SB 0099 - Fiscal Note

Fiscal Note - SB 0099 - Individual/group health insurance policies to provide certain cancer screening exams to nonsymptomatic patients

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 0575-01

BILL NO. SB 99

SUBJECT: Medical Insurance

TYPE: Original

DATE: January 26, 1999

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
All Funds	$0 to ($1,169,703)	$0 to ($1,471,366)	$0 to $647,508
Insurance Dedicated	$14,450 to $28,900	$0	$0
Total Estimated Net Effect on All State Funds	$14,450 to ($1,140,803)	$0 to ($1,471,366)	$0 to $647,508

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
None
Total Estimated Net Effect on All Federal Funds	$0	$0	$0

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 Conservation, and Department of Social Services assume this proposal would not fiscally impact their agencies.

The Department of Transportation (DHT) assumes their plan would be required to provide an annual pelvic examination and pap smear for any non-symptomatic woman, an annual prostate examination and laboratory tests for any non-symptomatic man, and an annual colorectal cancer examination and laboratory tests for any non-symptomatic person in the plan. All of these coverages would not be subject to a deductible, but they would be liable for any co-payment not to exceed $25.

Based on membership estimates and cost figures furnished by Westport personnel, and assuming only 25% of eligible participants would use the new examinations, DHT estimates costs of $110,250 for the pelvic examination and pap smears (1,050 participants @ $105 per exam), $217,856 for the prostate examination and lab tests (1,472 participants @ $148 per exam), and $277,420 for the colorectal cancer examination (2,522 participants @ $110 per exam). DHT assumes the total cost to their medical plan would be $399,522 to $504,605 in FY00, $498,603 to $629,747 in FY01, and $518,547 to $654,937 in FY02. DHT has assumed a range depending on whether the $25 co-payment would be accessed. DHT states that although they estimate costs for this proposal, the intended purpose is to achieve an overall cost reduction due to early detection of cancer conditions. However, DHT was not able to quantify the long range savings that may result.

The Department of Insurance (INS) states that approximately 259 health insurers and 30 HMO's have policies filed with INS. Each insurer may submit one or two policy form amendments (one for individual and one for group or one filing for both) to comply with the requirements of this proposal. Form filings are to be accompanied with a $50 filing fee. Based on the estimated range of new policy filings, INS estimates $14,450 to $28,900 in new revenue would be generated for the Insurance Dedicated Fund in the first fiscal year only. INS anticipates that current appropriations and staff would be able to absorb the work duties in this proposal. However, INS states that if additional proposals are approved, they may need to request an increase in appropriations due to the combined effect of multiple proposals.

Missouri Consolidated Health Care Plan (HCP) officials state that their HMO benefit requires a $10 co-pay for each visit to a physician's office. This small amount provides low cost access to care regardless of cost and whether for symptomatic or preventative in nature. The services prescribed under this proposal are currently available and accessible to HCP's HMO members. HCP states this proposal would eliminate co-pay for the services, but is unlikely to cause many ASSUMPTION (continued)

additional members to seek the services than already do now. HCP assumes the fiscal impact of this proposal upon the HMO segment of HCP's population would be minimal, but the fiscal impact upon the indemnity plan would be substantial.

HCP estimates that the elimination of the deductible would encourage a new 15% of the population to seek these services. HCP states this would generate new costs to the indemnity plan, including $909 per colorectal exam and $126 per prostate exam. The total adult state enrollment in the indemnity plan is 4,480, and HCP assumes this proposal would encourage 15% of membership to seek these additional services who would not have otherwise. HCP estimates that 673 additional colorectal exams would be performed, and 249 additional prostate exams, at a total cost of $643,131. After accounting for the 10% PPO discount, HCP assumes a fiscal impact of $482,348 in FY00, $613,547 in FY01, and $650,360 in FY02.

The Department of Public Safety, Missouri State Highway Patrol (MSHP) assumes no fiscal impact on the department because all fiscal impact would be on the insurance plan. However, if the Patrol and the Department of Transportation were to increase state shares to offset any increase in rates issued by the insurance plan, the fiscal impact would be approximately $219,300 per year. Based on information provided by Westport, the Patrol's insurance plan administrator, the estimated medical costs for the various services are $105 for a pelvic exam and pap smear, $148 for a prostate exam and lab test, and $110 for a colorectal cancer exam and lab tests. Assuming that 25% of eligible Patrol employees would participate, 426 women and 495 men would be affected, resulting in a total potential fiscal impact of $219,300 per year. MSHP states the fiscal impact would be split between General Revenue (8.44%), Highway Funds (81.9%), Air Pollution Control (.25%), Criminal Record System Fund (1.01%), Gaming Fund (5.04%) and Federal Fund (3.36%). Oversight has ranged the costs from $0 to $182,750 in FY00, $0 to $228,072 in FY01, and $0 to $237,195 in FY02, depending on the Patrol's decision to increase state shares to offset any increases in rates.

Oversight notes that any increased costs to the Department of Transportation and Missouri Consolidated Health Care Plans could be covered by increased premiums or by increased state contributions to the affected plans. Additional costs to state funds could, in theory, be the entire estimated additional cost for both Plans. Oversight assumes the additional cost would be a combination of increased premiums and increased state contributions but can not estimate how that cost would be divided. It is also possible that the proposal would create costs which would not be substantial enough to result in additional premiums or contributions.

Oversight reviewed information that estimates approximately one percent of individuals examined would indicate a prevalence of possible cancer. A study by the Office of Technology Assessment, Congress of the United States, indicates that this type of cancer may not be ASSUMPTION (continued)

confirmed in its early stages for about two years. The study indicated that early stage detection has a cost of $10,000 per incident versus a cost of $40,000 to $50,000 per late stage detection. Using information in the study, Oversight projects 73 cases of early detection would incur in the first year with savings projected in the third fiscal year of $30,000 per case (difference between early stage detection and late state detection). Oversight estimates potential savings up to $2,190,000 in FY02 and that long-term savings resulting from early detection could be substantial. These projected savings could result in premium reductions of up to the amount

projected. Oversight has shown potential increases in state costs due to rising premiums for testing and potential state savings due to decreased premiums in the third fiscal year. Both costs

and savings are ranged.

Oversight does not have available information concerning health plans for local governments and has not estimated a fiscal impact for them.

FISCAL IMPACT - State Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
ALL FUNDS
Savings - All Funds
Decreased health care costs	$0	$0	$0 to
			$2,190,000
Cost - All Funds
Increased premiums/state contributions	$0 to	$0 to	$0 to
	($1,169,703)	($1,471,366)	($1,542,492)
ESTIMATED NET EFFECT	$0 to	$0 to	$0 to
ON ALL FUNDS	($1,169,703)	($1,471,366)	$647,508
INSURANCE DEDICATED FUND
Income - Department of Insurance
Filing fees	$14,450	$0	$0
	to $28,900
ESTIMATED NET EFFECT ON	$14,450
INSURANCE DEDICATED FUND	to $28,900	$0	$0
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 that they would incur additional health insurance costs due to the requirements of this proposal.

DESCRIPTION

This proposal requires health insurers and similar entities to provide coverage for pelvic exams and pap smears for non-symptomatic women in accordance with American Cancer Society

guidelines. Prostate exams and laboratory tests will be covered for non-symptomatic men and colorectal cancer exams and laboratory tests will be covered for non-symptomatic persons in

accordance with American Cancer Society guidelines. The coverage is not subject to deductible limits but patients will be responsible for a co-payment not to exceed $25, if required. Accident-only, hospital indemnity, Medicare supplement, long-term care, and limited benefit health insurance policies are excluded from the provisions of this proposal.

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

Missouri Consolidated Health Care Plan

Department of Transportation

Department of Corrections

Department of Conservation

Department of Social Services

Department of Public Safety

Missouri State Highway Patrol

Jeanne Jarrett, CPA

Director

January 26, 1999