Fiscal Note - SB 0100 - Employee May Get Second Medical Opinion At Half of Employer's Cost
L.R. NO. 0170-02
BILL NO. SB 100
SUBJECT: Worker's Compensation: Medical Opinions
TYPE: Original
DATE: January 6, 1997
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
General Revenue ($399,825) ($491,786) ($504,080)
Partial Estimated
Net Effect on All
State Funds ($399,825) ($491,786) ($504,080)
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Total Estimated
Net Effect on All
Federal Funds $0 $0 $0
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Partial Effect on ($116,620) to ($140,000) to ($140,000) to
Local Government* ($145,775) ($175,000) ($175,000)
*Unknown costs to political subdivisions not included.
FISCAL ANALYSIS
ASSUMPTION
The Department of Economic Development (DED), Department of Insurance (INS),
State Auditor (SAU), Office of the Lt. Governor (MLT), Missouri House of
Representatives (MHR), Department of Revenue (DOR), Office of the Governor
(GOV), Department of Mental Health (DMH), State Public Defender (SPD),
Missouri Consolidated Health Care Plan (HCP), Office of State Courts
Administrator (CTS), Highway & Transportation Employees' and Highway Patrol
Retirement System (HRS), Department of Health (DOH), Department of Social
Services (DOS), Gaming Commission (GAM), Department of Corrections (DOC),
Department of Labor & Industrial Relations (DOL), Division of Workers'
Compensation and Department of Public Safety (DPS) do not expect a direct
fiscal impact.
The City of St. Louis anticipates increased costs as a result of this
proposal. It was assumed that the proposal would increase the likelihood
that an employee would obtain a second medical opinion and contest a
settlement if the City were to pay half of the expense. The City has between
800 to 1,000 Workers' Compensation cases per year at an average cost of $350
for a medical opinion. Using these amounts, the City assumes that it would
incur costs ranging from $140,000 to $175,000. The increased costs
associated with additional contested Workers' Compensation settlements cannot
be quantified, but the costs would be significant. Oversight prorated FY 98
to ten months.
The Department of Conservation (MDC) assumes that its' Conservation
Commission Fund could be minimally impacted. MDC estimates that costs would
be less than $2,000 per year. Currently, the Central Accident Reporting
Office (CARO) handles workers' compensation claims for the executive
departments. It was assumed that CARO would grant approval for second
opinions in less than 25% of the cases. Last year the department had a total
of 145 cases, with an average office visit cost of $100. Assuming that $50
of it would now be paid by the department for 36 cases, the cost would be
$1,800. Initially, this amount would be paid from the workers' compensation
appropriation in the Office of Administration (COA), and only for non general
revenue funded positions would the cost be transferred from the Conservation
Commission Fund to general revenue. Oversight assumes that this transfer
could be absorbed with existing resources.
The Coordinating Board for Higher Education (CBH) assumes that it could be
minimally impacted by this proposal. CBH reimburses the Office of
Administration for workers' compensation claims, However, CBH only
experiences one to two claims per year resulting in costs of less than
$5,000. Oversight assumes that this amount could be absorbed.
The Department of Elementary & Secondary Education (DES) assumes that this
proposal would have a minimal fiscal impact. The state would be responsible
for picking up one half of the cost of the second medical opinion, but it was
assumed that DES would have relatively few claims. Oversight assumes any
costs would be absorbed with existing resources.
The Department of Agriculture (AGR) assumes that it would incur costs as a
result of being required to pay half the costs of a second medical opinion.
AGR assumes that there could be ten requests at $150 per request for total
costs of $1,500 of which AGR would be required to pay $750. Oversight
assumes that this cost could be absorbed with existing resources.
Greene County would expect costs to increase as a result of this proposal.
The most obvious increase would be the actual cost of half of the second
opinion, but a greater cost could result from the employers' inability to
select or to approve the selection of a physician or surgeon who gives a
second medical opinion. This would eliminate management's ability to manage
the cost of treatment for workers' compensation claims. The increase in the
workers' compensation premiums was not provided. Oversight has shown the
increase in premiums as an unknown.
The Office of Administration (COA), Risk Management estimated costs resulting
from this proposal for all departments. The COA receives the initial
workers' compensation appropriation, with some funds being transferred from
the departments back to general revenue at the end of the fiscal year for non
general revenue positions where claims have been filed. Assuming 50
employees could seek a second medical opinion for treatment purposes and 250
employees for rating of disability purposes at an average cost of $400 per
exams, the annual cost would be $60,000 of which one-half would be paid by
the employer. However, claimant ratings tend to increase the cost of
permanent partial disability anywhere from 0% to 20%. It was assumed that
this proposal would result in an increase in the number of employees seeking
a second opinion for rating purposes, with settlements more than likely
increasing. In FY96, permanent partial disability cost the state $3,966,720.
Assuming an average increase of 10%, total annual costs would be $456,672
(i.e., $396,672 + $60,000). A 2.5% inflationary factor was included and FY98
was prorated to ten months.
FISCAL IMPACT - State Government FY 1998 FY 1999 FY 2000
(10 Mo.)
GENERAL REVENUE
Income
Transfers for Payment of
Workers' Compensation Claims
for Non General Revenue Positions Unknown Unknown Unknown
Costs-Office of Administration (COA)
Risk Management
Expenses for Second Medical Opinions ($399,825) ($491,786) ($504,080)
PARTIAL ESTIMATED NET EFFECT
ON GENERAL REVENUE FUND ($399,825) ($491,786) ($504,080)
FISCAL IMPACT - Local Government FY 1998 FY 1999 FY 2000
(10 Mo.)
LOCAL GOVERNMENT
Costs-City of St. Louis
Expenses for Second Medical Opinions ($116,620) ($140,000) ($140,000)
to to to
($145,775) ($175,000) ($175,000)
Increased Workers' Compensation Settlements (Unknown) (Unknown) (Unknown)
Costs-Green County
Expenses for Second Medical Opinions
and Increased Workers' Compensation
Premiums (Unknown) (Unknown) (Unknown)
PARTIAL ESTIMATED NET EFFECT ($116,620) ($140,000) ($140,000)
ON LOCAL GOVERNMENT to to to
($145,775) ($175,000) ($175,000)
FISCAL IMPACT - Small Business
This proposal could have a minimal direct impact on small businesses in the
form of payments for half the cost of a second medical opinion in some
situations. If workers compensation claims rise as a direct result of this
proposal, premiums to small businesses could also increase.
DESCRIPTION
The proposal, for purposes of a second medical opinion, would allow an
employee to obtain a second medical examination by a physician or surgeon of
choice at one-half the employer's and one-half the employee's expense.
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
Coordinating Board for Higher Education
Office of Administration
Risk Management
Office of State Courts Administrator
Department of Economic Development
Department of Elementary & Secondary Education
Department of Mental Health
Department of Corrections
Department of Health
Department of Labor & Industrial Relations
Division of Worker's Compensation
Department of Revenue
Department of Social Services
Gaming Commission
State Highway Employees & Patrol Retirement System
Department of Insurance
Department of Agriculture
Department of Conservation
State Public Defender
Office of the Governor
Office of the Lieutenant Governor
State Auditor
Secretary of State
State Treasurer
Jackson County
St. Louis City
Greene County
NOT RESPONDING: Department of Natural Resources, Department of
Transportation, Missouri Consolidated Health Care Plan, Lottery Commission,
House of Representatives, Senate, Tax Commission, Attorney General, St. Louis
County
This Fiscal Note is not an official copy and should not be quoted or cited.