The Impact of the New Connecticut Budget on the Health Care Industry

The bipartisan state budget became law yesterday (the “Budget Act”). While Governor Malloy vetoed a provision requiring supplemental payments to hospitals, the Budget Act includes numerous other provisions affecting the health care industry. We’ve highlighted some of the key provisions that impact the operations of hospitals and other health care providers in Connecticut. Unless otherwise noted, the legislation below is effective immediately. Stay tuned for summaries of additional provisions with later effective dates.

  • Hospital Provider Tax. The General Assembly established a new tax and fee structure on hospitals, but the effect of Governor Malloy’s veto on these provisions remains to be seen.
  • Medicaid Waivers and Amendments Notification. The Budget Act requires the Department of Social Services (“DSS”) to notify the Appropriations and Human Services committees of the General Assembly of potential Medicaid waivers and state plan amendments that may result in cost savings each year by December 15th. DSS must also notify these committees of any Medicaid waiver or state plan amendment it is considering in developing a budget for the next fiscal year prior to submitting such budget for legislative approval (Section 159).
  • Changes to Annual Reporting for Hospitals and Certain Group Practices. The Budget Act extends the start date for certain annual reporting requirements of hospitals and physician group practices to the Attorney General and the Department of Public Health (“DPH”). Specifically, by January 15, 2018, each hospital and hospital system must file an annual report describing each affiliation with another hospital or hospital system (prior law set the start date at December 15, 2015). Additionally, beginning January 15, 2018, and annually thereafter, each hospital and hospital system must file a report describing the activities of the group practices owned or affiliated with such hospital or hospital system, and each group practice comprised of thirty or more physicians must file a report concerning the group practice (prior law had required these reports to be filed beginning December 15, 2014) (Section 181).
  • Urgent Care Centers. Beginning April 1, 2018, urgent care centers operated by municipalities or corporations other than hospitals must be licensed as outpatient clinics. Under the Budget Act, an “urgent care center” is defined a free-standing facility, distinguished from an emergency department setting, that is licensed as an outpatient clinic and that: (1) provides treatment of medical conditions that do not require critical or emergent intervention for a life-threatening or potentially permanent disabling condition; (2) offers treatment of such conditions without requiring an appointment; and (3) provides services during times of the day, weekends or holidays when primary care provider offices are not customarily open to patients (Section 674, effective December 1, 2017).
  • Outpatient Clinics. The frequency of license renewal for outpatient clinics, including the urgent care centers noted above, is increased from every four years to every three years (Section 39).
  • Changes to Hospital’s Obligation to Notify Patients of Cost and Quality Information. Prior to the passage of the Budget Act, hospitals in Connecticut were required to notify patients of their right to request certain cost and quality information if their diagnosis or procedure was included in an annual report prepared by DPH and the Connecticut Insurance Department (“CID”). If the patient requested the information, the hospital was required to provide the patient with information, including written notice of the corresponding Medicare reimbursement amount for the patient’s procedure, the Joint Commission’s composite accountability rating and the Medicare hospital compare star rating for the hospital, as applicable. The Budget Act changes these requirements in some respects. It repeals the original provision (former Connecticut General Statutes §38a-1084a) effective immediately, and adds a new provision, effective on January 1, 2018, that requires hospitals to provide patients with the same notice of the right to request cost and quality information if the procedure is included, not in the DPH/CID report, but in an annual list to be posted on the Internet by the state’s Health Information Technology Officer (“HITO”) beginning January 1, 2018. The procedures in the HITO list will be similar to the procedures in the DPH/CID report, but the HITO list will also include the 25 most frequently used pharmaceutical products and medical devices in Connecticut. As under prior law, if the patient requests cost and quality information, the hospital must provide it within three business days (Section 114).
  • New Responsibilities of Health Information Technology Officer. Public Act 16-77 required Lt. Governor Wyman to designate a Health Information Technology Officer who is responsible for coordinating all state health information technology initiatives. A new law increases the duties of the HITO to include responsibility for the all-payer claims database and maintenance of a consumer health information website. Previously, these duties were the responsibility of the Connecticut Health Insurance Exchange (Sections 112-113, 115-125, 165 and 732).
  • Statewide Health Information Exchange. Effective immediately, the State must establish a program to expedite the development of the Statewide Health Information Exchange (“SHIE”), which was formed in 2015 to assist the State, health care providers, insurers and other stakeholders in empowering consumers to, among other things, make effective health care decisions, support clinical decision-making and reduce duplication of services. The law requires the HITO to design the program and authorizes the establishment of a nonprofit entity to implement the program, which must be owned and governed by parties other than the State (Section 128).
  • Health Care Providers without EHR Systems. Existing law specifies that health care providers with an electronic health record system capable of connecting to and participating in the SHIE must begin doing so no later than two years after the SHIE begins operations. The Budget Act specifies that health care providers whose electronic health record system is not capable of connecting to and participating in the SHIE must be capable of sending and receiving secure messages that comply with the Direct Project specifications published in the federal Office of the National Coordinator for Health Information Technology by the same deadline (Section 126).
  • State Health Information Technology Advisory Council. The Budget Act increases the membership of the State Health Information Technology Advisory Council, which was established in 2015 to advise DSS on developing policy recommendations to advance the State’s health information technology and exchange goals. The Budget Act effects other changes in the Council as well, including an expansion of the Chairpersons’ authority and a mandate to establish an All-Payer Claims Database Advisory Group, to be tasked with developing a plan to implement a statewide multi-payer data initiative to enhance the State’s use of health care data from multiple sources to increase efficiency, enhance outcomes and improve the understanding of health care expenditures in the public and private sectors (Section 127).
  • Changes to DSS Certificate of Need Rules. The requirement for Certificate of Need (“CON”) approval for the acquisition of major medical equipment involving a capital expenditure of over $400,000 has been eliminated. In addition, nursing homes, residential care homes, and intermediate care facilities for individuals with intellectual disabilities must now obtain CON approval to relocate any licensed beds to a new or replacement facility. DSS is not required to hold a public hearing on these CON applications (Sections 182, 183, and 732).
  • Home Health Care Add-On Payments. Conforming to current practice, DSS may eliminate home health care add-on payments for FYs 2018 and 2019 (Sections 558 and 572).
  • Payment In Lieu of Taxes (PILOT) For Colleges and Hospitals. The Budget Act allocates the PILOT for college and hospital property payable to towns, cities and boroughs by October 31 of each year (Section 591).
  • UCONN Health Center Public-Private Partnerships. A new law requires the board of directors of the University of Connecticut Health Center to seek to establish public-private partnerships with hospitals or other private entities selected by the board. The board is required to submit a report regarding the status of such partnerships and any recommended legislation to the General Assembly by April 1, 2018 (Section 60).

Please contact Stephen M. Cowherd (scowherd@pullcom.com) or Margaret Bartiromo (mbartiromo@pullcom.com) if you have any questions or would like more information about the Budget Act.