the tax threshold. This change also took effect with deaths occurring and gifts made on or after January 1, 2010.

The bill retains the higher tax threshold and eliminates the cliff but, to compensate for the resulting revenue loss, it increases the marginal tax rates on estates and gifts over $ 3. 5 million from between 7. 2% and 12% to between 14. 8% and 20%. These higher rates affect estates of those who die, and gifts made on or after January 1, 2010 (see Table 4).

Table 4: Pre- and Post-January 1, 2010 Estate & Gift Tax Rates Under

Current Law and the Bill

VALUE OF

TAXABLE ESTATE OR GIFT

ON OR AFTER JANUARY 1, 2005 AND BEFORE JANUARY 1, 2010

ON OR AFTER JANUARY 1, 2010

Current Law And The Bill

(Add cols. C & D)

Current Law

(Add cols. E & F)

The Bill

(Add cols. G & H)

Col. A:

Over

Col. B:

But not over

Col. C:

Tax on

Col. A

Col. D:

Tax rate on

excess

over Col. A

Col. E:

Tax on

Col. A

Col. F:

Tax rate on

excess

over Col. A

Col. G:

Tax on

Col. A

Col. H:

Tax rate on

excess

over Col. A

0

$ 2,000,000

NO TAX

NO TAX

NO TAX

$ 2,000,000

2,100,000

5. 085% of the total over 0

2,100,000

2,600,000

$ 106,800

8. 0%

2,600,000

3,100,000

146,800

8. 8%

3,100,000

3,500,000

190,800

9. 6%

3,500,000

3,600,000

190,800

9. 6%

0

7. 2%

0

14. 8%

3,600,000

4,100,000

238,800

10. 4%

$ 7,200

7. 8%

$ 14,800

15. 6%

4,100,000

5,100,000

290,800

11. 2%

46,200

8. 4%

92,800

16. 4%

5,100,000

6,100,000

402,800

12. 0%

130,200

9. 0%

256,800

17. 2%

6,100,000

7,100,000

522,800

12. 8%

220,200

9. 6%

428,800

18. 0%

7,100,000

8,100,000

650,800

13. 6%

316,200

10. 2%

608,800

18. 8%

8,100,000

9,100,000

786,800

14. 4%

418,200

10. 8%

796,800

19. 2%

9,100,000

10,100,000

930,800

15. 2%

526,200

11. 4%

998,880

19. 6%

Over $ 10,100,000

1,082,800

16. 0%

640,200

12. 0%

1,184,800

20. 0%

EFFECTIVE DATE: Upon passage and applicable to gifts made, and estates of those dying, on or after January 1, 2010.

60 — MILEAGE FOR WORKERS' COMPENSATION COMMISSIONERS

Starting April 1, 2010, the bill eliminates mileage reimbursements for workers' compensation commissioners for FY 10 and FY 11. It transfers to the General Fund for FY10 the savings that would otherwise accrue to another appropriated fund.

61-63 — WILDLIFE CONSERVATION ACCOUNT AND LICENSE PLATES

This bill re-establishes the Wildlife Conservation account as a separate, non-lapsing General Fund account. The 2009 state budget eliminated the account and transferred the revenue from the sale of Wildlife Conservation commemorative license plates to the General Fund.

This bill requires that $ 35 of the fees collected from the sale of wildlife conservation commemorative license plates, funds earned from marketing the plate's image on various items, any other designated funds, and any private donations for the account be deposited in it. The DEP commissioner must use the account for wildlife conservation, research, management, and acquiring wildlife habitat.

The bill requires that funds transferred from the Wildlife Conservation account to the General Fund before the bill's passage be sent back.

64-67 — GREENWAYS ACCOUNT

The bill restores the Greenways account as a separate, non-lapsing account within the General Fund instead of within the Conservation Fund. The 2009 state budget act eliminated the latter fund and the account. The bill requires that all fees collected from the sale of greenways commemorative license plates and from marketing the plate's image be deposited in the account, along with any private donations for it.

The bill requires that funds transferred from the Greenways account to the General Fund before the bill's passage be sent back.

67-80 — INCREASES IN MOTOR VEHICLE FINES

The bill increases fines for various motor vehicle and other violations (see Table 5). It also institutes a $ 100 fee for people with suspended licenses who apply for special work or education permits and makes a conforming change.

Table 5: Motor Vehicle Fine Increases

Bill

CGS

Description

Current

Law

The Bill

67

14-100a (c) and 51-164m (c)

Failure to wear seat belt

$ 15

$ 25

68

14-37a (a), 2010 CGS Supp.

Application fee for special work or education permits

0

100

69

51-164m (a) (c)

Minimum fine for speeding infractions changed to flat $ 90 fine

35

90

69

51-164m (e)

Fine for infractions for which no other fine is specified

35

90

70

51-164n(g)

Minimum fine for any motor vehicle infractions

35

50

71

14-13 (b)

Failure to carry registration or insurance card in vehicle

35, first offense;

50, subsequent offenses

50

72

14-17 (b)

Altering appearance of motor vehicle without changing registration

35

50

73

14-26 (c)

Failure to carry registration certificate of bus, taxi, school bus, or motor vehicle in livery on vehicle

35, first offense;

$ 35 to 50, subsequent offenses

50

74

14-36a (e)

Operating a motor vehicle in violation of a person's driver's license classification, first offense

35 to 50

50

75

14- 40a (e)

Operating a motorcycle in violation of the motorcycle endorsement, first offense

35 to 50

50

76

14-81 (b), 2010 CGS Supp.

Trailer braking system violations

35 to 50

50

77

14-145 (c)

Improper storage fee charge on vehicles removed from private property, first offense

35 to 50

50

78

14-164c (n)

Emissions systems inspection violations, first offense

35

50

79

14-223 (a)

Failure to stop motor vehicle when signaled

35, first offense;

35 to 50, subsequent offenses

50

80

14-285

Failure to equip non-motor vehicles with mirrors or reflectors when operated on highway

35-50

50

EFFECTIVE DATE: May 1, 2010

81-88 — HUNTING AND FISHING LICENSE FEE REDUCTIONS

The bill reduces fees for certain hunting and fishing licenses and permits as shown in Table 6 below.

Table 6: Hunting and Fishing License Fee Reductions

Bill

2010 CGS Supp.

Fee Description

Current Law

The Bill

81

26-27b

Migratory Bird Conservation Stamp

15

12

82

26-28

Resident firearms hunting license

28

17

82

26-28

Resident inland waters fishing license

40

24

82

26-28

One-day resident marine waters fishing license

15

5

82

26-28

Resident all waters fishing license

50

30

82

26-28

Resident combination inland waters and firearms hunting license

56

34

82

26-28

Resident combination marine waters sport fishing and firearms hunting license

50

25

82

26-28

Resident combination all-waters sport fishing and firearms hunting license

60

45

82

26-28

Resident combination all-waters sport fishing license and bow and arrow permit to hunt deer and small game

84

60

82

26-28

Resident firearms super sport license to fish in all waters and firearms hunt, firearms private land shotgun or rifle deer permit, and permit to hunt wild turkey during spring season on private land

116

75

82

26-28

Resident archery super sport license to fish in all waters, bow and arrow permit to hunt deer and small game, and permit to hunt wild turkey during spring season on private land

104

80

82

26-28

Resident trapping license

50

30

82

26-28

Resident junior trapping license fee for people under age 16

15

4

82

26-28

Junior firearms hunting license

15

4

82

26-28

Nonresident firearms hunting license

134

80

82

26-28

Nonresident inland waters fishing license

80

48

82

26-28

Nonresident inland waters fishing license for three consecutive days

32

19

83

26-37

Replacement hunting, trapping, fishing, or combination license

15

8

84

26-39

License to use a pack of 10 or more hounds or beagles to hunt foxes or rabbits

70

42

85

26-48a

Turkey permit

28

17

85

26-48a

Migratory game bird stamp

15

4

85

26-48a

Pheasant tags

28

17

85

26-48a

Salmon permit

56

34

85

26-48a

Permit to hunt wild turkey on state-owned or private land

28

17

86

26-86a

Resident firearm deer hunting permit

28

17

86

26-86a

Nonresident firearm deer hunting permit

100

60

87

26-86c

Resident bow and arrow deer and small game hunting permit

60

36

87

26-86c

Nonresident bow and arrow deer and small game hunting permit

200

120

87

26-86c

Permit for 12 to 16-year-olds to bow and arrow hunt deer and small game

26

16

88

26-142a

Resident license to take lobsters for personal use (not sale) using no more than 10 lobster pots, traps or similar devices or by skin or scuba diving or by hand

120

72

88

26-142a

Resident license to take lobster, fish, or crabs (other than blue crabs) for personal use or sale using more than 10 lobster pots or similar devices

190

180

88

26-142a

Nonresident license to take lobster , fish, or crabs (other than blue crabs) for personal use or sale using more than 10 lobster pots or similar devices

285

270

88

26-142a

Resident commercial license for taking lobster, crabs (other than blue crabs), squid, sea scallops and finfish for personal use or for sale, using more than ten lobster pots or any otter trawl, balloon trawl, beam trawl, sea scallop dredge or similar devices

285

270

88

26-142a

License to tend devices used to take American Shad

200

120

88

26-142a

License to take menhaden from marine waters for personal use (not sale) using a single gill net not more than 60 feet long

100

60

EFFECTIVE DATE: April 6, 2010 and applicable to all license and permit fees collected on or after that date.

89 — MERGER OF ECONOMIC DEVELOPMENT AGENCIES

By July 1, 2010, the bill requires that the following agencies be consolidated: (1) the Department of Economic and Community Development (DECD), (2) Connecticut Development Authority, and (3) Connecticut Innovations, Inc. It requires the merger to (1) eliminate at least three executive-level positions in DECD and (2) align the agencies' services and functions to save money.

90 — CARRYFORWARD FOR COMMON LICENSING/PERMIT SERVICE

The bill carries forward to FY 11 the unspent balance, minus $ 37,857, of an appropriation to OPM for licensing and permit fees and transfers it to the Department of Information Technology to implement a common licensing/permit issuance service for state agencies during FY 11.

91 — SAVINGS FROM ADDITIONAL FURLOUGH DAYS

The bill transfers to the General Fund for FY 10 any savings that would otherwise accrue to another appropriated fund from the required additional furlough days for nonunion state employees in FY 10 and FY 11 ( 32 above).

92 — REPEALER

Medically Necessary Definition Under Medicaid

The bill eliminates a requirement that DSS, by July 1, 2010, amend the definition of “medically necessary” services in its Medicaid regulations to reflect savings in the current biennial budget from reducing program administration inefficiencies while maintaining the quality of care provided to Medicaid beneficiaries.

It also eliminates a committee to (1) advise DSS on the amended definition and its implementation, (2) provide comment to DSS and the legislature on its impact, and (3) report annually to the governor and the Public Health, Human Services, and Appropriations committees on its findings and recommendations for three years beginning by January 1, 2010.