Oversight of hospitals, nursing homes and pharmaceutical companies topped Gov. Ned Lamont’s list of health care priorities in his spending plan for the fiscal year that begins July 1.
But the governor also proposed shifting some residents from Medicaid plans to free coverage through Connecticut’s health insurance exchange and adding funds for the long-term care ombudsman’s office.
Lamont’s budget proposal would devote $627,000 to create four new positions in the state’s Office of Health Strategy. One would support “expanded” financial monitoring of hospitals, “to develop advanced warning of financial distress,” and to strengthen Connecticut’s certificate of need review process, officials wrote in the administration’s plan.
“There have been quite a few news stories of late of hospitals facing financial difficulties that ultimately the state has to get involved in one way or another,” Jeffrey Beckham, secretary of the state’s Office of Policy and Management, said Wednesday. “We’d like to have a little more early warning as to when that’s going to happen.”
The Connecticut Mirror has reported on the plight of three Connecticut hospitals — Manchester Memorial, Rockville General and Waterbury Hospital — that were hit with a devastating cyberattack and owe tens of millions to vendors, physicians and the state for taxes. The data breach and financial woes also put in jeopardy the sale of those facilities, owned by Prospect Medical Holdings, to Yale New Haven Health. YNHH has asked the state to contribute $80 million to the deal.
Another two positions recommended for the Office of Health Strategy would explore best practices for prescription drug affordability, monitoring policies in other states and launching a prescription drug board to work with similar panels across the country. The new workers would also be responsible for initiating a review of how well health insurers prioritize affordability.
The last additional position at OHS would oversee performance improvement plans for health care providers that exceed the state’s cost growth benchmarks. The benchmarks, put into executive order in 2020 and passed into law in 2022, require OHS to come up with annual targets for health care cost increases and mandate that providers, insurers and others report their yearly price increases to the state.
The program is designed to expose the hospitals, medical practices and insurance companies whose costs soar beyond the state-imposed targets. Lamont has said the annual reporting mandate would put public pressure on those agencies and companies to keep costs down.
“Health care only makes a difference if it’s accessible and affordable,” the governor said in his State of the State speech Wednesday. “Deidre Gifford [OHS’ director] is building off our health care benchmark to hold hospitals, insurance, and pharma accountable for those big price increases.”
“The new positions proposed for the Office of Health Strategy reflect Gov. Lamont’s ongoing commitment to increasing health care affordability and ensuring a high-quality, equitable and affordable hospital system,” added Tina Kumar Hyde, a spokeswoman for OHS.
Medicaid reimbursement rates
The issue of Medicaid reimbursement rates garnered significant attention last year after leaders directed the Department of Social Services to conduct a two-step review of rates paid to providers that treat poor patients.
Lamont’s proposal maintains the $7 million he and lawmakers agreed upon last year to bolster rates for physician specialists, dentists and behavioral health providers. The administration is expected to provide data on rates paid to these groups early in this legislative session.
The second phase of the report, which is not expected to be completed until early 2025, will cover all other aspects of the Medicaid program.
Because of that timetable, Lamont recommended Wednesday that rate hikes already approved for ambulance and methadone maintenance providers be suspended so they can be resolved when the second phase of the study is addressed in the 2025 session. This would save the state $5.4 million in the next budget, according to the administration.
Medicaid reimbursement rates establish how much providers get paid to treat qualified patients. In 2007, Connecticut set the Medicaid reimbursement rates for most physician services at 57.5% of the Medicare rate at the time.
The rates have not been broadly adjusted since, though certain providers, including primary care physicians and OBGYNs, have received rate increases.
Physicians say the low rates prevent them from accepting as many Medicaid patients as they would like. Hospitals and community health centers, which must accept patients regardless of ability to pay, say they’re losing money.
“We’ve been consistent in our call that the chronic underfunding of Medicaid reimbursement payments to providers is harmful to Medicaid patient access but also puts enormous pressure on commercial insurance payments, and we think now is the time to address that underpayment’s role in health care affordability,” said Paul Kidwell, senior vice president of policy at the Connecticut Hospital Association.
Hospitals were paid 62 cents on the dollar for treating Medicaid patients in the 2022 fiscal year, according to a report published by the Office of Health Strategy. Community health centers across the state were underpaid by $65 million for medical services provided to patients with Medicaid coverage, said Jennifer Granger, president and CEO of United Community and Family Services in Norwich.
“When the state agrees to participate in the Medicaid program, it’s responsible for the Medicaid members that are enrolled and to provide them with the highest quality care possible and appropriate access to services. By not paying the network of providers adequately, they’re shifting the cost to nonprofit community health centers to bear the burden, and it’s not sustainable. We cannot continue to function in this environment,” said Granger.
“We’re well aware that the rates need to be updated, and we have a plan to do that next year,” Beckham said last June.
On Wednesday morning, Beckham said officials are waiting to see the results of the rate reimbursement study before deciding where to prioritize rate increases.
“We probably want to address the ones that are in some acute areas that are low rates, but we want to see what the whole system looks like before we propose those,” said Beckham. “We fully expect we’ll have to do something in the biennium on the others. I’m not saying we’re going to do all of what the gap is, but we will try to address as much of it as we can.”
Medicaid is one of the largest and fastest-growing components of the state budget, and the administration used its proposal Wednesday to remind legislators.
Medicaid represents nearly $3.4 billion out of this fiscal year’s $25.1 billion total state budget. But that’s not even close to all the Medicaid dollars Connecticut will spend this year.
Because Medicaid is a federal program run cooperatively with states, Connecticut will receive another $4.9 billion in matching grants from Washington that, although outside the state budget, also will be spent on Medicaid-affiliated programs here.
The governor’s staff projects the state’s share of Medicaid costs will rise by another $21 million next fiscal year, at which point it will be $780 million greater or 30% beyond what it was when Lamont first took office in 2019.
But Rep. Jillian Gilchrest, D-West Hartford, co-chair of the Human Services Committee, hoped to see Lamont propose a greater health care investment.
“I’m disappointed,” she said. “Even without the study, we know there’s a need to increase rates. At this point, the rates are so low that providers cannot offer health care to Medicaid recipients.”
But, Gilchrest said, she still believes the legislature will make gains on the rates, even though the governor’s proposal does not include an increase.
“Now it’s our turn,” she said. “I think there is a high likelihood for increased investment in Medicaid rates because I hear about it a lot from my colleagues. It truly impacts providers across the state.”
The governor’s proposal also maintains two nursing home-related Medicaid items from the preliminary state budget he and legislators approved last June for the 2024-25 fiscal year.
The state would continue to adjust rates to reflect the greater medical needs typically found among nursing home residents. This would cost Connecticut an extra $33 million next fiscal year.
But the state also would eliminate inflationary rate adjustments otherwise required by statute for nursing homes, residential care homes and intermediate care facilities for clients with developmental disabilities. This would save Connecticut almost $67 million in 2024-25.
HUSKY eligibility
The governor’s proposed budget also would decrease the eligibility threshold for the state’s Medicaid HUSKY A program from 160% of the federal poverty level, or FPL, to 138%. This would affect most adults but not pregnant women or children. The measure would save the state $2.1 million in 2024-25 and $33 million on an annualized basis afterward.
Connecticut is the only state providing Medicaid coverage to parents and relative caregivers with incomes over 138% of FPL. Beckham said people who no longer qualify for Medicaid would still be eligible for a zero-premium, no cost-share coverage plan under Covered CT, through the state’s health insurance exchange.
“It’s a blend of federal subsidies that allows the state to have substantial savings over what we would have to pay in HUSKY A, the state’s share under Medicaid,” said Beckham. “We recommend that we move those parents and relative caregivers over to Covered CT. They would not lose coverage. They would simply be on the exchange.”
Prospect Medical Holdings’ taxes
The governor’s proposal also assumes that a problem in recent years with state health provider tax collections won’t happen again in the next budget.
Lamont’s plan projects $957 million from the provider tax, the same amount originally estimated for this year. But Prospect Medical Holdings, the California parent company for hospitals in Waterbury, Manchester and Vernon, neglected to pay $67 million in taxes, the CT Mirror reported last month.
According to liens filed by the Department of Revenue Services, the company hasn’t paid taxes dating back to March 2022.
When asked why the administration didn’t adjust its revenue projections given Prospect’s recent history, Beckham deflected.
“That matter is being — what’s the word — dealt with currently,” said Beckham. “Can’t say too much more about it.”
Ombudsman’s Office
Lamont has recommended spending $90,000 to add a community ombudsman position to the long-term care ombudsman’s office.
In 2022, lawmakers signed off on a state budget that funded one position to begin expanding that office into the home care sector. Until recently, only nursing home and assisted living center residents had access to the ombudsman’s services. The state that year approved a manager to help design and oversee a program for the home care sector. But no money was set aside to hire workers who could field complaints.
Last year, one additional position was authorized to help home care residents. Mairead Painter, the long-term care ombudsman, said she would start the home care program by extending services to people on the state’s waiver programs, such as those who participate in the Money Follows the Person initiative or the Connecticut Home Care Program for Elders. But she hoped to expand. Tens of thousands of people in Connecticut use home care services.
Painter this year asked for funding for several additional positions, including a supervisor to oversee regional nursing home ombudsmen, another seven regional ombudsmen for nursing facilities, 11 more regional community ombudsmen to serve the home care population, and two intake coordinators.
Legislators said they plan to include funding for at least two additional ombudsman positions this year beyond what Lamont has proposed.
This session’s priorities will “go toward keeping seniors safe, and that includes backing the ombudsman’s office with the support they need,” Rep. Jane Garibay, D-Windsor, a co-chair of the Aging Committee, told the CT Mirror. “We put a number of laws in place, but we also need to give them the tools to enforce them.”