State settles lawsuit with Connecticut Hospital Association

The lawsuit filed against the state by a number of hospitals under the Connecticut Hospital Association banner has been settled, bringing an end to a years-long dispute.

As detailed by Gov. Ned Lamont, Attorney General William Tong and the CHA, the settlement will result in a withdrawal of all pending legal claims that various hospitals filed against the state challenging the first hospital “user fee,” or “hospital tax,” including the lawsuits filed in 2016, and all of the rate appeals brought by hospitals challenging Medicaid payments.

The seven-year agreement stabilizes user fee revenues for both the state and the hospitals, and will help fund the state”™s share of the Medicaid program and other state programs. Lamont said the agreement also provides stability in the Medicaid payment system for hospitals and resolves potential state liability.

Under the settlement”™s terms, the state of Connecticut is able to abrogate legal claims that potentially exposed it to up to $4 billion in liability. At the same time, hospitals will have a more stable and predictable user fee schedule, with the agreement providing for a reduction in the user fee from $900 million to $820 million by fiscal year 2026.

The agreement also increases Medicaid hospital rates by about 2% per year, sets supplemental payments and provides one-time Medicaid payments this fiscal year. Lastly, the parties retain the ability to negotiate changes to the agreement in the event of changes in federal requirements that would impact the terms of the settlement.

A tentative agreement between the CHA and the state was announced in May; in October both sides indicated that a resolution was growing near.

“Throughout this process,” Lamont said, “my administration and the Connecticut Hospital Association have been respectful and honest, which has proven instrumental in reaching this settlement. This historic agreement will reduce our state”™s potential exposure to billions of dollars in liability and removes that uncertainty for years to come. It is my hope that we can continue down this path to work with our hospitals and providers to increase the quality of care while simultaneously addressing the cost of that care.”

“This is a fair and reasonable settlement that ends over four years of legal and financial risk and uncertainty and provides necessary predictability for both the state and Connecticut”™s hospitals,” Tong said.

CHA CEO Jennifer Jackson described the agreement as “a win for patients, hospitals and the state. Governor Lamont has paved the way for a new, collaborative relationship in which we are working together to provide patients with quality healthcare and strengthen Connecticut”™s economy.”

Because the settlement exceeds $2.5 million in value, the matter now must go before the Connecticut General Assembly for approval and adoption of implementing legislation. Earlier this week Lamont indicated that he hoped a special session of the legislature could be scheduled before Christmas, with what was then a tentative agreement with the CHA among the subjects to be discussed.

House Republican Leader Themis Klarides has indicated her support for the settlement.