OLR Bill Analysis

SB 811 (File 655, as amended by Senate "A" and "B")*

AN ACT CONCERNING PARITY IN HOSPITAL SALES OVERSIGHT.

SUMMARY:

This bill includes numerous provisions affecting hospitals and health systems, health care providers, and health carriers (e.g., insurers and HMOs), as described in the section-by-section analysis below.

It requires the Connecticut Health Insurance Exchange to establish a consumer health information website with comparative price, quality, and related information.

It establishes a statewide health information exchange, to be overseen by the Department of Social Services (DSS), and sets deadlines for hospitals, clinical laboratories, and certain providers to connect to and participate in the exchange. Among other changes concerning health information technology, it establishes an advisory council to advise the DSS commissioner on various related matters.

With respect to hospitals and health systems, the bill:

1. places certain limits on allowable facility fees for outpatient services;

2. adds to the factors that the Department of Public Health's (DPH) Office of Health Care Access (OHCA) must consider when reviewing a certificate of need (CON) application for a hospital transfer of ownership;

3. sets certain requirements when OHCA places conditions on its approval of a CON application involving a hospital ownership transfer;

4. requires OHCA to hire an independent consultant as a post-transfer compliance reporter for three years after a hospital ownership transfer is completed; and

5. requires OHCA to conduct a cost and market impact review for hospital ownership transfers that considers factors related to the transacting parties' business and relative market positions.

Among other provisions concerning health care providers, the bill (1) requires them to give patients certain notices of health care costs, (2) creates notice requirements when providers refer a patient to an affiliated provider, and (3) expands what conduct by providers constitutes an unfair trade practice.

Regarding health carriers, among other things, the bill allows them to offer at least one health care plan with a tiered provider network. It also requires them to (1) provide insureds notice about covered benefits, the network status of health care providers, and surprise bills and (2) bill insureds at the in-network level for services if the services were emergency in nature or resulted in a surprise bill.

It requires each health carrier to maintain a website and use a phone application and toll-free telephone number allowing consumers to obtain information on in- and out-of-network costs, and generally prohibits carriers from charging more than the disclosed amounts. It also sets certain limits on the out-of-pocket costs insurers can collect for facility fees.

Among other things, the bill also:

1. narrows the current exemption from the CON requirement for a group practice of eight or more physicians transferring ownership to another group practice;

2. expands the membership of the state's Health Care Cabinet, requires it to convene a working group to study rising health care costs, and expands its duties to include setting statewide health care cost growth goals and reviewing provider price and insurance reimbursement rate variations, among other things;

3. requires DPH to report to the Public Health Committee on recommendations for eliminating CON approval requirements or creating an expedited approval process for certain health care facility transactions that currently require such approval; and

4. requires the chair of the Connecticut Health and Education Facilities Authority board of directors to study and report to the Public Health Committee on financing options for community hospitals to make certain improvements, such as purchasing medical equipment or updating information technology, among other things.

The bill also makes minor, technical, and conforming changes.

*Senate Amendment “A” replaces the underlying bill, which among other things, (1) extended to all hospital sales the current approval process that applies to hospital conversions to for-profit status and (2) required the public health commissioner and attorney general to weigh certain factors when deciding whether to place conditions on their approval of a hospital sale.

*Senate Amendment “B” makes a technical change.

EFFECTIVE DATE: Various; see below.

1 & 2 – CONSUMER HEALTH INFORMATION WEBSITE

The bill requires the Connecticut Health Insurance Exchange to establish and maintain a consumer health information website. The website must be designed to help consumers and institutional purchasers make informed decisions about health care and their choice of health care providers. It also must allow comparisons of health carrier reimbursement to providers.

The website must present information in a language and format understandable to the average consumer. The exchange must publicize the website.

EFFECTIVE DATE: Upon passage, except a conforming change is effective October 1, 2015.

Website Contents

Under the bill, the website must contain information comparing the quality, price, and cost of health care services. This must include, to the extent practicable:

1. comparative price and cost information for the most common referrals or prescribed services, categorized by payer and listed by health care provider;

2. comparative quality information for these services or service categories, listed by provider;

3. data on health care-associated infections and serious reportable events;

4. definitions of common health insurance and medical terms, as determined by the insurance commissioner (see 7), so consumers may compare health coverage and understand coverage terms;

5. a list of health care provider types, including primary care physicians, advanced practice registered nurses, and physician assistants, and the types of services each is authorized to provide;

6. factors consumers should consider when choosing an insurance product or provider group, including provider network, premium, cost-sharing, covered services, and tier information;

7. patient decision aids;

8. a list of provider services accessible to people with disabilities; and

9. descriptions of standard quality measures.

Data Submission and Reporting Requirements

The bill establishes several data submission and reporting requirements to collect data for the consumer website. The exchange must post all such information on the website.

The bill provides that all information the exchange collects, stores, and publishes under these provisions is subject to the federal Health Insurance Portability and Accountability Act (HIPAA).

Insurance and Public Health Commissioners. The bill requires the insurance and DPH commissioners, by October 1, 2015 and annually after that, to jointly report to the exchange and make available on their departments' websites the following information on health procedures in the state: (1) the 100 most frequent inpatient admissions and outpatient procedures and (2) the 25 most frequent surgical procedures and imaging procedures. The lists may include bundled episodes of care (i.e., all health care services related to the treatment).

The bill allows the exchange to expand this requirement to include more admissions and procedures.

Health Carriers. The bill requires health carriers, by January 1, 2016 and annually after that, to submit to the exchange:

1. the allowed amounts (i.e., maximum reimbursements) paid to in-network providers for each admission and procedure included in the commissioners' report (e.g., the 100 most frequent admissions) and

2. out-of-pocket costs for each such admission and procedure (i.e., unreimbursed costs such as deductibles, coinsurance, and copayments).

For this purpose, “health carriers” are insurers, HMOs, hospital or medical service corporations, or other entities delivering, issuing, renewing, amending, or continuing individual or group health insurance policies in Connecticut that cover (1) basic hospital expenses; (2) basic medical-surgical expenses; (3) major medical expenses; or (4) hospital or medical services, including coverage under an HMO plan.

Hospitals and Outpatient Surgical Facilities. The bill requires hospitals and outpatient surgical facilities, by January 1, 2016 and annually thereafter, to report to the exchange the following information for each admission and procedure in the commissioners' report described above:

1. the amount they charge patients if all charges are paid in full without a third party (e.g., a public or private insurer) paying any portion;

2. the average negotiated settlement on these charges;

3. the Medicaid reimbursement amount, including claims and pro rata supplement payments;

4. the Medicare reimbursement amount; and

5. the allowed amounts for the hospital's or facility's five largest carriers according to the previous year's patient volume, with the carriers' names and other identifying information redacted.

The bill prohibits a hospital or outpatient surgical facility from reporting information that may reasonably lead to the identification of specific patients.

DSS Commissioner. The bill requires the DSS commissioner to submit to the exchange all Medicaid data the exchange requests for the all-payer claims database (which the exchange administers).

Quality Measures

The bill requires the DPH commissioner, in consultation with the insurance commissioner, healthcare advocate, and director of the State Innovation Model Initiative program, to:

1. develop quality measures for carriers to include when informing patients about the costs of health care services and

2. determine quality measures to be reported by carriers and providers to the exchange.

In developing these measures, they must consider recommendations by the National Quality Forum's Measures Applications Partnership and the National Priorities Partnership (see BACKGROUND). They also must solicit information from, and involvement of, hospitals, physicians, carriers, and patient advocates.

2 & 3 – NOTICES TO PATIENTS

Providers

The bill requires all licensed health care providers, before any scheduled admission, procedure, or service that is not listed in the DPH and insurance commissioners' annual report described above, to determine whether the patient is insured. If the answer is yes, the provider must notify the patient, in writing, as to whether the provider is in-network under the patient's policy and provide the carrier's toll-free telephone number and website.

If the patient is uninsured or the provider is out-of-network, the provider must notify the patient in writing (1) of the actual charges for the admission, procedure, or service; (2) that the patient may be charged for unforeseen services that may arise, and is responsible for these charges; and (3) that if the provider is out-of-network, the admission, service, or procedure will likely be deemed out-of-network and applicable out-of-network rates will apply. The bill specifies that these provisions do not prevent a provider from charging for unforeseen services.

Before a scheduled admission, procedure, or service that is not listed in the commissioners' report, hospitals and outpatient surgical facilities must notify the patient, in addition to the information noted above, of (1) The Joint Commission's composite accountability rating and the Medicare compare hospital star rating for the hospital or facility, as applicable, and (2) the websites for The Joint Commission and the Medicare Hospital Compare tool where the patient may obtain information on the hospital or facility. (The Joint Commission is an independent, nonprofit organization that accredits and certifies many categories of health care organizations and programs in the U.S.)

In each case, the provider must give the notice before the date of the scheduled admission, procedure, or service, and at least two days after the appointment is made. If the appointment is made on the same day the admission, procedure or service is scheduled to take place, or if the patient arrives without a previously-scheduled appointment, the notice must be provided to the patient when he or she arrives.

If an out-of-network provider fails to give the patient the above required notices, the bill specifies that the patient is responsible only for the coinsurance, copayment, deductible, or other out-of-pocket expenses that would be required if the provider were an in-network provider. In such a case, the bill requires that provider to accept as reimbursement the in-network rate under the health insurance policy.

EFFECTIVE DATE: October 1, 2015

Hospitals and Outpatient Surgical Facilities: Procedures Listed in Commissioners' Report.

Under the bill, beginning January 1, 2016, hospitals and outpatient surgical facilities must provide written notice to patients within two business days after scheduling an admission or procedure included in the DPH and insurance commissioners' report described above (e.g., the 100 most frequent outpatient procedures). The notice must include the following information:

1. for uninsured patients, (a) the amount to be charged if all charges are paid in full without a third party paying any portion, including any facility fee, or (b) if the hospital or facility cannot predict the specific treatment or diagnostic code and is thus unable to provide a specific amount to be charged, the estimated maximum allowed amount or charge, including any facility fee;

2. the Medicare reimbursement amount;

3. for insured patients, the allowed amount, toll-free telephone number, and website of the patient's health carrier where the patient can obtain information on charges and out-of-pocket costs;

4. The Joint Commission's composite accountability rating and the Medicare compare hospital star rating for the hospital or facility, as applicable; and

5. the websites for The Joint Commission and the Medicare Hospital Compare tool where the patient may obtain information on the hospital or facility.

If the patient is insured and the hospital or facility is out-of-network, the notice must state that the admission, service, or procedure will likely be deemed out-of-network and applicable out-of-network rates will apply.

EFFECTIVE DATE: Upon passage

Plain Language on Bills and Benefit Statements

The bill requires providers and carriers to ensure that any billing statement or explanation of benefits they submit to a patient or insured is written in language understandable to an average reader.

EFFECTIVE DATE: October 1, 2015

4 – DISCLOSURE OF NEGOTIATED PRICING INFORMATION

On and after October 1, 2015, the bill prohibits contracts between providers and carriers from restricting the disclosure of negotiated pricing information, including information on out-of-pocket costs.

EFFECTIVE DATE: October 1, 2015

5 – CARRIER COSTS, WEBSITE, AND INFORMATION

On and after March 1, 2016, the bill requires each health carrier to maintain a website and begin using a mobile device application and toll-free telephone number that allow consumers to request and obtain information on in-network and out-of-network costs for health care procedures, services, and inpatient admissions.

The in-network information must include:

1. the allowed amount for at least the admissions and procedures reported to the exchange under the bill, for each provider in the state;

2. the allowed amount for prescribed drugs and durable medical equipment;

3. the estimated out-of-pocket costs (including any facility fees) that the consumer would be responsible for paying for these admissions or procedures that are medically necessary; and

4. data or other information on (a) quality measures for the provider; (b) patient satisfaction, if this information is available; (c) a list of in-network providers; (d) whether a provider is accepting new patients; and (e) languages spoken by health care providers.

On their websites, carriers must use the defined terms established by the insurance commissioner under the bill (see 7 below).

The bill generally prohibits carriers from requiring consumers to pay a higher amount for health care procedures, services, or inpatient admissions than the amounts disclosed to the consumer as set forth above. The carrier may impose additional cost-sharing requirements for related unforeseen services if (1) these requirements are disclosed in the benefit plan and (2) the carrier advised the consumer when providing the information on out-of-pocket costs that the amounts are estimates and the consumer's actual cost may vary due to the need for unforeseen services.

The bill requires each carrier, by July 1, 2016 and annually after that, to submit to the insurance commissioner a detailed description of:

1. how it communicates cost information to consumers, as required under the bill;

2. its marketing efforts, if any, to inform consumers of the information available under these provisions;

3. any consumer surveys the carrier has conducted to determine consumer satisfaction with how it communicates cost-sharing information; and

4. the tools it uses to provide cost-sharing information.

EFFECTIVE DATE: October 1, 2015

6 – NOTICE WHEN PROVIDER STOPS ACCEPTING INSURER

The bill requires providers to send written notice to the applicable carrier within 30 days after they stop accepting patients enrolled in an insurance plan.

EFFECTIVE DATE: October 1, 2015

7 – STANDARD TERMS

The bill requires the insurance commissioner to establish standard terms with definitions to be used by carriers and providers to comply with the provisions described above in sections 2, 3, and 5 to ensure consumers obtain accurate, relevant, and complete price information.

EFFECTIVE DATE: October 1, 2015

8 – CARRIERS TO PROVIDE CONSUMERS INFORMATION

The bill requires health insurers, HMOs, fraternal benefit societies, and hospital and medical service corporations (“entities”) that deliver, issue, renew, amend, or continue certain health insurance policies or plans in Connecticut to disclose specified information to consumers at enrollment and post the information on their websites. The requirement applies to policies and plans that cover (1) basic hospital expenses, (2) basic medical-surgical expenses, (3) major medical expenses, and (4) hospital and medical services.

Under the bill, the entities must disclose the following at enrollment for each applicable health insurance policy, in an easily readable and understandable format:

1. any coverage exclusions;

2. any restrictions on the use or quantity of a covered benefit, including prescription drugs;

3. a description of the deductible and other out-of-pocket expenses that apply to prescription drugs; and

4. the applicable copayment and coinsurance percentage for each covered benefit, including each covered prescription drug.

In addition, the entities must give consumers a way to accurately determine:

1. whether a prescription drug is covered under the policy's drug formulary (i.e., list of covered drugs);

2. the coinsurance, copayment, deductible, or other out-of-pocket expense applicable to a prescription drug;

3. whether a prescription drug is covered when a physician or clinic dispenses it;

4. whether a prescription drug requires preauthorization or the use of step therapy (i.e., a protocol establishing the sequence for prescribing drugs for a specific medical condition); and

5. whether specific health care providers, specialists, or hospitals are in the policy's provider network.

The bill requires the Connecticut Health Insurance Exchange (Access Health CT) to post links on its website to the entities' information for each qualified health plan offered or sold through the exchange.

The bill also requires the insurance commissioner to post links on the Insurance Department's website to any online tools or calculators available to help consumers compare and evaluate health insurance policies and plans. By law, the department must already post certain tools on its website, including the annual Consumer Report Card on Health Insurance Carriers in Connecticut.

EFFECTIVE DATE: January 1, 2016

9 – INSURANCE COMMISSIONER TO EVALUATE COMPLIANCE WITH THE AFFORDABLE CARE ACT

The bill requires the insurance commissioner to (1) within available appropriations, evaluate health insurers', HMOs', fraternal benefit societies', and hospital and medical service corporations' compliance with the federal Affordable Care Act (ACA) and (2) report annually to the Insurance and Real Estate Committee on her findings. It requires the entities to give the commissioner, upon request, information to help her evaluate their compliance.

Under the bill, the entities subject to the ACA must give the commissioner the following information for a specific health insurance policy or plan:

1. the benefits covered under each category of the essential health benefits package, as defined by the U.S. Health and Human Services secretary;

2. any coverage exclusions or restrictions on covered benefits, including prescription drug benefits;

3. any prescription drug formulary used, the tier structure of the formulary (tiers generally relate to the applicable copayments), and a list of each covered prescription drug and its tier placement;

4. the applicable coinsurance, copayment, deductible, or other out-of-pocket expense for each covered benefit; and

5. any other information the commissioner deems necessary to evaluate the entity's ACA compliance.

By law, the commissioner may adopt regulations to implement these provisions.

EFFECTIVE DATE: January 1, 2016

10, 12-15 – SURPRISE BILLS, BILLS FOR EMERGENCY SERVICES, AND UNFAIR BILLING PRACTICES

10 – Emergency Services

The bill prohibits health carriers from requiring prior authorization for emergency services. It also prohibits health carriers from charging a copayment, coinsurance, deductible, or other out-of-pocket expense for emergency services performed by an out-of-network health care provider that is greater than that charged when performed by an in-network provider.

The bill requires health carriers to reimburse out-of-network providers who perform emergency services for insureds the greatest of the: (1) amount the health care plan would pay if the services were rendered by an in-network provider; (2) usual, customary, and reasonable rate as determined by the health carrier; or (3) amount Medicare reimburses for those services.

Under the bill, “health carriers” includes health insurers, HMOs, fraternal benefit societies, hospital and medical service corporations, and other entities that issue health care plans in Connecticut. “Emergency services” are medical screenings to evaluate an emergency condition and examinations and treatment to stabilize the patient.

10 – Surprise Bills

Under the bill, if an insured receives a surprise bill, the insured will only be required to pay the coinsurance, copayment, deductible, or other out-of-pocket expense that would apply if the services had been rendered by an in-network provider. A health carrier must reimburse an out-of-network provider for the services at the in-network rate under the plan, unless they agree otherwise.

Under the bill, a “surprise bill” is a bill for non-emergency health care services received by an insured for services rendered by an out-of-network provider, where:

1. an in-network provider was unavailable when services were being rendered,

2. an out-of-network provider rendered the services without telling the insured that he or she was out-of-network and that out-of-network rates would apply, or

3. unforeseen services were rendered by an out-of-network provider at an in-network facility during a service or procedure that was (a) performed by an in-network provider or (b) previously approved by the health carrier.

“Surprise bill” also means a bill for non-emergency services where an in-network provider referred an insured to an out-of-network provider without the insured's written consent acknowledging the referral could result in costs not covered by the health plan.

The bill specifies that a bill for services is not a surprise bill if an in-network provider is available but an insured knowingly elects to receive services from an out-of-network provider.

10 & 12 – Surprise Bill and Network Status Notification

The bill requires a health carrier to include a description of a surprise bill (1) in the insurance policy, certificate of coverage, or handbook given to a covered person and (2) prominently on its website.

The bill also requires each health carrier to tell a covered person, or his or her health care professional, when the person or professional requests a prospective or concurrent benefit review;

1. the professional's network status under the person's health benefit plan;

1. the amount the health carrier will reimburse the professional; and

2. how that amount compares to the usual, customary, and reasonable charge, as determined by the federal Centers for Medicare and Medicaid Services.

Under the bill, if an out-of-network provider renders services to an insured and the health carrier did not inform the insured of the provider's network status if required, the health carrier is prohibited from imposing a coinsurance, copayment, deductible, or other out-of-pocket expense that is more than what would be imposed if an in-network provider rendered services.

13 – Notification of Provider Termination

By law, a managed care organization (MCO) (e.g., insurer or HMO that issues managed care plans) must give each plan enrollee a list of providers available under the plan. Under current law, an MCO must give enrollees notice, as soon as possible, of his or her primary care physician's termination or withdrawal from the plan.

The bill instead requires an MCO to give each enrollee notice as soon as possible but at least within 30 days after the termination or withdrawal of any provider who was available under the plan. The notice must be in writing or through the Internet at the enrollee's option.

14 & 15 – Unfair Billing Practices by Health Care Providers

The bill expands what constitutes an unfair trade practice (see BACKGROUND) by a health care provider. Under current law, it is an unfair trade practice for a health care provider to request payment from a managed care plan enrollee for covered services, except for a copayment or deductible.

The bill instead makes it an unfair trade practice for a health care provider to request payment from a health care plan enrollee, except for a copayment, deductible, coinsurance, or other out-of-pocket expense, for:

1. covered health care services or facility fees,

1. covered emergency services rendered by an out-of-network provider, or

2. a surprise bill.

The bill also makes it an unfair trade practice for a health care provider to report to a credit reporting agency an enrollee's failure to pay a bill for the above listed items when a health carrier has primary responsibility for paying. Under current law, it is an unfair trade practice to report to a credit reporting agency an enrollee's failure to pay a bill for medical services that an MCO has primary responsibility for paying.

The bill requires contracts between HMOs and participating providers to reflect what constitutes an unfair trade practice, as described above. It also makes technical and conforming changes.

EFFECTIVE DATE: January 1, 2016

11 – NOTICE UPON REFERRALS

Under the bill, if a provider refers a patient to an affiliated provider, the provider must notify the patient, in writing, that the providers are affiliated. This notice must also (1) inform the patient that he or she is not required to see the provider to whom he or she was referred and that the patient has a right to seek care from a provider the patient chooses and (2) provide the patient with the website and toll-free telephone number of the patient's health carrier to obtain information on in-network providers and estimated out-of-pocket costs.

The bill defines “affiliated” for this purpose as:

1. a relationship between two or more providers that permits them to negotiate jointly, or as a member of the same group, with third parties over rates for professional medical services or

2. a joint venture, collaboration, or agreement between two or more entities that permits (a) coordination of professional medical services, (b) monitoring and control or modification of the use of such services, or (c) the referral of patients for such services.

EFFECTIVE DATE: October 1, 2015

16 & 17 – FACILITY FEES

Limits on Allowable Fees

By law, a “facility fee” is any fee a hospital or health system charges or bills for outpatient hospital services provided in a hospital-based facility that is (1) intended to compensate the hospital or health system for its operational expenses and (2) separate from the provider's professional fee.

Except as noted below, on and after October 1, 2015, the bill places certain limits on facility fees. It prohibits hospitals, health systems, and hospital-based facilities from collecting a facility fee for outpatient services that (1) use a current procedural terminology evaluation and management code and (2) are provided at a facility not on a hospital campus. For uninsured patients, it prohibits hospitals, health systems, or hospital-based facilities from collecting a facility fee that exceeds the Medicare facility fee rate. A violation is an unfair trade practice.

If an insurance contract in effect on October 1, 2015 provides reimbursement for facility fees that are prohibited by these provisions, the hospital or other entity may continue to collect reimbursement from insurers for these fees until the contract expires.

EFFECTIVE DATE: Upon passage

Billing Statement Notice

The bill requires each billing statement that includes a facility fee to:

1. clearly identify the fee as a facility fee that is in addition to, or separate from, the provider's professional fee, if any;

2. provide the comparable Medicare facility fee reimbursement rate for the same service;

3. include a statement that the fee is intended to cover the hospital's or health system's operational expenses;

4. inform the patient that his or her financial liability might have been less if the services had been provided at a facility not owned or operated by the hospital or health system; and

5. include notice of the patient's right to request a reduction in the facility fee or any portion of the bill and a telephone number that the patient may use to make this request.

These requirements do not apply to billing statements for Medicare or Medicaid patients or those receiving services under a workers' compensation plan.

EFFECTIVE DATE: Upon passage

Notice of Transaction Resulting in Hospital-Based Facility; Stay on Collecting Facility Fees

Under the bill, if a transaction materially changes the business or corporate structure of a physician group practice and results in the establishment of a hospital-based facility at which facility fees will likely be billed, the hospital or health system purchasing the practice must notify each patient the practice served over the previous three years. The purchaser must send the notice by first class mail, within 30 days after the transaction.

The notice must include the following:

1. a statement that the purchased facility is now a hospital-based facility and is part of a hospital or health system;

1. the purchaser's name, business address, and telephone number;

2. a statement that the hospital-based facility bills, or is likely to bill, patients a facility fee that may be in addition to, and separate from, any provider professional fees;

3. a statement that the patient's actual financial liability will depend on the medical services provided him or her;

4. an explanation that the patient may incur greater financial liability than if the facility were not hospital-based;

5. the estimated facility fee amount or range of amounts the facility may bill or an example of the average facility fee it bills for its most common services; and

6. a statement that, before seeking services at the facility, an insured patient should contact his or her insurer for additional information on hospital-based facility fees, including any potential financial liability for the patient.

Some of these requirements are similar to existing notice requirements for facilities that already charge facility fees.

The purchaser also must provide a copy of this notice to OHCA, which must post the notice on its website.

The bill prohibits a hospital, health system, or hospital-based facility from collecting a facility fee for services provided at a purchased facility subject to these notice provisions from the transaction date until at least 30 days after the required notice is mailed to the patient or a copy is filed with OHCA, whichever is later. A violation is an unfair trade practice.

EFFECTIVE DATE: Upon passage

Form of Written Notices

Existing law sets certain notice requirements for hospitals or health systems that charge facility fees, and requires notices to patients to be in plain language and in a form reasonably understandable to someone without special knowledge of these fees. The bill extends this requirement to the (1) billing statement notice and notices following certain group practice acquisitions as described above and (2) other existing notice requirements (such as required signs about potentially greater financial liability due to facility fees, compared to facilities that are not hospital-based).

EFFECTIVE DATE: Upon passage

Annual Reporting

Beginning by July 1, 2016, the bill requires each hospital and health system to annually report to the DPH commissioner on the facility fees it charged or billed the prior year at hospital-based facilities outside a hospital campus. The commissioner must publish the reported information or post a link to the information on OHCA's website.

Each report must include:

1. the name and location of each such facility that the hospital or health system owns or operates and that provides services for which a facility fee is charged or billed;

1. the number of patient visits at each such facility for which it charged a facility fee;

2. the number, total amount, and range of allowable facility fees paid at each facility by Medicare, Medicaid, and private insurance policies;

3. the amount of the hospital's or health system's facility fee revenue from these facilities, per facility and in the aggregate;

4. a description of the ten procedures or services that generated the most facility fee revenue and, for each such procedure or service, the total revenue derived from these fees; and

5. the top ten procedures for which facility fees are charged, based on patient volume.

EFFECTIVE DATE: Upon passage

17 – Insurance Copayments and Deductibles

The bill prohibits health insurers and similar entities that reimburse a hospital, health system, or hospital-based facility for facility fees for outpatient services provided off-site from a hospital campus, from imposing additional copayments for these fees. If an insured person has not satisfied his or her deductible, the hospital, health system, or hospital-based facility may not collect from the person a facility fee exceeding the agreed-upon reimbursement rate under that contract.

These provisions apply to health insurers, HMOs, or other entities delivering, issuing, renewing, amending, or continuing individual or group health insurance policies or health benefit plans on or after January 1, 2016, 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. The provisions apply to reimbursement agreements under contracts entered, renewed, or amended between these entities and a hospital, health system, or hospital-based facility on or after October 1, 2015. Due to the federal Employee Retirement Income Security Act (ERISA), state insurance benefit mandates do not apply to self-insured benefit plans.

EFFECTIVE DATE: October 1, 2015

18 & 19 – TIERED PROVIDER NETWORKS

The bill allows certain entities that offer health insurance policies to offer plans with a tiered provider network. A tiered provider network (“tiered network”) must have different cost-sharing rates for different provider tiers, and rewards insureds and enrollees with lower copayments, deductibles, or other out-of-pocket expenses for choosing providers in certain tiers.

The bill applies to health insurers, health care centers, hospital service corporations, medical service corporations, or any other entity that delivers, issues, renews, amends, or continues an individual or group health insurance policy in Connecticut that covers (1) basic hospital expenses; (2) basic medical-surgical expenses; (3) major medical expenses; or (4) hospital or medical services, including coverage under an HMO plan.

EFFECTIVE DATE: October 1, 2015

Tiered Network Requirements

A tiered network plan must (1) only include variations on cost-sharing between provider tiers that are reasonable in relation to the premiums charged and (2) provide adequate access to covered services.

Reclassifying Tiers

Under the bill, insurers and other entities may, only once a year, (1) reclassify a health care provider's tier placement or (2) determine a health care provider's participation in a tiered network. But, they may reclassify a provider from a higher cost tier to a lower cost tier or add new providers to its tiered network at any time.

An insurer or other entity that reclassifies a provider's tier placement during the plan year must notify affected insureds and enrollees at least 30 days before the change takes effect.

Public Notice

The bill requires each insurer and other entity that offers a tiered network plan to post information about the plan on its website. The post must include a current list of health care providers participating in the plan, how the providers were selected, and each participating provider's tier.

Regulations and Exchange Requirements

The bill (1) allows the insurance commissioner to adopt regulations to implement the tiered network provisions and (2) requires the exchange to encourage health carriers to offer, and offer through the exchange, tiered network plans.

20 – SEPARATE NEGOTIATION OF HOSPITAL CONTRACTS

The bill requires each hospital, at the request of a health insurance company, health care center, or other entity providing health care benefits, to negotiate reimbursement rates separately when negotiating rates (1) on a fee-for-service basis or (2) based on bundled services per diagnosis, condition, procedure, or other standardized bundles of service. Under the bill, a hospital must (1) negotiate separately with such an insurer or other entity, even if any hospitals are commonly owned and (2) negotiate for health care services provided by a hospital at a hospital-based facility located on the hospital campus separately from outpatient health care services provided by hospital-affiliated providers at outpatient facilities, health care providers' offices, or other hospital-based facilities located off-site from the hospital.

EFFECTIVE DATE: October 1, 2015

21 – SITE-NEUTRAL BILLING REIMBURSEMENT POLICIES IN PROVIDER CONTRACTS

The bill requires each health insurer, HMO, hospital service corporation, medical service corporation, preferred provider network, or other entity that contracts with health care providers to include in each contract entered into, renewed, or amended on or after July 1, 2016 (1) site-neutral reimbursement provisions for certain outpatient health care services and (2) a conspicuous statement that the contract complies with the law's site-neutral reimbursement policies requirement.

Site-Neutral Reimbursement Provisions

The site-neutral reimbursement provisions apply to outpatient health care services that use a current procedural terminology evaluation and management code and are provided off-site from a hospital campus. Under the bill, reimbursements (1) made on a fee-for-service basis or (2) based on bundled services per diagnosis, condition, procedure or other standardized bundle of service, must be the same as those provided for such outpatient health care services in the same geographic region, as determined by the insurance commissioner, regardless of the employer or affiliation of a health care provider.

EFFECTIVE DATE: October 1, 2015

22 & 24 – HEALTH CARE CABINET

The bill renames the “Sustinet Health Care Cabinet” the “Health Care Cabinet” to conform to current practice and expands its membership and duties. It also makes related technical and conforming changes.

By law, the cabinet is within the Office of the Lieutenant Governor and advises the governor on the development of an integrated health care system for Connecticut.

Membership

The cabinet currently consists of 28 appointed members and ex-officio voting and non-voting members. Beginning July 1, 2015, the bill adds the following three members:

1. the director of the State Innovation Model Initiative Program Management Office, or his designee, as an ex-officio voting member and

2. one behavioral health provider and one health economist with experience in health care payment models, each serving for three years and appointed by the governor.

As under existing law, subsequent cabinet terms begin on August 1 of the year appointed and last for four years. If an appointing authority does not make an appointment within 90 days after a vacancy occurs, the cabinet must appoint a member by a majority vote. The bill specifies that it does not affect the terms of the cabinet's existing members, who include various state officials and industry representatives.

Under existing law, unchanged by the bill, the lieutenant governor serves as the cabinet's chairperson.

Setting Health Care Cost Growth Goals

The bill requires the cabinet to set the state's health care cost growth goals and consider recommendations for (1) establishing annual health care cost growth benchmarks for average growth in total health care spending in the next calendar year and (2) publishing them on a website the cabinet maintains.

The cabinet must also consider recommendations to establish procedures to help health care providers that exceed these benchmarks improve efficiency and reduce cost growth, including implementing performance improvement plans. These procedures would apply only to providers who exceed the benchmarks (1) without corresponding quality improvements or (2) for efficiency-related causes.

Reviewing Price and Insurance Reimbursement Rate Variations

Under the bill, the cabinet must collect and analyze data necessary to monitor variation in health care providers' prices and insurance reimbursement rates. It must analyze the data by payer and provider type and:

1. identify factors contributing to price and reimbursement variation;

2. assess the impact of the variation on health care costs, insurance premiums, and access to care; and

3. recommend policy changes to reduce provider price variations that are unrelated to actual cost or quality differences, or that unnecessarily contribute to health care cost inflation.

Additional Duties

Additionally, the bill requires the cabinet to:

1. review the effectiveness of delivery system reforms and other efforts to enhance competition and improve cost effectiveness and quality of care, including those implemented by state agencies (it must already do this for efforts to control health care costs);

1. review cost containment models in other states, including Maryland, Massachusetts, Oregon, Rhode Island, Vermont, and Washington, to identify successful practices and programs that may be relevant for and implemented in Connecticut; and

2. collect and analyze data it deems necessary to make recommendations to enhance the transparency of provider costs and prices, as well as business organizations and affiliations.

The bill eliminates the requirement that the cabinet jointly evaluate, with the chief executive officer of the Connecticut Health Insurance Exchange, the feasibility of implementing a basic health program option allowed under the ACA.

Existing law, unchanged by the bill, also requires the cabinet to:

1. evaluate the means of ensuring an adequate health care workforce in Connecticut;

1. identify short- and long-range opportunities, issues, and gaps created by the ACA; and

2. advise the governor on the (a) design, implementation, actionable objectives, and evaluation of state and federal health care policies, priorities, and objectives relating to the state's efforts to improve health care access and (b) quality of such care and the affordability and sustainability of the state's health care system.

Report

Starting by January 1, 2016, the bill requires the cabinet to annually report on its activities to the governor and Public Health Committee.

23 – HEALTH CARE CABINET WORKING GROUP ON RISING HEALTH CARE COSTS

The bill requires the Health Care Cabinet to convene a working group by July 15, 2015 to study rising health care costs, including (1) increases in prices charged for health care services, (2) variation in provider charges, and (3) the impact of these prices and variations on health insurance reimbursement rates. The working group must examine policies to (1) enhance health care market competition, fairness, and cost-effectiveness and (2) reduce disparities in provider charges and insurance reimbursement rates.

EFFECTIVE DATE: July 1, 2015

Study

Under the bill, the working group must examine variations in (1) provider charges within similar provider groups and for services of comparable acuity, quality, and complexity and (2) the volume of care provided by those with low and high levels of relative provider charges or health status adjusted total medical expenses.

Additionally, the group must examine the correlation between:

1. provider charges and (a) quality of care; (b) patient acuity; (c) payer mix; (d) unique services provided, including specialty teaching and community services; and (e) providers' operational costs, including administrative and management costs;

2. for hospitals, their charges and status as disproportionate share hospitals, specialty hospitals, pediatric specialty hospitals, or academic teaching hospitals;

3. provider charges and market share, horizontal consolidation and vertical integration, and referral policies and patterns; and

4. facility fees and total medical spending, consumer out-of-pocket expenses, and price variation for services of comparable acuity, quality, and complexity.

The bill authorizes the working group to hold information hearings, consult with the attorney general, and solicit information from, and the participation of, parties likely affected by its study. Such parties include hospitals with a high proportion of Medicaid and Medicare reimbursements, primary care providers, community health centers, health insurers, third-party administrators, employers, Health Care Cost Containment Committee representatives, and organizations representing consumers and the uninsured.

Confidentiality

Under the bill, the cabinet chairperson may request relevant information and materials from health insurers, providers, or third-party administrators. Any information or materials they submit or disclose to the working group are confidential and exempt from disclosure under the Freedom of Information Act (FOIA). But the bill allows the working group to disclose in its report data that (1) is not otherwise protected by law; (2) has identifying information removed; and (3) does not disclose the names of any health care provider, insurer, payer, or individual.

Report

The working group must report to the legislature on its study findings and recommendations to (1) reduce variation in provider prices, (2) promote the use of high-quality health care providers with low total medical expenses and prices, and (3) mitigate the impact of facility fees on consumer out-of-pocket expenses and total medical spending.

Under the bill, these recommendations may include (1) expanding or modifying site-neutral reimbursements (see 21) and limitations on facility fees and (2) establishing a reasonable maximum provider price variation limit and state-wide median rate for certain services and procedures.

The working group must submit its report to the legislature by January 1, 2016 unless it notifies the House speaker, Senate president pro tempore, and House and Senate minority leaders that it needs to extend the deadline. The notice must identify an extended submission date, which cannot be later than January 1, 2017. Additionally, the working group must submit a preliminary report by January 1, 2016.

The working group terminates on January 1, 2016 or, if it extends the final reporting date, on that date, or January 1, 2017, whichever is later.

25 – HEALTH INFORMATION ACCESS AND BLOCKING

The bill provides that electronic health records, to the fullest extent practicable, must (1) follow and be accessible to the patient and (2) be shared and exchanged in a timely manner with providers of the patient's choice.

The bill makes “health information blocking” an unfair trade practice, and specifies that a hospital, health system, or seller of electronic health record systems that engages in health information blocking is subject to civil penalties under the unfair trade practices law. It defines health information blocking as knowingly:

1. interfering with, or engaging in business practices or other conduct reasonably likely to interfere with, the ability of patients, providers, or other authorized persons to access, exchange, or use electronic health records or

2. using an electronic health record system to (a) steer patient referrals to affiliated providers, (b) prevent referrals to non-affiliated providers, or (c) otherwise unreasonably interfere with referrals to non-affiliated providers.

For this purpose, an affiliated provider is a one that is:

1. employed by a hospital or health system,

2. under a professional services agreement with a hospital or health system that allows the hospital or health system to bill on the provider's behalf, or

3. a clinical faculty member of a medical school that is affiliated with a hospital or health system in a manner that allows the hospital or health system to bill on the faculty member's behalf.

A seller of electronic health records systems is any person or entity that directly, or indirectly through an employee, agent, independent contractor, or other person, sells, leases, or offers to sell or lease such a system or a license or right to use such a system.

The bill also makes it an unfair trade practice for a seller of an electronic health record system to make a false, misleading, or deceptive representation that such a system is certified by the federal Office of the National Coordinator for Health Information Technology.

In addition, the bill provides that (1) the attorney general must enforce these provisions and (2) these provisions must not be construed as limiting the power or authority of the state, the attorney general, or the consumer protection commissioner to seek administrative, legal, or equitable relief as provided by any state statute or the common law.

EFFECTIVE DATE: October 1, 2015

26 & 27 – STATEWIDE HEALTH INFORMATION EXCHANGE

26 – Overview and Goals

The bill establishes a Statewide Health Information Exchange, and gives DSS administrative authority over it. The exchange's purposes include (1) empowering consumers to make effective health care decisions; (2) promoting patient-centered care; (3) improving health care quality, safety, and value; (4) reducing waste and duplication of services; (5) supporting clinical decision-making; (6) keeping confidential health information secure; and (7) making progress toward the state's public health goals.

Under the bill, the exchange's goals include:

1. allowing real-time, secure access to patient health information and complete medical records across all provider settings;

2. providing patients with secure electronic access to their health information, and allowing them to access their own health information free of charge;

3. supporting care coordination through real-time alerts and timely access to clinical information;

4. reducing costs associated with preventable readmissions, duplicative testing, and medical errors;

5. promoting the highest level of interoperability;

6. meeting all state and federal privacy and security requirements; and

7. supporting public health reporting, quality improvement, academic research, health care delivery, and payment reform through data aggregation and analytics.

The bill requires all contracts and agreements entered into by the state, or on the state's behalf, on health information technology or the exchange of health information to (1) be consistent with these goals and (2) use contractors, vendors, and other partners with a demonstrated commitment to them.

EFFECTIVE DATE: Upon passage

26 – Request for Proposals (RFP)

Except as noted below, the bill requires the DSS commissioner, in consultation with the Office of Policy and Management (OPM) secretary, to issue an RFP for eligible nonprofit organizations to develop, manage, and operate the exchange. The commissioner must do so when the state bond commission approves legislatively-authorized bond funds to establish the exchange.

To be eligible, a nonprofit organization must have at least three years' experience operating a (1) statewide health information exchange in another state or (2) regional exchange serving a population of at least one million. This other exchange must:

1. enable the exchange of patient health information among providers, patients, and other authorized users regardless of location, payment source, or technology;

2. include behavioral health and substance abuse treatment information, with proper consent;

3. support transitions of care and care coordination through real-time provider alerts and access to clinical information;

4. allow health information to follow each patient and patients to access and manage their health data; and

5. have successfully reduced costs associated with preventable readmissions, duplicative testing, or medical errors.

To be eligible, an organization must also (1) have a high level of transparency in its governance, decision-making, and operations; (2) be able to provide consulting to ensure effective governance; (3) be regulated or administratively overseen by a state agency; and (4) have enough staff and appropriate expertise and experience to carry out the exchange's administrative, operational, and financial responsibilities.

The RFP must require broad local governance committed to the exchange's successful development and implementation. That governance must include all stakeholders, including a representative of DSS, hospitals, physicians, behavioral health providers, long-term care providers, health insurers, employers, patients, and academic or medical research institutions.

The RFP must require the organization to complete a health information exchange plan and business plan. The health information exchange plan must:

1. improve upon existing infrastructure and coordinate with existing programs,

2. ensure patient information privacy and security at all levels and at least comply with all applicable state and federal privacy and security laws,

3. focus on maximizing utility with minimal cost and burden on stakeholders,

4. promote the highest level of interoperability and use of national information technology standards, and

5. align with the existing statewide health information technology plan and data standards established by the DSS commissioner (see 30).

The business plan must include (1) a collaborative process that engages all stakeholders in developing recommended funding streams sufficient to support the exchange's annual operating expenses and (2) the development of services and products to support the exchange's long-term sustainability.

Exception to RFP Requirement. The bill establishes a procedure for the DSS commissioner to enter into a contract to establish the exchange without issuing an RFP. To do so, by December 1, 2015, he must submit a plan to the OPM secretary to establish an exchange consistent with the provisions noted above on its goals and purposes. He must submit the plan with the advice and consent of the State Health Information Technology Advisory Council established by the bill.

If the OPM secretary approves the plan, the commissioner may implement the plan and enter a contract or agreement to do so.

EFFECTIVE DATE: Upon passage

27 – Required Participation

Under the bill, within a year after the exchange's launch, each hospital and clinical laboratory must (1) maintain an electronic health record system capable of connecting to and participating in the exchange and (2) apply to begin the process of connecting to and participating in it.

Within two years after the exchange's launch, each health care provider with such a system capable of connecting to and participating in the exchange must apply to begin the process to do so.

EFFECTIVE DATE: Upon passage

28, 31, & 44 – STATEWIDE HEALTH INFORMATION TECHNOLOGY PLAN AND DSS RESPONSIBILITIES

Statewide Health Information Technology Plan

By law, the DSS commissioner must implement and periodically revise the statewide health information technology plan. In doing so, current law requires him to consult with the DPH and mental health and addiction services (DMHAS) commissioners. The bill instead requires him to consult with the State Health Information Technology Advisory Council established by the bill (see 30 below; the council includes several members, including the DPH and DMHAS commissioners or their designees).

The bill broadens the plan's applicability. It requires the plan to include electronic data standards to facilitate the development of a statewide, integrated electronic health information system for state-licensed providers and institutions, instead of just state-funded providers and institutions as under current law.

The bill eliminates the requirement that the plan include pilot programs for health information exchange and the projected costs and sources of funding for these programs.

Other DSS Duties

Within existing resources, the bill requires the DSS commissioner, in consultation with the State Health Information Technology Advisory Council, to:

1. oversee the development and implementation of the Statewide Health Information Exchange;

2. coordinate the state's health information technology and health information exchange efforts to ensure consistent and collaborative cross-agency planning and implementation;

3. serve as the state liaison to, and collaborate with, the Statewide Health Information Exchange to ensure consistency between the plan and the exchange and to support the state's health information technology and exchange goals; and

4. make recommendations to the legislature on health information technology and health information exchange policy and legislation.

EFFECTIVE DATE: October 1, 2015

29 – HOSPITAL ELECTRONIC HEALTH RECORDS SYSTEMS

The bill requires each licensed hospital, to the fullest extent practicable, to use its electronic health records system to enable bidirectional connectivity and the secure exchange of patient electronic health records between the hospital and any other licensed providers who:

1. have a system that can exchange these records, including at least laboratory and diagnostic tests, radiological and other diagnostic imaging, continuity of care documents, and discharge notifications and documents, and

2. provide health care services to a patient whose records are being exchanged.

For this purpose, an exchange of records is secure if it complies with all state and federal privacy requirements, including HIPAA.

The bill requires hospitals to use any hardware, software, bandwidth, or other program functions or settings already purchased or available to the hospital to support this records and information exchange.

Under the bill, a hospital is deemed to have satisfied these requirements if it connects to and actively participates in the Statewide Health Information Exchange.

The bill specifies that the above provisions do not require a hospital to pay for any new or additional information technology, equipment, hardware, or software, including interfaces, when needed to enable this exchange.

The bill also provides that a hospital's failure to take all reasonable steps to comply with these provisions constitutes evidence of health information blocking (see 25).

EFFECTIVE DATE: October 1, 2015

30 – STATE HEALTH INFORMATION TECHNOLOGY ADVISORY COUNCIL

Purpose

The bill creates a 28-member State Health Information Technology Advisory Council. The council's purpose is to advise the DSS commissioner on developing:

1. priorities and policy recommendations to advance the state's health information technology and health information exchange efforts and goals;

2. and implementing the statewide health information technology plan and standards and the Statewide Health Information Exchange; and

3. appropriate governance, oversight, and accountability measures to ensure success in achieving the state's health information technology and exchange goals.

The council also has a role in reviewing and commenting on certain DSS federal grant applications (see below).

EFFECTIVE DATE: July 1, 2015

Membership and Procedure

The membership includes the following individuals, or their designees:

1. the DSS, DMHAS, DPH, Children and Families, Correction, and Developmental Services commissioners;

2. the state's Chief Information Officer;

3. the Connecticut Health Insurance Exchange's chief executive officer;

4. the State Innovation Model Initiative program management office's director;

5. the UConn Health Center's chief information officer;

6. the Healthcare Advocate; and

7. the Senate president pro tempore, House speaker, and Senate and House minority leaders (their designees may be legislators).

The council also includes 13 appointed members, as shown in Table 1.

Table 1: Appointed Council Members

Appointing Authority

Member Qualifications

Governor

- a representative of a multi-hospital health system

- a representative of the health insurance industry

- an expert in health information technology

- a health care consumer or consumer advocate

- an employee or trustee of an employee benefit fund established under specified federal law

Senate president pro tempore

- a representative of a federally qualified health center

- a behavioral health services provider

House speaker

- a representative of the business community

- a home health care services provider

Senate majority leader

- a representative of an independent community hospital

House majority leader

- a physician who provides services in a multispecialty group and who is not employed by a hospital

Senate minority leader

- a primary care physician who provides services in a small independent practice

House minority leader

- an expert in health care analytics and quality analysis

Under the bill, all council appointments must be made by July 1, 2015. The council has two chairpersons: the DSS commissioner and one the council elects who is not a state official. The members' terms are coterminous with those of the appointing authority. The appropriate appointing authority fills any vacancies. Any appointed members may be legislators.

The DSS commissioner must schedule the first council meeting, to be held no later than August 1, 2015. The council must meet at least monthly. A majority of the members constitutes a quorum.

The bill provides that council members are not paid for their service, except for reimbursement for necessary expenses incurred in performing their duties.

Reporting Requirement

The bill requires the council to report quarterly to the DSS commissioner and the Human Services and Public Health committees, with the first report due January 1, 2016. The reports must address:

1. the development and implementation of the statewide health information technology plan and standards;

2. the establishment of the Statewide Health Information Exchange and progress in meeting the exchange goals; and

3. recommendations for policy, regulatory, and legislative changes and other initiatives to promote the state's health information technology and exchange goals.

Review of DSS Federal Grant Applications

Under the bill, before the DSS commissioner submits an application, proposal, planning document, or other request for federal grants, matching funds, or other federal support for health information technology or health information exchange, he must present the document to the council for review and comment.

At least 30 days before submitting the application or other document to the federal government, he also must submit it, with a summary of the council's comments and recommendations, if any, to the Appropriations, Human Services, Insurance, and Public Health committees.

32 – HOSPITAL AFFILIATIONS AND GROUP MEDICAL PRACTICE TRANSACTIONS

Definition

The bill expands the definition of “affiliation” to include a physician network joint venture or any collaboration or agreement between two or more entities that allows (1) medical service coordination; (2) medical service utilization monitoring, control, or modification; or (3) patient referrals. Under existing law, an “affiliation” also includes the formulation of a relationship between two or more entities that allows them to negotiate jointly with third parties over medical service rates.

The bill exempts from the definition mergers between hospitals, hospital systems, or health care providers.

Notification of Hospital Affiliations

The bill requires the parties to a transaction that results in an affiliation between one hospital or hospital system and another hospital or hospital system to notify the attorney general in writing at least 30 days before the transaction takes effect. The notice must identify each party and describe the affiliation as of the notice date, including:

1. a description of the nature of the proposed relationship among the parties;

2. the names of the business entities that will provide services after the affiliation takes effect, including the addresses for each location where the services will be provided;

3. a description of the services to be provided at each location; and

4. the primary service area to be served by each location.

Notification of Group Practice Transactions

The bill requires parties engaging in any transaction resulting in a material change to a group practice to notify the DPH commissioner in writing at least 30 days after the transaction takes effect. Existing law already requires the parties to notify the attorney general in writing at least 30 days before the transaction's effective date.

Under existing law and the bill, the notice must describe the material change in a similar manner as required for hospital affiliations described above. The bill requires the commissioner to post a link to the notice on the department's website.

Report

Starting by December 31, 2015, the bill requires each hospital and hospital system to annually file a written report with the attorney general and DPH commissioner describing its affiliation with any other hospital or hospital system. The report must include:

1. the names and addresses of each party to the affiliation;

1. a description of the nature of the relationship among the parties;

2. the names of the business entities that provide services as part of the affiliation, including the addresses for each location where services are provided;

3. a description of the services provided at each location; and

4. the primary service area to be served by each location.

Existing law already requires hospitals and hospital systems with affiliated group practices, and unaffiliated group practices of 30 or more physicians, to report annually to the attorney general and DPH commissioner in a similar manner.

EFFECTIVE DATE: October 1, 2015

33, 35-37, & 40 – CERTIFICATE OF NEED FOR HOSPITAL SALES

By law, hospital transfers of ownership are subject to certificate of need (CON) review by OHCA. Transfers of non-profit hospitals to for-profit purchasers (i.e., “hospital conversions”) are subject to an enhanced review process, requiring approval from both DPH and the attorney general. As part of that conversion process, the DPH commissioner must determine that the transaction is justified under the CON law.

33 & 37 – Review Factors

The bill adds to the factors that OHCA must consider when reviewing a CON application for a hospital transfer of ownership, regardless of whether it is a hospital conversion. In addition to the current factors, it requires OHCA to consider and make written findings on:

1. whether the applicant fairly considered alternative proposals or offers in light of maintaining provider diversity and consumer choice and access to affordable quality care for the affected community (i.e., a municipality where the hospital is located or whose inhabitants are regularly served by the hospital);

2. whether the transacting parties submitted a plan showing how the new hospital will provide health care services for the first five years following the transfer of ownership, including any new services or consolidation, reduction, elimination, or expansion of existing services;

3. whether the parties submitted a plan accounting for employment and workforce retraining needs in light of the hospital's post-transfer business and service plan; and

4. whether the parties' officers, directors, board members, or senior managers (a) are expected to receive future contracts or any salary, severance, stock offering, or other current or deferred financial gain as a result of, or in relation to, the proposed transfer, or hold a position with either party or an affiliated entity, and (b) if so, have fully disclosed the terms and conditions of this financial gain or position.

Under current law, the DPH commissioner must deny a hospital conversion application unless she finds, among other things, that the affected community would be assured of continued access to high quality affordable health care after accounting for any proposed change affecting hospital staffing. The bill instead requires OHCA to deny a CON application for any hospital transfer of ownership (not just a conversion) unless the commissioner finds that the affected community would be assured of such continued access after accounting for any:

1. proposed change affecting hospital staffing;

1. consolidation in the hospital and health care market that may reduce provider diversity, consumer choice, and access to care; and

2. likely increases in health care prices or total health care spending in the state that may make care less affordable.

EFFECTIVE DATE: July 1, 2015

33 & 40 – Conditions on Approval

The bill specifically allows OHCA to place conditions on the approval of a CON application involving a hospital ownership transfer, consistent with the OHCA law. Before doing so, OHCA must weigh the conditions' value in promoting the law's purposes against the conditions' individual and cumulative burden on the parties and the new hospital. Each condition must be reasonably tailored in time and scope.

The bill:

1. requires OHCA to include a concise statement of the legal and factual basis for each condition and refer to the provision it is intended to promote and

1. gives the parties or the new hospital the right to petition OHCA for an amendment to, or relief from, any condition based on changed circumstances, hardship, or other good cause.

By law, the DPH commissioner and attorney general, when approving an application under the hospital conversion law, may place any conditions on their approval that relate to the law's purposes. The bill specifies that any such conditions may be in addition to any placed under the CON law. It also requires any conditions the commissioner imposes under the conversion law to meet the bill's guidelines and above criteria that apply to conditions under the CON law.

EFFECTIVE DATE: July 1, 2015, except the provisions specific to hospital conversions are effective October 1, 2015.

35 & 36 – Public Hearing Requirement

The bill requires, rather than allows, OHCA to hold a public hearing on a CON application for a hospital ownership transfer. The hearing must be held in the municipality where the hospital is located.

For hospital conversions, current law requires the purchaser and hospital to hold a hearing on the CON determination letter that they must submit to begin the review process. Under the bill, a public hearing OHCA holds on the CON application satisfies this requirement. Existing law, unchanged by the bill, also requires the attorney general and DPH commissioner to hold a second hearing later in the process (CGS 19a-486e).

EFFECTIVE DATE: July 1, 2015

33 – POST-TRANSFER COMPLIANCE REPORTER

Duties

Under the bill, if OHCA approves a CON for a hospital's ownership transfer, the office must hire an independent consultant to serve as a post-transfer compliance reporter for three years after the transfer is completed. OHCA must do this if a transacting party is (1) an in-or out-of-state hospital system, (2) an in- or out-of-state hospital that is a member of a hospital system, or (3) any person organized or operating for profit.

The reporter must, at least quarterly:

1. meet with representatives of the new hospital and members of the affected community and

2. report to OHCA on (a) the new hospitals' efforts to comply with any conditions OHCA placed on the CON approval and its plans for future compliance and (b) community benefits and uncompensated care the new hospital provided.

The bill requires the purchaser to provide the reporter access to its records and facilities so that the reporter may carry out his or her duties.

Public Hearing

The bill requires the purchaser to hold a public hearing at least annually during the reporting period in the municipality where the new hospital is located to allow the public to review and comment on the reporter's reports and findings.

Performance Improvement Plan

If the reporter determines that the purchaser has breached a condition of the CON approval, the bill allows OHCA to implement a performance improvement plan to (1) remedy the conditions the reporter identifies and (2) extend the reporting period for up to one year after OHCA determines that these conditions have been resolved.

The office must implement the plan in consultation with the purchaser, reporter, and other interested parties it deems appropriate.

Cost

The bill requires the purchaser to pay the cost of hiring the reporter in an amount OHCA determines, up to $200,000 annually.

EFFECTIVE DATE: July 1, 2015

34 & 40 – COST AND MARKET IMPACT REVIEW

The bill requires OHCA to conduct a cost and market impact review (CMIR) of CON applications that propose to transfer a hospital's ownership, if a transacting party is (1) an in- or out-of-state hospital system, (2) an in- or out-of-state hospital that is a hospital system member, or (3) any person organized or operating for profit.

Notice Requirements

The bill requires OHCA to initiate a CMIR by notifying the transacting parties within 21 days after receiving a properly filed CON application. The notice must include a (1) description of the basis for the CMIR and (2) request for information and documents.

Within 30 days after receiving the notice, the transacting parties must submit a written response to OHCA that includes any information or documents OHCA requested concerning the ownership transfer.

Investigative Powers

The bill allows OHCA to conduct any inquiry, investigation, or hearing needed to complete a CMIR. This includes issuing subpoenas; requiring the production of books, records or documents; administering oaths; and taking testimony under oath. If a person disobeys a subpoena or refuses to answer a pertinent question or produce a requested document, the DPH commissioner or her agent may apply to Superior Court for compliance.

Confidentiality

Under the bill, all nonpublic information and documents OHCA obtains while conducting the CMIR are confidential and exempt from disclosure under FOIA. OHCA cannot disclose the information or documents without the consent of the person who produced them, except in a preliminary or final report if OHCA:

1. believes disclosure is in the public interest and

1. takes into account privacy, trade secret, or anti-competitive considerations.

CMIR Factors

The bill requires the CMIR to examine factors related to the transacting parties' businesses and relative market positions, including such things as the transacting parties':

1. size and market share within their (a) primary service areas, by major service category and (b) dispersed service areas;

1. prices for services, including their relative prices compared to other health care providers for the same services in the same market;

2. health status adjusted total medical expense, including a comparison to similar health care providers;

3. service quality, including patient experience;

4. cost and cost trends compared to statewide total health care expenditures;

5. methods used to attract patient volume and recruit or acquire health care professionals or facilities;

6. individual roles in serving at-risk, underserved, and government-payer populations, including those with behavioral, substance use disorder, and mental health conditions within their primary and dispersed service areas; and

7. individual roles in providing low or negative margin services within their primary and dispersed service areas.

The CMIR must also examine:

1. availability and accessibility of services similar to those each transacting party provides, or proposes to provide, within their primary and dispersed service areas;

1. the proposed ownership transfer's impact on competing options for health care services delivery within each transacting party's primary and dispersed service areas, including the impact on existing providers;

2. consumer concerns, including complaints or other allegations that a transacting party engaged in unfair methods of competition or unfair or deceptive acts or practices; and

3. any other factors OHCA determines are in the public interest.

Preliminary Report

The bill requires OHCA to make factual findings and issue a preliminary CMIR report (1) within 90 days after it certifies that the transacting parties substantially complied with any request for information or documents or (2) by a later date mutually agreed to by OHCA and the transacting parties.

The preliminary report must at least indicate whether a transacting party currently or, after the proposed ownership transfer, will likely:

1. have a dominant market share for the services it provides and

1. (a) charge prices for services that are materially higher than the median prices charged by all other providers of the same services in the same market or (b) has a health status adjusted total medical expense that is materially higher than the median total medical expense for all other providers of the same service in the same market.

The bill permits the transacting parties to respond in writing to the preliminary report within 30 days after it is issued.

Final Report

The bill requires OHCA to issue its final CMIR within 60 days after issuing the preliminary report. OHCA must refer the final report to the attorney general if the proposed ownership transfer meets the preliminary report criteria on market share, cost, and expense listed above. The attorney general may then investigate whether the transacting parties engaged in or, after the proposed ownership transfer, are expected to engage in (1) unfair methods of competition; (2) anti-competitive behavior; (3) other conduct that violates Connecticut's Antitrust Act or Unfair Trade Practices Act (CUTPA); or (4) any other state or federal law.

The attorney general may take appropriate legal action to protect consumers in the health care market. Under the bill, the final report may be evidence in any such action.

The bill subjects the transacting parties to direct enforcement of CUTPA by the attorney general. It specifies that it does not modify, impair, or supersede any state antitrust law or limit the attorney general's authority to (1) take any legally authorized action against a transacting party or (2) protect health care market consumers by any law.

Prohibition on Ownership Transfers

The bill specifies that the CMIR requirements cannot prohibit a hospital ownership transfer, but the proposed transfer must not be completed:

1. less than 30 days after OHCA issues a final CMIR report, if the CMIR is required or

1. before the court issues a final judgment on any pending legal action brought by the attorney general relating to unfair trade practices, antitrust, or unfair competition.

Hospital Conversion Decision Timeframe

By law, the attorney general and DPH commissioner must decide on a hospital conversion application within 120 days after it is complete, unless the deadline is extended by mutual agreement or tolled for certain legal action.  The bill also allows the commissioner to extend the deadline pending completion of the CMIR.

Independent Consultant

The bill requires OHCA to hire an independent consultant to conduct the CMIR. The consultant must have expertise in the economic analysis of the health care market and health care costs and prices. OHCA must submit the bills for the consultant's services to the hospital purchaser who must pay the bills, up to $200,000 per application, within 30 days after receiving them.

The bill specifies that any agreement executed for independent consultant services is not subject to state laws on (1) the department of administrative services, (2) consultant and personal service agreements, and (3) methods for awarding state contracts.

Additionally, it prohibits an OHCA employee who directly oversees or assists in conducting a CMIR from participating in factual deliberations or issuing a preliminary or final decision on a CON application for a hospital ownership transfer that is the subject of the CMIR.

Regulations

The bill requires the DPH commissioner to adopt regulations on CMIRs including definitions of (1) “dispersed service area,” (2) “health status adjusted total medical expense,” (3) “major service category,” (4) “relative prices,” (5) “total health care spending,” and (6) “health care services.”

The commissioner may implement policies and procedures while adopting them in regulation, if she publishes notice on the DPH website and eRegulations system within 20 days after implementation. The policies and procedures are valid until the regulations take effect.

EFFECTIVE DATE: October 1, 2015

33, 35, 41, & 42 – CERTIFICATE OF NEED FOR LARGE GROUP PRACTICE SALES

Current law requires a CON for a transfer of ownership of a group practice of eight or more full-time equivalent physicians, meeting certain conditions, to any entity other than a physician or group of physicians. For such transfers when an offer was made in response to a request for proposal or similar voluntary offer for sale, there are certain differences in the general CON process (e.g., a presumption of approval for the application).

The bill labels this group of eight or more physicians as a “large group practice” and makes conforming changes. It also narrows the current exemption from the CON requirement. Under the bill, the exemption applies to transfers to (1) a physician or (2) a group of two or more physicians who are legally organized in a partnership, professional corporation, or limited liability company formed to render professional services and who are not employed by or an affiliate of a hospital, medical foundation, insurance company, or similar entity.

EFFECTIVE DATE: July 1, 2015

38 – HEALTH SYSTEM ANNUAL REPORTING

Under current law, general and children's hospitals must annually report to OHCA certain information about salaries and related entities, with reports due each February 28. The bill extends this requirement to health systems and applies an existing definition of that term. Under that definition, a “health system” is a business entity consisting of a parent corporation of one or more hospitals affiliated through governance, membership, or other means.

Under existing law, these reports must include:

1. salaries and fringe benefits for the 10 highest paid positions;

2. the name of each hospital-related corporation, joint venture, partnership, and subsidiary; and

3. salaries paid to hospital employees by each such entity and by the hospital to employees of related corporations (the bill specifies that the reports must include salaries paid to health system employees by the related entities).

By law, DPH must adopt regulations providing for the collection of additional data and information about the operations of hospitals' parent corporations or certain entities affiliated with hospitals (CGS 19a-644(b)).

EFFECTIVE DATE: July 1, 2015

39 – DPH REPORT ON CON REQUIREMENTS

The bill requires the DPH commissioner, by January 1, 2016, to report to the Public Health Committee on the OHCA's CON requirements for health care facilities. The report must include recommendations to (1) eliminate CON approval requirements or (2) create an expedited approval process for certain services, equipment purchases, ownership transfers, or other matters that currently require CON approval, including:

1. ancillary capital spending not related to direct patient care or services;

1. replacing outdated or damaged equipment that was originally purchased with OHCA's approval;

2. repairing facilities damaged by floods, storms, or other unexpected occurrences; and

3. facility improvements needed to comply with building codes or other legal requirements.

Additionally, the report must include recommendations on an expedited automatic approval of certain CON applications if OHCA fails to notify the applicant within 30 days of its intent to review the application.

EFFECTIVE DATE: July 1, 2015

43 – STUDY ON FINANCING OPTIONS FOR HOSPITAL IMPROVEMENTS

The bill requires the chairperson of the Connecticut Health and Education Facilities Authority (CHEFA) board, in consultation with the economic and community development commissioner to study financing options for community hospitals to purchase medical equipment; update information technology; renovate, purchase, or build new health care facilities; and engage in other activities to:

1. improve community hospitals' ability to effectively serve the community, including (a) enhancing care coordination, (b) advancing integrated health services, (c) promoting evidence-based care practices and efficient health care delivery, and (d) providing culturally and linguistically appropriate services to the community;

1. advance hospitals' adoption of health information technology, including interoperable electronic health records systems and clinical support tools;

2. help hospitals and other providers to electronically exchange health information to ensure continuity of care among all providers;

3. support infrastructure investments in health care facilities necessary for (a) transitioning to alternative payment methods, including investments in data analysis functions and performance management programs to promote price transparency for health care services and (b) aggregating and analyzing clinical data to facilitate appropriate, evidenced-based intervention and care management practices, especially for vulnerable populations and people with complex health care needs;

4. improve health care affordability and quality by increasing coordination between hospitals and community-based providers and organizations;

5. improve access to health care services, including behavioral health services; and

6. ensure staff-to-patient ratios are sufficient to deliver high quality health care.

The CHEFA chairperson must report by January 1, 2016 to the Public Health and Commerce committees on the study. The report must include, to the extent practicable, a capital needs assessment for community hospitals, and recommendations on:

1. financing methods for improvements currently needed by Connecticut community hospitals to fulfill the purposes listed above, including (a) using bond funds and alternative funding methods and (b) establishing a program that provides low- or no-interest loans to community hospitals;

1. other state programs that may be used to support community hospital improvements; and

2. legislative or regulatory changes needed to enable community hospitals to make the improvements listed above.

Under the bill, a “community hospital” means a hospital that (1) is not a teaching hospital and has 25 or fewer full-time equivalent interns or residents for every 100 inpatient beds; (2) charges less than the state median price for services; and (3) is a nonprofit and (4) is not part of a hospital system.

EFFECTIVE DATE: Upon passage

BACKGROUND

2 – National Quality Forum and National Priorities Partnership

The National Quality Forum (NQF) is a nonprofit membership organization that works to improve health care quality management and reporting. The National Priorities Partnership, convened by the NQF, is a partnership of over 50 organizations that, among other things, provides input to the federal Health and Human Services secretary on the National Quality Strategy (a blueprint to improve health care quality).

Connecticut Unfair Trade Practices Act (CUTPA)

CUTPA prohibits businesses from engaging in unfair and deceptive acts or practices. It allows the consumer protection commissioner to issue regulations defining what constitutes an unfair trade practice, investigate complaints, issue cease and desist orders, order restitution in cases involving less than $5,000, enter into consent agreements, ask the attorney general to seek injunctive relief, and accept voluntary statements of compliance. It also allows individuals to sue. Courts may issue restraining orders; award actual and punitive damages, costs, and reasonable attorney's fees; and impose civil penalties of up to $5,000 for willful violations and $25,000 for violation of a restraining order.

Certificate of Need (CON)

Under the CON law, health care facilities must generally receive OHCA's approval when (1) establishing new facilities or services, (2) changing ownership, (3) acquiring certain equipment, or (4) terminating certain services. The law sets forth the criteria the office must consider.

COMMITTEE ACTION

Public Health Committee

Joint Favorable

Yea

27

Nay

0

(03/27/2015)

Judiciary Committee

Joint Favorable

Yea

27

Nay

15

(04/27/2015)

Appropriations Committee

Joint Favorable

Yea

53

Nay

2

(05/11/2015)

Finance, Revenue and Bonding Committee

Joint Favorable

Yea

28

Nay

15

(05/19/2015)