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General Assembly Substitute Bill No. 5042
February Session, 2022
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statutes is repealed and the following is substituted in lieu thereof 2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
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 Substitute Bill No. 5042
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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 spending target pursuant to section 3 of 25
this act, (C) developing and adopting health care quality benchmarks 26
pursuant to section 3 of this act, (D) developing strategies, in 27
consultation with stakeholders, to facilitate adherence with such 28
benchmarks and targets developed pursuant to section 3 of this act, (E) 29
enhancing the transparency of provider entities, as defined in 30
subdivision (13) of section 2 of this act, (F) monitoring the development 31
of accountable care organizations and patient-centered medical homes 32
in the state, and (G) monitoring the adoption of alternative payment 33
methodologies in the 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
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 Substitute Bill No. 5042
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(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
(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 Substitute Bill No. 5042
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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
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 health care cost growth 109 Substitute Bill No. 5042
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benchmark, primary care spending target or health care quality 110
benchmark; 111
(11) "Pharmacy benefits manager" has the same meaning as provided 112
in subdivision (10) of section 38a-479ooo of the general statutes; 113
(12) "Primary care spending target" means the annual target 114
established pursuant to section 3 of this act; 115
(13) "Provider entity" means an organized group of clinicians that 116
come together for the purposes of contracting, or are an established 117
billing unit that, at a minimum, includes primary care providers, and 118
that collectively, during any given calendar year, has enough attributed 119
lives to participate in total cost of care contracts, even if they are not 120
engaged in a total cost of care contract; 121
(14) "Potential gross state product" means a forecasted measure of the 122
economy that equals the sum of the (A) expected growth in national 123
labor force productivity, (B) expected growth in the state's labor force, 124
and (C) expected national inflation, minus the expected state population 125
growth; 126
(15) "Total health care expenditures" means the sum of all health care 127
expenditures in this state from public and private sources for a given 128
calendar year, including: (A) All claims-based spending paid to 129
providers, net of pharmacy rebates, (B) all patient cost-sharing amounts, 130
and (C) the net cost of private health insurance; and 131
(16) "Total medical expense" means the total cost of care for the 132
patient population of a payer or provider entity for a given calendar 133
year, where cost is calculated for such year as the sum of (A) all claims-134
based spending paid to providers by public and private payers, and net 135
of pharmacy rebates, (B) all nonclaims payments for such year, 136
including, but not limited to, incentive payments and care coordination 137
payments, and (C) all patient cost-sharing amounts expressed on a per 138
capita basis for the patient population of a payer or provider entity in 139
this state. 140 Substitute Bill No. 5042
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Sec. 3. (NEW) (Effective from passage) (a) Not later than July 1, 2022, 141
the executive director shall publish (1) the health care cost growth 142
benchmarks and annual primary care spending targets as a percentage 143
of total medical expenses for the calendar years 2021 to 2025, inclusive, 144
and (2) the annual health care quality benchmarks for the calendar years 145
2022 to 2025, inclusive, on the office's Internet web site. 146
(b) (1) (A) Not later than July 1, 2025, and every five years thereafter, 147
the executive director shall develop and adopt annual health care cost 148
growth benchmarks and annual primary care spending targets for the 149
succeeding five calendar years for provider entities and payers. 150
(B) In developing the health care cost growth benchmarks and 151
primary care spending targets pursuant to this subdivision, the 152
executive director shall consider (i) any historical and forecasted 153
changes in median income for individuals in the state and the growth 154
rate of potential gross state product, (ii) the rate of inflation, and (iii) the 155
most recent report, if any, prepared by the executive director pursuant 156
to subsection (b) of section 4 of this act. 157
(C) (i) The executive director may hold informational public hearings 158
concerning the benchmarks and targets set pursuant to subsection (a) or 159
subdivision (1) of subsection (b) of this section. Such informational 160
public hearings shall be held at a time and place designated by the 161
executive director in a notice prominently posted by the executive 162
director on the office's Internet web site and in a form and manner 163
prescribed by the executive director. 164
(ii) If the executive director determines, after any informational 165
public hearing held pursuant to this subparagraph, that a modification 166
to any health care cost growth benchmark or annual primary care 167
spending target is, in the executive director's discretion, reasonably 168
warranted, the executive director may modify such benchmark or 169
target. 170
(iii) If the executive director determines that the rate of inflation 171 Substitute Bill No. 5042
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requires modification of any health care cost growth benchmark 172
adopted under this section, the executive director may modify such 173
benchmark. In such event, the executive director shall not be required 174
to hold an informational public hearing concerning such modified 175
health care cost growth benchmark. 176
(D) The executive director shall post each adopted health care cost 177
growth benchmark and annual primary care spending target on the 178
office's Internet web site. 179
(2) (A) Not later than July 1, 2025, and every five years thereafter, the 180
executive director shall develop and adopt annual health care quality 181
benchmarks for the succeeding five calendar years for provider entities 182
and payers. 183
(B) In developing annual health care quality benchmarks pursuant to 184
this subdivision, the executive director shall consider (i) quality 185
measures endorsed by nationally recognized organizations, including, 186
but not limited to, the National Quality Forum, the National Committee 187
for Quality Assurance, the Centers for Medicare and Medicaid Services, 188
the Centers for Disease Control, the Joint Commission and expert 189
organizations that develop health equity measures, and (ii) measures 190
that: (I) Concern health outcomes, overutilization, underutilization and 191
patient safety, (II) meet standards of patient-centeredness and ensure 192
consideration of differences in preferences and clinical characteristics 193
within patient subpopulations, and (III) concern community health or 194
population health. 195
(C) (i) The executive director may hold informational public hearings 196
concerning the quality measures the executive director proposes to 197
adopt as health care quality benchmarks. Such informational public 198
hearings shall be held at a time and place designated by the executive 199
director in a notice prominently posted by the executive director on the 200
office's Internet web site and in a form and manner prescribed by the 201
executive director. 202 Substitute Bill No. 5042
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(ii) If the executive director determines, after any informational 203
public hearing held pursuant to this subparagraph, that modifications 204
to any health care quality benchmarks are, in the executive director's 205
discretion, reasonably warranted, the executive director may modify 206
such quality benchmarks. The executive director shall not be required 207
to hold an additional informational public hearing concerning such 208
modified quality benchmarks. 209
(D) The executive director shall post each adopted health care quality 210
benchmark on the office's Internet web site. 211
(c) The executive director may enter into such contractual agreements 212
as may be necessary to carry out the purposes of this section, including, 213
but not limited to, contractual agreements with actuarial, economic and 214
other experts and consultants. 215
Sec. 4. (NEW) (Effective from passage) (a) Not later than August 15, 216
2022, and annually thereafter, each payer shall report to the executive 217
director, in a form and manner prescribed by the executive director, for 218
the preceding or prior years, if the executive director so requests based 219
on material changes to data previously submitted, aggregated data, 220
including aggregated self-funded data as applicable, necessary for the 221
executive director to calculate total health care expenditures, primary 222
care spending as a percentage of total medical expenses and net cost of 223
private health insurance. Each payer shall also disclose, as requested by 224
the executive director, payer data required for adjusting total medical 225
expense calculations to reflect changes in the patient population. 226
(b) Not later than March 31, 2023, and annually thereafter, the 227
executive director shall prepare and post on the office's Internet web 228
site, a report concerning the total health care expenditures utilizing the 229
total aggregate medical expenses reported by payers pursuant to 230
subsection (a) of this section, including, but not limited to, a breakdown 231
of such population-adjusted total medical expenses by payer and 232
provider entities. The report may include, but shall not be limited to, 233
information regarding the following: 234 Substitute Bill No. 5042
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(1) Trends in major service category spending; 235
(2) Primary care spending as a percentage of total medical expenses; 236
and 237
(3) The net cost of private health insurance by payer by market 238
segment, including individual, small group, large group, self-insured, 239
student and Medicare Advantage markets. 240
(c) The executive director shall annually submit a request to the 241
federal Centers for Medicare and Medicaid Services for the unadjusted 242
total medical expenses of Connecticut residents. 243
(d) Not later than August 15, 2023, and annually thereafter, each 244
payer or provider entity shall report to the executive director in a form 245
and manner prescribed by the executive director, for the preceding year, 246
and for prior years if the executive director so requests based on material 247
changes to data previously submitted, on the health care quality 248
benchmarks adopted pursuant to section 3 of this act. 249
(e) Not later than March 31, 2024, and annually thereafter, the 250
executive director shall prepare and post on the office's Internet web 251
site, a report concerning health care quality benchmarks reported by 252
payers and provider entities pursuant to subsection (d) of this section. 253
(f) The executive director may enter into such contractual agreements 254
as may be necessary to carry out the purposes of this section, including, 255
but not limited to, contractual agreements with actuarial, economic and 256
other experts and consultants. 257
Sec. 5. (NEW) (Effective from passage) (a) (1) For each calendar year, 258
beginning on January 1, 2023, the executive director shall identify, not 259
later than May first of such calendar year, each payer or provider entity 260
that exceeded the health care cost growth benchmark or failed to meet 261
the primary care spending target for the performance year. For each 262
calendar year beginning on or after January 1, 2024, the executive 263
director shall identify, not later than May first of such calendar year, 264 Substitute Bill No. 5042
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each payer or provider entity that failed to meet the health care quality 265
benchmarks for the performance year. 266
(2) Not later than thirty days after the executive director identifies 267
each payer or provider entity pursuant to subsection (a) of this section, 268
the executive director shall send a notice to each such payer or provider 269
entity. Such notice shall be in a form and manner prescribed by the 270
executive director, and shall disclose to each such payer or provider 271
entity: 272
(A) That the executive director has identified such payer or provider 273
entity pursuant to subdivision (1) of this subsection; and 274
(B) The factual basis for the executive director's identification of such 275
payer or provider entity pursuant to subdivision (1) of this subsection. 276
(b) (1) For each calendar year beginning on and after January 1, 2023, 277
if the executive director determines that the annual percentage change 278
in total health care expenditures for the performance year exceeded the 279
health care cost growth benchmark for such year, the executive director 280
shall identify, not later than May first of such calendar year, any other 281
entity that significantly contributed to exceeding such benchmark. Each 282
identification shall be based on: 283
(A) The report, if any, prepared by the executive director pursuant to 284
subsection (b) of section 4 of this act for such calendar year; 285
(B) The report filed pursuant to section 38a-479ppp of the general 286
statutes for such calendar year; 287
(C) The information and data reported to the office pursuant to 288
subsection (d) of section 19a-754b of the general statutes for such 289
calendar year; 290
(D) Information obtained from the all-payer claims database 291
established under section 19a-755a of the general statutes; and 292 Substitute Bill No. 5042
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(E) Any other information that the executive director, in the executive 293
director's discretion, deems relevant for the purposes of this section. 294
(2) The executive director shall account for costs, net of rebates and 295
discounts, when identifying other entities pursuant to this section. 296
Sec. 6. (NEW) (Effective from passage) (a) (1) Not later than June 30, 297
2023, and annually thereafter, the executive director shall hold an 298
informational public hearing to compare the growth in total health care 299
expenditures in the performance year to the health care cost growth 300
benchmark established pursuant to section 3 of this act for such year. 301
Such hearing shall involve an examination of: 302
(A) The report, if any, most recently prepared by the executive 303
director pursuant to subsection (b) of section 4 of this act; 304
(B) The expenditures of provider entities and payers, including, but 305
not limited to, health care cost trends, primary care spending as a 306
percentage of total medical expenses and the factors contributing to 307
such costs and expenditures; and 308
(C) Any other matters that the executive director, in the executive 309
director's discretion, deems relevant for the purposes of this section. 310
(2) The executive director may require any payer or provider entity 311
that, for the performance year, is found to be a significant contributor to 312
health care cost growth in the state or has failed to meet the primary care 313
spending target, to participate in such hearing. Each such payer or 314
provider entity that is required to participate in such hearing shall 315
provide testimony on issues identified by the executive director and 316
provide additional information on actions taken to reduce such payer's 317
or entity's contribution to future state-wide health care costs and 318
expenditures or to increase such payer's or provider entity's primary 319
care spending as a percentage of total medical expenses. 320
(3) The executive director may require that any other entity that is 321
found to be a significant contributor to health care cost growth in this 322 Substitute Bill No. 5042
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state during the performance year participate in such hearing. Any other 323
entity that is required to participate in such hearing shall provide 324
testimony on issues identified by the executive director and provide 325
additional information on actions taken to reduce such other entity's 326
contribution to future state-wide health care costs. If such other entity is 327
a drug manufacturer, and the executive director requires that such drug 328
manufacturer participate in such hearing with respect to a specific drug 329
or class of drugs, such hearing may, to the extent possible, include 330
representatives from at least one brand-name manufacturer, one generic 331
manufacturer and one innovator company that is less than ten years old. 332
(4) Not later than October 15, 2023, and annually thereafter, the 333
executive director shall prepare and submit a report, in accordance with 334
section 11-4a of the general statutes, to the joint standing committees of 335
the General Assembly having cognizance of matters relating to 336
insurance and public health. Such report shall be based on the executive 337
director's analysis of the information submitted during the most recent 338
informational public hearing conducted pursuant to this subsection and 339
any other information that the executive director, in the executive 340
director's discretion, deems relevant for the purposes of this section, and 341
shall: 342
(A) Describe health care spending trends in this state, including, but 343
not limited to, trends in primary care spending as a percentage of total 344
medical expense, and the factors underlying such trends; and 345
(B) Disclose the executive director's recommendations, if any, 346
concerning strategies to increase the efficiency of the state's health care 347
system, including, but not limited to, any recommended legislation 348
concerning the state's health care system. 349
(b) (1) Not later than June 30, 2024, and annually thereafter, the 350
executive director shall hold an informational public hearing to 351
compare the performance of payers and provider entities in the 352
performance year to the quality benchmarks established for such year 353
pursuant to section 3 of this act. Such hearing shall include an 354 Substitute Bill No. 5042
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examination of: 355
(A) The report, if any, most recently prepared by the executive 356
director pursuant to subsection (e) of section 4 of this act; and 357
(B) Any other matters that the executive director, in the executive 358
director's discretion, deems relevant for the purposes of this section. 359
(2) The executive director may require any payer or provider entity 360
that failed to meet any health care quality benchmarks in this state 361
during the performance year to participate in such hearing. Each such 362
payer or provider entity that is required to participate in such hearing 363
shall provide testimony on issues identified by the executive director 364
and provide additional information on actions taken to improve such 365
payer's or provider entity's quality benchmark performance. 366
(3) Not later than October 15, 2024, and annually thereafter, the 367
executive director shall prepare and submit a report, in accordance with 368
section 11-4a of the general statutes, to the joint standing committees of 369
the General Assembly having cognizance of matters relating to 370
insurance and public health. Such report shall be based on the executive 371
director's analysis of the information submitted during the most recent 372
informational public hearing conducted pursuant to this subsection and 373
any other information that the executive director, in the executive 374
director's discretion, deems relevant for the purposes of this section, and 375
shall: 376
(A) Describe health care quality trends in this state and the factors 377
underlying such trends; and 378
(B) Disclose the executive director's recommendations, if any, 379
concerning strategies to improve the quality of the state's health care 380
system, including, but not limited to, any recommended legislation 381
concerning the state's health care system. 382
Sec. 7. (NEW) (Effective from passage) The executive director may 383
adopt regulations, in accordance with chapter 54 of the general statutes, 384 Substitute Bill No. 5042
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to implement the provisions of section 19a-754a of the general statutes, 385
as amended by this act, and sections 2 to 6, inclusive, of this act. 386
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 Legislative Commissioners:
In Section 1(b)(3), "primary care target" was changed to "primary care
spending target" for consistency; in Section 2(10), "cost growth
benchmark" was changed to "health care cost growth benchmark",
"primary care spend target" was changed to "primary care spending
target", and "quality benchmark" was changed to "health care quality
benchmark" for consistency; in Section 2(12), "Primary care target" was
changed to "Primary care spending target" for consistency; and in
Section 3(b)(2)(C)(ii), "quality benchmarks" was changed to "health care
quality benchmarks" for consistency.
INS Joint Favorable Subst. -LCO