SB 0311 - Fiscal Note

Fiscal Note - SB 0311 - Adds new protection for health care consumers

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 0518-01

BILL NO. SB 311

SUBJECT: Consumer Protection

TYPE: Original

DATE: February 3, 1999

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
All Funds*	(Unknown)	(Unknown)	(Unknown)
General Revenue	$0 to ($28,485)	$0 to ($35,549)	$0 to ($36,971)
Highway	$0 to ($1,288,913)	$0 to ($1,608,563)	$0 to ($1,672,905)
Gaming	$0 to ($17,010)	$0 to ($21,228)	$0 to ($22,078)
Total Estimated Net Effect on All State Funds*	(Unknown)	(Unknown)	(Unknown)

*Costs expected to exceed $100,000.

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
Federal	$0 to ($11,340)	$0 to ($14,152)	$0 to ($14,718)
Total Estimated Net Effect on All Federal Funds	$0 to ($11,340)	$0 to ($14,152)	$0 to ($14,718)

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
Local Government	(Unknown)	(Unknown)	(Unknown)

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 6 pages.

FISCAL ANALYSIS

ASSUMPTION

The Department of Corrections, Department of Social Services, Department of Health, Department of Public Safety, and Department of Conservation assume this proposal would not fiscally impact their agencies.

The Department of Insurance (INS) assumes that current appropriations and staff can absorb the work responsibilities for this single proposal. However, if additional proposals are approved, INS may need to request increased appropriations due to the combined effect of multiple proposals.

The Department of Transportation (DHT) states that this proposal requires coverage for patient costs to a member in a clinical trial as a result of treatment provided for a life-threatening condition or prevention, early detection, and treatment studies on cancer. DHT assumes this will require their medical plan to cover the cost of medically necessary health care services that are incurred as a result of treatment being provided to a member for purposes of clinical trial. DHT estimates this would increase their plan costs by 4.5% of total claims for a year. In 1998, total claims were in excess of $36,000,000. Increasing costs by 4.5% would increase the total medical plan cost by $1,620,000. Because 75% of the participants in the plan are DHT participants, the increased cost to DHT's medical plan would be $1,215,000 the first year.

The Department of Public Safety, Missouri State Highway Patrol (MSHP) assume this proposal would not fiscally impact them because the impact will be on the insurance plan. However, if MSHP and DHT were to increase state shares to offset any increase in rates issued by the insurance plan, there would be an impact of 4.5% of total claims. In 1998, total claims were in excess of $36,000,000, and MSHP participants were approximately 25%, or $9,000,000, of that. Therefore, MSHP assumes the impact could be $405,000, and it would be split among general revenue (8.44%), federal (3.36%), Gaming (5.04%), Highway (81.9%), Criminal Record Systems (1.01%) and Air Pollution Control (.25%).

Oversight assumes a minimal fiscal impact on the Criminal Records System Fund and the Air Pollution Control Fund, and will range costs for DHT and MSHP depending on the decision to increase the state shares to offset an increase in rates.

The Missouri Consolidated Health Care Plan (HCP) assumes that two of the provisions in this proposal would result in costs. First, this proposal requires the coverage of patient costs for treatment being provided in a clinical trial, including the use of investigational new drug ASSUMPTION (continued)

applications. HCP notes these drugs are typically expensive, resulting in additional costs to the plan. In addition, HCP states that this proposal allows HMOs to be sued. HCP assumes this would increase premiums so that HMOs will be able to cover any potential liability. HCP assumes the costs associated with proposal are not determinable; however, they are estimated to exceed $100,000, annually.

Oversight assumes a four percent annual increase in medical costs. Oversight also assumes these cost estimates are based on HCP's current contract, as a change in contracts could result in additional costs in future years.

FISCAL IMPACT - State Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
ALL FUNDS
Costs
Increased premiums/state contributions	(Unknown)	(Unknown)	(Unknown)
ESTIMATED NET EFFECT
ON ALL FUNDS	(Unknown)	(Unknown)	(Unknown)
GENERAL REVENUE
Costs - Missouri State Highway Patrol
Increased contributions	$0 to	$0 to	$0 to
	($28,485)	($35,549)	($36,971)
ESTIMATED NET EFFECT	$0 to	$0 to	$0 to
ON GENERAL REVENUE	($28,485)	($35,549)	($36,971)
HIGHWAY FUND
Costs - Department of Transportation
Increases contributions	$0 to	$0 to	$0 to
	($1,012,500)	($1,263,600)	($1,314,144)
FISCAL IMPACT - State Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
Costs - Missouri State Highway Patrol
Increased contributions	$0 to	$0 to	$0 to
	($276,413)	($344,963)	($358,761)
ESTIMATED NET EFFECT	$0 to	$0 to	$0 to
ON HIGHWAY FUND	($1,288,913)	($1,608,563)	($1,672,905)
GAMING FUND
Costs - Missouri State Highway Patrol
Increased contributions	$0 to	$0 to	$0 to
	($17,010)	($21,228)	($22,078)
ESTIMATED NET EFFECT	$0 to	$0 to	$0 to
ON GAMING FUNDS	($17,010)	($21,228)	($22,078)
FEDERAL FUNDS
Costs - Missouri State Highway Patrol
Increased contributions	$0 to	$0 to	$0 to($11,340)($14,152)($14,718)
ESTIMATED NET EFFECT	$0 to	$0 to	$0 to
ON FEDERAL FUNDS	($11,340)	($14,152)	($14,718)
FISCAL IMPACT - Local Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
LOCAL GOVERNMENT
Increased costs to local health plans	(Unknown)	(Unknown)	(Unknown)
ESTIMATED NET EFFECT
ON LOCAL GOVERNMENT	(Unknown)	(Unknown)	(Unknown)
FISCAL IMPACT - Small Business
Small businesses would be expected to be fiscally impacted to the extent they could incur increased health insurance costs due to the requirements of this proposal.

DESCRIPTION

This proposal addresses four areas of the federal Patient's Bill of Rights which Missouri has not previously enacted. The proposal requires health carriers to allow a woman to designate her

obstetrician/gynecologist as her primary care provider or, in the alternative, to have direct access to the services of her obstetrician/gynecologist without first obtaining a referral from her primary care provider. It also requires health carriers to permit enrollees with life-threatening or serious

illnesses to participate in approved clinical trials, provided there is meaningful potential for significant clinical benefit.

The proposal prohibits health maintenance organizations from entering into any compensation agreement with a provider that would induce the provider to limit medical care. It also creates a state cause of action for enrollees who are improperly denied care by their health maintenance organizations. A health maintenance organization has the duty to exercise ordinary care when making health care treatment decisions and it will be liable to an enrollee when it fails to do so.

However, a health maintenance organization will not be liable for improper care if it did not control, influence, or participate in the health care treatment decision and the health maintenance organization did not deny or delay payment for the enrollee's treatment. In addition, a health maintenance organization is not obligated to provide an enrollee treatment which is not covered under the health plan.

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 Social Services

Department of Conservation

Department of Transportation

Department of Corrections

Missouri Consolidated Health Care Plan

Department of Public Safety

Missouri State Highway Patrol

Jeanne Jarrett, CPA

Director

February 3, 1999