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General Assembly Governor's Bill No. 5018
February Session, 2020
LCO No. 628
Referred to Committee on INSURANCE AND REAL ESTATE
Introduced by:
REP. ARESIMOWICZ, 30
th
Dist.
REP. RITTER M., 1
st
Dist.
SEN. LOONEY, 11
th
Dist.
SEN. DUFF, 25
th
Dist.
AN ACT CONCERNING HE ALTH CARE COST GROWT H IN
CONNECTICUT.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. Section 19a-754a of the 2020 supplement to the general 1
statutes is repealed and the following is substituted in lieu thereof 2
(Effective July 1, 2020): 3
(a) There is established an Office of Health Strategy, which shall be 4
within the Department of Public Health for administrative purposes 5
only. The department head of said office shall be the executive director 6
of the Office of Health Strategy, who shall be appointed by the Governor 7
in accordance with the provisions of sections 4-5 to 4-8, inclusive, with 8
the powers and duties therein prescribed. 9
(b) The Office of Health Strategy shall be responsible for the 10
following: 11 Governor's Bill No. 5018
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(1) Developing and implementing a comprehensive and cohesive 12
health care vision for the state, including, but not limited to, a 13
coordinated state health care cost containment strategy; 14
(2) Promoting effective health planning and the provision of quality 15
health care in the state in a manner that ensures access for all state 16
residents to cost-effective health care services, avoids the duplication of 17
such services and improves the availability and financial stability of 18
such services throughout the state; 19
(3) [Directing] (A) Developing, innovating, directing and overseeing 20
health care delivery and payment models in the state that reduce health 21
care cost growth and improve the quality of patient care, including, but 22
not limited to, the State Innovation Model Initiative and related 23
successor initiatives, (B) setting an annual health care cost growth 24
benchmark and primary care target pursuant to section 3 of this act, (C) 25
developing and adopting health care quality benchmarks pursuant to 26
section 8 of this act, (D) enhancing the transparency of health care 27
entities, as defined in section 2 of this act, (E) monitoring the 28
development of accountable care organizations and patient-centered 29
medical homes in the state, and (F) monitoring the adoption of 30
alternative payment methodologies in the state; 31
(4) (A) Coordinating the state's health information technology 32
initiatives, (B) seeking funding for and overseeing the planning, 33
implementation and development of policies and procedures for the 34
administration of the all-payer claims database program established 35
under section 19a-775a, (C) establishing and maintaining a consumer 36
health information Internet web site under section 19a-755b, and (D) 37
designating an unclassified individual from the office to perform the 38
duties of a health information technology officer as set forth in sections 39
17b-59f and 17b-59g; 40
(5) Directing and overseeing the Health Systems Planning Unit 41
established under section 19a-612 and all of its duties and 42
responsibilities as set forth in chapter 368z; and 43 Governor's Bill No. 5018
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(6) Convening forums and meetings with state government and 44
external stakeholders, including, but not limited to, the Connecticut 45
Health Insurance Exchange, to discuss health care issues designed to 46
develop effective health care cost and quality strategies. 47
(c) The Office of Health Strategy shall constitute a successor, in 48
accordance with the provisions of sections 4-38d, 4-38e and 4-39, to the 49
functions, powers and duties of the following: 50
(1) The Connecticut Health Insurance Exchange, established 51
pursuant to section 38a-1081, relating to the administration of the all-52
payer claims database pursuant to section 19a-755a; and 53
(2) The Office of the Lieutenant Governor, relating to the (A) 54
development of a chronic disease plan pursuant to section 19a-6q, (B) 55
housing, chairing and staffing of the Health Care Cabinet pursuant to 56
section 19a-725, and (C) (i) appointment of the health information 57
technology officer, and (ii) oversight of the duties of such health 58
information technology officer as set forth in sections 17b-59f and 17b-59
59g. 60
(d) Any order or regulation of the entities listed in subdivisions (1) 61
and (2) of subsection (c) of this section that is in force on July 1, 2018, 62
shall continue in force and effect as an order or regulation until 63
amended, repealed or superseded pursuant to law. 64
Sec. 2. (NEW) (Effective July 1, 2020) For the purposes of this section 65
and sections 3 to 9, inclusive, of this act: 66
(1) "Device manufacturer" means a manufacturer that manufactures 67
a device for which annual sales in this state exceed ten million dollars; 68
(2) "Drug manufacturer" means the manufacturer of a drug that is: 69
(A) Included in information and data submitted by a health carrier 70
pursuant to section 38a-479qqq of the general statutes; (B) studied or 71
listed pursuant to subsection (c) or (d) of section 19a-754b of the general 72
statutes; or (C) in a therapeutic class of drugs that the executive director 73 Governor's Bill No. 5018
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determines, through public or private reports, has had a substantial 74
impact on prescription drug expenditures, net of rebates, as a 75
percentage of total health care expenditures; 76
(3) "Executive director" means the executive director of the office; 77
(4) "Health care cost growth benchmark" means the annual 78
benchmark established pursuant to section 3 of this act; 79
(5) "Health care entity" means an accountable care organization, 80
ambulatory surgical center, clinic, hospital or provider organization in 81
this state, other than a health care provider contracting unit that, for a 82
given calendar year: (A) Has a patient panel of not more than ten 83
thousand patients; or (B) represents health care providers who 84
collectively receive less than twenty million dollars in net patient service 85
revenue from health carriers; 86
(6) "Health care facility" has the same meaning as provided in section 87
19a-630 of the general statutes; 88
(7) "Health care quality benchmark" means an annual benchmark 89
established pursuant to section 8 of this act; 90
(8) "Health care provider" has the same meaning as provided in 91
section 19a-17b of the general statutes; 92
(9) "Health status adjusted total medical expenses" means: (A) The 93
total cost of care for the patient population of a provider organization 94
with at least thirty-six thousand member months for a given calendar 95
year, which cost (i) is calculated for such year on the basis of the allowed 96
claims for all categories of medical expenses and all nonclaims 97
payments for such year, including, but not limited to, cost-sharing 98
payments, adjusted by health status and expressed on a per member, 99
per month basis for all members in this state, (ii) is reported to the 100
executive director separately for Medicaid, Medicare and 101
nongovernment health plans for such year, and (iii) discloses the health 102
adjustment risk score and the version of the risk adjustment tool used to 103 Governor's Bill No. 5018
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calculate such score for such provider organization for such year; and 104
(B) the total aggregate medical expenses for all health care providers and 105
provider organizations with fewer than thirty-six thousand member 106
months for a given calendar year; 107
(10) "Hospital outpatient department" has the same meaning as such 108
term is used in Section 413.65 of Title 42 of the Code of Federal 109
Regulations, as amended from time to time; 110
(11) "Institutional provider" means any health care provider that 111
provides skilled nursing facility services, or acute, chronic or 112
rehabilitation hospital services, in this state; 113
(12) "Office" means the Office of Health Strategy established under 114
section 19a-754a of the general statutes, as amended by this act; 115
(13) "Other entity" means a device manufacturer, drug manufacturer 116
or pharmacy benefits manager; 117
(14) "Payer" means a payer that, during a given calendar year, pays 118
health care providers for health care services on behalf of, or pharmacies 119
for prescription drugs dispensed to, more than ten thousand individuals 120
in this state; 121
(15) "Pharmacy benefits manager" has the same meaning as provided 122
in section 38a-479ooo of the general statutes; 123
(16) "Primary care target" means the annual target established 124
pursuant to section 3 of this act; 125
(17) "Provider organization" means a group of persons, including, but 126
not limited to, an accountable care organization, association, business 127
trust, corporation, independent practice association, partnership, 128
physician organization, physician-hospital organization or provider 129
network, that is in the business of health care delivery or management 130
in this state and represents a health care provider in contracting with a 131
payer for payment for health care services; and 132 Governor's Bill No. 5018
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(18) "Total health care expenditures" means the per capita sum of all 133
health care expenditures in this state from public and private sources 134
for a given calendar year, including: (A) All categories of medical 135
expenses and all nonclaims payments to health care providers and 136
health care facilities, as included in the health status adjusted total 137
medical expenses reported, if any, by the executive director pursuant to 138
subsection (c) of section 5 of this act; (B) all patient cost-sharing 139
amounts, including, but not limited to, deductibles and copayments; (C) 140
the net cost of nongovernment health insurance; (D) prescription drug 141
expenditures net of rebates and discounts; (E) device manufacturer 142
expenditures net of rebates and discounts; and (F) any other 143
expenditures specified by the executive director. 144
Sec. 3. (NEW) (Effective July 1, 2020) (a) Not later than December 1, 145
2020, and annually thereafter, the executive director shall establish a 146
health care cost growth benchmark for the calendar year next 147
succeeding. Such health care cost growth benchmark shall address the 148
average growth in total health care expenditures across all payers and 149
populations in this state for such year, and the executive director shall 150
include within such health care cost growth benchmark a primary care 151
target to ensure primary care spending as a percentage of total health 152
care expenditures reaches a goal of ten per cent for the calendar year 153
beginning January 1, 2025. 154
(b) In establishing each health care cost growth benchmark pursuant 155
to subsection (a) of this section, the executive director shall, at a 156
minimum: 157
(1) Consider any change in the consumer price index for all urban 158
consumers in the northeast region from the preceding calendar year, 159
and the most recent publicly available information concerning the 160
growth rate of the gross state product; 161
(2) Evaluate current primary care spending as a percentage of total 162
health care expenditures; and 163
(3) (A) Hold an informational public hearing concerning such health 164 Governor's Bill No. 5018
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care cost growth benchmark: 165
(i) At a time and place designated by the executive director in a notice 166
prominently posted by the executive director on the office's Internet 167
web site; 168
(ii) In a form and manner prescribed by the executive director; and 169
(iii) On the basis of the most recent report, if any, prepared by the 170
executive director pursuant to subsection (c) of section 5 of this act, and 171
any other information that the executive director, in the executive 172
director's discretion, deems relevant for the purposes of such hearing. 173
(B) Notwithstanding subparagraph (A) of this subdivision, the 174
executive director shall not be required to hold an informational public 175
hearing concerning a health care cost growth benchmark for any 176
calendar year beginning on or after January 1, 2022, if such health care 177
cost growth benchmark is the same as the health care cost growth 178
benchmark for the preceding calendar year. 179
(c) If the executive director determines, after any informational public 180
hearing held pursuant to subdivision (3) of subsection (b) of this section, 181
that a modification to the health care cost growth benchmark is, in the 182
executive director's discretion, reasonably warranted, the executive 183
director may modify such health care cost growth benchmark. The 184
executive director need not hold an additional informational public 185
hearing concerning such modified health care cost growth benchmark. 186
(d) The executive director shall post each health care cost growth 187
benchmark on the office's Internet web site. 188
(e) The executive director may enter into such contractual agreements 189
as may be necessary to carry out the purposes of this section, including, 190
but not limited to, contractual agreements with actuarial, economic and 191
other experts and consultants to assist the executive director in 192
establishing health care cost growth benchmarks. 193
Sec. 4. (NEW) (Effective July 1, 2020) (a) (1) Not later than May 1, 2022, 194 Governor's Bill No. 5018
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and annually thereafter, the executive director shall hold an 195
informational public hearing to compare the growth in total health care 196
expenditures during the preceding calendar year to the health care cost 197
growth benchmark established pursuant to section 3 of this act for such 198
year. Such hearing shall involve an examination of: 199
(A) The report, if any, most recently prepared by the executive 200
director pursuant to subsection (c) of section 5 of this act; 201
(B) The expenditures of health care entities and payers, including, but 202
not limited to, health care cost trends, primary care spending as a 203
percentage of total health care expenditures, and the factors 204
contributing to such costs and expenditures; 205
(C) Whether one category of expenditures may be offset by savings 206
in another category of expenditures; and 207
(D) Any other matters that the executive director, in the executive 208
director's discretion, deems relevant for the purposes of this section. 209
(2) The executive director may require that any health care entity or 210
payer that is found to be a significant contributor to health care cost 211
growth in this state during the preceding calendar year participate in 212
such hearing. Each such health care entity or payer that is required to 213
participate in such hearing shall provide testimony on issues identified 214
by the executive director, and provide additional information on actions 215
taken to reduce such health care entity's contribution to future state-216
wide health care costs and expenditures. 217
(b) Not later than October 1, 2022, and annually thereafter, the 218
executive director shall prepare and submit a report, in accordance with 219
section 11-4a of the general statutes, to the joint standing committees of 220
the General Assembly having cognizance of matters relating to 221
insurance and public health. Such report shall be based on the executive 222
director's analysis of the information submitted during the most recent 223
informational public hearing conducted pursuant to subsection (a) of 224
this section and any other information that the executive director, in the 225 Governor's Bill No. 5018
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executive director's discretion, deems relevant for the purposes of this 226
section, and shall: 227
(1) Describe health care spending trends in this state, including, but 228
not limited to, trends in primary care spending as a percentage of total 229
health care expenditures, and the factors underlying such trends; and 230
(2) Disclose the executive director's recommendations, if any, 231
concerning strategies to increase the efficiency of this state's health care 232
system, including, but not limited to, any recommended legislation 233
concerning this state's health care system. 234
Sec. 5. (NEW) (Effective July 1, 2020) (a) Not later than March 1, 2022, 235
and annually thereafter, each institutional provider, on behalf of such 236
institutional provider and its parent organization and affiliated entities, 237
health care provider that is not an institutional provider and provider 238
organization in this state, shall submit to the executive director, for the 239
preceding calendar year: 240
(1) Data concerning: 241
(A) The utilization of health care services provided by such provider 242
or organization; 243
(B) The charges, prices imposed and payments received by such 244
provider or organization for such services; 245
(C) The costs incurred, and revenues earned, by such provider or 246
organization in providing such services; and 247
(D) Any other matter that the executive director deems relevant for 248
the purposes of this section; and 249
(2) If such provider is a hospital, the data described in subdivision (1) 250
of this subsection, and such additional data, information and documents 251
designated by the executive director, including, but not limited to, 252
charge masters, cost data, audited financial statements and merged 253
billing and discharge data, provided such provider shall not be required 254 Governor's Bill No. 5018
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to submit any data contained in a report that is filed pursuant to 255
chapters 368aa to 368ll, inclusive, of the general statutes and available to 256
the executive director. 257
(b) The executive director shall establish standards to ensure that the 258
data, information and documents submitted to the executive director 259
pursuant to subsection (a) of this section are submitted to the executive 260
director in a uniform manner. Such standards shall enable the executive 261
director to identify, on a patient-centered and health care provider-262
specific basis, state-wide and regional trends in the availability, cost, 263
price and utilization of medical, surgical, diagnostic and ancillary 264
services and prescription drugs provided by hospital outpatient 265
departments, acute care hospitals, chronic disease hospitals, 266
rehabilitation hospitals and other specialty hospitals, clinics, including, 267
but not limited to, psychiatric clinics, urgent care facilities and facilities 268
providing ambulatory care. Such standards may require hospitals to 269
submit such data, information and documents to the executive director 270
in an electronic form, provided such standards shall provide for a 271
waiver of such requirement if such waiver is reasonable in the judgment 272
of the executive director. 273
(c) (1) Not later than December 1, 2021, and annually thereafter, the 274
executive director shall prepare, to the extent practicable, and post on 275
the office's Internet web site, a report concerning health status adjusted 276
total medical expenses for the preceding calendar year, including, but 277
not limited to, a breakdown of such health status adjusted total medical 278
expenses by: 279
(A) Major service category; 280
(B) Payment methodology; 281
(C) Relative price; 282
(D) Direct hospital inpatient cost; 283
(E) Indirect hospital inpatient cost; 284 Governor's Bill No. 5018
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(F) Direct hospital outpatient cost; 285
(G) Indirect hospital outpatient cost; and 286
(H) Primary care spending as a percentage of total health care 287
expenditures. 288
(2) Notwithstanding subdivision (1) of this subsection, the executive 289
director shall not disclose any health care provider-specific data or 290
information unless the executive director provides at least ten days' 291
advance written notice of such disclosure to each health care provider 292
that would be affected by such disclosure. 293
(d) The executive director shall, at least annually, submit a request to 294
the federal Centers for Medicare and Medicaid Services for the health 295
status adjusted total medical expenses of provider organizations that 296
served Medicare patients during the calendar year next preceding. 297
(e) The executive director may enter into such contractual agreements 298
as may be necessary to carry out the purposes of this section, including, 299
but not limited to, contractual agreements with actuarial, economic and 300
other experts and consultants. 301
Sec. 6. (NEW) (Effective July 1, 2020) (a) (1) For each calendar year 302
beginning on or after January 1, 2022, if the executive director 303
determines that the average annual percentage change in total health 304
care expenditures for the preceding calendar year exceeded the health 305
care cost growth benchmark for such year, the executive director shall 306
identify, not later than May first of such calendar year, each health care 307
entity or payer that exceeded such health care cost growth benchmark 308
for such year. 309
(2) The executive director may require any health care entity or payer 310
that is found to be a significant contributor to health care cost growth in 311
this state during the preceding calendar year to participate in the 312
informational public hearing held pursuant to subsection (a) of section 313
4 of this act. Each such entity or payer that is required to participate in 314 Governor's Bill No. 5018
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such hearing shall provide testimony on issues identified by the 315
executive director, and provide additional information on actions taken 316
to reduce such entity's or payer's contribution to future state-wide 317
health care costs. 318
(b) Not later than thirty days after the executive director identifies 319
each health care entity or payer pursuant to subsection (a) of this section, 320
the executive director shall send a notice to each such entity or payer. 321
Such notice shall be in a form and manner prescribed by the executive 322
director, and disclose to each such entity or payer: 323
(1) That the executive director has identified such entity or payer 324
pursuant to subsection (a) of this section; 325
(2) The factual basis for the executive director's identification of such 326
entity or payer pursuant to subsection (a) of this section; and 327
(3) That such entity or payer shall file a proposed performance 328
improvement plan pursuant to subdivision (1) of subsection (e) of this 329
section, provided such entity or payer may: 330
(A) File a request for an extension of time, or a waiver, pursuant to 331
subdivision (1) of subsection (c) of this section; and 332
(B) Request a hearing pursuant to subsection (d) of this section. 333
(c) (1) (A) Each health care entity or payer identified by the executive 334
director pursuant to subsection (a) of this section may, not later than 335
thirty days after the executive director sends a notice to such entity or 336
payer pursuant to subsection (b) of this section, file with the executive 337
director, in a form and manner prescribed by the executive director, a 338
request seeking: 339
(i) An extension of time to file a proposed performance improvement 340
plan pursuant to subdivision (1) of subsection (e) of this section; or 341
(ii) A waiver from the requirement that such entity or payer file a 342
proposed performance improvement plan pursuant to subdivision (1) 343 Governor's Bill No. 5018
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of subsection (e) of this section. 344
(B) Each health care entity or payer that files a request pursuant to 345
subparagraph (A) of this subdivision shall set forth in such request the 346
reasons for such request. 347
(2) Not later than thirty days after a health care entity or payer files a 348
request pursuant to subdivision (1) of this subsection, the executive 349
director shall: 350
(A) Examine the reasons set forth in the request and decide, on the 351
basis of such reasons, whether to approve or deny such request; and 352
(B) Send a notice, in a form and manner prescribed by the executive 353
director, to the entity or payer that filed such request disclosing, at a 354
minimum: 355
(i) The executive director's decision concerning such request and the 356
reasons therefor; 357
(ii) If the executive director denies such entity's or payer's request, 358
that such entity or payer may file a request for a hearing pursuant to 359
subsection (d) of this section; and 360
(iii) If such entity's or payer's request is a request for an extension of 361
time to file a proposed performance improvement plan pursuant to 362
subdivision (1) of subsection (e) of this section and the executive director 363
approves such request, the date by which such entity or payer shall file 364
such proposed performance improvement plan. 365
(d) Each health care entity or payer identified by the executive 366
director pursuant to subsection (a) of this section may, not later than 367
thirty days after the executive director sends a notice to such entity or 368
payer pursuant to subsection (b) of this section or subparagraph (B) of 369
subdivision (2) of subsection (c) of this section, as applicable, file with 370
the executive director a request for a hearing. Each hearing conducted 371
pursuant to this subsection shall be conducted in accordance with the 372
procedures for hearings on contested cases established in chapter 54 of 373 Governor's Bill No. 5018
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the general statutes. 374
(e) (1) Each health care entity or payer identified by the executive 375
director pursuant to subsection (a) of this section, or required by the 376
executive director pursuant to subparagraph (C)(ii)(III) of subdivision 377
(4) of subsection (f) of this section, shall, subject to the provisions of 378
subsections (b) to (d), inclusive, of this section, file with the executive 379
director a proposed performance improvement plan. Such entity or 380
payer shall file such proposed performance improvement plan, which 381
shall include an implementation timetable, with the executive director, 382
in a form and manner prescribed by the executive director, not later than 383
whichever of the following dates first occurs: 384
(A) The date that is thirty days after the date on which the executive 385
director sent a notice to such entity or payer pursuant to subsection (b) 386
of this section; 387
(B) The date that the executive director disclosed to such entity or 388
payer pursuant to subparagraph (B)(iii) of subdivision (2) of subsection 389
(c) of this section; or 390
(C) The date that is thirty days after the date on which the notice of a 391
final decision is issued following a hearing conducted pursuant to 392
subsection (d) of this section. 393
(2) (A) The executive director shall review each health care entity's 394
and payer's proposed performance improvement plan filed pursuant to 395
subdivision (1) of this subsection to determine whether, in the executive 396
director's judgment, it is reasonably likely that: 397
(i) Such proposed performance improvement plan will address the 398
cause of such entity's or payer's excessive cost growth; and 399
(ii) Such entity or payer will successfully implement such proposed 400
performance improvement plan. 401
(B) After the executive director reviews a proposed performance 402
improvement plan pursuant to subparagraph (A) of this subdivision, 403 Governor's Bill No. 5018
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the executive director shall: 404
(i) Approve such proposed performance improvement plan if the 405
executive director determines, in the executive director's judgment, that 406
such proposed plan satisfies the criteria established in subparagraph (A) 407
of this subdivision; or 408
(ii) Deny such proposed performance improvement plan if the 409
executive director determines, in the executive director's judgment, that 410
such proposed performance improvement plan does not satisfy the 411
criteria established in subparagraph (A) of this subdivision. 412
(C) (i) Not later than thirty days after the executive director approves 413
or denies a proposed performance improvement plan pursuant to 414
subparagraph (B) of this subdivision, the executive director shall send a 415
notice to the health care entity or payer that filed such proposed 416
performance improvement plan disclosing, at a minimum, that: 417
(I) The executive director approved such proposed performance 418
improvement plan; or 419
(II) The executive director denied such proposed performance 420
improvement plan, the reasons for such denial and that such entity or 421
payer shall file with the executive director such amendments as are 422
necessary for such proposed performance improvement plan to satisfy 423
the criteria established in subparagraph (A) of this subdivision. 424
(ii) The executive director shall post a notice on the office's Internet 425
web site disclosing: 426
(I) The name of each health care entity or payer that files, and receives 427
approval for, a proposed performance improvement plan; and 428
(II) That such health care entity or payer is implementing such 429
performance improvement plan. 430
(D) Each health care entity or payer that receives a notice from the 431
executive director pursuant to subparagraph (C)(i) of this subdivision 432 Governor's Bill No. 5018
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notifying such entity or payer that the executive director has denied 433
such entity's or payer's proposed performance improvement plan shall 434
file with the executive director, in a form and manner prescribed by the 435
executive director and not later than thirty days after the date that the 436
executive director sends such notice to such entity or payer, such 437
amendments as are necessary for such proposed performance 438
improvement plan to satisfy the criteria established in subparagraph (A) 439
of this subdivision. 440
(f) (1) Each health care entity or payer that receives a notice from the 441
executive director pursuant to subparagraph (C)(i) of subdivision (2) of 442
subsection (e) of this section notifying such entity or payer that the 443
executive director has approved such entity's or payer's proposed 444
performance improvement plan: 445
(A) Shall immediately make good faith efforts to implement such 446
performance improvement plan; and 447
(B) May amend such plan at any time during the implementation 448
timetable included in such performance improvement plan, provided 449
the executive director approves such amendment. 450
(2) The office may provide such assistance to each health care entity 451
or payer that the executive director, in the executive director's 452
discretion, deems necessary and appropriate to ensure that such entity 453
or payer successfully implements such entity's or payer's performance 454
improvement plan. 455
(3) Each health care entity or payer shall be subject to such additional 456
reporting requirements that the executive director, in the executive 457
director's discretion, deems necessary to ensure that such entity or payer 458
successfully implements such entity's or payer's performance 459
improvement plan. 460
(4) (A) Each health care entity or payer that files, and receives 461
approval for, a performance improvement plan pursuant to this section 462
shall, not later than thirty days after the last date specified in the 463 Governor's Bill No. 5018
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implementation timetable included in such performance improvement 464
plan, submit to the executive director, in a form and manner prescribed 465
by the executive director, a report regarding the outcome of such entity's 466
or payer's implementation of such performance improvement plan. 467
(B) If the executive director determines, on the basis of the report 468
submitted by a health care entity or payer pursuant to subparagraph (A) 469
of this subdivision, that such entity or payer successfully implemented 470
such entity's or payer's performance improvement plan, the executive 471
director shall: 472
(i) Send a notice to such entity or payer, in a form and manner 473
prescribed by the executive director, disclosing such determination; and 474
(ii) Remove from the office's Internet web site the notice concerning 475
such entity or payer that the executive director posted on such Internet 476
web site pursuant to subparagraph (C)(ii) of subdivision (2) of 477
subsection (e) of this section. 478
(C) If the executive director determines, on the basis of the report 479
submitted by a health care entity or payer pursuant to subparagraph (A) 480
of this subdivision, that such entity or payer failed to successfully 481
implement such entity's or payer's performance improvement plan, the 482
executive director shall: 483
(i) Send a notice to such entity or payer, in a form and manner 484
prescribed by the executive director, disclosing such determination and 485
any action taken by the executive director pursuant to clause (ii) of this 486
subparagraph; and 487
(ii) In the executive director's discretion: 488
(I) Extend the implementation timetable included in such 489
performance improvement plan; 490
(II) Require such entity or payer to file with the executive director, in 491
a form and manner prescribed by the executive director, such 492
amendments to such performance improvement plan as are, in the 493 Governor's Bill No. 5018
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executive director's judgment, necessary to ensure that such entity or 494
payer successfully implements such performance improvement plan; 495
(III) Require such entity or payer to file a new proposed performance 496
improvement plan pursuant to subdivision (1) of subsection (e) of this 497
section; or 498
(IV) Waive or delay the requirement that such entity or payer file any 499
future proposed performance improvement plan until the executive 500
director determines, in the executive director's discretion, that such 501
entity or payer has successfully implemented its current performance 502
improvement plan. 503
(g) The executive director shall keep confidential all nonpublic 504
clinical, financial, operational or strategic documents and information 505
filed with, or submitted to, the executive director pursuant to this 506
section. The executive director shall not disclose any such document or 507
information to any person without the consent of the health care entity 508
or payer that filed such document or information with, or submitted 509
such document or information to, the executive director pursuant to this 510
section, except in summary form as part of an evaluative report if the 511
executive director determines that such disclosure should be made in 512
the public interest after taking into account any privacy, trade secret or 513
anti-competitive considerations. Notwithstanding any provision of the 514
general statutes, no document or information filed with, or submitted 515
to, the executive director pursuant to this section shall be deemed to be 516
a public record or subject to disclosure under the Freedom of 517
Information Act, as defined in section 1-200 of the general statutes. 518
Sec. 7. (NEW) (Effective July 1, 2020) (a) (1) For each calendar year 519
beginning on or after January 1, 2022, if the executive director 520
determines that the average annual percentage change in total health 521
care expenditures for the preceding calendar year exceeded the health 522
care cost growth benchmark for such year, the executive director shall 523
identify each other entity that significantly contributed to exceeding 524
such benchmark. Each identification shall be based on: 525 Governor's Bill No. 5018
LCO No. 628 19 of 38
(A) The report, if any, prepared by the executive director pursuant to 526
subsection (c) of section 5 of this act for such calendar year; 527
(B) The report filed pursuant to section 38a-479ppp of the general 528
statutes for such calendar year; 529
(C) The information and data reported to the office pursuant to 530
section 19a-754b of the general statutes for such calendar year; 531
(D) Information obtained from the all-payer claims database 532
established under section 19a-755a of the general statutes; and 533
(E) Any other information that the executive director, in the executive 534
director's discretion, deems relevant for the purposes of this section. 535
(2) The executive director shall account for costs, net of rebates and 536
discounts, when identifying other entities pursuant to this section. 537
(b) The executive director may require that any other entity that is 538
found to be a significant contributor to health care cost growth in this 539
state during the preceding calendar year participate in the informational 540
public hearing held pursuant to subsection (a) of section 4 of this act. 541
Each such other entity that is required to participate in such hearing 542
shall provide testimony on issues identified by the executive director, 543
and provide additional information on actions taken to reduce such 544
health care entity's contribution to future state-wide health care costs. If 545
such other entity is a drug manufacturer, and the executive director 546
requires that such drug manufacturer participate in such hearing with 547
respect to a specific drug or class of drugs, such hearing may, to the 548
extent possible, include representatives from at least one brand-name 549
manufacturer, one generic manufacturer and one innovator company 550
that is less than ten years old. 551
Sec. 8. (NEW) (Effective July 1, 2020) (a) (1) For each calendar year 552
beginning on or after January 1, 2022, the executive director shall 553
develop and adopt annual health care quality benchmarks for health 554
care entities and payers that: 555 Governor's Bill No. 5018
LCO No. 628 20 of 38
(A) Enable health care entities and payers to report to the executive 556
director a standard set of information concerning health care quality for 557
such year; and 558
(B) Include measures concerning clinical health outcomes, 559
overutilization, underutilization and safety measures. 560
(2) In developing annual health care quality benchmarks pursuant to 561
subdivision (1) of this subsection, the executive director shall: 562
(A) Consider: 563
(i) Nationally recognized quality measures that are recommended by 564
medical groups or provider organizations concerning appropriate 565
quality measures for such groups' or organizations' specialties; and 566
(ii) Measures, including, but not limited to, newly developed 567
measures, that: 568
(I) Concern health outcomes, overutilization, underutilization and 569
patient safety; and 570
(II) Meet standards of patient-centeredness and ensure consideration 571
of important differences in preferences and clinical characteristics 572
within patient subpopulations; 573
(B) Provide stakeholders with an opportunity to engage with the 574
executive director in developing such benchmarks; and 575
(C) Ensure that the processes the executive director uses to develop, 576
and any research that the executive director relies upon in developing, 577
such benchmarks is transparent. 578
(b) Not later than October 1, 2021, and annually thereafter, the 579
executive director shall, prior to adopting health care quality 580
benchmarks pursuant to subdivision (1) of subsection (a) of this section 581
for the calendar year next succeeding, hold an informational public 582
hearing concerning the quality measures the executive director 583 Governor's Bill No. 5018
LCO No. 628 21 of 38
proposes to adopt as health care quality benchmarks for the calendar 584
year next succeeding. 585
(c) Not later than November 1, 2021, and annually thereafter, the 586
executive director shall send a notice to each health care entity, payer 587
and other entity disclosing the health care quality benchmarks that the 588
executive director has adopted for the calendar year next succeeding. 589
Sec. 9. (NEW) (Effective July 1, 2020) The executive director may adopt 590
regulations, in accordance with chapter 54 of the general statutes, to 591
implement the provisions of sections 2 to 8, inclusive, of this act. 592
Sec. 10. (NEW) (Effective July 1, 2020) For the purposes of this section 593
and sections 11 to 15, inclusive, of this act unless the context otherwise 594
requires: 595
(1) "Drug" means an article that is (A) recognized in the official United 596
States Pharmacopoeia, official Homeopathic Pharmacopoeia of the 597
United States or official National Formulary, or any supplement thereto, 598
(B) intended for use in the diagnosis, cure, mitigation, treatment or 599
prevention of disease in humans, (C) not food and intended to affect the 600
structure or any function of the human body, and (D) not a device and 601
intended for use as a component of any other article specified in 602
subparagraphs (A) to (C), inclusive, of this subdivision; 603
(2) "Drug Quality and Security Act" means the federal Drug Quality 604
and Security Act, 21 USC 351, et seq., as amended from time to time; 605
(3) "Food, Drug and Cosmetic Act" means the federal Food, Drug and 606
Cosmetic Act, 21 USC 301, et seq., as amended by the Drug Quality and 607
Security Act, as both may be amended from time to time; 608
(4) "Laboratory testing" means a quantitative and qualitative analysis 609
of a prescription drug consistent with the official United States 610
Pharmacopoeia; 611
(5) "Legend drug" means a drug that (A) any applicable federal or 612
state law requires must only be (i) dispensed pursuant to a prescription, 613 Governor's Bill No. 5018
LCO No. 628 22 of 38
or (ii) used by a prescribing practitioner, or (B) applicable federal law 614
requires to bear the following legend: "RX ONLY" IN ACCORDANCE 615
WITH GUIDELINES ESTABLISHED IN THE FEDERAL FOOD, DRUG 616
AND COSMETIC ACT; 617
(6) "Participating Canadian supplier" means a manufacturer or 618
wholesale drug distributor that is (A) licensed or permitted under 619
applicable Canadian law to manufacture or distribute prescription 620
drugs, (B) exporting legend drugs, in the manufacturer's original 621
container, to a participating wholesaler for distribution in this state 622
under the program, and (C) properly registered, if such Canadian 623
supplier is required to be registered, with the United States Food and 624
Drug Administration, or any successor agency; 625
(7) "Participating wholesaler" means a wholesaler, as defined in 626
section 21a-70 of the general statutes, that (A) has received a certificate 627
of registration from the Commissioner of Consumer Protection 628
pursuant to said section, and (B) is designated by the commissioner to 629
participate in the program; 630
(8) "Prescription" means a lawful verbal, written or electronic order 631
by a prescribing practitioner for a drug for a specific patient; 632
(9) "Program" means the Canadian legend drug importation program 633
established by the Commissioner of Consumer Protection pursuant to 634
section 11 of this act; 635
(10) "Qualified laboratory" means a laboratory that is (A) adequately 636
equipped and staffed to properly perform laboratory testing on legend 637
drugs, and (B) accredited to International Organization for 638
Standardization (ISO) 17025; and 639
(11) "Track-and-trace" means the product tracing process for the 640
components of the pharmaceutical distribution supply chain, as 641
described in Title II of the Drug Quality and Security Act. 642
Sec. 11. (NEW) (Effective July 1, 2020) (a) The Commissioner of 643 Governor's Bill No. 5018
LCO No. 628 23 of 38
Consumer Protection shall establish a program to be known as the 644
"Canadian legend drug importation program". Under such program, 645
the commissioner shall, notwithstanding any contrary provision of the 646
general statutes: 647
(1) Provide for the importation of safe and effective legend drugs 648
from Canada that have the highest potential for cost savings in this state; 649
and 650
(2) Designate one or more participating wholesalers to distribute 651
legend drugs in this state: 652
(A) In the manufacturer's original container; 653
(B) From a participating Canadian supplier; and 654
(C) To a pharmacy or institutional pharmacy, as defined in section 655
20-571 of the general statutes, or a qualified laboratory. 656
(b) (1) Not later than July 1, 2021, the Commissioner of Consumer 657
Protection shall submit a request to the federal Secretary of Health and 658
Human Services seeking approval for the program under 21 USC 384, 659
as amended from time to time. Such request shall, at a minimum: 660
(A) Describe the commissioner's plans for operating the program; 661
(B) Demonstrate that the legend drugs that will be imported and 662
distributed in this state under the program shall: 663
(i) Meet all applicable federal and state standards for safety and 664
effectiveness; and 665
(ii) Comply with all federal tracing procedures; and 666
(C) Disclose the costs of implementing the program. 667
(2) (A) If the federal Secretary of Health and Human Services 668
approves the commissioner's request, the commissioner shall: 669 Governor's Bill No. 5018
LCO No. 628 24 of 38
(i) Submit to the Commissioner of Public Health a notice disclosing 670
that the federal Secretary of Health and Human Services has approved 671
such request; 672
(ii) Submit to the joint standing committees of the General Assembly 673
having cognizance of matters relating to appropriations, general law, 674
human services and public health a notice disclosing that the federal 675
Secretary of Health and Human Services has approved such request; 676
and 677
(iii) Begin operating the program not later than one hundred eighty 678
days after the date of such approval. 679
(B) Except as otherwise provided in this subsection, the 680
Commissioner of Consumer Protection shall not operate the program 681
unless the federal Secretary of Health and Human Services approves the 682
commissioner's request. 683
Sec. 12. (NEW) (Effective July 1, 2020) (a) Each participating 684
wholesaler may, subject to the provisions of this section and sections 11 685
and 14 of this act, import into this state a legend drug from a 686
participating Canadian supplier, and distribute such legend drug to a 687
pharmacy or institutional pharmacy, as defined in section 20-571 of the 688
general statutes, or a qualified laboratory in this state, under the 689
program if: 690
(1) Such participating wholesaler: 691
(A) Is registered with the federal Secretary of Health and Human 692
Services pursuant to Section 510(b) of the Food, Drug and Cosmetic Act, 693
21 USC 360(b), as amended from time to time; and 694
(B) Holds a valid labeler code that has been issued to such 695
participating wholesaler by the United States Food and Drug 696
Administration, or any successor agency; and 697
(2) Such legend drug: 698 Governor's Bill No. 5018
LCO No. 628 25 of 38
(A) May be imported into this state in accordance with applicable 699
federal patent laws; 700
(B) Meets the United States Food and Drug Administration's, or any 701
successor agency's, standards concerning drug safety, effectiveness, 702
misbranding and adulteration; and 703
(C) Is not: 704
(i) A controlled substance, as defined in 21 USC 802, as amended from 705
time to time; 706
(ii) A biological product, as defined in 42 USC 262, as amended from 707
time to time; 708
(iii) An infused drug; 709
(iv) An intravenously injected drug; 710
(v) A drug that is inhaled during surgery; or 711
(vi) A drug that is a parenteral drug, the importation of which is 712
determined by the federal Secretary of Health and Human Services to 713
pose a threat to the public health. 714
(b) Each participating wholesaler shall: 715
(1) Comply with all applicable track-and-trace requirements, and 716
make available to the Commissioner of Consumer Protection all track-717
and-trace records not later than forty-eight hours after the commissioner 718
requests such records; 719
(2) Not import, distribute, dispense or sell in this state any legend 720
drugs under the program except in accordance with the provisions of 721
this section and sections 11 and 14 of this act; 722
(3) Not distribute, dispense or sell outside of this state any legend 723
drugs that are imported into this state under the program; 724 Governor's Bill No. 5018
LCO No. 628 26 of 38
(4) Ensure the safety and quality of the legend drugs that are 725
imported and distributed in this state under the program; 726
(5) For each initial shipment of a legend drug that is imported into 727
this state by such participating wholesaler, ensure that a qualified 728
laboratory engaged by such participating wholesaler tests a statistically 729
valid sample size for each batch of such legend drug in such shipment 730
for authenticity and degradation in a manner that is consistent with the 731
Food, Drug and Cosmetic Act; 732
(6) For each shipment of a legend drug that is imported into this state 733
by such participating wholesaler, and sampled and tested pursuant to 734
subdivision (5) of this subsection, ensure that a qualified laboratory 735
engaged by such participating wholesaler tests a statistically valid 736
sample of such legend drug in such shipment for authenticity and 737
degradation in a manner that is consistent with the Food, Drug and 738
Cosmetic Act; 739
(7) Certify to the Commissioner of Consumer Protection that each 740
legend drug imported into this state under the program: 741
(A) Is approved for marketing in the United States and not 742
adulterated or misbranded; and 743
(B) Meets all labeling requirements under 21 USC 352, as amended 744
from time to time; 745
(8) Maintain laboratory records, including, but not limited to, 746
complete data derived from all tests necessary to ensure that each 747
legend drug imported into this state under the program satisfies the 748
requirements of subdivisions (5) and (6) of this subsection; 749
(9) Maintain documentation demonstrating that the testing required 750
by subdivisions (5) and (6) of this subsection was conducted at a 751
qualified laboratory in accordance with the Food, Drug and Cosmetic 752
Act and all other applicable federal and state laws and regulations 753
concerning laboratory qualifications; 754 Governor's Bill No. 5018
LCO No. 628 27 of 38
(10) Maintain the following information for each legend drug that 755
such participating wholesaler imports and distributes in this state under 756
the program, and submit such information to the Commissioner of 757
Consumer Protection upon request by the commissioner: 758
(A) The name and quantity of the active ingredient of such legend 759
drug; 760
(B) A description of the dosage form of such legend drug; 761
(C) The date on which such participating wholesaler received such 762
legend drug; 763
(D) The quantity of such legend drug that such participating 764
wholesaler received; 765
(E) The point of origin and destination of such legend drug; 766
(F) The price paid by such participating wholesaler for such legend 767
drug; 768
(G) A report for any legend drug that fails laboratory testing under 769
subdivision (5) or (6) of this subsection; and 770
(H) Such additional information and documentation that the 771
commissioner deems necessary to ensure the protection of the public 772
health; and 773
(11) Maintain all information and documentation that is submitted to 774
the Commissioner of Consumer Protection pursuant to this subsection 775
for a period of not less than three years. 776
Sec. 13. (NEW) (Effective July 1, 2020) Each participating Canadian 777
supplier shall: 778
(1) Comply with all applicable track-and-trace requirements; 779
(2) Not distribute, dispense or sell outside of this state any legend 780
drugs that are imported into this state under the program; and 781 Governor's Bill No. 5018
LCO No. 628 28 of 38
(3) Maintain the following information and documentation and, 782
upon request by the Commissioner of Consumer Protection, submit 783
such information and documentation to the commissioner for each 784
legend drug that such participating Canadian supplier exports into this 785
state under the program: 786
(A) The original source of such legend drug, including, but not 787
limited to: 788
(i) The name of the manufacturer of such legend drug; 789
(ii) The date on which such legend drug was manufactured; and 790
(iii) The location where such legend drug was manufactured; 791
(B) The date on which such legend drug was shipped to a 792
participating wholesaler; 793
(C) The quantity of such legend drug that was shipped to a 794
participating wholesaler; 795
(D) The quantity of each lot of such legend drug that such 796
participating Canadian supplier originally received and the source of 797
such lot; 798
(E) The lot or control number and the batch number assigned to such 799
legend drug by the manufacturer; and 800
(F) Such additional information and documentation that the 801
commissioner deems necessary to ensure the protection of the public 802
health. 803
Sec. 14. (NEW) (Effective July 1, 2020) (a) The Commissioner of 804
Consumer Protection shall issue a written order: 805
(1) Suspending importation and distribution of a legend drug under 806
the program if the commissioner discovers that such distribution or 807
importation violates any provision of sections 11 to 13, inclusive, of this 808
act or any other applicable state or federal law or regulation; 809 Governor's Bill No. 5018
LCO No. 628 29 of 38
(2) Suspending all importation and distribution of legend drugs by a 810
participating wholesaler under the program if the commissioner 811
discovers that the participating wholesaler has violated any provision 812
of section 11 or 12 of this act or any other applicable state or federal law 813
or regulation; 814
(3) Suspending all importation and distribution of legend drugs by a 815
participating Canadian supplier under the program if the commissioner 816
discovers that the participating Canadian supplier has violated any 817
provision of section 11 or 13 of this act or any other applicable state or 818
federal law or regulation; or 819
(4) Requiring the recall or seizure of any legend drug that was 820
imported and distributed under the program and has been identified as 821
adulterated, within the meaning of section 21a-105 of the general 822
statutes, or misbranded. 823
(b) The Commissioner of Consumer Protection shall send a notice to 824
each participating Canadian supplier and participating wholesaler 825
affected by an order issued pursuant to subsection (a) of this section 826
notifying such participating Canadian supplier or participating 827
wholesaler that: 828
(1) The commissioner has issued such order, and providing the legal 829
and factual basis for such order; and 830
(2) Such participating Canadian supplier or participating wholesaler 831
may request, in writing, a hearing before the commissioner, provided 832
such request is received by the commissioner not later than thirty days 833
after the date of such notice. 834
(c) If a participating Canadian supplier or participating wholesaler 835
timely requests a hearing pursuant to subsection (b) of this section, the 836
Commissioner of Consumer Protection shall, not later than thirty days 837
after the receipt of the request, convene the hearing as a contested case 838
in accordance with the provisions of chapter 54 of the general statutes. 839
Not later than sixty days after the receipt of such request, the 840 Governor's Bill No. 5018
LCO No. 628 30 of 38
commissioner shall issue a final decision vacating, modifying or 841
affirming the commissioner's order. The participating Canadian 842
supplier or participating wholesaler aggrieved by such final decision 843
may appeal such decision in accordance with the provisions of section 844
4-183 of the general statutes. 845
Sec. 15. (NEW) (Effective July 1, 2020) The Commissioner of Consumer 846
Protection may, in consultation with the Commissioner of Public 847
Health, adopt regulations in accordance with the provisions of chapter 848
54 of the general statutes to implement the provisions of sections 10 to 849
14, inclusive, of this act. 850
Sec. 16. Section 38a-8b of the general statutes is repealed and the 851
following is substituted in lieu thereof (Effective January 1, 2021): 852
(a) For the purposes of this section: 853
(1) "Attachment point" means the dollar value of claims incurred by 854
a policyholder at which the insurer that issues or delivers a medical 855
stop-loss insurance policy to the policyholder incurs liability to such 856
policyholder for payment under such medical stop-loss insurance 857
policy; 858
(2) "Employee" has the same meaning as provided in section 38a-564; 859
(3) "Expected claims" means the dollar value of claims that, in the 860
absence of a medical stop-loss insurance policy, the policyholder of a 861
medical stop-loss insurance policy is projected to incur under such 862
policyholder's health benefit plan; 863
(4) "Lasering" means assigning a different attachment point or 864
deductible, or denying coverage altogether, under a medical stop-loss 865
insurance policy for an enrollee or a dependent because the enrollee or 866
dependent has a high-cost preexisting condition or another identified 867
risk; 868
(5) "Medical stop-loss insurance" means stop-loss insurance 869
purchased by a person, other than a health carrier or health care 870 Governor's Bill No. 5018
LCO No. 628 31 of 38
provider, and providing coverage for catastrophic, excess or unexpected 871
losses incurred by the policyholder, and due and owing to a third party, 872
under a health benefit plan not providing coverage for retirees; 873
(6) "Medical stop-loss insurer" means an insurer that is licensed 874
pursuant to section 38a-41 to sell, issue and deliver medical stop-loss 875
insurance in this state; 876
(7) "Retiree stop-loss insurance" means stop-loss insurance purchased 877
by a person, other than a health carrier or health care provider, and 878
providing coverage for catastrophic, excess or unexpected losses 879
incurred by the policyholder, and due and owing to a third party, under 880
a health benefit plan providing coverage for retirees; and 881
(8) "Stop-loss insurance" means insurance, other than reinsurance, 882
providing coverage for catastrophic, excess or unexpected losses 883
incurred by the policyholder, and due and owing to a third party, under 884
another insurance policy or a health benefit plan. 885
(b) No [stop loss] stop-loss insurance policy [may] shall be issued or 886
delivered in this state unless a copy of the [stop loss] stop-loss insurance 887
policy form has been submitted to, and approved by, the Insurance 888
Commissioner. [pursuant to regulations that the commissioner may 889
adopt in accordance with chapter 54. Such regulations, if adopted, shall 890
include, but need not be limited to, a definition of a stop loss policy and 891
the standards for filing and review of stop loss policies.] 892
(c) (1) Except as provided in subdivision (4) of subsection (d) of this 893
section, no medical stop-loss insurer shall issue or deliver, and the 894
Insurance Commissioner shall not approve, a medical stop-loss 895
insurance policy in this state on or after January 1, 2021, if the medical 896
stop-loss insurance policy: 897
(A) Imposes an annual attachment point that is less than twenty 898
thousand dollars for claims incurred per enrolled employee or 899
dependent; 900 Governor's Bill No. 5018
LCO No. 628 32 of 38
(B) Imposes an annual aggregate attachment point: 901
(i) That is less than the greatest of the following amounts for an 902
insured group consisting of not more than fifty employees, as calculated 903
in the manner set forth in subdivision (2) of this subsection: 904
(I) Four thousand dollars multiplied by the number of employees in 905
such insured group; 906
(II) One hundred twenty per cent of the expected claims for such 907
insured group; or 908
(III) Twenty thousand dollars; or 909
(ii) That is less than one hundred ten per cent of the expected claims 910
for an insured group consisting of more than fifty employees, as 911
calculated in the manner set forth in subdivision (2) of this subsection; 912
(C) Provides direct coverage for an enrollee's or dependent's health 913
care expenses; 914
(D) Provides for a determination regarding whether a benefit is: 915
(i) Medically necessary; 916
(ii) Usual or customary; or 917
(iii) Experimental or investigational; 918
(E) Imposes a case management requirement or an annual dollar 919
limitation for an enrolled employee, dependent or benefit; 920
(F) Requires an enrolled employee or dependent to use a provider 921
network or provides a benefit incentive for an enrolled employee or 922
dependent to use a provider participating in a provider network; 923
(G) Provides the medical stop-loss insurer with a right to examine an 924
enrolled employee or dependent; 925
(H) Permits the medical stop-loss insurer to: 926 Governor's Bill No. 5018
LCO No. 628 33 of 38
(i) Deny a claim if the policyholder is legally obligated to pay the 927
claim under such policyholder's health benefit plan; 928
(ii) Rescind such medical stop-loss insurance policy for any reason 929
other than fraud or intentional misrepresentation; 930
(iii) Terminate such medical stop-loss insurance policy, in the sole 931
discretion of such medical stop-loss insurer, in any manner that is 932
inconsistent with applicable laws concerning cancellation or 933
nonrenewal of medical stop-loss insurance policies; or 934
(iv) Increase the rates imposed under such medical stop-loss 935
insurance policy, in the sole discretion of such medical stop-loss insurer, 936
during the term of such medical stop-loss insurance policy; 937
(I) Requires an enrolled employee to be actively at work; or 938
(J) Contains any provision that is misleading, deceptive or contrary 939
to any provision of the general statutes or the public interest. 940
(2) (A) For the purposes of subparagraph (B) of subdivision (1) of this 941
subsection, the number of employees in an insured group shall be 942
determined by adding: 943
(i) The number of the policyholder's full-time employees for each 944
month who work a normal work week of thirty hours or more; and 945
(ii) The number of the policyholder's full-time equivalent employees, 946
calculated for each month by dividing by one hundred twenty the 947
aggregate number of hours worked for such month by employees who 948
work a normal work week of less than thirty hours, and averaging such 949
total for the calendar year. 950
(B) If a policyholder was not in existence throughout the preceding 951
calendar year, the number of employees shall be based on the average 952
number of employees that such policyholder reasonably expects to 953
employ in the current calendar year. 954 Governor's Bill No. 5018
LCO No. 628 34 of 38
(d) Each insurer that underwrites a medical stop-loss insurance 955
policy issued or delivered in this state on or after January 1, 2021, may 956
use lasering in underwriting such medical stop-loss insurance policy, 957
provided: 958
(1) If such insurer uses lasering in underwriting such medical stop-959
loss insurance policy, such insurer and any insurance producer who 960
sells, solicits or negotiates such medical stop-loss insurance policy on 961
behalf of such insurer includes in each application for coverage under 962
such medical stop-loss insurance policy: 963
(A) A statement disclosing the increased financial risk that each 964
prospective policyholder under such medical stop-loss insurance policy 965
will bear because such insurer intends to use lasering in underwriting 966
such medical stop-loss insurance policy, and any alternatives available 967
to each such prospective policyholder with respect to such insurer's 968
intended use of lasering in underwriting such medical stop-loss 969
insurance policy; 970
(B) A statement by such insurer or insurance producer, as applicable, 971
affirming that such insurer or insurance producer fully explained to 972
each prospective policyholder under such medical stop-loss insurance 973
policy the increased financial risk described in subparagraph (A) of this 974
subdivision and that each such prospective policyholder understands 975
such increased financial risk; and 976
(C) The signature of such insurer, insurance producer and each 977
prospective policyholder below the statement required under 978
subparagraph (B) of this subdivision; 979
(2) If such insurer uses lasering on the effective date of such medical 980
stop-loss insurance policy, such insurer shall not change such lasering 981
during the term of such medical stop-loss insurance policy; 982
(3) If such insurer does not use lasering on the effective date of such 983
medical stop-loss insurance policy, such insurer shall not use lasering 984
during the term of such medical stop-loss insurance policy; and 985 Governor's Bill No. 5018
LCO No. 628 35 of 38
(4) The attachment point for an enrolled employee under such 986
medical stop-loss insurance policy shall not exceed an amount that is 987
equal to three hundred per cent of the attachment point for such medical 988
stop-loss insurance policy. 989
(e) No retiree stop-loss insurance policy issued or delivered in this 990
state on or after January 1, 2021, shall be subject to the provisions of 991
subsection (c) or (d) of this section, and the Insurance Commissioner 992
shall review and approve, on a case-by case basis, such retiree stop-loss 993
insurance policies for issuance and delivery in this state on or after said 994
date. 995
(f) The Insurance Commissioner may adopt regulations, in 996
accordance with chapter 54, to carry out the purposes of this section. 997
Sec. 17. Subparagraph (C) of subdivision (3) of subsection (m) of 998
section 5-259 of the 2020 supplement to the general statutes is repealed 999
and the following is substituted in lieu thereof (Effective January 1, 2021): 1000
(C) The Comptroller may offer to nonstate public employers that 1001
choose to purchase prescription drugs pursuant to subparagraph (A) of 1002
this subdivision the option to purchase [stop loss] stop-loss coverage 1003
from an insurer at a rate negotiated by the Comptroller. 1004
Sec. 18. Subdivision (1) of subsection (c) of section 7-464 of the general 1005
statutes is repealed and the following is substituted in lieu thereof 1006
(Effective January 1, 2021): 1007
(1) In no event shall any commercial insurance company which 1008
provides health insurance benefits to the employees of a town, city or 1009
borough and their covered dependents and family members, including, 1010
but not limited to, [stop loss] stop-loss insurance beyond a municipal 1011
self-funded medical expense amount, be entitled to any reimbursement 1012
from a tortfeasor recovery. The provisions of this subsection shall be 1013
construed to only permit a self-insured town, city or borough to recover 1014
medical expenses paid from its own revenues. The provisions of this 1015
subsection shall not be construed to permit a self-insured town, city or 1016 Governor's Bill No. 5018
LCO No. 628 36 of 38
borough to recover medical expenses paid from an insured plan, 1017
whether insured in whole or in part. 1018
Sec. 19. Subparagraph (F) of subdivision (18) of section 38a-465 of the 1019
general statutes is repealed and the following is substituted in lieu 1020
thereof (Effective January 1, 2021): 1021
(F) An authorized or eligible insurer that provides [stop loss] stop-1022
loss coverage to a provider, purchaser, financing entity, special purpose 1023
entity or related provider trust; 1024
Sec. 20. Subsection (c) of section 38a-465d of the general statutes is 1025
repealed and the following is substituted in lieu thereof (Effective January 1026
1, 2021): 1027
(c) Except as otherwise required or permitted by law, no person, 1028
including, but not limited to, a provider, broker, insurance company, 1029
insurance producer, information bureau, rating agency or company, or 1030
any other person with actual knowledge of an insured's identity, shall 1031
disclose such identity or information where there is a reasonable basis 1032
to conclude such information could be used to identify the insured or 1033
the insured's financial or medical information to any other person unless 1034
such disclosure: (1) Is necessary to effect a life settlement contract 1035
between the owner and a provider and the owner and insured have 1036
provided prior written consent to such disclosure; (2) is provided in 1037
response to an investigation or examination by the commissioner or any 1038
other governmental office or agency or pursuant to the requirements of 1039
section 38a-465i; (3) is necessary to effectuate the sale of life settlement 1040
contracts or interests therein as investments, provided the sale is 1041
conducted in accordance with applicable state and federal securities 1042
laws, and provided further the owner and the insured have both 1043
provided prior written consent to the disclosure; (4) is a term of or 1044
condition to the transfer of a policy by one provider to another provider, 1045
in which case the provider receiving such information shall comply with 1046
the confidentiality requirements specified in this subsection; (5) is 1047
necessary to allow the provider or broker or their authorized 1048 Governor's Bill No. 5018
LCO No. 628 37 of 38
representatives to make contacts for the purpose of determining health 1049
status. For the purpose of this section, "authorized representative" does 1050
not include any person who has or may have a financial interest in the 1051
settlement contract other than a provider, licensed broker, financing 1052
entity, related provider trust or special purpose entity. Each provider or 1053
broker shall require its authorized representative to agree in writing to 1054
comply with the privacy provisions of this part; or (6) is required to 1055
purchase [stop loss] stop-loss coverage. 1056
Sec. 21. Subparagraph (A) of subdivision (2) of subsection (b) of 1057
section 38a-478l of the general statutes is repealed and the following is 1058
substituted in lieu thereof (Effective January 1, 2021): 1059
(A) "State medical loss ratio" means the ratio of incurred claims to 1060
earned premiums for the prior calendar year for managed care plans 1061
issued in the state. Claims shall be limited to medical expenses for 1062
services and supplies provided to enrollees and shall not include 1063
expenses for [stop loss] stop-loss coverage, reinsurance, enrollee 1064
educational programs or other cost containment programs or features; 1065
Sec. 22. Subsection (c) of section 38a-720h of the general statutes is 1066
repealed and the following is substituted in lieu thereof (Effective January 1067
1, 2021): 1068
(c) The third-party administrator shall disclose to the insurer or other 1069
person utilizing the services of the third-party administrator all charges, 1070
fees and commissions that the third-party administrator receives arising 1071
from services it provides for the insurer or other person utilizing the 1072
services of the third-party administrator, including any fees or 1073
commissions paid by insurers providing reinsurance or [stop loss] stop-1074
loss coverage. 1075
This act shall take effect as follows and shall amend the following
sections:
Section 1 July 1, 2020 19a-754a
Sec. 2 July 1, 2020 New section
Sec. 3 July 1, 2020 New section Governor's Bill No. 5018
LCO No. 628 38 of 38
Sec. 4 July 1, 2020 New section
Sec. 5 July 1, 2020 New section
Sec. 6 July 1, 2020 New section
Sec. 7 July 1, 2020 New section
Sec. 8 July 1, 2020 New section
Sec. 9 July 1, 2020 New section
Sec. 10 July 1, 2020 New section
Sec. 11 July 1, 2020 New section
Sec. 12 July 1, 2020 New section
Sec. 13 July 1, 2020 New section
Sec. 14 July 1, 2020 New section
Sec. 15 July 1, 2020 New section
Sec. 16 January 1, 2021 38a-8b
Sec. 17 January 1, 2021 5-259(m)(3)(C)
Sec. 18 January 1, 2021 7-464(c)(1)
Sec. 19 January 1, 2021 38a-465(18)(F)
Sec. 20 January 1, 2021 38a-465d(c)
Sec. 21 January 1, 2021 38a-478l(b)(2)(A)
Sec. 22 January 1, 2021 38a-720h(c)
Statement of Purpose:
To implement the Governor's budget recommendations.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
underlined.]