COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION



FISCAL NOTE



L.R. No.: 1774-01

Bill No.: SB 424

Subject: Insurance - Medical; Insurance Department

Type: Original

Date: March 2, 2001




FISCAL SUMMARY



ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 2002 FY 2003 FY 2004
All funds* (Unknown) (Unknown) (Unknown)
General Revenue (Unknown) (Unknown) (Unknown)
Insurance Dedicated $10,000 $0 $0
Total Estimated

Net Effect on All

State Funds*

(UNKNOWN) (UNKNOWN) (UNKNOWN)

*Expected to exceed $100,000 annually.

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 2002 FY 2003 FY 2004
Federal $0 $0 $0
Total Estimated

Net Effect on All

Federal Funds*

$0 $0 $0

*Unknown revenues and expenditures annually net to $0.

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 2002 FY 2003 FY 2004
Local Government $0 $0 $0

Numbers within parentheses: ( ) indicate costs or losses.

This fiscal note contains 6 pages.

FISCAL ANALYSIS



ASSUMPTION



Officials from the Department of Conservation assume this proposal would not fiscally impact their agency.



Department of Insurance (INS) officials state that health insurers and HMOs would be required to amend policy forms in order to comply with this proposal. INS states that they anticipate that current appropriations and staff would be able to absorb the work for implementation of this proposal. However, if additional proposals are approved during the legislative session, INS may need to request an increase in appropriations due to the combined effect of multiple proposals.

INS states there are 171 health insurers and 29 HMOs that offer health insurance coverage. INS states that of the health insurers, many offer coverage through out-of-state trusts which are not typically subject to such mandates. INS estimates that 171 health insurers and 29 HMOs would each submit one policy form amendment resulting in revenues of $10,000 to the Insurance Dedicated Fund. If multiple proposals pass during the legislative session which would require form amendments to be filed, the insurers would probably file one amendment for all required mandates. INS states this would result in increased revenue of $10,000 for all proposals.



Officials from the Department of Transportation (DHT) state the Highway & Patrol Medical Plan currently does not limit direct access to obstetrical/gynecological services; therefore, this provision would have no impact on the Medical Plan. The provision of annually notifying enrollees of the cancer screenings would not impact the Medical Plan because Section 104.801 RSMo. 2000, does not require the Medical Plan to provide this notification. The Medical Plan does not provide coverage for bone density testing unless it is medically necessary, therefore, this provision would have a fiscal impact to the Medical Plan. The Medical Plan does not cover contraceptives at 100 percent and this proposal would require the Medical Plan to do so, therefore, this provision would have a fiscal impact on the Medical Plan. DHT states that menopause occurs naturally in women between the ages of 58 and 52, but it can occur as early as their late 30s or as late as their mid 50s. The assumption for this fiscal note is that menopause occurs by age 50 and a woman would be considered postmenopausal at age 50 and over. The Medical Plan's third party administrator, indicated that currently there are 245 female participants between the age of 50 and 65. Females 65 years of age and older are usually participating in a Medicare supplement policy and the Medical Plan would have to cover these tests for individuals with a Medicare supplement policy. DHT's third party administrator provides the usual and customary rate for the bone density testing. The actual bone density test would cost $147.50 and the fee for the radiologist to interpret is $62.75. Assuming that the women between the ages of 50 and 65 have met their deductible and out-of-pocket maximums, the fiscal impact for coverage of bone density testing for postmenopausal women would be approximately $51,511 [($147.50 + $62.75) X 245 females]. In the 2000 calendar year, the Medical Plan paid $121,000 in claims for contraceptives. The Medical Plan currently pays 70 percent and the participant pays 30 ASSUMPTION (continued)



percent for prescriptions. The fiscal impact for 100 percent coverage of contraceptives would be approximately $51,857 ($121,000/.70 = $172,857 - $121,000). The total fiscal impact to the Medical Plan due to this proposal would be approximately $103,386 ($51,511 + $51,857). There is 75 percent participation for MoDOT and 25 percent participation for the Patrol, therefore, there would be a $77,526 ($103,386 X .75) impact due to MoDOT and $25,842 ($103,386 X .25) impact due to the Patrol. Historically, the department 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 department (commission) must make a decision on what portion they would provide. Until the commission makes a decision, we can only provide the cost to the medical plan.



Department of Social Services (DOS) officials state proposal would affect the Division of Medical Services. Currently, MC+ managed care does not provide enrollees with direct access to OB/GYN services. State law does mandate access on one annual visit. Many health plans require a referral from the enrollees primary care physician to obtain OB/GYN services. DOS states this would increase their capitated rate when the health plans re-bid their contracts. The MC+ managed care and the fee-for-service programs do not currently notify enrollees of cancer screenings. This requirement would increase administrative cost for both the MC+ health plans and the fee-for-service program. DOS states the fiscal impact to the Division of Medical Services is unknown.



Officials from the Missouri Consolidated Health Care Plan (HCP) state the proposal would require insurers to provide direct access to OB/GYN services and provide other women-related health coverages. HCP states the proposal would require direct access to an OB/GYN, requires annual notification of available cancer screenings, provides coverage for bone density testing for postmenopausal women and provides all contraceptives at 100%. HCP states that allowing members to directly access participating obstetricians or gynecologists without a referral from a primary care physician (PCP) would be more costly. The more "open" the access to providers, the higher the premium associated with the product. As evident in the HCP plans, the open access plans are considerably more costly than those requiring a PCP referral to a specialist. HCP states it is very difficult to accurately predict the cost associated with this proposal because one cannot predict how many self-referrals there may be or for what services. However, for every percentage increase the state would incur an additional cost of $2,717,595.



HCP

First Ten Months: $2,264,663

First Full Year: $2,717,595

Second Full Year: $3,053,490



ASSUMPTION (continued)



HCP states notifying members of available cancer screenings may be an additional cost to the plans. However, HCP assumes this cost would be minimal as most plans currently do mailings to their members. Providing coverage for bone density test for postmenopausal women and requiring 100% coverage for all contraceptives should have a minimal impact. Bone density testing is not a new procedure so the cost should reflect this. Also, the plans currently cover the bone density testing when medically necessary. HCP plans currently cover oral contraceptives at 100%. Covering the additional contraceptives at 100% would be more costly, however the impact should be minimal.



Department of Public Safety - Missouri State Highway Patrol officials did not respond to our fiscal impact request.



FISCAL IMPACT - State Government FY 2002

(10 Mo.)

FY 2003 FY 2004
ALL FUNDS
Costs - All Funds
Increased state contributions* (Unknown) (Unknown) (Unknown)
ESTIMATED NET EFFECT ON ALL FUNDS*



(UNKNOWN)


(UNKNOWN)


(UNKNOWN)
*Expected to exceed $100,000 annually.
GENERAL REVENUE FUND
Costs - Department of Social Services
Medical assistance payments (Unknown) (Unknown) (Unknown)
ESTIMATED NET EFFECT ON GENERAL REVENUE FUND

(UNKNOWN)


(UNKNOWN)


(UNKNOWN)
INSURANCE DEDICATED FUND
Income - Department of Insurance
Form filing fees $10,000 $0 $0
ESTIMATED NET EFFECT ON INSURANCE DEDICATED FUND

$10,000


$0


$0
FEDERAL FUNDS
Income - Department of Social Services
Medicaid reimbursements Unknown Unknown Unknown
Costs - Department of Social Services
Medical assistance payments (Unknown) (Unknown) (Unknown)
ESTIMATED NET EFFECT ON FEDERAL FUNDS

$0


$0


$0


FISCAL IMPACT - Local Government FY 2002

(10 Mo.)

FY 2003 FY 2004
$0 $0 $0



FISCAL IMPACT - Small Business



Small businesses would expect to be fiscally impacted to the extent they would incur additional health insurance premiums as a result of the requirements of this proposal.



DESCRIPTION



This proposal would require insurance companies to offer enrollees direct access to OB/GYN services through open referral whenever services would be medically appropriate; annually notify enrollees of cancer screenings provided by the health care plan; provide coverage for bone density testing for postmenopausal women; and provide 100% coverage for contraceptives.



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 Conservation

Department of Insurance

Department of Transportation

Department of Social Services

Missouri Consolidated Health Care Plan



NOT RESPONDING: Department of Public Safety - Missouri State Highway Patrol















Jeanne Jarrett, CPA

Director



March 2, 2001