The Connecticut Hospital Association (CHA), along with thirteen other medical associations, sent a letter to members of the Insurance and Real Estate Committee opposing Gov. Ned Lamont’s plan to cap how much medical providers can charge for out-of-network (OON) services, arguing it will hurt struggling hospitals and unfairly puts the government’s thumb on the scale of negotiations between insurance companies and providers.

The CHA has made a case in recent months for the Connecticut legislature to increase Medicaid and Medicare reimbursement rates, noting that hospitals are operating at a deficit and low reimbursement rates are balanced on the backs of consumers with private insurance.   

Instead of increased reimbursement rates, the Lamont administration wants to implement a new tax-and-reimburse strategy on the hospitals to increase federal Medicaid dollars. The plan comes following the conclusion of a settlement reached between Lamont and Connecticut hospitals after Gov. Dannel Malloy reneged on a similar tax agreement with the hospitals to balance the state’s budget, costing them billions.

Not only did hospitals not see increased Medicaid reimbursements in Lamont’s budget, but also a plan to cap the amount hospitals and other providers can charge for out-of-network services, something they say will do more harm than good. The CHA is strongly opposed to Lamont’s plan, calling it “devastating” in a press release.

“The proposed caps could cause hospitals to lose more than $700 million of commercial revenue annually, while operating expenses continue to increase at a rapid rate. The consequences would be damaging to many Connecticut hospitals, health systems, and providers and would jeopardize hospitals’ financial recovery and ability to maintain current levels of access to services for patients,” the associations wrote in the March 10 letter. “The proposed caps do nothing to address the role that Medicaid underpayment plays in the cost of commercial insurance. Rather, the proposed policy would exacerbate the well-known and significant challenges hospitals and care providers face as a result of government underpayment.”

The governor’s proposal received a public hearing on February 18, where many of the same associations listed in the letter offered their testimony in opposition to the plan. However, some consumer-focused organizations and state agencies – like leaders from the Office of Health Strategy (OHS), the Department of Public Health, and the Office of the Healthcare Advocate — supported the cap.

Dierdre Gifford, head of OHS, wrote that capping the out-of-network costs, which can be up to seven times more expensive than Medicare, would help reduce in-network costs and encourage more in-network collaboration.

“The premise of this initiative is that a fixed and reasonable out-of- network rate can reduce in-network negotiated rates, encourage in-network participation, and reduce overall spending by limiting the value of the option of staying out-of-network, which providers can use to increase their prices,” Gifford wrote. “These types of restrictions can assist in leveling the playing field between insurers and large health care systems, with a result of lowering costs and increasing access for patients.”

Acting Healthcare Advocate Kathleen Holt said the 240 percent over Medicare cap on out-of-network costs is still too high, and the cap could potentially drive providers who charge less than that – she states OON hospital costs range from 145 percent to 282 percent – to charge higher prices to reach the maximum.

“On behalf of Connecticut consumers, it is necessary to say that a 240% Medicare rate limit, for the unfortunate individuals among us who are out- of-a-hospital-network at any particular given time, is still too high,” Holt wrote. “No one should be subjected to the OON space on the health care roulette wheel.”

Doctors and other medical professionals who submitted testimony argued the cap would essentially decimate private practices that offer services like reconstructive surgery and other specialty care services that are already difficult to find in Connecticut.

“It is completely unsustainable for a physician to maintain a practice based on reimbursements that are tied to the Medicare fee schedule,” wrote Shareef Jandali, a plastic surgeon out of Fairfield. “Specifically for plastic surgeons, this proposed bill would push many plastic surgeons to stop performing reconstructive surgeries (e.g. breast cancer, skin cancer, trauma, burns) – they would need to solely perform cosmetic surgery just to be able to pay for their offices and staff. Most plastic surgeons would likely stop taking emergency call in their local hospitals, and solely operate at surgery centers.”

Connecticut lawmakers have attempted to tackle escalating medical and insurance costs over the past five years with little agreement on what to do and thus, little success. Escalating medical costs tied to everything from medicine and materials to labor have all been rising quickly, putting upward pressure on insurance rates.  

Connecticut has also seen higher-than-expected Medicaid costs that must be addressed in this year’s budget and state officials are bracing for potential cuts to Medicaid by President Donald Trump’s administration that would require more state dollars to go toward the program that supports nearly one million people in the state. Meanwhile, changes at the federal level mean the state will have to kick in more toward Medicare for its state employee health system – all of it driving up costs and taking up more and more room in the budget.

The CHA was one of the first to denounce Lamont’s budget proposal based, its Medicaid reimbursement plans and its cap on OON costs, and the plan to increase taxes on hospital services – which have been frozen since the settlement agreement – to leverage more federal Medicaid dollars.

“We all share the same goal of wanting to make high-quality healthcare more accessible, affordable, and sustainable. One of the most crucial reforms that must be part of any solution to achieve this goal is addressing Medicaid underpayment,” the associations wrote in their letter. “The proposed caps do nothing to address the role that Medicaid underpayment plays in the cost of commercial insurance. Rather, the proposed policy would exacerbate the well-known and significant challenges hospitals and care providers face as a result of government underpayment.” 

Republish This Story

Republish our articles for free, online or in print, under a Creative Commons license.