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