This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0880 - Removes Hosps. From CON Process & Changes Makeup of CON com.
L.R. NO. 3161-02
BILL NO. SB 880
SUBJECT: Boards; Certificate of Need; Department of Health
TYPE: Original
DATE: February 26, 1996
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
General Revenue ($88,492) ($568,884) ($791,820)
Total Estimated
Net Effect on All
State Funds ($88,492) ($568,884) ($791,820)
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
Medicaid $0 $0 $0
Total Estimated
Net Effect on All
Federal Funds $0 $0 $0
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
Local Government $0 $0 $0
FISCAL ANALYSIS
ASSUMPTION
Officials from the Senate, the Office of Administration, the Office of
Governor, and the House of Representatives assume this proposal would not
fiscally impact their agencies.
Department of Health (DOH) officials state that the actual number of
applications reviewed over the last three years was divided into two groups.
The first group contained those projects which would still be reviewable even
if this proposal passed. The second group contained those projects which
would no longer be reviewed as a result of this proposal. DOH states the
average number of those projects reviewed annually was 39. DOH estimates the
average annual total amount of application fees lost to General Revenue
annually to be $191,000.
DOH assumes this proposal would reduce the number of Missouri Health
Facilities Review Committee members by two. This reduction in members would
result in a meeting cost savings of $1,500. DOH further assumes this
proposal would reduce staff by two FTE ($58,000), reduce fringe benefits
($17,000), and expense and equipment ($26,008).
Officials from the Department of Social Services (DOS) state that currently
hospitals need a certificate of need (CON) for new equipment or expanded
services costing in excess of an expenditure minimum. DOS states that this
proposal would remove hospitals, tuberculosis hospitals, psychiatric
hospitals, and ambulatory surgical facilities from the CON process. DOS
assumes that repeal of the CON process for hospitals would result in an
increase in new and expanded services and new facilitities which would
increase payments to hospitals through increased perdiems. Per DOH, it is
estimated that 100 hospitals projects are not done each year because of the
current CON process. DOS estimates, that if hospitals would be exempt from
the CON process, 100 additional projects would be started each year.
DOS states the prospective reimbursement plan provides for per diem rate
increases for hospitals which meet certain requirements. DOS may grant
special rate increases for new or expanded services. DOS currently grants
rate increases to 75% of the special rate increase requests. DOS assumes
that the percentage would remain constant. DOS assumes a one year lag for
construction/inspection/licensure with fiscal impact to first occur in FY98.
DOS estimates the FY98 average special rate increase to be $17.99. DOS
states the current average increase is $16.86 and was adjusted for projected
for increases of 3.375% in FY97, 3.2% in FY98, and 3.625% in FY99. DOS
states the average Medicaid paid days per hospital (adjusted for managed
care) is 891 days. DOS assumes the occupancy would remain constant. DOS
projects the annual cost for the increase in projects for new or expanded
services to be $1,202,182 in FY98 and $1,245,618 in FY99.
In addition, DOS estimates that four new hospital facilities would be built.
DOS estimates that the additional facilities would not increase hospital
utilization but would increase the per diem paid for patient days. DOS
states the Medicaid per diem for new facilities is initially set at 120% of
the state-wide average Medicaid per diem. The increase in cost would result
from the rate being set at 20% over the average. DOS states the current
weighted average rate $652.86 was adjusted by the same percentages as the
special rate increases to arrive at the projected weighted average rate of
$721.74 for FY99. DOS assumes two years would be needed for
construction/inspection/licensure. DOS states the average Medicaid paid days
per hospital (adjusted for manage care) is 891 days. DOS projects the annual
cost for the increase in cost from new facilities to be $514,463 in FY99.
DOS assumes the federal Medicaid assistance percentage would be 60.04%.
FISCAL IMPACT - State Government FY 1997 FY 1998 FY 1999
(10 Mo.)
GENERAL REVENUE FUND
Savings - Department of Health
Personal service (2 FTE) $58,000 $58,000 $58,000
Fringe benefits $17,000 $17,000 $17,000
Expense and equipment $27,508 $27,508 $27,508
Total Savings - Department of Health $102,508 $102,508 $102,508
Loss - Department of Health
Application fees for projects not filed ($191,000) ($191,000) ($191,000)
Costs - Department of Social Services
Increase in services and facilities $0 ($480,392) ($703,328)
ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND ($88,492) ($568,884) ($791,820)
FEDERAL FUNDS
Income - Department of Social Services
Additional Medicaid reimbursements $0 $721,790 $1,056,753
Costs - Department of Social Services
Increase in services and facilities $0 ($721,790) ($1,056,753)
ESTIMATED NET EFFECT ON
FEDERAL FUNDS $0 $0 $0
FISCAL IMPACT - Local Government FY 1997 FY 1998 FY 1999
(10 Mo.)
$0 $0 $0
DESCRIPTION
This proposal would remove hospitals, tuberculosis hospitals, psychiatric
hospitals, kidney disease treatment centers and ambulatory surgical
facilities from Certificate of Need process leaving only professional nursing
facilities, practical nursing facilities, and residential care facilities I
and II within the scope of the Certificate of Need Review. The proposal
would also require that two legislative members sit on the Missouri Health
Facilities Review Committee, one member from the Senate and one member from
the House of Representatives. The Senate Pro Tem would make the first
legislative appointment and the Speaker of the House would make the second
appointment to a member of the house who is from a different political party
as the senatorial member. The proposal would also require the Missouri
Health Facilities Review Committee to prepare a report regarding the
effectiveness of the moratorium on the development of additional bed capacity
of residential care facilities I and II and the amount of state savings based
upon the moratorium.
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 Health
Department of Social Services
Office of Administration
Senate
House of Representatives
Office of Governor