HARTFORD, CT — It’s not a conversation Gov. Ned Lamont’s administration is ready to have, and whatever decision his team makes regarding how it treats state hospitals may be revealed on Feb. 20 with his budget.
In the meantime, the fresh start the hospitals were hoping for seems to be fading fast.
Senate Republican Leader Len Fasano, R-North Haven, questioned Office of Policy and Management Secretary Melissa McCaw earlier this month about why the administration hasn’t moved to correct the mistake that’s caused the state to pay about $60 million less per quarter to Connecticut’s hospitals.
McCaw has said the administration has yet to make a decision about how to resolve the problem.
The issue involves new rate-setting software from a third-party vendor that weighted certain medical procedures differently than it had in the past, and as such ended up changing rates for inpatient hospital stays.
Neither the state or the hospitals anticipated the change and none was assumed as far as the budget is concerned. However, no one at the state level has moved to correct the problem.
Carl Schiessl, senior director of regulatory advocacy at the Connecticut Hospital Association, was in Bristol Tuesday morning. According to the Bristol Press, Schiessl said they are asking the state to correct the unintended error. He said if they don’t, the association will have to take action.
The Connecticut Hospital Association declined further comment for this story.
A spokesman for the Office of Policy and Management said Tuesday that no decision has been made yet on how to proceed.
The rate-setting problem was discovered in December, a few weeks before Lamont was sworn into office.
Fasano expressed concern that the Lamont administration was using the problem, which is reducing inpatient hospital rates an average of 26 percent, to help resolve the more global dispute over the hospital tax, which has also been the subject of litigation since 2016.
McCaw said the state’s exposure in the litigation is about $2.5 billion at the moment. The first pre-trial conference in the case is scheduled next month, but in the meantime McCaw insisted no decisions have been made about how to proceed as a new administration.
“We have been making ourselves have a better understanding of the comprehensive issue surrounding the hospitals,” McCaw told Fasano Feb. 5.
She said it was top priority for the new administration.
Lawmakers were surprised to learn the Lamont administration might seek to use an unintended error in the rate setting software as leverage in a negotiation.
Asked about what they knew about the situation, top lawmakers on the two budget writing committees who are familiar with the hospital tax said they were unaware of the problem.
Kurt Barwis, president and CEO of Bristol Hospital, told the Bristol Press the problem was beginning to cause cash flow issues for the hospital.
For lawmakers the problem is only just beginning. In 2017, during the longest budget battle in the state’s history, they decided to steeply increase the tax to maximize federal matching funds and then reduce it starting July 1, 2019.
That means Lamont has to contend with a policy that planned to reduce the hospital tax from $900 million to $384 million. The reduction in taxes also means there’s a corresponding reduction in federal matching grants.
It’s the largest reduction in state revenue impacting the two-year budget Lamont will unveil Feb. 20.
But Lamont is trying to strike a different tone and set himself apart from the previous administration.
Former Office of Policy and Management Secretary Ben Barnes had an adversarial relationship with the hospitals. The relationship was summed up when he told the Finance, Revenue, and Bonding Committee in 2015 that they were increasing the hospital tax because, “It’s like why do you rob banks? … It’s where the money is.”
In the meantime, the hospitals are making sure lawmakers know they are economic drivers in their communities. The Connecticut Hospital Association released a report which found that their members generate $27.7 billion for the state’s economy and provide 103,000 jobs.