Connecticut lawmakers ratify $1.8B settlement with hospitals

Connecticut lawmakers recently ratified an agreement with hospitals on a unanimous vote, ending a four-year legal battle over the provider tax imposed on hospitals in 2011, according to the Hartford Courant.

Under the agreement, Connecticut hospitals will receive a total of $1.8 billion through 2026. The state will contribute $872 million to the settlement, and the federal government will cover the remaining $1 billion, according to the report.

The settlement resolves a lawsuit filed in 2015 alleging the state abused the hospital provider fee, or provider tax, which collects money from hospitals and pays them back through reimbursements. The amount hospitals get back hinges on their amount of Medicaid business.

The provider fee was implemented in 2011, and it initially provided a financial benefit to Connecticut hospitals. However, that changed in subsequent years as Connecticut struggled with budget deficits. Despite an increase in the federal reimbursement rate, the provider tax grew between 2013 and 2017, and payments back to Connecticut hospitals shrank.

Connecticut Gov. Ned Lamont said he's pleased with the settlement, which allowed the state to avoid trial and a judgment of up to $4 billion. 

"Today marks the start of a desperately needed reset between the state and our hospitals, and I am thankful that we were able to come together and negotiate a settlement in good faith that provides stability for both sides while reducing the losses the state would have incurred in the absence of this agreement," he said in a written statement to the Hartford Courant on Dec. 18.   

Connecticut Hospital Association CEO Jennifer Jackson said the agreement is a win for hospitals, patients and the state. 

The settlement "marks the start of a new partnership with the state that will strengthen healthcare in Connecticut for the benefit of everyone who lives here," Ms. Jackson told the Hartford Courant.

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