SB 0934 - Fiscal Note

Fiscal Note - SB 0934 - Changes Certificate of Need Process

L.R. NO.  3516-01
BILL NO.  SB 934
SUBJECT:  Department of Health; Certificate of Need; Civil Procedures
TYPE:     Original
DATE:     February 26, 1996



                              FISCAL SUMMARY
                    ESTIMATED NET EFFECT ON STATE FUNDS


FUND AFFECTED              FY 1997             FY 1998           FY 1999

General Revenue           $385,089            $457,550          $453,525

Total Estimated
Net Effect on All
State Funds               $385,089            $457,550          $453,525

                   ESTIMATED NET EFFECT ON FEDERAL FUNDS


FUND AFFECTED              FY 1997             FY 1998           FY 1999

None

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 Office of Attorney General and the Office of State Courts
Administrator assume this proposal would not fiscally impact their agencies.

Department of Health (DOH) officials state that as a result of this proposal,
the expenditure minimum would increase to $1 million.  DOH stated that using
actual figures from 1995, of the sixty-four applications reviewed, twelve
would not have been reviewable under this proposal.  DOH estimates this would
result in a loss of $12,000 in application fees.  DOH further states that the
majority of applications previously considered "not reviewable", would become
reviewable under this proposal.  DOH states that based on the average number
of reviewability determinations for the past three years, DOH projects that
approximately twenty-eight additional applications would be reviewed
resulting in $28,000 in additional fees.  DOH estimates this would result in
an overall gain to General Revenue of $16,000.

DOH assumes this proposal would establish a two-step review process.  DOH
states that revenue is based on the assumption that 200 letters of intent
would be filed and of those, 100 would result in opportunities from
submission of applications.  DOH would expect four applications to be filed
for each opportunity and projects the average cost per project to be $3
million based on the previous three-years' average.  Based on an application
fee of .1% of the total project cost, DOH estimates an additional $600,000 in
revenue to General Revenue.  DOH projects meeting costs for the technical
advisory council for the third year only since the council would be meeting
every two years.  DOH assumes an additional four FTE, plus related expense
and equipment, would be required to implement this proposal.  One Attorney
($35,000) would provide legal counsel in the development of rules, criteria,
and standards and provide counsel and defense for litigation.  Two Health
Planning Specialists ($27,648) would review the increased number of letters
of intent and applications which would be filed as a result of this proposal.
One Clerk-Typist II ($15,852) would provide clerical support to the attorney
and health planning specialists.  Expenses would include rental space for
four FTE and communication and travel expenses ($40,600).  Equipment would
include office furniture and personal computers for four FTE ($17,966).

Oversight assumes for purposes of this fiscal note that $7,500 in travel
expenses would be incurred by the attorney and health planning specialists
and no additional rental space would be needed.  Oversight assumes that
$4,800 in communication expenses would be incurred by the four FTE.

Officials from the Department of Social Services (DOS) assume this proposal
would not have a fiscal impact on their department.  DOS states they believe
the increase in the expenditure minimum and the change in definition of new
institutional health services would not increase Medicaid costs or services.
DOS states that during the past three years no rate increase has been granted
for new institutional health services.

FISCAL IMPACT - State Government      FY 1997     FY 1998     FY 1999
                                     (10 Mo.)

GENERAL REVENUE FUND

Income - Department of Health
   Application filing fees           $513,813    $616,000    $616,000

Costs - Department of Health
   Personal service (4 FTE)         ($90,632)  ($111,522)  ($114,310)
   Fringe benefits                  ($27,842)   ($34,259)   ($35,116)
   Expense and equipment            ($10,250)   ($12,669)   ($13,049)
Total Costs - Department of Health ($128,724)  ($158,450)  ($162,475)

ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND                 $385,089    $457,550    $453,525

FISCAL IMPACT  - Local Government     FY 1997     FY 1998     FY 1999
                                     (10 Mo.)

                                           $0          $0          $0

DESCRIPTION

This proposal would raise the expenditure minimum for review from $600,000 to
$1,000,000 in case of capital expenditures or major medical equipment.  In
addition, a new institutional health service would be required to be reviewed
without regard to cost.  This proposal would expand the review committee to
seven members.  The committee would prepare a report to the General Assembly
on the effectiveness of the moratorium on development of residential care
facilities I and II.  The committee would establish a technical health care
advisory council that would meet every two years to review the committee's
criteria and standards for appropriateness, accuracy, review, and adequacy of
the review process.

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 Attorney General
Office of State Courts Administrator