Connecticut 2024 Regular Session

Connecticut House Bill HB05054 Compare Versions

Only one version of the bill is available at this time.

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3	3	LCO No. 582 1 of 24
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5	5	General Assembly Governor's Bill No. 5054
6	6	February Session, 2024
7	7	LCO No. 582
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9	9
10	10	Referred to Committee on INSURANCE AND REAL ESTATE
11	11
12	12
13	13	Introduced by:
14	14	Request of the Governor Pursuant
15	15	to Joint Rule 9
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21	21	AN ACT ADDRESSING HEALTH CARE AFFORDABILITY.
22	22	Be it enacted by the Senate and House of Representatives in General
23	23	Assembly convened:
24	24
25	25	Section 1. (NEW) (Effective October 1, 2024) (a) There is hereby 1
26	26	established the Prescription Drug Affordability Board to advise the 2
27	27	executive director of the Office of Health Strategy on decisions 3
28	28	regarding the affordability of prescription drugs. The board shall be 4
29	29	within the Office of Health Strategy for administrative purposes only. 5
30	30	(b) The purposes of the Prescription Drug Affordability Board shall 6
31	31	be to (1) explore strategies to reduce out-of-pocket drug costs to 7
32	32	consumers while supporting innovations in biotechnology and scientific 8
33	33	discovery; (2) study the prescription drug supply chain and 9
34	34	pharmaceutical pricing strategies to identify opportunities for consumer 10
35	35	savings; (3) monitor prescription drug prices in the state; (4) promote 11
36	36	innovative strategies for the use of more affordable drugs; and (5) 12
37	37	recommend a range of options of prescription drug cost affordability 13
38	38	tools to the executive director of the Office of Health Strategy. 14 Governor's Bill No. 5054
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44	44	(c) The board shall consist of five members, each of whom shall have 15
45	45	an advanced degree and experience or expertise in health care 16
46	46	economics, health services research, pharmoeconomics, pharmacology 17
47	47	or clinical medicine. At least one such member shall have direct 18
48	48	experience with consumer advocacy and health equity. The members 19
49	49	shall be appointed by the Governor with the advice and consent of either 20
50	50	house of the General Assembly. The Governor shall make all initial 21
51	51	appointments not later than ninety days after the effective date of this 22
52	52	section. Any vacancy shall be filled for the remainder of the unexpired 23
53	53	term by the Governor. 24
54	54	(d) Each member of the board shall serve a term of three years, except 25
55	55	as to the terms of the members who are first appointed to the board. 26
56	56	Two such members shall serve an initial term of three years, two such 27
57	57	members shall serve an initial term of two years, and one such member 28
58	58	shall serve an initial term of one year, to be determined by the Governor. 29
59	59	The Governor may remove any appointed member of the board for 30
60	60	malfeasance in office, failure to regularly attend meetings or any cause 31
61	61	that renders the member incapable or unfit to discharge the duties of the 32
62	62	member's office. Any such removal is not subject to review. 33
63	63	(e) The Governor shall designate one member of the board to serve as 34
64	64	the chairperson of the board. Such chairperson shall schedule the first 35
65	65	meeting of the board, which shall be held not later than one hundred 36
66	66	twenty days after the effective date of this section. 37
67	67	(f) The board shall meet not less than four times annually to carry out 38
68	68	its purposes as set forth in subsection (b) of this section. A majority of 39
69	69	the board constitutes a quorum. The concurrence of a majority of the 40
70	70	board in any matter within its powers and duties is required for any 41
71	71	determination made by the board. Any conflict of interest involving a 42
72	72	member of the board shall be disclosed at the next board meeting after 43
73	73	the conflict is identified. 44
74	74	(g) Not later than December 31, 2025, and annually thereafter, the 45
75	75	board shall report, in accordance with the provisions of section 11-4a of 46 Governor's Bill No. 5054
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81	81	the general statutes, to the joint standing committees of the General 47
82	82	Assembly having cognizance of matters relating to aging, human 48
83	83	services, insurance and public health. The report shall include, but need 49
84	84	not be limited to: (1) Strategies for identifying and eliminating pricing 50
85	85	or business practices that do not support or enhance innovation in drug 51
86	86	development, (2) price trends and affordability strategies for any drug 52
87	87	identified pursuant to subsection (b) or (c) of section 3 of this act, (3) any 53
88	88	recommendations the board may have for legislation needed to make 54
89	89	prescription drug products more affordable in the state while 55
90	90	supporting and enhancing innovation in drug development, (4) 56
91	91	purchasing strategies, cost effectiveness evaluations and the 57
92	92	development of new technologies and drugs that increase affordability, 58
93	93	and (5) a summary and evaluation of state prescription drug advisory 59
94	94	board activities and recommendations. 60
95	95	(h) Members of the board may engage in private employment, or in 61
96	96	a profession or business, subject to any applicable laws, rules and 62
97	97	regulations of the state regarding official ethics or conflict of interest. As 63
98	98	used in this subsection, (1) "conflict of interest" means (A) an association, 64
99	99	including a financial or personal association, that has the potential to 65
100	100	bias or appear to bias an individual's decisions in matters related to the 66
101	101	board, and (B) any instance in which a board member, a staff member, 67
102	102	a contractor of the division on behalf of the board or an immediate 68
103	103	family member of a board member has received or could receive (i) a 69
104	104	financial benefit of any amount derived from the results or findings of a 70
105	105	study or determination that is reached by or for the board, or (ii) a 71
106	106	financial benefit from an individual or company that owns or 72
107	107	manufacturers a prescription drug, service or item that is being or will 73
108	108	be studied by the board, and (2) "financial benefit" means honoraria, 74
109	109	fees, stock or any other form of compensation, including increases to the 75
110	110	value of existing stock holdings. 76
111	111	(i) In carrying out its purposes, the board may: 77
112	112	(1) Collect and review publicly available information regarding 78
113	113	prescription drug pricing and business practices of health carriers, 79 Governor's Bill No. 5054
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119	119	health maintenance organizations, managed care organizations, 80
120	120	manufacturers, wholesale distributors and pharmacy benefit managers, 81
121	121	including, but not limited to, the annual report by pharmacy benefit 82
122	122	managers required pursuant to section 38a-479ppp of the general 83
123	123	statutes; 84
124	124	(2) Identify innovative strategies that may reduce the cost of 85
125	125	prescription drugs to consumers; 86
126	126	(3) Identify states with innovative programs to lower prescription 87
127	127	drug costs and, if relevant, enter into memoranda of understanding with 88
128	128	such states to aid in the collection of transparency data for prescription 89
129	129	drug products or any other information needed to establish similar 90
130	130	programs in this state; and 91
131	131	(4) Receive and accept aid or contributions from any source of money, 92
132	132	property, labor or other things of value, to be held, used and applied to 93
133	133	carry out the purposes of the board, provided acceptance of such aid or 94
134	134	contributions does not present a conflict of interest for any board 95
135	135	member or any purpose of the board. 96
136	136	Sec. 2. (NEW) (Effective October 1, 2024) As used in this section and 97
137	137	section 3 of this act: 98
138	138	(1) "Biologic" means a drug licensed under 42 USC 262, as amended 99
139	139	from time to time; 100
140	140	(2) "Biosimilar" means a drug that is highly similar to a biologic and 101
141	141	is produced or distributed in accordance with a biologics license 102
142	142	application approved under 42 USC 262(k), as amended from time to 103
143	143	time; 104
144	144	(3) "Board" means the Prescription Drug Affordability Board 105
145	145	established pursuant to section 1 of this act; 106
146	146	(4) "Brand name drug" means a drug that is produced or distributed 107
147	147	in accordance with an original new drug application approved under 21 108
148	148	USC 355, as amended from time to time, but does not include an 109 Governor's Bill No. 5054
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154	154	authorized generic drug as defined in 42 CFR 447.502, as amended from 110
155	155	time to time; 111
156	156	(5) "FDA breakthrough drug" means a drug granted expedited 112
157	157	review by the United States Food and Drug Administration under 21 113
158	158	USC 356, as amended from time to time. 114
159	159	(6) "Generic drug" means (A) a prescription drug product that is 115
160	160	marketed or distributed in accordance with an abbreviated new drug 116
161	161	application approved under 21 USC 355, as amended from time to time, 117
162	162	(B) an authorized generic drug as defined in 42 CFR 447.502, as 118
163	163	amended from time to time, or (C) a drug that entered the market before 119
164	164	calendar year 1962 that was not originally marketed under a new 120
165	165	prescription drug product application; 121
166	166	(7) "Manufacturer" means an entity that (A) engages in the 122
167	167	manufacture of a drug product, or (B) enters into a lease with another 123
168	168	manufacturer to market and distribute a prescription drug product 124
169	169	under the entity's own name and sets or changes the wholesale 125
170	170	acquisition cost of the prescription drug product it manufactures or 126
171	171	markets; 127
172	172	(8) "Orphan drug" has the same meaning as provided in 21 CFR 316.3, 128
173	173	as amended from time to time; and 129
174	174	(9) "Prescription drug product" means a brand name drug, a generic 130
175	175	drug, a biologic or biosimilar. 131
176	176	Sec. 3. (NEW) (Effective October 1, 2024) (a) To the extent practicable, 132
177	177	the Prescription Drug Affordability Board established pursuant to 133
178	178	section 1 of this act may assess pricing information for prescription drug 134
179	179	products by: (1) Entering into a memorandum of understanding with 135
180	180	another state to which a manufacturer reports pricing information, (2) 136
181	181	assessing spending for the drug in the state, (3) utilizing data and 137
182	182	findings, including consumer affordability strategies, developed by 138
183	183	another state's board, (4) utilizing data and findings, including cost 139
184	184	containment strategies, developed by any other state or federal entity, 140 Governor's Bill No. 5054
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190	190	(5) utilizing the maximum fair price for a prescription drug for persons 141
191	191	eligible for Medicare established pursuant to the federal Inflation 142
192	192	Reduction Act of 2022, P.L. No. 117-169, and (6) assessing any other 143
193	193	available pricing information. 144
194	194	(b) On and after October 1, 2026, the board shall identify prescription 145
195	195	drug products that, as adjusted annually for inflation in accordance with 146
196	196	the consumer price index for all urban consumers published by the 147
197	197	United States Department of Labor, Bureau of Labor Statistics, are: 148
198	198	(1) Brand name drugs that have a launch wholesale acquisition cost 149
199	199	of thirty thousand dollars or more per year or course of treatment; 150
200	200	(2) Brand name drugs that have a wholesale acquisition cost increase 151
201	201	of three thousand dollars or more in any twelve–month period; 152
202	202	(3) Biosimilars that have a launch wholesale acquisition cost that is 153
203	203	not at least fifteen per cent lower than the referenced brand biologic at 154
204	204	the time the biosimilars are launched; and 155
205	205	(4) Generic drugs that have: 156
206	206	(A) A wholesale acquisition cost of one hundred dollars or more for 157
207	207	(i) a thirty-day supply lasting a patient for a period of thirty consecutive 158
208	208	days based on the recommended dosage approved for labeling by the 159
209	209	United States Food and Drug Administration, (ii) a supply lasting a 160
210	210	patient for fewer than thirty days based on the recommended dosage 161
211	211	approved for labeling by the United States Food and Drug 162
212	212	Administration, or (iii) one unit of the drug if the labeling approved by 163
213	213	the United States Food and Drug Administration does not recommend 164
214	214	a finite dosage; and 165
215	215	(B) A wholesale acquisition cost that increased by two hundred per 166
216	216	cent or more during the immediately preceding twelve-month period, 167
217	217	as determined by the difference between the resulting wholesale 168
218	218	acquisition cost and the average of the wholesale acquisition cost 169
219	219	reported over the immediately preceding twelve months. 170 Governor's Bill No. 5054
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225	225	(c) On and after October 1, 2026, the board shall identify any other 171
226	226	prescription drug products or pricing practices that may create 172
227	227	affordability challenges for the health care system in the state or 173
228	228	patients, including, but not limited to, drugs needed to address 174
229	229	significant public health priorities. 175
230	230	(d) After identifying prescription drug products as required by 176
231	231	subsections (b) and (c) of this section, the board may conduct, within 177
232	232	available appropriations, a review for any identified prescription drug 178
233	233	product or pricing practice if, after (1) seeking input from relevant 179
234	234	stakeholders, and (2) considering the average patient cost share of the 180
235	235	prescription drug product, the board determines such review is in the 181
236	236	interest of consumers, provided the drug product is not an FDA 182
237	237	breakthrough drug, an orphan drug, a drug with a new and unique 183
238	238	mechanism of action for treating a medical condition or any other drug 184
239	239	that represents a significant innovation or advance in therapy. 185
240	240	(e) In conducting a review of prescription drugs, the board shall 186
241	241	examine any document and research related to the pricing of the 187
242	242	prescription drug product, including, but not limited to, (1) net average 188
243	243	price in the state, (2) market competition and context, (3) projected 189
244	244	revenue to the manufacturer, (4) the estimated value or cost 190
245	245	effectiveness, (5) whether and how the prescription drug product 191
246	246	represents an innovative therapy or is likely to improve health or health 192
247	247	outcomes for the target consumer, and (6) any rebates, discounts, patient 193
248	248	access programs or other cost mitigation strategies relevant to the 194
249	249	prescription drug product. 195
250	250	(f) The board shall determine whether use of the prescription drug 196
251	251	product, consistent with the labeling approved by the United States 197
252	252	Food and Drug Administration or standard medical practice, has led or 198
253	253	will lead to affordability challenges for the health care system in the 199
254	254	state or high out–of–pocket costs for patients but has not led or will not 200
255	255	lead to significant improvements in health or health outcomes. In 201
256	256	determining whether a prescription drug product has led or will lead to 202
257	257	an affordability challenge, the board may consider the following factors: 203 Governor's Bill No. 5054
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263	263	(1) The wholesale acquisition cost for the prescription drug product 204
264	264	sold in the state; 205
265	265	(2) The average monetary price concession, discount or rebate 206
266	266	provided or expected to be provided to health plans in the state as 207
267	267	reported by manufacturers and health plans, expressed as a percentage 208
268	268	of the wholesale acquisition cost for the prescription drug product 209
269	269	under review; 210
270	270	(3) The total amount of the price concession, discount or rebate the 211
271	271	manufacturer provides to each pharmacy benefits manager operating in 212
272	272	the state for the prescription drug product under review, as reported by 213
273	273	manufacturers and pharmacy benefits managers, expressed as a 214
274	274	percentage of the wholesale acquisition costs; 215
275	275	(4) The price at which therapeutic alternatives have been sold in the 216
276	276	state; 217
277	277	(5) The average monetary concession, discount or rebate the 218
278	278	manufacturer provides or is expected to provide to health plan payors 219
279	279	and pharmacy benefits managers in the state for therapeutic 220
280	280	alternatives; 221
281	281	(6) The costs to health plans based on patient access consistent with 222
282	282	United States Food and Drug Administration labeled indications and 223
283	283	recognized standard medical practice; 224
284	284	(7) The impact on patient access resulting from the cost of the 225
285	285	prescription drug product relative to health plan benefit design; 226
286	286	(8) The current or expected dollar value of drug–specific patient 227
287	287	access programs that are supported by the manufacturer; 228
288	288	(9) The relative financial impacts to health, medical or social services 229
289	289	costs as may be quantified and compared to baseline effects of existing 230
290	290	therapeutic alternatives; 231
291	291	(10) The average patient copayment or other cost sharing for the 232 Governor's Bill No. 5054
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297	297	prescription drug product in the state; 233
298	298	(11) Any information a manufacturer chooses to provide; and 234
299	299	(12) Any other factors as determined by the board. 235
300	300	(g) If the board finds that the spending on a prescription drug 236
301	301	product reviewed under this section has led or will lead to an 237
302	302	affordability challenge but has not provided or will not provide 238
303	303	significant benefits to health or health outcomes, the board shall 239
304	304	recommend potential cost containment strategies and tools to the 240
305	305	executive director of the Office of Health Strategy considering: (1) The 241
306	306	cost of administering the drug, (2) the cost of delivering the drug to 242
307	307	patients, and (3) other administrative costs related to the drug. In 243
308	308	making such recommendations, the board may utilize (A) cost 244
309	309	containment strategies set by similar boards in other states, (B) cost 245
310	310	containment strategies set by any other state or federal entity, and (C) 246
311	311	the maximum fair price for a prescription drug for persons eligible for 247
312	312	Medicare established pursuant to the federal Inflation Reduction Act of 248
313	313	2022. The board's recommendations shall not apply to Medicare Part D 249
314	314	prescription drug plans. 250
315	315	Sec. 4. (NEW) (Effective July 1, 2024) (a) There is established, within 251
316	316	the Office of Health Strategy, the Cost Growth Benchmark Oversight 252
317	317	Commission for the purpose of advising the executive director of the 253
318	318	Office of Health Strategy regarding implementation of the provisions of 254
319	319	sections 19a-754f to 19a-754j, inclusive, of the general statutes, as 255
320	320	amended by this act. 256
321	321	(b) (1) The commission shall consist of thirteen voting members who 257
322	322	shall be appointed by the Governor not later than August 31, 2024. The 258
323	323	Governor shall endeavor to appoint members representing the 259
324	324	following interests and specialties across the health care continuum, 260
325	325	including, but not limited to, (A) academic institutions, (B) employers, 261
326	326	(C) philanthropic, medical research and nonprofit organizations with 262
327	327	experience addressing health equity, health care costs, health care 263
328	328	advocacy and access to health care for underserved communities, (D) 264 Governor's Bill No. 5054
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334	334	health care economists or actuarial experts, (E) health care-related 265
335	335	employer coalitions and labor unions, (F) consumers of health care 266
336	336	services, and (G) health care advocates. At a minimum, the commission 267
337	337	shall include the following voting members: (i) Two representatives of 268
338	338	one or more consumer organizations with expertise in cost and quality 269
339	339	management; (ii) two health economists; (iii) two experts in health care 270
340	340	quality measurement and reporting; (iv) one expert in payment and 271
341	341	delivery system reform; and (v) one expert in primary care. Members 272
342	342	shall not include representatives of organizations that directly 273
343	343	contribute to health care costs in the state, including, but not limited to, 274
344	344	hospital systems, health carriers and provider organizations. The 275
345	345	executive director of the Office of Health Strategy, or the executive 276
346	346	director's designee, the Insurance Commissioner, or the commissioner's 277
347	347	designee, the Commissioners of Public Health, Social Services and 278
348	348	Mental Health and Addiction Services, or the commissioners' designees, 279
349	349	and the chief executive officer of the Connecticut Health Insurance 280
350	350	Exchange, or the chief executive officer's designee, shall serve as ex-281
351	351	officio nonvoting members of the commission. 282
352	352	(2) The membership terms for voting members initially appointed to 283
353	353	the commission shall be divided such that seven of the voting members 284
354	354	are appointed for an initial two-year term and six of the voting members 285
355	355	are appointed for an initial three-year term. Following the expiration of 286
356	356	such voting members' initial terms, the membership terms for voting 287
357	357	members shall be for two years, commencing on August first of the year 288
358	358	of the member's appointment. 289
359	359	(3) The Governor shall designate one member of the commission to 290
360	360	serve as the chairperson of the commission. 291
361	361	(c) The commission shall advise the executive director of the Office of 292
362	362	Health Strategy regarding all aspects of the initiatives concerning the 293
363	363	health care cost growth and health care quality benchmarks set forth in 294
364	364	sections 19a-754f to 19a-754j, inclusive, of the general statutes, as 295
365	365	amended by this act, and shall: 296 Governor's Bill No. 5054
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371	371	(1) Provide guidance, direction and oversight with respect to such 297
372	372	initiatives; 298
373	373	(2) Review and make recommendations to the executive director on 299
374	374	the methodology for (A) setting such benchmarks, (B) determining 300
375	375	compliance with such benchmarks, (C) analyzing the data regarding 301
376	376	drivers of health care cost growth, (D) conducting annual inflation 302
377	377	reviews, and (E) establishing additional quality benchmarks and 303
378	378	measure sets; 304
379	379	(3) Review and make policy recommendations and advise on 305
380	380	implementation strategies; and 306
381	381	(4) Develop recommendations that advance health equity in the 307
382	382	implementation of the health care cost growth benchmark to support 308
383	383	equitable access to affordable and high-quality health care for 309
384	384	underserved populations. 310
385	385	(d) The commission shall vote on each recommendation and submit 311
386	386	recommendations approved by the majority of voting members to the 312
387	387	executive director. The executive director shall: 313
388	388	(1) Review each recommendation; 314
389	389	(2) Determine whether to accept each recommendation; and 315
390	390	(3) If the executive director does not accept a recommendation from 316
391	391	the commission, the executive director shall provide a written response 317
392	392	to the commission that outlines the facts concerning such 318
393	393	recommendation and explains the factors considered in and rationale 319
394	394	for not accepting the recommendation. The executive director shall 320
395	395	submit such response to the commission not later than thirty days after 321
396	396	the receipt of the commission's recommendation. The commission may 322
397	397	allow the executive director additional time to respond. 323
398	398	(e) The commission may convene working groups that include 324
399	399	volunteer health care experts to advise the commission on any matters 325
400	400	related to the provisions of sections 19a-754f to 19a-754j, inclusive, of the 326 Governor's Bill No. 5054
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406	406	general statutes, as amended by this act. 327
407	407	(f) The Office of Health Strategy shall provide administrative support 328
408	408	to the commission. 329
409	409	Sec. 5. Section 19a-754i of the general statutes is amended by adding 330
410	410	subsections (c) and (d) as follows (Effective October 1, 2025): 331
411	411	(NEW) (c) (1) Not later than January 1, 2026, if the executive director 332
412	412	finds, based on the office's annual cost growth benchmark report 333
413	413	required pursuant to subsection (b) of section 19a-754h, the office's 334
414	414	annual cost trend hearings or any other pertinent information, that the 335
415	415	average percentage change in cumulative total health care expenditures 336
416	416	from calendar years 2022 to 2023 exceeded the average health care cost 337
417	417	growth benchmark for calendar years 2022 to 2023, the executive 338
418	418	director shall establish procedures to (A) assist health care entities in 339
419	419	improving efficiency and reducing cost growth by requiring certain 340
420	420	health care entities to file and implement a performance improvement 341
421	421	plan, and (B) support the state's efforts to meet future health care cost 342
422	422	growth benchmarks, as established pursuant to section 19a-754g. 343
423	423	(2) On and after January 1, 2026, and annually thereafter, if the 344
424	424	executive director finds, based on the office's annual cost growth 345
425	425	benchmark report required pursuant to subsection (b) of section 19a-346
426	426	754h, the office's annual cost trend hearings or any other pertinent 347
427	427	information, that the percentage change in cumulative total health care 348
428	428	expenditures from one calendar year to the next, beginning with 349
429	429	calendar years 2023 to 2024, exceeded the health care cost growth 350
430	430	benchmark for such calendar years, the executive director shall establish 351
431	431	procedures to (A) assist health care entities in improving efficiency and 352
432	432	reducing cost growth by requiring certain health care entities to file and 353
433	433	implement a performance improvement plan, and (B) support the state's 354
434	434	efforts to meet future health care cost growth benchmarks developed 355
435	435	pursuant to section 19a-754g. 356
436	436	(3) In addition to the notice provided under subdivision (3) of 357
437	437	subsection (a) of this section, the executive director may require any 358 Governor's Bill No. 5054
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443	443	health care entity that is identified by the office under subsection (a) of 359
444	444	this section as exceeding the health care cost growth benchmark 360
445	445	developed pursuant to section 19a-754g to file a performance 361
446	446	improvement plan with the office. The executive director shall provide 362
447	447	written notice to such health care entity that the entity is required to file 363
448	448	a performance improvement plan. Not later than forty-five days after 364
449	449	receipt of such written notice, the health care entity shall either file (A) 365
450	450	a performance improvement plan with the office, or (B) an application 366
451	451	with the office to waive or extend the requirement to file a performance 367
452	452	improvement plan. 368
453	453	(4) The health care entity identified under subsection (a) of this 369
454	454	section may file any documentation or supporting evidence with the 370
455	455	office to support the health care entity's application to waive or extend 371
456	456	the requirement to file a performance improvement plan. The executive 372
457	457	director shall require the health care entity to submit any other relevant 373
458	458	information it deems necessary in considering the waiver or extension 374
459	459	application, provided such information shall be made public at the 375
460	460	discretion of the office. 376
461	461	(5) The executive director may waive or delay the requirement for a 377
462	462	health care entity to file a performance improvement plan in response 378
463	463	to a waiver or extension request filed under subdivision (3) of this 379
464	464	subsection and in consideration of any information received from the 380
465	465	health care entity pursuant to subdivision (4) of this subsection, based 381
466	466	on a consideration of the following factors: (A) The costs, price and 382
467	467	utilization trends of the health care entity over time and any 383
468	468	demonstrated reduction in total medical expenses related to the health 384
469	469	status of patients; (B) any ongoing strategies or investments that the 385
470	470	health care entity is implementing to improve future long-term 386
471	471	efficiency and reduce cost growth; (C) whether the factors that led to 387
472	472	increased costs for the health care entity may reasonably be considered 388
473	473	to be unanticipated and outside of the control of the entity. Such factors 389
474	474	may include, but need not be limited to, the age of patients, other factors 390
475	475	related to the health status of patients and other cost inputs such as 391
476	476	pharmaceutical expenses and medical device expenses; (D) the overall 392 Governor's Bill No. 5054
477	477
478	478
479	479
480	480	LCO No. 582 14 of 24
481	481
482	482	financial condition of the health care entity; (E) a significant difference 393
483	483	between the growth rate of the potential gross state product, as defined 394
484	484	in section 19a-754f, and the growth rate of the actual gross state product; 395
485	485	and (F) any other factors the executive director considers relevant. 396
486	486	(6) If the executive director declines to waive or extend the 397
487	487	requirement for the health care entity to file a performance 398
488	488	improvement plan, the executive director shall provide written notice 399
489	489	to the health care entity that its application for a waiver or extension was 400
490	490	denied and the health care entity shall file a performance improvement 401
491	491	plan pursuant to subdivision (7) of this subsection. 402
492	492	(7) A health care entity shall file a performance improvement plan: 403
493	493	(A) Not later than forty-five days after receipt of a notice under 404
494	494	subdivision (6) of this subsection; (B) if the health care entity has 405
495	495	requested a waiver or extension, not later than forty-five days after 406
496	496	receipt of a notice that such waiver or extension has been denied; or (C) 407
497	497	if the health care entity is granted an extension, on the date for filing 408
498	498	provided on the notice of such extension. The performance 409
499	499	improvement plan shall identify the causes of the entity's cost growth 410
500	500	and shall include, but need not be limited to, specific strategies, 411
501	501	adjustments and action steps the entity proposes to implement to 412
502	502	improve cost performance. The performance improvement plan shall 413
503	503	include specific identifiable and measurable expected outcomes and a 414
504	504	timetable for implementation. The timetable for a performance 415
505	505	improvement plan shall not exceed eighteen months. 416
506	506	(8) The executive director shall approve any performance 417
507	507	improvement plan that it determines is reasonably likely to address the 418
508	508	underlying cause of the entity's cost growth and has a reasonable 419
509	509	expectation for successful implementation. 420
510	510	(9) If the executive director determines that the performance 421
511	511	improvement plan is unacceptable or incomplete, the executive director 422
512	512	may provide consultation on the criteria that have not been met and 423
513	513	may allow an additional time period, up to thirty calendar days, for 424 Governor's Bill No. 5054
514	514
515	515
516	516
517	517	LCO No. 582 15 of 24
518	518
519	519	resubmission of the performance improvement plan, provided all 425
520	520	aspects of the performance improvement plan shall be proposed by the 426
521	521	health care entity and the office shall not require specific elements for 427
522	522	approval. 428
523	523	(10) Upon approval of a proposed performance improvement plan, 429
524	524	the executive director shall notify the health care entity to begin 430
525	525	immediate implementation of such plan. The executive director shall 431
526	526	provide public notice on the office's Internet web site that the health care 432
527	527	entity is implementing a performance improvement plan. All health 433
528	528	care entities implementing an approved performance improvement 434
529	529	plan shall be subject to additional reporting requirements and 435
530	530	compliance monitoring, as determined by the office. 436
531	531	(11) All health care entities shall, in good faith, work to implement 437
532	532	the performance improvement plan. At any point during the 438
533	533	implementation of the performance improvement plan, the health care 439
534	534	entity may file amendments to the performance improvement plan, 440
535	535	subject to the approval of the executive director. 441
536	536	(12) At the conclusion of the timetable established in the performance 442
537	537	improvement plan, the health care entity shall report to the office 443
538	538	regarding the outcome of the performance improvement plan. If the 444
539	539	performance improvement plan is found to be unsuccessful, the 445
540	540	executive director shall: (A) Extend the implementation timetable of the 446
541	541	existing performance improvement plan; (B) approve amendments to 447
542	542	the performance improvement plan as proposed by the health care 448
543	543	entity; (C) require the health care entity to submit a new performance 449
544	544	improvement plan; or (D) waive or delay the requirement to file any 450
545	545	additional performance improvement plans. 451
546	546	(13) Upon the successful completion of the perfor mance 452
547	547	improvement plan, the executive director shall remove the identity of 453
548	548	the health care entity from the office's Internet web site. 454
549	549	(14) If the executive director determines that further legislative 455
550	550	authority is needed to (A) achieve the health care cost growth 456 Governor's Bill No. 5054
551	551
552	552
553	553
554	554	LCO No. 582 16 of 24
555	555
556	556	benchmarks, primary care spending targets or health care quality 457
557	557	benchmarks developed pursuant to section 19a-754g, (B) assist health 458
558	558	care entities with the implementation of performance improvement 459
559	559	plans, or (C) otherwise ensure compliance with the provisions of this 460
560	560	section, the executive director may submit, in accordance with the 461
561	561	provisions of section 11-4a, a recommendation for proposed legislation 462
562	562	to the joint standing committee of the General Assembly having 463
563	563	cognizance of matters relating to public health. 464
564	564	(15) If the executive director determines that a health care entity has 465
565	565	(A) negligently failed to file a performance improvement plan with the 466
566	566	office not later than forty-five days after receipt of notice from the office 467
567	567	pursuant to subsection (d) of this section, (B) failed to file an acceptable 468
568	568	performance improvement plan in good faith with the office, (C) failed 469
569	569	to implement the performance improvement plan in good faith, or (D) 470
570	570	knowingly failed to provide required information to the office or 471
571	571	knowingly falsified such information, the executive director may assess 472
572	572	a civil penalty to the health care entity of not more than five hundred 473
573	573	thousand dollars. The executive director shall seek to promote 474
574	574	compliance with this section and shall only impose a civil penalty as a 475
575	575	last resort. 476
576	576	(NEW) (d) (1) If the executive director finds, based on the office's 477
577	577	annual report and in addition to the grounds for a cost and market 478
578	578	impact review set forth in section 19a-639f, that the percentage change 479
579	579	in total health care expenditures exceeded the health care cost growth 480
580	580	benchmark in the previous calendar year, the executive director may 481
581	581	conduct, within available appropriations, a cost and market impact 482
582	582	review of any health care entity identified by the office under this 483
583	583	section. 484
584	584	(2) The executive director shall initiate a cost and market impact 485
585	585	review by sending the identified health care entity a written notice 486
586	586	containing a description of the basis for the cost and market impact 487
587	587	review and a request for information and documents. Not later than 488
588	588	thirty days after receipt of such notice, the identified entity shall submit 489 Governor's Bill No. 5054
589	589
590	590
591	591
592	592	LCO No. 582 17 of 24
593	593
594	594	to the office a written response. 490
595	595	(3) A cost and market impact review may examine factors relating to 491
596	596	the health care entity's business and its relative market position, 492
597	597	including, but not limited to: (A) The health care entity's size and market 493
598	598	share within its primary service areas by major service category and 494
599	599	within its dispersed service areas; (B) the health care entity's prices for 495
600	600	services, including its relative price compared to other health care 496
601	601	entities for the same services in the same market; (C) the health care 497
602	602	entity's health status adjusted total medical expense, including its health 498
603	603	status adjusted total medical expense compared to similar providers; 499
604	604	(D) the quality of the services the health care entity provides, including 500
605	605	patient experience; (E) the health care entity's provider cost and cost 501
606	606	trends in comparison to total health care expenditures state-wide; (F) 502
607	607	the availability and accessibility of services similar to those provided, or 503
608	608	proposed to be provided, through the health care entity within its 504
609	609	primary service areas and dispersed service areas; (G) the health care 505
610	610	entity's impact on competing options for the delivery of health care 506
611	611	services within its primary service areas and dispersed service areas 507
612	612	including, if applicable, the impact on existing service providers of a 508
613	613	health care entity's expansion, affiliation, merger or acquisition, to enter 509
614	614	a primary or dispersed service area in which it did not previously 510
615	615	operate; (H) the methods used by the health care entity to attract patient 511
616	616	volume and to recruit or acquire health care professionals or facilities; 512
617	617	(I) the role of the health care entity in serving at-risk, underserved and 513
618	618	government payer patient populations, including those with behavioral, 514
619	619	substance use disorder and mental health conditions, within its primary 515
620	620	service areas and dispersed service areas; (J) the role of the health care 516
621	621	entity in providing low margin or negative margin services within its 517
622	622	primary service areas and dispersed service areas; (K) consumer 518
623	623	concerns, including, but not limited to, complaints or other allegations 519
624	624	that the health care entity has engaged in any unfair method of 520
625	625	competition or any unfair or deceptive act or practice; and (L) any other 521
626	626	factors that the executive director determines to be in the public interest. 522
627	627	(4) The executive director shall make factual findings and issue a 523 Governor's Bill No. 5054
628	628
629	629
630	630
631	631	LCO No. 582 18 of 24
632	632
633	633	preliminary report on the cost and market impact review. In the report, 524
634	634	the executive director shall identify any health care entity that meets all 525
635	635	of the following criteria: (A) The health care entity has a dominant 526
636	636	market share for the services it provides; (B) the health care entity 527
637	637	charges prices for services that are materially higher than the median 528
638	638	prices charged by all other providers for the same services in the same 529
639	639	market; and (C) the health care entity has a health status adjusted total 530
640	640	medical expense that is materially higher than the median total medical 531
641	641	expense for all other providers for the same service in the same market. 532
642	642	(5) Not later than thirty days after issuance of a preliminary report, 533
643	643	the health care entity may respond in writing to the findings of the 534
644	644	executive director in the report. After receipt of such written response, 535
645	645	or if no response is received by the office on or before thirty days after 536
646	646	issuance of its preliminary report, the executive director shall issue the 537
647	647	office's final report on the cost and market impact review. 538
648	648	Sec. 6. Subsection (a) of section 19a-754j of the general statutes is 539
649	649	repealed and the following is substituted in lieu thereof (Effective July 1, 540
650	650	2024): 541
651	651	(a) (1) Not later than June 30, 2023, and annually thereafter, the 542
652	652	executive director shall hold an informational public hearing to 543
653	653	compare the growth in total health care expenditures in the performance 544
654	654	year to the health care cost growth benchmark established pursuant to 545
655	655	section 19a-754g for such year. Such hearing shall involve an 546
656	656	examination of: 547
657	657	(A) The report most recently prepared by the executive director 548
658	658	pursuant to subsection (b) of section 19a-754h; 549
659	659	(B) The expenditures of provider entities and payers, including, but 550
660	660	not limited to, health care cost trends, primary care spending as a 551
661	661	percentage of total medical expenses and the factors contributing to 552
662	662	such costs and expenditures; and 553
663	663	(C) Any other matters that the executive director, in the executive 554 Governor's Bill No. 5054
664	664
665	665
666	666
667	667	LCO No. 582 19 of 24
668	668
669	669	director's discretion, deems relevant for the purposes of this section. 555
670	670	(2) The executive director may require any payer or provider entity 556
671	671	that, for the performance year, is found to be a significant contributor to 557
672	672	health care cost growth in the state or has failed to meet the primary care 558
673	673	spending target, to participate in such hearing. Each such payer or 559
674	674	provider entity that is required to participate in such hearing shall 560
675	675	provide testimony on issues identified by the executive director and 561
676	676	provide additional information on actions taken to reduce such payer's 562
677	677	or entity's contribution to future state-wide health care costs and 563
678	678	expenditures or to increase such payer's or provider entity's primary 564
679	679	care spending as a percentage of total medical expenses. 565
680	680	(3) The executive director may require that any other entity that is 566
681	681	found to be a significant contributor to health care cost growth in this 567
682	682	state during the performance year participate in such hearing. Any other 568
683	683	entity that is required to participate in such hearing shall provide 569
684	684	testimony on issues identified by the executive director and provide 570
685	685	additional information on actions taken to reduce such other entity's 571
686	686	contribution to future state-wide health care costs. If such other entity is 572
687	687	a drug manufacturer, and the executive director requires that such drug 573
688	688	manufacturer participate in such hearing with respect to a specific drug 574
689	689	or class of drugs, such hearing may, to the extent possible, include 575
690	690	representatives from at least one brand-name manufacturer, one generic 576
691	691	manufacturer and one innovator company that is less than ten years old. 577
692	692	(4) For any hearing to be held pursuant to this subsection, the 578
693	693	executive director or such agent having authority by law to issue such 579
694	694	process may subpoena witnesses and require the production of records, 580
695	695	papers and documents pertinent to such inquiry. If any person disobeys 581
696	696	such process or, having appeared in obedience thereto, refuses to 582
697	697	answer any pertinent question put to such person by the executive 583
698	698	director or such executive director's authorized agent or to produce any 584
699	699	records and papers pursuant thereto, the executive director or such 585
700	700	executive director's agent may apply to the superior court for the 586
701	701	judicial district of Hartford or for the judicial district wherein the person 587 Governor's Bill No. 5054
702	702
703	703
704	704
705	705	LCO No. 582 20 of 24
706	706
707	707	resides or wherein the business has been conducted, or to any judge of 588
708	708	said court if the same is not in session, setting forth such disobedience 589
709	709	to process or refusal to answer, and said court or such judge shall cite 590
710	710	such person to appear before said court or such judge to answer such 591
711	711	question or to produce such records and papers. 592
712	712	[(4)] (5) Not later than October 15, 2023, and annually thereafter, the 593
713	713	executive director shall prepare and submit a report, in accordance with 594
714	714	section 11-4a, to the joint standing committees of the General Assembly 595
715	715	having cognizance of matters relating to insurance and public health. 596
716	716	Such report shall be based on the executive director's analysis of the 597
717	717	information submitted during the most recent informational public 598
718	718	hearing conducted pursuant to this subsection and any other 599
719	719	information that the executive director, in the executive director's 600
720	720	discretion, deems relevant for the purposes of this section, and shall: 601
721	721	(A) Describe health care spending trends in this state, including, but 602
722	722	not limited to, trends in primary care spending as a percentage of total 603
723	723	medical expense, and the factors underlying such trends; 604
724	724	(B) Include the findings from the report prepared pursuant to 605
725	725	subsection (b) of section 19a-754h; 606
726	726	(C) Describe a plan for monitoring any unintended adverse 607
727	727	consequences resulting from the adoption of cost growth benchmarks 608
728	728	and primary care spending targets and the results of any findings from 609
729	729	the implementation of such plan; and 610
730	730	(D) Disclose the executive director's recommendations, if any, 611
731	731	concerning strategies to increase the efficiency of the state's health care 612
732	732	system, including, but not limited to, any recommended legislation 613
733	733	concerning the state's health care system. 614
734	734	Sec. 7. Section 19a-754k of the general statutes is repealed and the 615
735	735	following is substituted in lieu thereof (Effective October 1, 2024): 616
736	736	The executive director may adopt regulations, in accordance with 617 Governor's Bill No. 5054
737	737
738	738
739	739
740	740	LCO No. 582 21 of 24
741	741
742	742	chapter 54, to implement the provisions of section 19a-754a and sections 618
743	743	19a-754f to 19a-754j, inclusive, as amended by this act. The executive 619
744	744	director may implement policies and procedures necessary to 620
745	745	administer the provisions of this section while in the process of adopting 621
746	746	such policies and procedures in regulation form, provided the executive 622
747	747	director holds a public hearing at least thirty days prior to implementing 623
748	748	such policies and procedures and publishes notice of intention to adopt 624
749	749	the regulations on the Office of Health Strategy's Internet web site and 625
750	750	the eRegulations System not later than twenty days after implementing 626
751	751	such policies and procedures. Policies and procedures implemented 627
752	752	pursuant to this section shall be valid until the time such regulations are 628
753	753	effective. 629
754	754	Sec. 8. (NEW) (Effective January 1, 2025) (a) As used in this section: 630
755	755	(1) "Alternative payment model" means a health care payment 631
756	756	method that uses financial incentives to promote or leverage greater 632
757	757	value, including higher quality care at lower costs for patients, 633
758	758	purchasers, payers and providers. 634
759	759	(2) "Health care cost growth benchmark" means the annual 635
760	760	benchmark established pursuant to section 19a-754g of the general 636
761	761	statutes. 637
762	762	(3) "Total medical expenditure" means the total cost of care for the 638
763	763	patient population of a payer or provider entity for a given calendar 639
764	764	year, where cost is calculated for such year as the sum of (A) all claims-640
765	765	based spending paid to providers by public and private payers, and net 641
766	766	of pharmacy rebates, (B) all nonclaims payments for such year, 642
767	767	including, but not limited to, incentive payments and care coordination 643
768	768	payments, and (C) all patient cost-sharing amounts expressed on a per 644
769	769	capita basis for the patient population of a payer or provider entity in 645
770	770	this state. 646
771	771	(4) "Carrier" has the same meaning as provided in section 38a-175 of 647
772	772	the general statutes. 648 Governor's Bill No. 5054
773	773
774	774
775	775
776	776	LCO No. 582 22 of 24
777	777
778	778	(b) The executive director of the Office of Health Strategy shall 649
779	779	establish an affordability standard for coverage of persons by an 650
780	780	individual health insurance policy or a group health insurance policy 651
781	781	providing coverage of the type specified in section 38a-469 of the general 652
782	782	statutes that is delivered, issued for delivery or renewed in the state. 653
783	783	Such standard shall consider a carrier's efforts to keep year over year 654
784	784	increases in premiums at or below the health care cost growth 655
785	785	benchmark developed pursuant to section 19a-754g of the general 656
786	786	statutes, including, but not limited to, the following: 657
787	787	(1) Efforts to reach primary care spending targets as established 658
788	788	under such benchmark; 659
789	789	(2) The number and type of alternative payment models in operation 660
790	790	and the dates on which such models were established, including details 661
791	791	on models that tie payments to health care quality, health outcomes and 662
792	792	decreases in health disparities; 663
793	793	(3) The proportion of total medical expenditure and the percentage of 664
794	794	covered lives in each market that are associated with alternative 665
795	795	payment models; 666
796	796	(4) Efforts to tie increases in contracted provider rates to the health 667
797	797	care cost growth benchmark; 668
798	798	(5) Efforts to reduce unnecessary utilization by addressing health-669
799	799	related social needs; and 670
800	800	(6) Efforts to incorporate standards of the health care organizations 671
801	801	designated by the Comptroller as "Centers for Excellence" into provider 672
802	802	contracts. 673
803	803	(c) Beginning on April 1, 2025, each carrier shall annually submit, not 674
804	804	later than sixty days prior to filing premium rates pursuant to sections 675
805	805	38a-481 and 38a-513 of the general statutes, a report to the Office of 676
806	806	Health Strategy demonstrating its compliance with the affordability 677
807	807	standard established pursuant to subsection (b) of this section. Upon 678 Governor's Bill No. 5054
808	808
809	809
810	810
811	811	LCO No. 582 23 of 24
812	812
813	813	request by the executive director, a carrier shall provide additional 679
814	814	information to the office, not later than thirty days after the date of such 680
815	815	request, that the executive director of the office determines is necessary 681
816	816	to evaluate whether the carrier has met the affordability standard. The 682
817	817	office may hold a public hearing on the carrier's report. 683
818	818	(d) The executive director shall determine, based on the information 684
819	819	provided in the carrier's report and any additional information 685
820	820	provided by the carrier, if the carrier is in compliance with the 686
821	821	affordability standard established pursuant to subsection (b) of this 687
822	822	section. The executive director shall not unreasonably withhold a 688
823	823	determination of compliance. For any carrier that has not established 689
824	824	compliance with the affordability standard, the executive director may 690
825	825	request further explanation from the carrier as to the carrier's inability 691
826	826	to comply with the standard and may request that the carrier provide 692
827	827	information regarding how the carrier intends to come into compliance 693
828	828	with the standard in the following year. 694
829	829	(e) Not later than July 1, 2025, and annually thereafter, the executive 695
830	830	director shall submit determinations of compliance made pursuant to 696
831	831	subsection (d) of this section to the Insurance Commissioner. 697
832	832	(f) The executive director may adopt regulations, in accordance with 698
833	833	the provisions of chapter 54 of the general statutes, to carry out the 699
834	834	provisions of this section. If the executive director decides to adopt 700
835	835	regulations, the executive director shall propose such regulations not 701
836	836	later than January 1, 2025. The executive director may implement 702
837	837	policies and procedures necessary to administer the provisions of this 703
838	838	section while in the process of adopting such policies and procedures as 704
839	839	regulations, provided notice of intent to adopt regulations is published 705
840	840	on the eRegulations System not later than twenty days after the date of 706
841	841	implementation. Policies and procedures implemented pursuant to this 707
842	842	section shall be valid until the time final regulations are adopted. 708
843	843	Sec. 9. (NEW) (Effective January 1, 2025) On and after July 1, 2025, the 709
844	844	Insurance Commissioner may consider a carrier's compliance with the 710 Governor's Bill No. 5054
845	845
846	846
847	847
848	848	LCO No. 582 24 of 24
849	849
850	850	affordability standard established by the executive director of the Office 711
851	851	of Health Strategy pursuant to section 8 of this act when evaluating a 712
852	852	request for a rate increase pursuant to section 38a-481 or 38a-513 of the 713
853	853	general statutes. 714
854	854	This act shall take effect as follows and shall amend the following
855	855	sections:
856	856
857	857	Section 1 October 1, 2024 New section
858	858	Sec. 2 October 1, 2024 New section
859	859	Sec. 3 October 1, 2024 New section
860	860	Sec. 4 July 1, 2024 New section
861	861	Sec. 5 October 1, 2025 19a-754i(c) and (d)
862	862	Sec. 6 July 1, 2024 19a-754j(a)
863	863	Sec. 7 October 1, 2024 19a-754k
864	864	Sec. 8 January 1, 2025 New section
865	865	Sec. 9 January 1, 2025 New section
866	866
867	867	Statement of Purpose:
868	868	To implement the Governor's budget recommendations.
869	869	[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
870	870	that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
871	871	underlined.]
872	872