This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0938 - Insurance Coverage For Certains Drugs
L.R. NO. 3526-01
BILL NO. SB 938
SUBJECT: Insurance-Medical, Pharmacy
TYPE: Original
DATE: March 25, 1996
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
All State Funds ($431,500) to ($863,000) to ($914,780) to
($863,000) ($1,726,000) ($1,829,560)
General Revenue (762,713) (1,139,132) (1,194,950)
Insurance
Dedicated $40,500 $0 $0
Total Estimated
Net Effect on All
State Funds ($1,153,713) to ($2,002,132) to ($2,109,730) to
($1,585,213) ($2,865,132) ($3,024,510)
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
Federal (1,146,217) (1,712,977) (1,796,912)
Total Estimated
Net Effect on All
Federal Funds (1,146,217) (1,712,977) (1,796,912)
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
Local Government $0 $0 $0
FISCAL ANALYSIS
ASSUMPTION
Officials from the Consolidated Health Care Plan (HCP) reported that this
proposal would allow for the broader use of prescription drugs in Missouri,
specifically for conditions and treatments for which the drug was not
originally approved or intended. This change would add costs to HCP's
contracted health plans which would be passed along as premium increases. HCP
stated that is difficult to estimate the exact impact of the proposal. Drugs
make up 20% or $17.26 million of HCP's total health care cost and HCP
estimates cost would increase 1-2%, resulting in $863,000 to $1,726,000 in
additional annual cost.
The Department of Insurance (INS) stated it will need .5 FTE, an Insurance
Product Analyst II, and related expense to review all new life and health
form filings caused by changes to insurance policies and plans generated by
this and all other legislation enacted during this session. This FTE would
work full-time for six months a year. INS states that approximately 245
insurers and 25 HMOs are currently writing medical plans. On average each
company offers three plans. The result would be 810 new policy filings
needed to comply with this legislation. A policy filing fee of $50 is
required and based on 810 filings, $40,500 in revenue to the Insurance
Dedicated Fund would be generated in the first fiscal year only.
Oversight assumes the passage of this proposal would not increase cost to
INS; however, revenue of $40,500 in the first fiscal year only would be
realized. In addition, passage of more than one similar proposal could
require the INS to request increased appropriations to cover cumulative
administrative costs.
Officials from the Department of Corrections (DOC), Department of
Conservation (MDC), Department of Public Safety (DPS) - Missouri State
Highway Patrol (HP), Department of Health (DOH), Office of Administration
(OA), and the assume this proposal would not fiscally impact their agencies.
Officials from the Department of Highways and Transportation (DHT) stated
this proposal would have an indeterminable fiscal impact on the Highway and
Patrol Medical Plan and a minimal fiscal impact on DHT.
Officials from the Department of Social Services (DOS) reported that this
proposal would require all health plans to provide coverage for all drugs
prescribed to treat a covered indication so long as the drug has been
approved by the FDA for at least one indication. As a result of this
proposal, the Medicaid fee-for-service plan may be required to provide
coverage for certain types of drugs such as fertility drugs, smoking
cessation products, and baldness treatments which are currently excluded from
coverage. Since coverage is not currently provided DOS was unable to estimate
the fiscal impact of this proposal on the fee-for-service Medicaid program.
This proposal would also impact the Medicaid managed care program. This
program currently operates with a restrictive formulary which limits coverage
for certain drugs. This proposal would limit managed care plans ability to
restrict which drugs may be prescribed. DOS estimates a 5% increase in costs
in the pharmacy portion of the Medicaid managed care program. This would
translate to an increase of $2,852,109 in fiscal year 1998.
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.
FISCAL IMPACT-State Government FY 1997 FY 1998 FY 1999
(10 Months)
ALL STATE FUNDS
Cost - Consolidated Health Care Plan
Increased health care cost ($431,500) ($863,000) ($914,780)
to ($863,000) to ($1,726,000) to ($1,829,560)
Estimated Net Effect on All State
Funds ($431,500) ($863,000) ($914,780)
to ($863,000) to ($1,726,000) to ($1,829,560)
INSURANCE DEDICATED FUND
Income - Department of Insurance
Policy filing fees $40,500 $0 $0
ESTIMATED NET EFFECT ON
INSURANCE DEDICATED FUND $40,500 $0 $0
GENERAL REVENUE FUND
Cost - Department of Social Services
Increased Medicaid cost ($762,713) ($1,139,132) ($1,194,950)
Estimated Net Effect on General
Revenue Fund ($762,713) ($1,139,132) ($1,194,950)
FEDERAL FUNDS
Cost - Department of Social Services
Increased Medicaid cost ($1,146,217) ($1,712,977) ($1,796,912)
Estimated Net Effect
on Federal Funds ($1,146,217) ($1,712,977) ($1,796,912)
FISCAL IMPACT - Local Government FY 1997 FY 1998 FY 1999
(10 Mo.)
$0 $0 $0
DESCRIPTION
This proposal would require insurance companies to provide coverage for any
drugs prescribed to treat a covered illness if: (1) the drug has been
approved by the FDA for at least one illness; or (2) if the drug is
recognized for treatment of the covered illness in one of the standard
reference compendia or in substantially accepted peer-reviewed medical
literature. Insurers are not required to cover any drugs that: (1) the FDA
has not approved for any use; (2) a drug that the FDA has advised should not
be used for the specific illness; (3) drugs used in research trials sponsored
by their manufacturers or a government entity; or (4) drugs used in research
trials, if the sponsor of the research trial furnishes the drugs or services
without charge to any participant in the research trial.
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 Corrections
Department of Conservation
Department of Public Safety
Department of Health
Department of Social Services
Office of Administration
Department of Highway and Transportation
Missouri Consolidated Health Care Plan