COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.: 3727-01
Bill No.: SB 1151
Subject: Disabilities; Health Care; Insurance - Medical; Insurance Dept.; Mental Health
Type: Original
Date: February 24, 2004
FISCAL SUMMARY
| FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
| Total Estimated
Net Effect on General Revenue Fund |
$0 | $0 | $0 |
| FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
| Insurance Dedicated | $8,000 | $0 | $0 |
| Patrol Highway Fund | ($31,574) | ($65,042) | ($66,994) |
| Highway Fund - MoDOT | ($121,635) | ($250,568) | ($258,085) |
| Total Estimated
Net Effect on All State Funds |
($145,209) | ($315,610) | ($325,079) |
Numbers within parentheses: ( ) indicate costs or losses.
This fiscal note contains 6 pages.
| FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
| Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
| FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
| Local Government | (Unknown less than $100,000) | (Unknown less than $100,000) | (Unknown less than $100,000) |
ASSUMPTION
Officials from the Department of Economic Development - Division of Professional Registration and Missouri Department of Conservation assume the proposal will have no fiscal impact on their organizations.
Officials from the Department of Social Services - Division of Medical Services (DMS) - state they assume no fiscal impact from this proposal. The DMS currently covers mental health conditions as medically necessary. It is assumed this proposal allows for the continued use of prior authorization of services and performing utilization reviews by DMS for both physical and mental health conditions to ensure payment for only medically necessary conditions. Only those medically necessary are eligible for federal match. The DMS assumes this proposal is not intended to require coverage for non-medically necessary services, which would be paid 100% from General Revenue.
Officials from the Department of Mental Health (DMH) state to the extent that DMH consumers have insurance coverage, there could be minimal savings to the DMH. However, it is likely that any savings would be offset by increased service utilization of individuals who are currently underserved. At this time, the DMH is unsure of the number of consumers that would be affected by this proposal, the type of coverage involved and/or the amount of insurance coverage. Based on the current understanding that any savings would be offset by additional service utilization costs, the resulting fiscal impact to the DMH would be zero.
ASSUMPTION (continued)
Officials from the Department of Public Safety - Missouri State Highway Patrol defer to the Missouri Department of Transportation for response regarding the potential fiscal impact of this proposal on their organization.
Officials from the Missouri Department of Transportation (DOT) state the Highway and Patrol Medical Plan covers mental health services the same as medical services and, as result,
there would be no impact to the Medical Plan for mental health services. However, the Medical Plan has a thirty-day maximum per plan year for inpatient hospital services and inpatient medical care for the treatment of chemical dependency.
In addition, the Medical Plan has a lifetime maximum of four times the plan year maximum for chemical dependency treatments and services. Because this proposal would require the Medical Plan to cover chemical dependency services with no greater financial burden than medical services, this proposal would have a fiscal impact on the Medical Plan due to the chemical dependency provisions.
DOT spoke to the Medical Plan's actuary, Watson and Wyatt, and based on their review of a report to Congress in June 2000 by the National Advisory Mental Health Council, they estimated this proposal would result in an increase of 0.7% to 1.4% of total claims due to the annual maximum number of days and lifetime maximum for treatment being removed.
Based on Watson and Wyatt's knowledge of the plan, they believe the plan would demonstrate an increase closer to 0.7% with this proposal/plan design. However, there are many factors that affect mental health/chemical dependency utilization, including economic conditions (job security, financial stability, stress, etc.), catastrophic events (9/11), and provider coding. Westport Benefits reported that the Medical Plan would pay a total of approximately $45,485,000 in claims for the calendar year 2003. Based on this information, DOT is assuming there would be an increase of approximately $318,398 ($45,485,000 X 0.7%) in total claims to the Highway and Patrol Medical Plan.
The Medical Plan consists of 77% DOT and 23% Patrol participants. Therefore, there would be a fiscal impact of $245,166 ($318,398 X 77%) due to DOT participation and $73,232 ($318,398 X 23%) due to Patrol participation. If usage is greater than anticipated, costs will increase proportionately.
Historically, the DOT and the plan members have shared in any premium increases necessary because of increases in benefits. The costs may be shared in the long run (meaning shared between three categories: absorbed by the plan, state appropriated funds, and/or costs to individuals covered under the plan). However, the Medical Plan, MHTC, DOT, and Patrol must make a decision on how to fund the increase.
ASSUMPTION (continued)
Oversight has, for fiscal note purposes, presented only DOT's costs for the Patrol Highway Fund and the Highway Fund - MoDOT. All other fund costs are minimal and could be absorbed within existing resources by the DOT.
Officials from the Missouri Consolidated Health Care Plan (HCP) state the proposal requires every insurance company and health services corporation to offer in all health insurance policies, benefits or coverage for chemical dependency following minimum standards not to exceed more than twenty-six days per policy benefit period. Coverage for residential treatment would include not less than twenty-one days per policy period and coverage for medical or social setting detoxification of not less than six days per policy period. The coverages shall be subject to the same coinsurance, co-payment and deductible factors as apply to physical illness. This proposal also mandates the coverage for mental health conditions at the same level as any health condition.
Currently, HCP Public Entity PPO plan applies some limitation to its benefits. The PPO plan offers a maximum of 90 days per year for mental health, a maximum of twenty-one combined days per year for alcohol and chemical dependency and detoxification at a maximum six days per year, with a lifetime maximum of $50,000. Therefore, this may result in the acquisition of additional risk and could produce a minimal premium increase.
Officials from the Department of Insurance (INS) state the INS estimates 160 insurers and HMOs would be required to submit amendments to their policies to comply with this proposal. Policy amendments must be submitted to the INS for review along with a $50 filing fee. One-time additional revenues to the Insurance Dedicated Fund are estimated to be $8,000 (160 insurers X $50).
The INS states that additional staff and expenses are not being requested with this single proposal, but if multiple proposals pass during the legislative session which require policy for reviews, the INS will need to request additional staff to handle the increase in workload.
This proposal will result in an increase in Total State Revenue.
| FISCAL IMPACT - State Government | FY 2005
(6 Mo.) |
FY 2006 | FY 2007 |
| INSURANCE DEDICATED FUND | |||
| Income - Department of Insurance | |||
| Policy Form Filing Fees | $8,000 | $0 | $0 |
| ESTIMATED NET EFFECT ON INSURANCE DEDICATED FUND |
$8,000 |
$0 |
$0 |
| FISCAL IMPACT - State Government | FY 2005
(6 Mo.) |
FY 2006 | FY 2007 |
| PATROL HIGHWAY FUND | |||
| Costs - Department of Transportation | |||
| Increase in Contributions | ($31,574) | ($65,042) | ($66,994) |
| ESTIMATED NET EFFECT ON PATROL HIGHWAY FUND |
($31,574) |
($65,042) |
($66,994) |
| HIGHWAY FUND - MoDOT | |||
| Costs - Missouri Department of Transportation | |||
| Increase in Contributions | ($121,635) | ($250,568) | ($258,085) |
| ESTIMATED NET EFFECT ON HIGHWAY FUND - MoDOT |
($121,635) |
($250,568) |
($258,085) |
| FISCAL IMPACT - Local Government | FY 2005
(10 Mo.) |
FY 2006 | FY 2007 |
| ALL POLITICAL SUBDIVISIONS | |||
| Costs - All Political Subdivisions | |||
| Increase in Contributions | (Unknown less than $100,000) | (Unknown less than $100,000) | (Unknown less than $100,000) |
| ESTIMATED NET EFFECT ON ALL POLITICAL SUBDIVISIONS |
(Unknown less than $100,000) |
(Unknown less than $100,000) |
(Unknown less than $100,000) |
FISCAL IMPACT - Small Business
Small businesses would be expected to be fiscally impacted to the extent they may incur additional health insurance costs due to the requirements of this proposal.
DESCRIPTION
This proposal requires health carriers that offer health benefit plans in Missouri to provide coverage for mental health conditions on or after January 1, 2005. Under current law, there are several exceptions to the requirement that health insurers provide the same coverage for mental illness and addictive disorders as they do for physical illness. This proposal repeals those exceptions.
Mental health conditions are defined as those listed in the most recent edition of the Diagnostic and Statistical Manual of Mental Disorders. Coverage for mental health conditions cannot have rates, terms or conditions that place a greater financial burden on an insured for treatment of a mental health condition than for treatment of a physical health condition.
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 Economic Development -
Division of Professional Registration
Department of Mental Health
Department of Social Services
Missouri Department of Transportation
Department of Public Safety -
Missouri State Highway Patrol
Missouri Consolidated Health Care Plan
Department of Insurance
Missouri Department of Conservation
Mickey Wilson, CPA
Director
February 24, 2004