Health officials in the administration of Gov. Ned Lamont faced sharp questioning Monday over the governor’s proposal to control prescription drug and hospital costs, a measure that would cost hospitals hundreds of millions in lost revenue.
A primary target of House Bill 6669 is the “facility fees” hospitals charge on top of the cost of professional services at offices and surgical centers away from their main campuses, a source of annual revenue of at least $412 million.
Dr. Deidre Gifford, the executive director of the state Office of Health Strategies, told legislators at a public hearing that the fees drive up insurance premiums and out-of-pocket costs without improving outcomes or quality.
But even allies of the governor told Gifford and Dr. Manisha Juthani, the commissioner of public health, that the administration needed to demonstrate that the changes would benefit consumers, not health insurers.
“If this bill is just going to make the insurance industry richer, I’m not going to be able to even look at this very seriously myself,” said Sen. Saud Anwar, D-South Windsor, a practicing physician and co-chair of the Public Health Committee.
“It’s a very fair point,” Gifford replied, “And we share your goal, ensuring that any savings that are achieved by the facilities fee or any other provision in this bill are passed on to consumers.”
Gifford said she expected the legislative language to evolve after conversations with lawmakers and a Connecticut hospital industry that claimed collective losses of $164 million in fiscal 2022.
The facility fees would be curtailed, not eliminated, Gifford said.
The administration’s aggressive stance on health costs rattled hospitals.
“This legislation is an unfortunate departure from the spirit of collaboration and cooperation that has been the hallmark of statewide discussions on how to address health care affordability,” the Connecticut Hospital Association said in unsigned written testimony submitted Monday.
Four years ago, Lamont settled a long-running tax battle with the industry opened by his predecessor, then worked closely with hospitals when COVID-19 threatened to overwhelm the system.
Lamont said he still believes he has a good working relationship with the hospitals. He said hospital executives have not reached out to him directly about his two cost-containment bills, the House bill up for a hearing Monday and Senate Bill 983, which was heard by the Insurance and Real Estate Committee last month.
“You got to deal with the underlying costs. That’s pharma, and that’s hospital costs,” Lamont said. Regarding his effort to limit facility fees, he said, “I know they don’t appreciate that, but it’s one more way we can hold down health care costs.”
Anwar, a pulmonologist, told Gifford and Juthani at the hearing Monday that increasing health costs are “a critical situation” for consumers and taxpayers. With multiple causes, the administration understandably is proposing multi-pronged legislation, he said.
“There’s not one magic wand,” Anwar said. “So you have to have a piecemeal approach.”
Several provisions are aimed at controlling drug costs or at least providing transparency about their utilization and costs.
One would require the hospitals to disclose data on prices they charge for discounted drugs purchased under a Medicaid program, Section 340B. It requires drug companies participating in Medicaid to sell outpatient drugs at discounted prices to health care organizations that care for uninsured and low-income patients.
Gifford said the administration is trying to learn what is the “differential between what they pay and what insurance pays them, and what are they doing with the difference?”
The hospital industry said the benefit to low-income patients is baked into hospital economics, including its provision of uncompensated care.
“This reporting is unnecessary and unworkable. It creates a significant risk that hospitals will use the program less because the administrative burdens will outweigh the benefits of participation,” the hospitals said.
Republicans on the committee, including two with backgrounds in medicine or pharmaceuticals, challenged whether provisions aimed at drug costs were either fair or realistic.
Sen. Heather Somers, R-Groton, who used to work in pharma, said one provision seemed to require that drug representatives advise doctors if a competitor offers a lower-priced alternative.
Was her interpretation correct? Somers asked.
“Yes,” Gifford replied.
“I just think this is way overreach,” Somers said.
Sen. Jeff Gordon, R-Woodstock, a physician, called the legislation intrusive.
“I don’t think we need more government regulation to tell us what we already are doing every day taking care of people,” Gordon said.
Anwar and his co-chair, Rep. Cristin McCarthy Vahey, D-Fairfield, held a press conference with Lamont before the hearing to endorse Senate Bill 986, an administration initiative on maternal health.
At a time when some hospitals are trying to close birthing centers, the bill would encourage the opening of birth centers by creating an accredited non-hospital alternative to hospital-based labor and delivery.
“Often staffed by nurse midwives, birthing centers are a safe alternative to hospital births and have been shown to provide high-quality care for properly screened women with low risk pregnancies when appropriate arrangements for transfer are in place,” Gifford said in prepared testimony.
She said a delivery in a birthing center can cost $2,000 less than in a hospital.
Lucinda Canty, a certified nurse midwife and associate professor at UMass-Amherst, said research shows that birthing centers can improve better access and prenatal care to women of color.
“I hear stories of women feeling like they haven’t been seen or heard. Just a few weeks ago, I had a young mom telling me that she called her provider saying she wasn’t feeling well,” Canty said.
A health care provider downplayed her concerns, and she ended up delivering her baby prematurely.
“She’s still traumatized by her experience,” Canty said.
The birthing centers are not intended as a substitute for maternity services, as they would not provide unplanned C-sections that can be necessary in emergencies.
Windham Community Hospital, Sharon Hospital and Johnson Memorial Hospital have proposed halting birthing services, citing a mix of financial challenges, patient safety concerns and difficulty recruiting OB-GYN healthcare providers.
Correction: As originally posted, Sen. Jeff Gordon’s party affiliation was incorrect.