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As Amended by Senate "A" (LCO 6045)

Senate Calendar No. : 165

OFA Fiscal Note

State Impact:

Agency Affected


FY 12 $

FY 13 $

Comptroller Misc. Accounts (Fringe Benefits)

GF & TF - Cost



Note: GF=General Fund and TF= Transportation Fund

Municipal Impact:



FY 12 $

FY 13 $

Various Municipalities





As of July 1, 2010, the State Employees' Health plan went self insured. Pursuant to current federal law, the state's self-insured health plan would be exempt from state health insurance benefit mandates. However, in previous self-funded arrangements the state has traditionally adopted all state mandates. To the extent that the state continues this practice of voluntary mandate adoption, the following impact would be anticipated.

Subsection (a) of the bill requires the American College of Gastroenterology to consult with the American College of Radiology. Current law requires the American College of Gastroenterology to consult with the American Cancer Society. This provision is not anticipated to result in a fiscal impact to the state or municipalities.

Subsection (b) of the bill prohibits policies from imposing any cost-sharing for additional colonoscopies ordered by a physician for an insured in a single policy year. This mandate will cost the state employee health plan approximately $176,500 annually. The state health plan currently provides coverage for in-network colorectal cancer screening, with no copayments and no limit as to the number of colorectal cancer screening tests, provided they are medically necessary. The state Point of Service Plan (POS) currently requires a 20% copayment for out-of-network colorectal cancer screening, and the state Point of Entry Plan (POE) does not cover this benefit out-of-network.

The bill would prevent the POS plan from charging the 20% copayment for any out-of-network follow-up tests, and results in the projected annual cost stipulated above.

The bill prohibits imposing a copayment for colorectal cancer screening; however it does not require out-of-network coverage of these services. Therefore the mandate would not require the POE plans to begin offering this benefit out-of-network.

The bill's provisions may increase costs to certain fully insured, municipal plans which require copayments for follow-up colonoscopies. The coverage requirements may result in increased premium costs when municipalities enter into new health insurance contracts after January 1, 2012. To the extent that follow-up screenings may be considered a preventative service pursuant to the Patient Protection and Affordable Care Act (PPACA), all non-grandfathered municipal plans are already required to cover screenings without cost-sharing1,2. Due to federal law, municipalities with self-insured health plans are exempt from state health insurance benefit mandates.

The state employee health plan and many municipal health plans are recognized as “grandfathered” health plans under the PPACA. It is unclear what effect the adoption of certain health mandates will have on the grandfathered status of the state employee health plan or grandfathered municipal plans under PPACA3.

Senate “A” adds subsection (b) to the bill, prohibiting insurers from imposing out-of-pocket expenses for any additional colonoscopies ordered by a physician for an insured in a single policy year and results in the fiscal impact described herein.

The Out Years

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

The federal health care reform act requires that, effective January 1, 2014; all states must establish a health benefit exchange, which will offer qualified plans that must include a federally defined essential benefits package. While states are allowed to mandate benefits in excess of the basic package, the federal law appears to require the state to pay the cost of any such additional mandated benefits. The extent of these costs will depend on the mandates included in the federal essential benefit package, which have not yet been determined. However, neither the agency nor mechanism for the state to pay these costs has been established.

The preceding Fiscal Impact statement is prepared for the benefit of the members of the General Assembly, solely for the purposes of information, summarization and explanation and does not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

1 Grandfathered plans include most group insurance plans and some individual health plans created or purchased on or before March 23, 2010. Pursuant to the PPACA, all health plans, including those with grandfathered status are required to provide the following as of September 23, 2010: 1) No lifetime limits on coverage, 2) No rescissions of coverage when individual gets sick or has previously made an unintentional error on an application, and 3) Extension of parents' coverage to young adults until age 26. (www. healthcare. gov )

2 Pursuant to the PPACA, as of September 23, 2010, all non-grandfathered health plans are required to cover preventative services rated A or B by the U. S. Preventive Services Task Force, with no cost sharing.

3 According to the PPACA, compared to the plans' policies as of March 23, 2010, grandfathered plans who make any of the following changes within a certain margin may lose their grandfathered status: 1) Significantly cut or reduce benefits, 2) Raise co-insurance charges, 3) Significantly raise co-payment charges, 4) Significantly raise deductibles, 5) Significantly lower employer contributions, and 5) Add or tighten annual limits on what insurer pays. (www. healthcare. gov)