Connecticut Governor Signs Health Care Legislation to Reduce Costs and Increase Competition
Today, Connecticut Governor Ned Lamont signed into law HB6669, “An Act Protecting Patients and Prohibiting Unnecessary Health Care Costs” (“the Act”), which seeks to reduce the costs of health care services for Connecticut residents. The Act is extensive and is aimed at increasing competition in the health care market, heightening price transparency, and reducing prescription drug costs. We have summarized key provisions of the Act below.
Payer-Provider Contracting Requirements (Effective July 1, 2024)
The Act prohibits healthcare providers, carriers, plan administrators, and any entities that contract on their behalf from offering, soliciting, requesting, renewing, or entering into health care contracts that directly or indirectly include all-or-nothing clauses, anti-steering clauses, anti-tiering clauses, or gag clauses. Under the Act, any such clause in a health care contract, written policy, written procedure or agreement entered into, renewed or amended on or after July 1, 2024 will be considered null and void.
In addition, the Act requires that all contracts involving tiered networks must include a provision requiring that such health carrier provide to the participating provider, upon request, the participating provider’s calculated score and related data, as available, and a description of the standards used for selecting and tiering participating providers. Under the Act, this must include:
- Definitions and specifications of measures related to factors like cost, quality, efficiency, and satisfaction, used to develop standards and measure performance;
- A defined time period of at least one year to measure performance; and
- A summary of the grievance process established for participating providers to appeal the results of tiering decisions and performance measures.
PBM Practices and Contracts (Effective October 1, 2023)
On and after January 1, 2024, contracts between pharmacy benefits managers (PBMs) and 340B covered entities shall not contain any of the following:
- A reimbursement rate for a prescription drug that is less than the rate paid to non-340B pharmacies;
- A fee or adjustment that is not imposed on non-340B providers or pharmacies;
- A fee or adjustment that exceeds the fee or adjustment amount imposed on non-340B providers or pharmacies;
- Any provision that prevents or interferes with a patient’s choice to receive a drug from a 340B covered entity; or
- Any provision that excludes a 340B covered entity from the PBM’s network based on participation in the 340B program.
In addition, PBMs will not be permitted to consider whether an entity is a 340B covered entity when determining reimbursement rates.
By January 1, 2025, the Office of Health Strategy will be required to report its analysis of PBMs’ practices of prescription drug distribution, including, but not limited to, spread pricing arrangements, manufacturer rebates and transparency, fees charged, financial incentives for adding drugs to health plan formularies and an evaluation of prescription drug distribution practices conducted by PBMs in other states. This report will provide recommendations to reduce prescription drug costs and regulate PBMs.
Drug Discount Card Program (Effective October 1, 2023)
The Act establishes a Drug Discount Card Program to be made available to all residents of Connecticut. The Act directs the Comptroller to pool prescription drug purchasing power to lower drug costs, negotiate discounts with manufacturers, centralize the purchasing of drugs, and establish volume discount contracting. It also requires the Comptroller to study the feasibility of centralizing state-wide contracts to consolidate the purchasing of drugs by state agencies, state hospitals, state-operated mental health authorities, and other public entities.
Registration for Pharmaceutical Marketing (Effective October 1, 2023)
The Act requires pharmaceutical manufacturers that employ individuals to perform the duties of pharmaceutical sales representatives register annually as a pharmaceutical marketing firm in a form and manner prescribed by the Commissioner of Consumer Protection. The Department of Consumer Protection will post updated lists on its website of all individuals employed as pharmaceutical sales representatives. Annually, each firm will provide the commissioner with information including: the number of contacts each sales representative had with prescribing practitioners and pharmacists; the specialty of each practitioner and pharmacist; whether samples, materials or gifts of any value were provided to a practitioner, pharmacist or their staff; and reports of all free samples. Sales representatives will also be required to disclose the list price of a legend drug when the representative provides information about the drug based on dose and quantity as described in the medication package insert, and information on the variation efficacy of the legend drug marketed to different racial and ethnic groups if such information is available. The Act provides enforcement discretion to the Commissioner if a firm fails to comply with any of these requirements.
Reducing Prescription Drug Costs (Effective October 1, 2023)
The Act has updated the process for listing drugs that are expensive to the state. The Office of Health Strategy (“OHS”) will continue to be required to prepare a list of 10 outpatient prescription drugs that are determined to be provided at substantial cost to the state, considering the net cost, or critical to public health. This will include drugs from different therapeutic classes of outpatient prescription drugs and at least one generic. Drugs will only be listed if the wholesale acquisition cost, minus any rebates paid to the state, 1) increased by at least 16% during the immediately preceding two calendar years; and 2) was not less than $40 for a course of treatment.
The preliminary list will be available for public comment for at least 30 days in which a manufacturer will be allowed to provide documentation to establish that the costs did not exceed the limits above. If established, the drug will be removed from the list prior to publication.
Facility Fees (Effective July 1, 2023)
If a hospital or health system charges a facility fee utilizing a current procedural terminology evaluation and management (CPT 300 E/M) code or assessment and management (CPT A/M) code for outpatient services provided at a hospital-based facility, the hospital or health system will be required to provide the patient with a written notice that includes the following information: 1) that the facility is part of a hospital or health system and that it charges a facility fee that is in addition to and separate from the professional fee charged by the provider; 2) the amount of the patient’s potential financial liability including facility and professional fees, a statement that the patient’s actual financial liability will depend on what services are provided to the patient, an explanation that the patient may incur greater financial liability than if services were not provided by a hospital-based facility, and a phone number that the patient may call for additional information and estimates; and 3) that patients should contact their health insurer for additional information about potential financial liability for charges and fees.
The Act requires that each billing statement that includes a facility fee shall clearly identify the facility fee as such, provide the corresponding Medicare facility fee reimbursement rate for the same service as a comparison, include a statement that the fee is intended to cover the provider’s operational expenses, inform the patient that the patient’s financial liability may have been less if services were provided at a facility not owned or operated by the hospital or health system, and include written notice of the patient’s right to request a reduction in the fee. Facilities must communicate about facility fees to patients when scheduling services. All of this information must be communicated in plain language, and any required written notices must be accessible to and visible by patients.
Lastly, this section provides that on and after July 1, 2024, hospitals and health systems will be prohibited from collecting facility fees for outpatient health care services that use a CPT E/M or A/M code and are provided on the hospital campus. This will not apply to the following services: wound care, orthopedics, anticoagulation, oncology, obstetrics, and solid organ transplant. If such fees are collected after July 1, 2024, OHS will have enforcement discretion to charge civil penalties of up to $1,000 for each violation.
Certificate of Need Laws (Effective October 1, 2023)
The Act clarifies that a Certificate of Need (“CON”) will be required for replacement scanners if the applicant already offers similar imaging services for each of the scanner’s modalities or functions that will be utilized. However, a CON will not be required for replacement scanners or nonhospital based linear accelerators if these are replacing items that were previously acquired through CONs.
In addition, the Act imposes certain notice requirements on applicants. Applicants must publish notice that applications are being submitted in local newspapers, on the applicant’s website, in two locations within the affected community, on the local health department’s website, and on OHS’s website. It also provides greater enforcement discretion to OHS to implement these policies.
The Act is one of many pieces of legislation signed into law by Governor Lamont that aims to protect and make health care more equitable for residents of Connecticut. Others include SB956, which sets requirements for discharge standards regarding follow-up appointments and prescription medications for patients being discharged from a hospital or nursing home facility. Another is SB0003 which establishes standards for access to and sharing of consumer health data. Providers in Connecticut should carefully review these updates to ensure continued compliance.
