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General Assembly Governor's Bill No. 5042
February Session, 2022
LCO No. 647
Referred to Committee on INSURANCE AND REAL ESTATE
Introduced by:
Request of the Governor Pursuant
to Joint Rule 9
AN ACT CONCERNING HEALTH CARE COST GROWTH.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. Section 19a-754a of the 2022 supplement to the general 1
statutes is repealed and the following is substituted in lieu thereof 2
(Effective from passage): 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
(1) Developing and implementing a comprehensive and cohesive 12
health care vision for the state, including, but not limited to, a 13 Governor's Bill No. 5042
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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 3 of this act, (D) developing strategies, in consultation with 27
stakeholders, to facilitate adherence with such benchmarks and targets 28
developed pursuant to section 3 of this act, (E) enhancing the 29
transparency of provider entities, as defined in subdivision (13) of 30
section 2 of this act, (F) monitoring the development of accountable care 31
organizations and patient-centered medical homes in the state, and (G) 32
monitoring the adoption of alternative payment methodologies in the 33
state; 34
(4) (A) Coordinating the state's health information technology 35
initiatives, (B) seeking funding for and overseeing the planning, 36
implementation and development of policies and procedures for the 37
administration of the all-payer claims database program established 38
under section 19a-775a, (C) establishing and maintaining a consumer 39
health information Internet web site under section 19a-755b, and (D) 40
designating an unclassified individual from the office to perform the 41
duties of a health information technology officer as set forth in sections 42
17b-59f and 17b-59g; 43
(5) Directing and overseeing the Health Systems Planning Unit 44
established under section 19a-612 and all of its duties and 45 Governor's Bill No. 5042
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responsibilities as set forth in chapter 368z; 46
(6) Convening forums and meetings with state government and 47
external stakeholders, including, but not limited to, the Connecticut 48
Health Insurance Exchange, to discuss health care issues designed to 49
develop effective health care cost and quality strategies; and 50
(7) (A) Administering the Covered Connecticut program established 51
under section 19a-754c in consultation with the Commissioner of Social 52
Services, Insurance Commissioner and Connecticut Health Insurance 53
Exchange, and (B) consulting with the Commissioner of Social Services 54
and Insurance Commissioner for the purposes set forth in section 17b-55
312. 56
(c) The Office of Health Strategy shall constitute a successor, in 57
accordance with the provisions of sections 4-38d, 4-38e and 4-39, to the 58
functions, powers and duties of the following: 59
(1) The Connecticut Health Insurance Exchange, established 60
pursuant to section 38a-1081, relating to the administration of the all-61
payer claims database pursuant to section 19a-755a; and 62
(2) The Office of the Lieutenant Governor, relating to the (A) 63
development of a chronic disease plan pursuant to section 19a-6q, (B) 64
housing, chairing and staffing of the Health Care Cabinet pursuant to 65
section 19a-725, and (C) (i) appointment of the health information 66
technology officer, and (ii) oversight of the duties of such health 67
information technology officer as set forth in sections 17b-59f and 17b-68
59g. 69
(d) Any order or regulation of the entities listed in subdivisions (1) 70
and (2) of subsection (c) of this section that is in force on July 1, 2018, 71
shall continue in force and effect as an order or regulation until 72
amended, repealed or superseded pursuant to law. 73
Sec. 2. (NEW) (Effective from passage) For the purposes of this section 74
and sections 3 to 7, inclusive, of this act: 75 Governor's Bill No. 5042
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(1) "Drug manufacturer" means the manufacturer of a drug that is: 76
(A) Included in the information and data submitted by a health carrier 77
pursuant to section 38a-479qqq of the general statutes, (B) studied or 78
listed pursuant to subsection (c) or (d) of section 19a-754b of the general 79
statutes, or (C) in a therapeutic class of drugs that the executive director 80
determines, through public or private reports, has had a substantial 81
impact on prescription drug expenditures, net of rebates, as a 82
percentage of total health care expenditures; 83
(2) "Executive director" means the executive director of the office; 84
(3) "Health care cost growth benchmark" means the annual 85
benchmark established pursuant to section 3 of this act; 86
(4) "Health care quality benchmark" means an annual benchmark 87
established pursuant to section 3 of this act; 88
(5) "Health care provider" has the same meaning as provided in 89
subdivision (1) of subsection (a) of section 19a-17b of the general 90
statutes; 91
(6) "Net cost of private health insurance" means the difference 92
between premiums earned and benefits incurred, and includes insurers' 93
costs of paying bills, advertising, sales commissions, and other 94
administrative costs, net additions or subtractions from reserves, rate 95
credits and dividends, premium taxes, and profits or losses; 96
(7) "Office" means the Office of Health Strategy established under 97
section 19a-754a of the general statutes, as amended by this act; 98
(8) "Other entity" means a drug manufacturer, pharmacy benefits 99
manager, or other health care provider that is not considered a provider 100
entity; 101
(9) "Payer" means a payer, including Medicaid, Medicare and 102
governmental and nongovernment health plans, and includes any 103
organization acting as payer that is a subsidiary, affiliate or business 104
owned or controlled by a payer that, during a given calendar year, pays 105 Governor's Bill No. 5042
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health care providers for health care services or pharmacies or provider 106
entities for prescription drugs designated by the executive director; 107
(10) "Performance year" means the most recent calendar year for 108
which data were submitted for the applicable cost growth benchmark, 109
primary care spend target or quality benchmark; 110
(11) "Pharmacy benefits manager" has the same meaning as provided 111
in subdivision (10) of section 38a-479ooo of the general statutes; 112
(12) "Primary care target" means the annual target established 113
pursuant to section 3 of this act; 114
(13) "Provider entity" means an organized group of clinicians that 115
come together for the purposes of contracting, or are an established 116
billing unit that, at a minimum, includes primary care providers, and 117
that collectively, during any given calendar year, has enough attributed 118
lives to participate in total cost of care contracts, even if they are not 119
engaged in a total cost of care contract; 120
(14) "Potential gross state product" means a forecasted measure of the 121
economy that equals the sum of the (A) expected growth in national 122
labor force productivity, (B) expected growth in the state's labor force, 123
and (C) expected national inflation, minus the expected state population 124
growth; 125
(15) "Total health care expenditures" means the sum of all health care 126
expenditures in this state from public and private sources for a given 127
calendar year, including: (A) All claims-based spending paid to 128
providers, net of pharmacy rebates, (B) all patient cost-sharing amounts, 129
and (C) the net cost of private health insurance; and 130
(16) "Total medical expense" means the total cost of care for the 131
patient population of a payer or provider entity for a given calendar 132
year, where cost is calculated for such year as the sum of (A) all claims-133
based spending paid to providers by public and private payers, and net 134
of pharmacy rebates, (B) all nonclaims payments for such year, 135 Governor's Bill No. 5042
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including, but not limited to, incentive payments and care coordination 136
payments, and (C) all patient cost-sharing amounts expressed on a per 137
capita basis for the patient population of a payer or provider entity in 138
this state. 139
Sec. 3. (NEW) (Effective from passage) (a) Not later than July 1, 2022, 140
the executive director shall publish (1) the health care cost growth 141
benchmarks and annual primary care spending targets as a percentage 142
of total medical expenses for the calendar years 2021 to 2025, inclusive, 143
and (2) the annual health care quality benchmarks for the calendar years 144
2022 to 2025, inclusive, on the office's Internet web site. 145
(b) (1) (A) Not later than July 1, 2025, and every five years thereafter, 146
the executive director shall develop and adopt annual health care cost 147
growth benchmarks and annual primary care spending targets for the 148
succeeding five calendar years for provider entities and payers. 149
(B) In developing the health care cost growth benchmarks and 150
primary care spending targets pursuant to this subdivision, the 151
executive director shall consider (i) any historical and forecasted 152
changes in median income for individuals in the state and the growth 153
rate of potential gross state product, (ii) the rate of inflation, and (iii) the 154
most recent report, if any, prepared by the executive director pursuant 155
to subsection (b) of section 4 of this act. 156
(C) (i) The executive director may hold informational public hearings 157
concerning the benchmarks and targets set pursuant to subsection (a) or 158
subdivision (1) of subsection (b) of this section. Such informational 159
public hearings shall be held at a time and place designated by the 160
executive director in a notice prominently posted by the executive 161
director on the office's Internet web site and in a form and manner 162
prescribed by the executive director. 163
(ii) If the executive director determines, after any informational 164
public hearing held pursuant to this subparagraph, that a modification 165
to any health care cost growth benchmark or annual primary care 166
spending target is, in the executive director's discretion, reasonably 167 Governor's Bill No. 5042
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warranted, the executive director may modify such benchmark or 168
target. 169
(iii) If the executive director determines that the rate of inflation 170
requires modification of any health care cost growth benchmark 171
adopted under this section, the executive director may modify such 172
benchmark. In such event, the executive director shall not be required 173
to hold an informational public hearing concerning such modified 174
health care cost growth benchmark. 175
(D) The executive director shall post each adopted health care cost 176
growth benchmark and annual primary care spending target on the 177
office's Internet web site. 178
(2) (A) Not later than July 1, 2025, and every five years thereafter, the 179
executive director shall develop and adopt annual health care quality 180
benchmarks for the succeeding five calendar years for provider entities 181
and payers. 182
(B) In developing annual health care quality benchmarks pursuant to 183
this subdivision, the executive director shall consider (i) quality 184
measures endorsed by nationally recognized organizations, including, 185
but not limited to, the National Quality Forum, the National Committee 186
for Quality Assurance, the Centers for Medicare and Medicaid Services, 187
the Centers for Disease Control, the Joint Commission and expert 188
organizations that develop health equity measures, and (ii) measures 189
that: (I) Concern health outcomes, overutilization, underutilization and 190
patient safety, (II) meet standards of patient-centeredness and ensure 191
consideration of differences in preferences and clinical characteristics 192
within patient subpopulations, and (III) concern community health or 193
population health. 194
(C) (i) The executive director may hold informational public hearings 195
concerning the quality measures the executive director proposes to 196
adopt as health care quality benchmarks. Such informational public 197
hearings shall be held at a time and place designated by the executive 198
director in a notice prominently posted by the executive director on the 199 Governor's Bill No. 5042
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office's Internet web site and in a form and manner prescribed by the 200
executive director. 201
(ii) If the executive director determines, after any informational 202
public hearing held pursuant to this subparagraph, that modifications 203
to any quality benchmarks are, in the executive director's discretion, 204
reasonably warranted, the executive director may modify such quality 205
benchmarks. The executive director shall not be required to hold an 206
additional informational public hearing concerning such modified 207
quality benchmarks. 208
(D) The executive director shall post each adopted health care quality 209
benchmark on the office's Internet web site. 210
(c) The executive director may enter into such contractual agreements 211
as may be necessary to carry out the purposes of this section, including, 212
but not limited to, contractual agreements with actuarial, economic and 213
other experts and consultants. 214
Sec. 4. (NEW) (Effective from passage) (a) Not later than August 15, 215
2022, and annually thereafter, each payer shall report to the executive 216
director, in a form and manner prescribed by the executive director, for 217
the preceding or prior years, if the executive director so requests based 218
on material changes to data previously submitted, aggregated data, 219
including aggregated self-funded data as applicable, necessary for the 220
executive director to calculate total health care expenditures, primary 221
care spending as a percentage of total medical expenses and net cost of 222
private health insurance. Each payer shall also disclose, as requested by 223
the executive director, payer data required for adjusting total medical 224
expense calculations to reflect changes in the patient population. 225
(b) Not later than March 31, 2023, and annually thereafter, the 226
executive director shall prepare and post on the office's Internet web 227
site, a report concerning the total health care expenditures utilizing the 228
total aggregate medical expenses reported by payers pursuant to 229
subsection (a) of this section, including, but not limited to, a breakdown 230
of such population-adjusted total medical expenses by payer and 231 Governor's Bill No. 5042
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provider entities. The report may include, but shall not be limited to, 232
information regarding the following: 233
(1) Trends in major service category spending; 234
(2) Primary care spending as a percentage of total medical expenses; 235
and 236
(3) The net cost of private health insurance by payer by market 237
segment, including individual, small group, large group, self-insured, 238
student and Medicare Advantage markets. 239
(c) The executive director shall annually submit a request to the 240
federal Centers for Medicare and Medicaid Services for the unadjusted 241
total medical expenses of Connecticut residents. 242
(d) Not later than August 15, 2023, and annually thereafter, each 243
payer or provider entity shall report to the executive director in a form 244
and manner prescribed by the executive director, for the preceding year, 245
and for prior years if the executive director so requests based on material 246
changes to data previously submitted, on the health care quality 247
benchmarks adopted pursuant to section 3 of this act. 248
(e) Not later than March 31, 2024, and annually thereafter, the 249
executive director shall prepare and post on the office's Internet web 250
site, a report concerning health care quality benchmarks reported by 251
payers and provider entities pursuant to subsection (d) of this section. 252
(f) The executive director may enter into such contractual agreements 253
as may be necessary to carry out the purposes of this section, including, 254
but not limited to, contractual agreements with actuarial, economic and 255
other experts and consultants. 256
Sec. 5. (NEW) (Effective from passage) (a) (1) For each calendar year, 257
beginning on January 1, 2023, the executive director shall identify, not 258
later than May first of such calendar year, each payer or provider entity 259
that exceeded the health care cost growth benchmark or failed to meet 260
the primary care spending target for the performance year. For each 261 Governor's Bill No. 5042
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calendar year beginning on or after January 1, 2024, the executive 262
director shall identify, not later than May first of such calendar year, 263
each payer or provider entity that failed to meet the health care quality 264
benchmarks for the performance year. 265
(2) Not later than thirty days after the executive director identifies 266
each payer or provider entity pursuant to subsection (a) of this section, 267
the executive director shall send a notice to each such payer or provider 268
entity. Such notice shall be in a form and manner prescribed by the 269
executive director, and shall disclose to each such payer or provider 270
entity: 271
(A) That the executive director has identified such payer or provider 272
entity pursuant to subdivision (1) of this subsection; and 273
(B) The factual basis for the executive director's identification of such 274
payer or provider entity pursuant to subdivision (1) of this subsection. 275
(b) (1) For each calendar year beginning on and after January 1, 2023, 276
if the executive director determines that the annual percentage change 277
in total health care expenditures for the performance year exceeded the 278
health care cost growth benchmark for such year, the executive director 279
shall identify, not later than May first of such calendar year, any other 280
entity that significantly contributed to exceeding such benchmark. Each 281
identification shall be based on: 282
(A) The report, if any, prepared by the executive director pursuant to 283
subsection (b) of section 4 of this act for such calendar year; 284
(B) The report filed pursuant to section 38a-479ppp of the general 285
statutes for such calendar year; 286
(C) The information and data reported to the office pursuant to 287
subsection (d) of section 19a-754b of the general statutes for such 288
calendar year; 289
(D) Information obtained from the all-payer claims database 290
established under section 19a-755a of the general statutes; and 291 Governor's Bill No. 5042
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(E) Any other information that the executive director, in the executive 292
director's discretion, deems relevant for the purposes of this section. 293
(2) The executive director shall account for costs, net of rebates and 294
discounts, when identifying other entities pursuant to this section. 295
Sec. 6. (NEW) (Effective from passage) (a) (1) Not later than June 30, 296
2023, and annually thereafter, the executive director shall hold an 297
informational public hearing to compare the growth in total health care 298
expenditures in the performance year to the health care cost growth 299
benchmark established pursuant to section 3 of this act for such year. 300
Such hearing shall involve an examination of: 301
(A) The report, if any, most recently prepared by the executive 302
director pursuant to subsection (b) of section 4 of this act; 303
(B) The expenditures of provider entities and payers, including, but 304
not limited to, health care cost trends, primary care spending as a 305
percentage of total medical expenses and the factors contributing to 306
such costs and expenditures; and 307
(C) Any other matters that the executive director, in the executive 308
director's discretion, deems relevant for the purposes of this section. 309
(2) The executive director may require any payer or provider entity 310
that, for the performance year, is found to be a significant contributor to 311
health care cost growth in the state or has failed to meet the primary care 312
spending target, to participate in such hearing. Each such payer or 313
provider entity that is required to participate in such hearing shall 314
provide testimony on issues identified by the executive director and 315
provide additional information on actions taken to reduce such payer's 316
or entity's contribution to future state-wide health care costs and 317
expenditures or to increase such payer's or provider entity's primary 318
care spending as a percentage of total medical expenses. 319
(3) The executive director may require that any other entity that is 320
found to be a significant contributor to health care cost growth in this 321 Governor's Bill No. 5042
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state during the performance year participate in such hearing. Any other 322
entity that is required to participate in such hearing shall provide 323
testimony on issues identified by the executive director and provide 324
additional information on actions taken to reduce such other entity's 325
contribution to future state-wide health care costs. If such other entity is 326
a drug manufacturer, and the executive director requires that such drug 327
manufacturer participate in such hearing with respect to a specific drug 328
or class of drugs, such hearing may, to the extent possible, include 329
representatives from at least one brand-name manufacturer, one generic 330
manufacturer and one innovator company that is less than ten years old. 331
(4) Not later than October 15, 2023, and annually thereafter, the 332
executive director shall prepare and submit a report, in accordance with 333
section 11-4a of the general statutes, to the joint standing committees of 334
the General Assembly having cognizance of matters relating to 335
insurance and public health. Such report shall be based on the executive 336
director's analysis of the information submitted during the most recent 337
informational public hearing conducted pursuant to this subsection and 338
any other information that the executive director, in the executive 339
director's discretion, deems relevant for the purposes of this section, and 340
shall: 341
(A) Describe health care spending trends in this state, including, but 342
not limited to, trends in primary care spending as a percentage of total 343
medical expense, and the factors underlying such trends; and 344
(B) Disclose the executive director's recommendations, if any, 345
concerning strategies to increase the efficiency of the state's health care 346
system, including, but not limited to, any recommended legislation 347
concerning the state's health care system. 348
(b) (1) Not later than June 30, 2024, and annually thereafter, the 349
executive director shall hold an informational public hearing to 350
compare the performance of payers and provider entities in the 351
performance year to the quality benchmarks established for such year 352
pursuant to section 3 of this act. Such hearing shall include an 353 Governor's Bill No. 5042
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examination of: 354
(A) The report, if any, most recently prepared by the executive 355
director pursuant to subsection (e) of section 4 of this act; and 356
(B) Any other matters that the executive director, in the executive 357
director's discretion, deems relevant for the purposes of this section. 358
(2) The executive director may require any payer or provider entity 359
that failed to meet any health care quality benchmarks in this state 360
during the performance year to participate in such hearing. Each such 361
payer or provider entity that is required to participate in such hearing 362
shall provide testimony on issues identified by the executive director 363
and provide additional information on actions taken to improve such 364
payer's or provider entity's quality benchmark performance. 365
(3) Not later than October 15, 2024, and annually thereafter, the 366
executive director shall prepare and submit a report, in accordance with 367
section 11-4a of the general statutes, to the joint standing committees of 368
the General Assembly having cognizance of matters relating to 369
insurance and public health. Such report shall be based on the executive 370
director's analysis of the information submitted during the most recent 371
informational public hearing conducted pursuant to this subsection and 372
any other information that the executive director, in the executive 373
director's discretion, deems relevant for the purposes of this section, and 374
shall: 375
(A) Describe health care quality trends in this state and the factors 376
underlying such trends; and 377
(B) Disclose the executive director's recommendations, if any, 378
concerning strategies to improve the quality of the state's health care 379
system, including, but not limited to, any recommended legislation 380
concerning the state's health care system. 381
Sec. 7. (NEW) (Effective from passage) The executive director may 382
adopt regulations, in accordance with chapter 54 of the general statutes, 383 Governor's Bill No. 5042
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to implement the provisions of section 19a-754a of the general statutes, 384
as amended by this act, and sections 2 to 6, inclusive, of this act. 385
This act shall take effect as follows and shall amend the following
sections:
Section 1 from passage 19a-754a
Sec. 2 from passage New section
Sec. 3 from passage New section
Sec. 4 from passage New section
Sec. 5 from passage New section
Sec. 6 from passage New section
Sec. 7 from passage New section
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.]