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September 27, 2019

Connecticut to play direct role in negotiating health care prices

HBJ File Photo State comptroller Kevin P. Lembo.

State government is looking to take a more direct role in negotiating the prices hospitals and other providers can charge for treating public-sector employees and retirees.

Comptroller Kevin P. Lembo announced a new bidding process Thursday that he said would radically reshape Connecticut’s healthcare market.

“Employers across the country have long ceded control, responsibility and oversight of health care purchasing to health insurance corporations – but that old way of doing business has been broken for some time,” Lembo said. “We are no longer going to take a hands-off approach.”

The state health plan, which serves about 210,000 employees and retirees, is a self-insured plan. In other words, the state assumes the financial risk associated with providing health benefits.

But Connecticut still contracts with two major insurers, Anthem and UnitedHealthcare to negotiate payments to health care providers and to process claims.

The request for proposals (RFP) Lembo issued this week also relies on third-party administrators — but with a twist.

Going forward, the state would have a direct seat at the negotiating table with healthcare providers. And the company or companies selected through the RFP will assist the state in carrying out the latter’s negotiating strategy.

What’s the difference?

Under the outgoing model, insurance companies — though negotiating on the state’s behalf — are not necessarily driven only by the state’s interests.

For example, insurance companies may not necessarily press for lower prices for health treatments if it means providers could respond by leaving that company’s network.

Lembo said he believes having the state leading health care cost negotiations also will result in providers less frequently ordering duplicative tests that waste time and money.

“We are preparing for a new market-altering dynamic where the state will ensure that corporate health care interests are better aligned with the interests of patients, health care providers and the state of Connecticut health plan,” Lembo said.

This new arrangement would affect benefits provided to state employees, retirees under age 65 and other public-sector and nonprofit workers covered under the general state plan.

Connecticut underwent a similar shift in negotiating strategy in 2017 for its plan serving about 49,-000 Medicare-eligible retirees, who are age 65 and older.

Lembo said it’s too soon to project how much the new RFP could save, but the 2017 changes are producing annual cost savings in the tens of millions of dollars.

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