OFFICE OF FISCAL ANALYSIS
Legislative Office Building, Room 5200
Hartford, CT 06106 (860) 240-0200
http://www.cga.ct.gov/ofa
sSB-10
AN ACT CONCERNING HEALTH INSURANCE AND PATIENT
PROTECTION.
Primary Analyst: AB 4/1/25
Contributing Analyst(s): DD, ME, NN
Reviewer: JS
OFA Fiscal Note
State Impact:
Agency Affected Fund-Effect FY 26 $ FY 27 $
State Comptroller - Fringe
Benefits, and Various State
Agencies
App Fund - Cost See Below See Below
State Comptroller - Fringe
Benefits, and Various State
Agencies
App Fund -
Indeterminate
See Below See Below
UConn Health Ctr. OF - Revenue
Gain/Loss
See Below See Below
Insurance Dept. IF - Cost 1.1 million 1.2 million
Insurance Dept. GF - Potential
Revenue Gain
See Below See Below
Insurance Dept. GF - Potential
Cost
None 218,101
Note: App Fund=All Appropriated Funds; IF=Insurance Fund; GF=General Fund
Municipal Impact:
Municipalities Effect FY 26 $ FY 27 $
Various Municipalities Cost See Below See Below
Explanation
The bill makes various changes regarding health insurance and
patient protection, including establishing a rebuttable presumption for
utilization review, which would likely result in a significant cost of
approximately $67.8 million annually to the State Comptroller - Fringe
Benefits account. The bill makes various other changes anticipated to
result in the fiscal impacts described below. 2025SB-00010-R000419-FN.DOCX Page 2 of 5
Sections 1 and 2 require insurers to file an annual certification of
compliance with mental health and substance user disorder benefit
reporting requirements to the Insurance Commissioner, who must make
these reports, including the names of health carriers, public. This
procedural change results in no fiscal impact.
Sections 3 and 4 create a separate, nonlapsing Parity Advancement
Account within the General Fund and require the Insurance
Department to enforce mental health parity and conduct education,
resulting in an annual cost of $218,101 to the new account, beginning in
FY 27. This cost is associated with hiring one Consumer Affairs
Associate Insurance Examiner, with an annual salary of $80,000 and
fringe benefits costs of $32,568, and one Business Office Support Staff,
with an annual salary of $75,000 and fringe benefits costs of $30,533, to
perform the additional responsibilities.
The account will be funded by donations and fines the department
may impose on health carriers for failing to comply with reporting.
Health carriers can be fined $100 per participant, up to $1 million
annually, resulting in a revenue gain to the General Fund beginning in
FY 26 and annually thereafter. Health carriers may also be fined for late
filings. The revenue gain to the account will depend on the number of
violations and will be used to enforce mental health parity and
education.
Sections 5 and 6 establish a rebuttable presumption that a health care
service undergoing utilization review is medically necessary if ordered
by a health care professional acting within his or her scope of practice.
This would likely result in a significant cost, approximately $121 million
annually across various funds beginning in FY 27 (with half-year costs
in FY 26). The General Fund share of these costs within the State
Comptroller – Fringe Benefits is approximately $67.8 million annually.
The cost to the state is associated with increased pharmacy and
medical utilization for the state employee health plan (SEHP). Medical
claims costs are expected to increase by approximately 20% as more
services are deemed "medically necessary" resulting from the change in 2025SB-00010-R000419-FN.DOCX Page 3 of 5
utilization review methodology. This impact is estimated to be $92
million annually. The impact of the change in utilization review on
pharmacy benefits is estimated to be $29 million annually, largely
driven by costs related to specialty drugs.
Fully insured municipalities and those participating in the state
partnership plan (SPP) are likely to see an increase in premiums to the
extent carriers expect to see higher utilization of services. Municipalities
enrolled in SPP will likely see costs commensurate with the increase to
the SEHP based on their enrollment.
These sections also result in a potential revenue gain annually
beginning in FY 26 to UConn Health. The revenue gain would vary
based on the procedures and the rates paid by insurers.
Sections 7 and 8 place certain restrictions on the use of step therapy:
(1) reduce the duration from 30 days to 20, (2) prohibit the use for
prescription drugs used to treat chronic, disabling, or life-threatening
diseases or conditions, and (3) prohibit its use for prescription drugs
used to treat mental or behavioral health conditions.
There is a potential cost of $9 million annually across various funds
for restrictions (1) and (2) dependent on the impact to premiums for the
state employee health plan related to increased prescription drug costs.
Restriction (3) does not result in a fiscal impact as the state employee
health plan does not require step therapy for mental health conditions.
The General Fund share of these costs within the State Comptroller –
Fringe Benefits is approximately $5 million annually.
Step therapy is used as a cost management tool, and its prohibition
for prescription drugs to treat a chronic, disabling, or life-threatening
condition or disease, as well as reduction for all other prescriptions is
likely to be reflected in higher premiums through an increased per
member per month cost. These restrictions are estimated to increase
costs related to the differential between the lower cost alternative and
the drug available after step therapy, as well as overall higher
prescription drug spend. 2025SB-00010-R000419-FN.DOCX Page 4 of 5
These sections also result in potential costs to various municipalities
that either have fully insured health plans or participate in the
partnership plan to the extent higher utilization and prescription drug
costs increase plan premiums. The partnership plan would face costs
commensurate with the increase to the state employee health plan based
on their enrollment.
Section 9 requires health carriers and preferred provider networks
that contract with heath care providers to pay equal reimbursement
rates for certain outpatient services to all providers in a geographic area
and regardless of the facility where the services are provided. The
section also requires the Department of Insurance to establish said
geographic regions and adopt site-neutral regulations. This results in a
one-time cost to the Insurance Fund of $75,000 in FY 26 for costs
associated with hiring a consultant.
Additionally, this section results in: (1) an indeterminate cost to the
state employee health plan and municipalities on the partnership plan
as the bill does not specify the rates; and (2) a revenue loss annually
beginning in FY 27 to the UConn Health Center. To the extent this
section results in reimbursement rates lower than what UConn Health
currently receives in certain settings, there is a revenue loss. Such
revenue loss would vary based on: (1) the difference between UConn
Health's current reimbursement rates in hospital-based settings and
those set pursuant to the bill; and (2) the number of procedures
performed.
Section 15 makes numerous changes that result in an Insurance Fund
cost of approximately $1 million in FY 26 and $1.2 million in FY 27 to
the Insurance Department. The section modifies the department's
existing rate review process by making a series of changes regarding
filing requirements, public transparency, and approval criteria,
including adding a fourth criterion prohibiting rate approval if the rate
is found to be "unaffordable." The department anticipates 45 additional
public hearings each year.
New staffing required by the department for the new transparency 2025SB-00010-R000419-FN.DOCX Page 5 of 5
and approval criteria requirements includes the addition of six new
positions, at a cost to the Insurance Fund of approximately $600,000 in
FY 26, increasing to an annual cost of $1.2 million in FY 27. (The lower
FY 26 impact reflects the bill's January 1 effective date). The new
positions are: one Rate Hearing Division Manager, with an annual
salary of $135,000 and fringe benefits of $112,401; two Insurance
Actuaries and two Insurance Attorneys, with an annual salary of
$110,000 and fringe benefits of $91,586 each; and one Insurance
Paralegal, with an annual salary of $75,000 and fringe benefits of
$62,445. The total annual salary cost for these six positions is $650,000
and fringe benefit cost of $541,190 annually.
In addition, to complete the requirements the department anticipates
engaging the services of consulting actuaries and outside counsel at a
cost of $300,000 in FY 26. Further, the cost of including a fourth criterion
to the rate review process results in a one-time cost to the Insurance
Fund of at least $100,000 to engage the services of consulting actuaries
in FY 26. Sections 10 - 14 modify various statutes with conforming
language.
Sections 17 and 18 prohibit health insurance policies from placing
time limits on general anesthesia coverage which does not result in a
fiscal impact to the state or municipalities because carriers do not
currently impose these restrictions.
The Out Years
The annualized ongoing fiscal impact identified above would
continue into the future subject to inflation.