This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0641 - Managed Health Care Plans
L.R. NO. 2494-03
BILL NO. SCS SB 641
SUBJECT: Insurance-Medical, Health, Department of Insurance
TYPE: Original
DATE: March 14, 1996
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
Insurance
Dedicated ($36,000) ($36,000) ($36,000)
Total Estimated
Net Effect on All
State Funds ($36,000) ($36,000) ($36,000)
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
None
Total Estimated
Net Effect on All
Federal Funds $0 $0 $0
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
Local Government $0 $0 $0
FISCAL ANALYSIS
ASSUMPTION
The Department of Insurance(MDI) stated that there are no certification or
recertification fees included in this proposal. They assume the expenditures
resulting from this proposal would be paid from the insurance dedicated fund.
There are approximately 244 insurers writing major and comprehensive medical
insurance policies for groups and individuals. Of these, approximately 90
percent offer some form of a managed care meeting this proposal's definition.
In addition, there are approximately 25 health maintenance organizations
writing policies in this state. The HMO's will write an average of three
variations of plans each. Based upon these numbers, the MDI estimates 295
applications for certification. The MDI also assumes an annual
recertification process since contractual arrangements between
insurers\hospitals\providers of care often change\terminate. The Department
would request two Insurance Product Analyst II to review applications for
certification of managed care plans for compliance to standards and criteria
set forth in the proposal and serve as liaisons between the MDI and managed
care entities, contractors, and health care providers and the public. They
would also need one Clerk Typist III for clerical support for the two
professional positions including filing applications for
certification\recertification and typing correspondence to applicants and
qualified managed care plans.
Oversight assumes this proposal can be implemented with the addition of one
Insurance Product Analyst II. Based on MDI estimates one analyst could
allocate at least five hours for each application.
Officials from the Department of Social Services (DSS) responded to an
earlier version of this proposal and stated this proposed legislation would
increase cost to the Medicaid program in an unknown amount. This proposal
reduces payors ability to negotiate aggressive rates based on guaranteed
volumes. DSS is concerned about Section 4. (5) of the proposal which requires
that all plans allow all health care providers within the plan's geographic
service area to apply for credentials. Managed care entities would not be
allowed to limit the number of specialists with which they contract.
Officials from the Missouri Consolidated Health Care Plan (HCP) responded to
an earlier version of this proposal and reported this proposal would require
all plans to credential providers seeking contracts regardless of whether
there are openings in the plan's network. Financial data currently
confidential would have to be released to enrollees and the public. The
publication of this data would eliminate competitive contracting. These
requirements would increase the administrative cost to HCP, and reduce their
ability to select only high quality appropriate providers for the network. A
study prepared for the Group Health Association of America concluded that
"any willing provider" legislation would increase costs resulting in premium
increases of 9.1% to 28.7%. The estimated cost of the above noted
administrative changes to HCP is $5,920,000 annually.
Officials from the Department of Highway and Transportation (DHT) stated that
passage of this legislation would have no fiscal impact on their agency.
Officials from the Department of Conservation (MDC) stated that passage of
this legislation would increase premium rates by 3% or $87,000 annually to
MDC.
Officials from the Department of Corrections (DOC), Department of Public
Safety (DPS)-Highway Patrol (MHP), Department of Health (DOH), Office of
Administration (OA), stated that passage of this legislation would have no
fiscal impact on their department.
Oversight does not have available information concerning health plans for
local governments. Therefore, no cost are reflected for the fiscal impact
that this proposal may have on local governments.
At a hearing of the Oversight Subcommittee held February 13, 1996 the
Subcommittee determined that the Fiscal Note for SB 641 from the 88th General
Assembly, Second Regular Session, be revised as follows:
1) the Department of Insurance should be allowed $36,000 for one Insurance
Product Analyst II to implement this proposal.
2) all other cost should be reduced to zero.
FISCAL IMPACT - State Government FY 1997 FY 1998 FY 1999
(10 Mo.)
INSURANCE DEDICATED FUND
Cost-Department of Insurance
Personal Services(1 FTE) ($21,280) ($26,174) ($26,289)
Fringe Benefits ($6,541) ($8,046) ($8,247)
Expense and Equipment ($8,179) ($1,780) ($1,464)
Total Cost Department of Insurance ($36,000) ($36,000) ($36,000)
Estimated Net Effect on Insurance
Dedicated Fund ($36,000) ($36,000) ($36,000)
FISCAL IMPACT - Local Government FY 1997 FY 1998 FY 1999
(10 Mo.)
$0 $0 $0
DESCRIPTION
This act deals with health insurance and managed health care plans. The
Director of the Department of Insurance shall establish a process for
certification of managed health care plans. The Director shall establish the
procedures for periodic review and recertification of qualified managed care
plans. Managed Care Plan is defined in Section 2 of the bill. The Director
shall terminate or suspend the certification of a previously qualified
managed care plan if the Director determines that a plan no longer meets
requirements for certification. Prior to termination or suspension, the
Director shall notify the managed care plan and provide the plan notice and
opportunity for a hearing on the decision. Specific requirements for
certification are set out in Section 4 of the act. No rule promulgated under
this act shall become effective unless the rule was promulgated pursuant to
Section 536.024, RSMo. All managed care entities shall be in compliance
with the provisions of this act, SB 641, by January 1, 1998.
This legislation is not federally mandated, would not duplicate any other
program and would not require additional capital improvements or rental
space.
SOURCES OF INFORMATION
Department of Insurance
Department of Health
Department of Highway and Transportation
Department of Corrections
Department of Public Safety
Department of Conservation
Office of Administration
Missouri Consolidated Health Care Plan
Not Responding: Department of Social Services, Missouri Consolidated Health
Care Plan