OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http://www.cga.ct.gov/ofa

HB-6431

AN ACT CONCERNING COOPERATIVE HEALTH CARE ARRANGEMENTS.

AMENDMENT

LCO No.: 6564

File Copy No.: 217

House Calendar No.: 160


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 14 $

FY 15 $

Office of the Healthcare Advocate

IF - Cost

555,000

555,000

State Comptroller - Fringe Benefits1

IF - Cost

157,157

157,157

Resources of the General Fund

GF - Revenue Gain

Uncertain

Uncertain

Municipal Impact: None

Explanation

The amendment results in an estimated annual cost of $712,157 for four attorneys, one paralegal and one health care analyst in the Office of the Healthcare Advocate (OHA) to certify and oversee authorized cooperative health care arrangements. This cost includes $455,000 in Personal Services, $25,000 in Other Expenses, $75,000 in consultant fees and $157,157 to provide fringe benefits. These employees would be necessary to review these arrangements and issue written decisions approving or denying applications for certificates of public advantage, which authorize health care providers to engage in conduct that could lessen health care competition. Hearings may be necessary to obtain background information. In addition, the OHA must actively supervise authorized cooperative health care arrangements and review annual reports submitted by parties to authorized cooperative health care arrangements. It is anticipated that in excess of ten cooperative arrangements may occur.

The amendment results in a potential revenue gain of less than $50,000 as it requires managed care companies to negotiate in good faith with health care providers holding a certificate of public advantage issued by the OHA. A company that fails to do so faces a daily $25,000 civil fine and is in violation of the state's Unfair Trade Practices Act.

Additionally, the amendment requires the OHA to charge each prospective health care collaborative an administrative fee of $1,000 to determine whether such cooperative is authorized to negotiate. The OHA is also required to set fees in amounts necessary to determine whether an agreement between a collaborative and a health plan shell be approved or disapproved. As it is at the discretion of the OHA to set the amount of these fees, it is uncertain what revenue will be generated.

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 The fringe benefit costs for most state employees are budgeted centrally in accounts administered by the Comptroller. The estimated active employee fringe benefit cost associated with most personnel changes is 34.54% of payroll in FY 14 and FY 15.