HARTFORD, CT — The battle between the state of Connecticut and the Connecticut Hospital Association has been going on for more than three years, but Gov. Ned Lamont and the association announced Tuesday that they’ve reached a “tentative agreement.”
However, there were few if any details available Tuesday evening because the Connecticut Hospital Association’s members still have to approve the deal. The court and Attorney General William Tong also will have to agree to settle all outstanding claims.
The Connecticut Hospital Association sued the state of Connecticut in 2016.
The complaint filed by 20 hospitals in New Britain Superior Court says Connecticut, starting in 2013, abandoned the idea of giving the hospitals back some of the money it leveraged with the hospital provider tax through federal matching grants.
“Over time, the State’s payments to hospitals from Hospitals Tax revenues have decreased, federal matching funds have decreased and the State has utilized the Hospitals Tax to balance the budget,” the original complaint states.
The Connecticut Hospital Association had a prickly relationship with former Gov. Dannel P. Malloy and had hoped for a better one with Lamont.
But that relationship got off to a rocky start in February when Lamont declined to reduce the hospital tax as proposed by the bipartisan budget. Instead, he decided to keep the hospital tax at a rate that generates $900 million for the state annually. It’s unclear what the new agreement will mean for the tax structure and the state budget.
“The beginning of my administration marked a reset of the relationship between the State of Connecticut and its hospitals,” Lamont said. “I was clear that this ongoing litigation benefited neither party, and certainly not the taxpayers of our state. Both sides came to the table and negotiated a good faith settlement that will provide predictability and stability for both the state and the hospitals, and reduces the losses the state would have incurred in the absence of this agreement. This is a path forward that provides fiscal stability for the hospital industry and marks a new chapter in our state’s relationships with the hospitals.”
Jennifer Jackson, CEO of the Connecticut Hospital Association, said the agreement provides a “path forward for hospitals and the state that recognizes the important role hospitals play in providing patients with quality healthcare and in strengthening our state’s economy.”
House Speaker Joe Aresimowicz, D-Berlin, said leaders were briefed on the agreement, but that the administration was “intentionally vague” about the details.
He said it’s his understanding that it won’t impact negotiations over the current two-year budget, but he’s not clear on exactly what that means.
The Lamont administration declined to offer further details about the financials of the deal.
After two years of paying $900 million annually in provider taxes, hospitals were supposed to see the tax drop to $384 million. Lamont’s budget maintained the tax at $900 million and gives them back $453 million as part of a calculation to get more federal Medicaid reimbursement. That ends up being a $43 million loss per year for the hospitals.
In addition, Lamont’s budget didn’t change the calculation for the inpatient hospital rates. That means hospitals will lose about 16.8% or about $170 million annually. The decision will save the state about $59.1 million in 2020 and $61.8 million in 2021.
It’s unclear if any of those numbers will remain the same following Tuesday’s announcement.
Lawmakers have been reluctant to weigh in on the issue of the hospital tax and have given the Lamont administration the space it needed to negotiate a settlement.