SB 0762 - Fiscal Note

Fiscal Note - SB 0762 - Mandates health insurance coverage of dental anesthesia and hospital charges for certain patients

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 3265-08

BILL NO. HCS for SCS for SB 762

SUBJECT: Insurance - Medical: Dentists

TYPE: Original

DATE: May 6, 1998

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
General Revenue	$0 to $144,456	$0 to $144,456	$0 to $144,456
Insurance Dedicated	$16,150 to $34,000	$0	$0
Total Estimated Net Effect on All State Funds	$16,150 to 178,456	$0 to $144,456	$0 to $144,456

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
None
Total Estimated Net Effect on All Federal Funds	$0	$0	$0

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
Local Government	$0	$0	$0

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 5 pages.

FISCAL ANALYSIS

ASSUMPTION

Officials from the Office of Administration, the Department of Transportation, the Department of Public Safety - Missouri State Highway Patrol, the Department of Corrections, the Department of Health, and the Department of Mental Health assume this proposal would not fiscally impact their agencies.

The Department of Insurance (INS) states that approximately 259 health insurers and 30 HMOs have policies filed with INS. Each insurer may submit one or two policy form amendments (one for individual and one for group or one filing for both) to comply with the requirements of this proposal. Form filings are to be accompanied with a $50 filing fee. Based on the estimated range of new policy filings, $14,450 to $28,900 in new revenue would be generated for the Insurance Dedicated Fund in the first fiscal year only. INS officials also state there are currently 2 health service corporations and 32 HMOs offering policies affected by this proposal. INS states that each insurer may submit one to three policy form amendments (individual; employer; group) to comply with the provisions of this proposal. INS states that policy form filings are to be accompanied by a $50 filing fee. Based on the estimated range of new policy filings, $1,700 to $5,100 in new revenue would be generated for the Insurance Dedicated Fund in the first fiscal year only. INS anticipates that current appropriations and staff would be able to absorb the work duties in this proposal. However, INS states that 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.

Officials from the Department of Conservation (MDC) state the proposal would appear to have possible fiscal impact on MDC; however, the amount would be negligible due to the persons covered.

Missouri Consolidated Health Care Plan (HCP) officials state that it is very difficult to quantify the fiscal impact of this proposal due to the uncertainty involved in the utilization of the prescribed benefits. HCP states this proposal would have an unknown fiscal impact because it would add a new benefit to most plans.

The Department of Social Services - Division of Medical Services (DMS) officials state that Missouri's Medicaid contracts with managed care plans currently require the plans to pay 90% of clean claims to their providers within thirty days of receipt of claims. DMS states this is mandated by the federal Balanced Budget Act. DMS assumes that administrative costs built in to the capitation payments bid by the plans would increase if plans are required to pay 100% of clean claims within forty-five days to their providers. The cost impact to DMS would be incurred when MC+ contracts are rebid. DMS states that the fifteen plans with MC+ contracts average 9% administrative cost built in to the capitation payments. DMS assumes that any costs ASSUMPTION (continued)

incurred by managed care contractors because of mandated Federal or State laws would have an effect on the administrative costs included in the future bids. DMS states while that it is not possible to predict capitation payment amounts that would be bid in future contracts, they conservatively estimate a 1% increase in capitation payments due to increased administrative cost. DMS estimates that the fiscal impact of this proposal would be $1,417,153 annually.

Oversight assumes there would be no fiscal impact due to DMS's contract requiring that 90% of clean claims be paid within thirty days and 99% within ninety days. DMS was not able to provide any information regarding how many clean claims were paid within forty-five days, sixty days, or ninety days. Oversight assumes that all clean claims would be paid within forty-five days within the current contract bid amounts.

Officials from the Department of Mental Health (DMH) state that in FY97, DMH received $1,852,000 in insurance claims. DMH does not maintain statistics for the time that elapses between claim and receipt of insurance money. DMH assumes that this proposal would either (1) allow DMH to receive insurance claims in a more timely manner or (2) increase revenues because of interest. DMH estimates that 80% of insurance claims received are received after thirty days. Of this 80%, DMH assumes that claims are received throughout the year (some at one month, some at twelve months or an average of 6.5 months). Therefore, DMH could receive up to $144,456 in additional revenues ($1,852,000 x 80% x 18% x 6.5/12) which would be deposited into the General Revenue Fund.

FISCAL IMPACT - State Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
GENERAL REVENUE FUND
Income - Department of Mental Health
Interest received on late payments	$0 to	$0 to	$0 to
	$144,456	$144,456	$144,456
ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND	$0 to	$0 to	$0 to
	$144,456	$144,456	$144,456
INSURANCE DEDICATED FUND
Income - Department of Insurance
Filings fees	$16,150 to $34,000	$0	$0
ESTIMATED NET EFFECT ON
INSURANCE DEDICATED FUND	$16,150 to $34,000	$0	$0
FISCAL IMPACT - Local Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
	$0	$0	$0
FISCAL IMPACT - Small Business

Small businesses would be expected to be fiscally impacted to the extent that they may incur increased premiums for health care insurance due to the requirements of this proposal. In addition, small businesses would also be expected to be fiscally impacted to the extent that they may incur increased costs for medical services not covered under their current policies due to the requirements of this proposal.

DESCRIPTION

This proposal would require health insurance plans to provide coverage for the administration of general anesthesia and hospital charges incurred by children under the age of 5, the disabled, and others in connection with dental care. Prior authorization may be required by the insurer. Certain limited benefit insurance policies would be excluded.

This proposal would also require insurers and nonprofit health service plans to pay interest on any health insurance claim that is not paid within 30 days unless the insurer or plan sends a notice within 45 days that it refuses to pay the claim or that additional information is necessary. The interest and notice provisions would not apply if there is a legitimate need for additional information. The proposal would also include similar provisions for health maintenance organizations that fail to reimburse a provider within 45 days of receiving a claim.

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 Insurance

Missouri Consolidated Health Care Plan

Department of Social Services

Department of Conservation

Office of Administration

Department of Transportation

Department of Mental Health

SOURCES OF INFORMATION (continued)

Department of Public Safety

Missouri State Highway Patrol

Department of Corrections

Department of Health

Jeanne Jarrett, CPA

Director

May 6, 1998