Connecticut Governor Ned Lamont recently signed into law Public Act No. 19-117 (PA 19-117), which contains provisions affecting health care providers, including revisions to the hospital provider tax, a prohibition on non-compete agreements for home care workers and an expansion to Connecticut’s current surprise bill law. Highlights of PA 19-117, including the effective dates for each provision, are described below.

Hospital Provider Tax Changes

Effective from Passage

Elimination of Tax Rate Decrease

Under the existing law, the tax rates for inpatient and outpatient hospital services were scheduled to decrease beginning in fiscal year (FY) 2020. PA 19-117 eliminates this planned decrease and instead maintains the existing tax rate at FY 2019 rates.  However, the tax base is to be adjusted every two years such that the taxes are based on the hospital’s net revenue three years prior to the start of the current biennium. For example, the taxes for FY 2020 and 2021 will be based on the hospital’s net revenue in FY 2017.

Successor Tax Liability in Hospital Mergers, Consolidations or Reorganizations

Under PA 19-117, if a hospital subject to the hospital provider tax merges, consolidates, or otherwise reorganizes, then the surviving hospital is liable for the total tax imposed on the merging, consolidating, or reorganizing hospitals. The surviving hospital must also assume any outstanding tax liabilities from periods before the merger, consolidation, or reorganization.

Refunds for Exceeding Federally Permissible Tax Rate

If, for any fiscal year, the Department of Social Services (DSS) determines that the effective hospital provider tax rate for inpatient services exceeded the rate allowed under federal law, the new law requires the Department of Revenue Services (DRS) to refund to hospitals the excess tax collected. Each hospital’s refund must be in proportion to the amount of inpatient hospital service net revenue on which it was taxed.

Beginning by July 1, 2020, each hospital subject to the provider tax must report annually to DSS the amount of hospital provider tax it paid and its net inpatient hospital services revenue for the fiscal year two years before the reporting date. Within 90 days after receiving completed reports from all such hospitals, DSS will notify DRS of the refund amount due to each hospital and DRS will issue the appropriate refunds. Interest will not be added to the refunds.

Prohibition on Non-Compete Agreements with Home Health Workers

Effective from Passage

PA 19-117 creates a new law that prohibits non-compete agreements with homemaker, companion, or home health services workers. The new law applies to any agreement that restricts the right of an individual to provide homemaker, companion or home health services in any geographic area of the state for any period of time or to a specific person. Under PA 19-117, such non-compete agreements are against public policy, void and unenforceable.

Surprise Bills for Laboratory Services

Effective January 1, 2020

Currently, a “surprise bill” is a bill for non-emergency health care services provided by an out-of-network provider at an in-network facility during a service or procedure performed by an in-network provider or previously authorized by the health insurer, and the individual receiving the services did not elect to receive the services from the out-of-network provider. Under existing law, if an individual with health insurance receives a surprise bill, he or she is obligated to pay only the coinsurance, copayment, deductible, or other out-of-pocket cost that would apply if the services were provided by an in-network provider, and it is a violation of the Connecticut Unfair Trade Practices Act for a provider to request from a patient any amount for a surprise bill beyond the coinsurance, copayment, deductible or other out-of-pocket expense. In general, the health insurer must reimburse the out-of-network provider or the insured, as applicable, for the health care services at the in-network rate.

PA 19-117 revises the definition of “surprise bill” to include non-emergency health care services rendered by an out-of-network clinical laboratory, if an insured is referred to it by an in-network provider.

Certified Community Health Workers  

Effective January 1, 2020

This legislation creates a community health worker certification program administrated by DPH. Under PA 19-117, community health workers are public health outreach professionals who act as liaisons between community members and health care providers, and provide services such as counseling, social support, care coordination and basic screenings of risks connected with social determinants of health. Beginning January 1, 2020, the new law requires every person who uses the title “certified community health worker” to be certified by DPH. The new law: (1) establishes certification requirements and sets initial certification and renewal fees, (2) establishes a continuing education requirement, and (3) allows DPH to take enforcement actions against certificate holders who fail to comply with accepted standards.

Newborn Infant Health Screening

Effective October 1, 2019

Under existing law, institutions (such as hospitals) caring for newborn infants must administer to every infant screenings to test for certain diseases and abnormal conditions. The Department of Public Health (DPH) administers this Newborn Screening Program and publishes a list of all the abnormal conditions for which the institutions must screen newborns. PA 19-117 broadens DPH’s newborn screening program to include any disorder listed on the federal Recommended Uniform Screening Panel, subject to the Office of Policy and Management’s approval.

Implementation of Medicaid Value-Based Payments for Hospitals

Effective July 1, 2019

PA 19-117 requires DSS to implement one or more value-based payment methodologies for hospitals participating in the Connecticut Medicaid program. While the law does not proscribe the specific value-based methodologies, it states that DSS may include methodologies designed to: (1) reduce inpatient hospital readmissions; (2) reduce unnecessary caesarian section deliveries, take appropriate actions to reduce pre-term deliveries, and improve obstetrical care outcomes; and (3) address outpatient infusions involving high-cost medications through performance-based payments. DSS is permitted to phase-in these new payment methodologies over time.

This new law also requires DSS to reduce the total applicable Medicaid rate by 15% for each hospital “readmission.” A readmission occurs when, within 30 days following discharge from an applicable hospital, a person is readmitted for observation services for the same or similar diagnosis(es).

Expansion of Connecticut’s Breach Notification Law

Effective October 1, 2020

Under Connecticut’s existing breach notification law, any person conducting business in the state who, in the ordinary course of business, owns, licenses or maintains computerized data that contains “personal information” must (1) notify Connecticut residents in the event that such resident’s personal information is breached or is reasonably believed to have been breached, and (2) offer at least two years of identify protection services to individuals affected by a breach. PA 19-117 expands the existing breach notification law to apply in cases of a breach or suspected breach of personal information or “nonpublic information.” Nonpublic information is defined as information that is not publicly available, not related to age or gender, and that (1) would materially impact a licensee’s business, operation, or security if disclosed; (2) is created or derived from a consumer or health care provider and concerns behavioral, mental, or physical health, or health care services or payments; or (3) concerns a consumer’s name, number, or other identifiable information that can identify a consumer when used in combination with other information such as an account number, credit or debit card number, biometric records, driver’s license or Social Security number.

Petition for Facility Closure

Effective July 1, 2019

Under current law, intermediate care facilities for individuals with intellectual disabilities that participate in Medicaid, nursing homes, rest homes, and residential care homes must generally apply to DSS for a certificate of need in order to terminate a service or substantially decrease their bed capacity. PA 19-117 allows such facilities to submit a petition for closure to DSS, and it allows DSS to authorize such closure if certain conditions are met. The facility must demonstrate that: (1) it is not viable based on actual and projected operating losses; (2) it has an occupancy rate under 70% of its licensed bed capacity; (3) the closure is in compliance with DSS’s strategic plans, including those with respect to bed-need by geographic region; (4) it is compliant with certain federal requirements, including those relating to notification of facility closure; and (5) it is not providing special services that would not be met by another provider if the facility closed. DSS is required to grant or deny the petition within 30 days of its receipt.

The new legislation requires the petitioning facility to notify the Office of the Long-Term Care Ombudsman when the facility submits the petition to DSS. Furthermore, when a facility submits a petition for closure to DSS, it must also provide written notice to all patients, guardians, conservators or other responsible parties, and it must post the written notice in the facility in a conspicuous place. Among other things, the notice must include a brief description of the reasons for the facility’s closure and that no patient will be involuntarily transferred or discharged from the facility as a result of the petition.