COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.: 4942-01
Bill No.: SB 1228
Subject: Health Insurance; Health Insurance Carriers; Health Care; Health Care Professionals.
Type: Original
Date: March 19, 2002
FISCAL SUMMARY
| FUND AFFECTED | FY 2003 | FY 2004 | FY 2005 |
| Insurance Dedicated | $9,850 | $0 | $0 |
| Highway Fund | ($20,833) | ($25,000) | ($25,000) |
| General Revenue | (Unknown exceeding $200,000) | (Unknown exceeding $200,000) | (Unknown exceeding $200,000) |
| Total Estimated
Net Effect on All State Funds |
(Unknown exceeding $210,983) | (Unknown exceeding $225,000) | (Unknown exceeding $225,000) |
| FUND AFFECTED | FY 2003 | FY 2004 | FY 2005 |
| Total Estimated
Net Effect on All Federal Funds* |
$0 | $0 | $0 |
* Revenues and expenditures Unknown exceeding $100,000 annually and net to $0.
| FUND AFFECTED | FY 2003 | FY 2004 | FY 2005 |
|
Local Government |
(Unknown exceeding $100,000) | (Unknown exceeding $100,000) | (Unknown exceeding $100,000) |
Numbers within parentheses: ( ) indicate costs or losses.
This fiscal note contains 11 pages.
ASSUMPTION
Officials from the Office of Administration (COA) - Division of Accounting, COA - Division of Budget and Planning and Missouri Department of Conservation assume the proposed legislation would not fiscally impact their organizations.
Officials from the Department of Public Safety - Missouri Highway Patrol (MHP) stated the Department of Transportation would be responding on their behalf.
Officials from the Barton County Memorial Hospital (Barton County Hospital) stated it is difficult to measure any revenue impact on the hospital, but they assume there would be none because this would require specialists the hospital does not currently employ.
Officials from Barton County Hospital are concerned with costs to their health insurance plan although they did not put any figures to the potential cost. They believe there should be some limits to the maximum benefits available because they have a self funded health plan. At the present time, the hospital has difficulty meeting all of the expenses associated with the care provided and a maximum benefit would need to be established to help control costs.
Officials from the Department of Insurance (INS) stated insurers and HMOs would be required to amend their policies to comply with the mandated benefit. Amendments must be filed with the INS. The INS estimates that 171 insurers and 26 HMOs would be required to file at least one amendment to their policy form with a filing fee of $50, resulting in revenue of $9,850. The INS has reached capacity in policy form reviews and the additional workload created by this legislation will cause delays in policy form reviews. Additional staff are not being requested with this single proposal, but if multiple proposals pass during the legislative session which require policy form amendments, the INS will need to request additional staff to handle the increase in workload.
Officials from the Department of Highways and Transportation (DHT) - Division of Resource Management stated this legislation would require the Medical Plan to provide coverage for medically necessary expenses incurred for medications prescribed for the treatment of infertility and also allow members to purchase additional coverage for the treatment of infertility. Currently, the Medical Plan excludes all services and prescriptions for the treatment of infertility. Because the Medical Plan does not provide coverage for medications prescribed for the treatment of infertility, there would be a fiscal impact to the Highway & Patrol Medical Plan. In addition the Medical Plan would have to provide an optional infertility treatment rider to the Medical Plan. This rider would be an additional cost to the member and not the Medical Plan.
ASSUMPTION (continued)
Services related to infertility are usually very expensive procedures and because the members who would purchase the infertility treatment rider are taking on the risk, we are assuming the additional premium cost would be very high. Generally, individual riders are not available in the insurance market place for group policies. Group policy riders must be purchased for the entire group. Without an Actuarial review of adding the benefit, we have no way of knowing what the cost may be.
The DHT officials asked their Pharmaceutical Consultant to help give an estimated cost for providing prescription coverage for the treatment of infertility. He used data from other clients that provide this type of coverage and based his assumption on establishing appropriate prior authorization protocols with Eckerd Health Services (the Medical Plan's PBM), the member's 30% co-pay and use of the drugs that are currently available for treating infertility (new drugs may be more expensive). Our consultant assumed that if the Highway & Patrol Medical Plan incurred more than $25,000 in one year in paid claims cost related to adding this type of benefit coverage, that would be a lot. Again, without knowing the utilization trend and other necessary data, it is difficult to give a more accurate estimate.
The Highway & Patrol Medical Plan currently has 77% MODOT participation and 23% MSHP participation. Therefore, we are assuming $19,250 of the $25,000 total fiscal impact would be due to MODOT participants and $5,750 would be due to MSHP participants.
Historically, the DHT 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 DHT commission must make a decision on what portion they will provide. Until the commission makes a decision, we can only provide the cost to the medical plan.
Officials from the Department of Health and Senior Services (DOH) stated there are no costs directly associated with this bill that would impact the DOH. However, the overall impact on the cost for health care insurance is unknown.
Officials from the Missouri Consolidated Health Care Plan (HCP) stated that according to the Center for Disease Control, fertility procedures in the United States jumped by 27 percent in just two years. The number of procedures increased from 64,724 in 1996 to 81,899 in 1998.
Assisted reproductive technology includes procedures such as in vitro fertilization, where both egg and sperm are handled outside the body. Artificial insemination was not tracked for the report. The CDC doctors declined to say why the popularity of the procedures are growing so quickly, but other experts attributed it to older couples trying to have children and a population more confident of fertility technology.
ASSUMPTION (continued)
The CDC warned that assisted fertility carries risks. The nearly 82,000 procedures in 1998 led to only about 20,000 live births and when there were live births there were multiple babies 56 percent of the time.
Mandating coverage for services relating to infertility will add costs. A local provider indicated 25% of women in their 30s experience infertility. This provider also priced some of the procedures listed in the bill:
Initial visit, history, physical and consultation cost $1,330. During this visit semen studies and Chlamydia screens are performed and blood workup is requested.
For in vitro fertilization, the program runs $7,673. This costs includes the medications, follicle scan, estradiol and progesterone level tests, ultrasound guided egg retrieval, and implantation monitoring and treatment.
GIFT and ZIFT procedures run from $13,000 to over $14,000 per cycle.
This bill allows any woman under the age of 45 to seek infertility treatment. The costs of health insurance would raise significantly. Unfortunately HCP has no means of determining which members will eventually seek treatment. Because the success rate varies among the population and the procedures may need to be repeated, the cost is too difficult to determine.
Officials from the Department of Social Services - Division of Medical Services (DMS) provided the following assumptions related to the proposed legislation:
The DMS contracts with managed care health plans to provide medical assistance to individuals eligible under Section 208.151. The managed care health plans are subject to the proposed legislation, therefore, there is a fiscal impact to the DMS.
If the service proposed in the new legislation is not a Medicaid state plan service, only the recipients enrolled in managed care would receive the service. There would be no federal financial participation (See Cost Scenario 1). In order to receive federal participation, the service would need to be included in the Medicaid state plan; therefore, services would be provided to all Medicaid recipients (See Cost Scenario 2).
ASSUMPTION (continued)
General Assumptions for Both Cost Scenarios:
A 1995 survey by the National Survey of Family Growth found that 13% of women of reproductive age had received infertility services at some point in time in their lives. It is assumed the adult Missouri
Medicaid population will use infertility services at the same rate.
It is assumed the infertility services and medication will be limited to those procedures currently covered
by Medicare.
Per DMS' Program Operations unit, the projected cost of artificial insemination is $32.63. The average Medicare rate is $65.25. The average rate was then multiplied by 50% to arrive at the Medicaid cost. Historically, Medicaid rates are originally set at 50% of the Medicare rate. In Vitro Fertilization costs are as high as $214.31. The Medicare rate is as high as $428.61. The rate was then multiplied by 50% to arrive at the Medicaid cost. USAToday shows that insurance plans covering high-tech infertility treatments report total costs of $10,000 or more per try for in vitro fertilization. DMS assumes that there will be a maximum of 4 tries for in vitro fertilization per lifetime. These costs do not include the several lab costs, medication costs, and other various costs that would need to be included. Medicare pricing is not available for those.
Per the Pharmacy Unit within DMS, there would be a significant increase in cost for medications to treat infertility. For example, the cervical medication used for in vitro fertilization is $4,045 per 12 days and for the spermatogenesis stimulation it is $6,825 per 3 months.
DMS assumes that with the use of fertility medications, there will be an increase in multiple births and
an increase in premature babies. These factors will dramatically increase Medicaid costs.
DMS further assumes that the children would then be Medicaid eligible and would be covered under fee for service or managed care.
It is projected the program would begin January 2003. This allows time for regulations to be written,
system work to be done and time for providers to enroll in the Medicaid program.
It is further assumed that both cost scenarios would involve the following administrative cost:
-Mercer would re-negotiate the current contracts with the managed care health plans. The increased fee is $75,000 related to Mercer services.
-A Medicaid bulletin will need to be prepared and distributed to all providers involved. The estimated cost is $13,100.
ASSUMPTION (continued)
-At least two mailings will need to be prepared and sent to notify enrollees. The estimated cost is $20,000.
-State Fair hearings will also increase which will add additional costs for administration. The estimated
cost is unknown.
-System work will need to be completed for claims to be processed and paid.
Total Administration costs for both scenarios is $108,100.
Cost Scenario 1
The DMS makes the following assumption if the service were not a Medicaid state plan service and only recipients enrolled in managed care would receive the service:
Additional costs for fee-for-service recipients. The estimated cost is no fiscal impact because fee for service individuals would not receive this service.
The managed care capitated rates will increase due to the added service. The estimated cost
is unknown.
There would be no federal match rate for the program expenditures; therefore, the full cost would be paid with general revenue funds.
Assuming no increase from actuarial calculations, the total fiscal impact for FY 03 to the DMS for scenario 1 is Unknown>$100,000 to General Revenue.
Cost Scenario 2
The DMS makes the following assumption if the service would be included in the Medicaid State Plan and services would be provided to all recipients:
Additional costs for Medicaid recipients. The estimated cost is unknown.
The federal match rate of 61.23% is used for program expenditures.
Assuming no increase from actuarial calculations, the total fiscal impact for FY 03 to the DMS for scenario 2 is Unknown > $100,000.
Cost Scenario 2 is being reported as the cost of this fiscal note due to its more efficient usage of State resources.
ASSUMPTION (continued)
Officials from Cass Medical Center, Cooper County Memorial Hospital, Excelsior Springs Medical Center, Lincoln County Memorial Hospital, Pemiscot Memorial Hospital, Phelps County Regional Medical Center, Ray County Memorial Hospital, Samaritan Memorial Hospital and Ste. Genevieve County Memorial Hospital did not respond to our request for a statement of fiscal impact.
The proposed legislation will result in an increase in Total State Revenue.
| FISCAL IMPACT - State Government | FY 2003
(10 Mo.) |
FY 2004 | FY 2005 |
| INSURANCE DEDICATED FUND | |||
| Income - Department of Insurance | |||
| Additional Filing Fees | $9,850 | $0 | $0 |
| ESTIMATED NET EFFECT ON INSURANCE DEDICATED FUND |
$9,850 |
$0 |
$0 |
| HIGHWAY FUND | |||
| Costs - Highway Fund | |||
| Increase in State Contributions | ($20,833) | ($25,000) | ($25,000) |
| ESTIMATED NET EFFECT ON HIGHWAY FUND |
($20,833) |
($25,000) |
($25,000) |
| GENERAL REVENUE FUND | |||
| Costs - Department of Social Services - Division of Medical Services | |||
|
Medicaid Reimbursements |
(Unknown exceeding $100,000) | (Unknown exceeding $100,000) | (Unknown exceeding $100,000) |
|
Total Costs - Department of Social Services |
(Unknown exceeding $100,000) | (Unknown exceeding $100,000) | (Unknown exceeding $100,000) |
| Costs - All State Departments | |||
|
Increased Insurance Premiums |
(Unknown exceeding $100,000) | (Unknown exceeding $100,000) | (Unknown exceeding $100,000) |
|
Total Costs - All State Departments |
(Unknown exceeding $100,000) | (Unknown exceeding $100,000) | (Unknown exceeding $100,000) |
| ESTIMATED NET
EFFECT ON GENERAL REVENUE FUND |
(Unknown exceeding $200,000) | (Unknown exceeding $200,000) | (Unknown exceeding $200,000) |
| FEDERAL FUNDS | |||
| Income - Department of Social Services - Division of Medical Services | |||
|
Medicaid Reimbursements |
Unknown exceeding $100,000 | Unknown exceeding $100,000 | Unknown exceeding $100,000 |
| Costs - Department of Social Services - Division of Medical Services | |||
|
Medicaid Reimbursements |
(Unknown exceeding $100,000) | (Unknown exceeding $100,000) | (Unknown exceeding $100,000) |
| ESTIMATED NET EFFECT ON FEDERAL FUNDS* |
$0 |
$0 |
$0 |
* Revenues and expenditures Unknown exceeding $100,000 annually and net to $0.
| FISCAL IMPACT - Local Government | FY 2003
(10 Mo.) |
FY 2004 | FY 2005 |
| LOCAL GOVERNMENT UNITS | |||
| Costs - Local Government Units | |||
|
Increased Insurance Premiums |
(Unknown exceeding $100,000) | (Unknown exceeding $100,000) | (Unknown exceeding $100,000) |
| ESTIMATED NET
EFFECT ON LOCAL GOVERNMENT UNITS |
(Unknown exceeding $100,000) | (Unknown exceeding $100,000) | (Unknown exceeding $100,000) |
FISCAL IMPACT - Small Business
The estimated net effect on small businesses is unknown. The extent to which these services would be necessary, and the ultimate cost of these procedures, is unknown. However, it could cause a general rise in health insurance premiums to meet the requirements of the proposal regarding co-pays and deductibles and to cover insurer costs.
DESCRIPTION
This act mandates coverage for fertility medications and requires insurers to offer coverage for additional infertility services.
A new Section 376.1252 is created to require insurers to provide coverage for medically necessary expenses incurred for medications prescribed for the treatment of infertility. The policy must also allow a member to purchase additional coverage for other services related to the diagnosis and treatment of infertility.
In providing such additional coverage, the insurer may provide that coverage for in vitro fertilization, gamete intra fallopian transfer, and zygote intra fallopian transfer shall be limited to a covered person who: 1. Has used all reasonable, less expensive, and medically appropriate treatments and is still unable to become pregnant or carry a pregnancy; 2. Has not reached the limit of 4 completed egg retrievals; and 3. Is 45 years old or younger.
The act defines "infertility". Such benefits must be provided to the same extent as other pregnancy-related procedures, except that the services shall be performed at facilities that conform to standards established by the American Society for Reproductive Medicine or the American College of Obstetricians and Gynecologists. This act does not apply to certain types of policies. Religious organizations are exempted if covering such procedures would violate their religious beliefs.
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
Office of Administration
- Division of Accounting
- Division of Budget and Planning
Department of Insurance
Barton County Memorial Hospital
Department of Highways and Transportation
Department of Public Safety - Missouri Highway Patrol
Department of Health and Senior Services
Missouri Consolidated Health Care Plan
Missouri Department of Conservation
Department of Social Services - Division of Medical Services
NOT RESPONDING: Cass Medical Center, Cooper County Memorial Hospital, Excelsior Springs Medical Center, Lincoln County Memorial Hospital, Pemiscot Memorial Hospital, Phelps County Regional Medical Center, Ray County Memorial Hospital, Samaritan Memorial Hospital and Ste. Genevieve County Memorial Hospital
Mickey Wilson, CPA
Acting Director
March 19, 2002