SB 0181 - Fiscal Note

Fiscal Note - SB 0181 - Requires insurance coverage for early cancer detection

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO.: 0854-01

BILL NO.: SB 181

SUBJECT: Health Care

TYPE: Original

DATE: February 5, 1999

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
Insurance Dedicated Fund	$14,450 to $28,900	$0	$0
All Funds	$0 to ($482,092)	$0 to ($602,785)	$0 to $1,320,000
Total Estimated Net Effect on All State Funds	($467,642) to $28,900	$0 to ($602,785)	$0 to $1,320,000

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
None	$0	$0	$0
Total Estimated Net Effect on All Federal Funds	$0	$0	$0

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
Local Government	(Unknown)	(Unknown)	(Unknown)

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 6 pages.

FISCAL ANALYSIS

ASSUMPTION

The Department of Corrections, Department of Public Safety, Department of Conservation, Department of Social Services assume this proposal would not fiscally impact their agencies.

The Department of Insurance (INS) states there are currently 259 Health Insurers and approximately 30 HMOs writing individual and group policies that would be affected by this proposal. Each insurer may submit one or two policy form amendments (one for individual and one for group) to comply with this mandate. Form filings are accompanied with a $50 filing fee; therefore, based on the estimated range of new policy filings, INS assumes $14,450 to $28,900 in new revenue would be generated for the Insurance Dedicated Fund in the first fiscal year only. INS further states that current appropriations and staff can absorb the work responsibilities for this single proposal; however, if additional proposals are approved, INS may need to request increased appropriations due to the combined effect of multiple proposals.

Missouri Consolidated Health Care Plan (HCP) officials state that their HMO benefit provides preventive care at 100% coverage. The services described in this proposal are currently available and accessible to HCP's HMO members and in-network for POS members. Therefore, it is unlikely to cause many of these members to seek the services than already do now. However, there could be some impact on the indemnity plan. HCP estimates that the elimination of the deductible will encourage an additional 15% of the population to seek these services, generating new cost to the indemnity plan.

HCP states that there are 3,579 adults in the indemnity plan. Assuming an additional 15% of these will seek the services described in this proposal, HCP estimates that 537 additional services would be provided to the health plans. The American Cancer Society recommends a colorectal exam every five years. Assuming these additional services are spread evenly over a five year period, and assuming the cost of a colorectal exam is $327 to $411, depending on the specific tests performed, HCP estimates total costs associated with the colorectal exams at $35,120 to $44,141. HCP also assumes an additional 181 male adults would seek prostate exams annually. Assuming the cost of a prostate exam is $104, HCP estimates total costs associated with the additional prostate exams to be $18,824. HCP estimates total additional costs to be $53,944 to $62,965. After accounting for the 10% PPO discount, HCP assumes a fiscal impact of $44,995 to $47,224 in FY00, $57,181 to $60,069 in FY01, and $60,611 to $63,673 in FY02.

The Department of Transportation (DHT) assumes their plan would be required to provide an annual pelvic examination and pap smear for any non-symptomatic woman, an annual prostate examination and laboratory tests for any non-symptomatic man, and an annual colorectal cancer ASSUMPTION (continued)

examination and laboratory tests for any non-symptomatic person in the plan. All of these coverages would not be subject to a deductible, but they would be liable for any co-payment not to exceed $25.

Based on membership estimates and cost figures furnished by Westport personnel, and assuming only 25% of eligible participants would use the new examinations, DHT estimates costs of $110,250 for the pelvic examination and pap smears (1,050 participants @ $105 per exam), $217,856 for the prostate examination and lab tests (1,472 participants @ $148 per exam), and $277,420 for the colorectal cancer examination (2,522 participants @ $110 per exam). DHT assumes the total cost to their medical plan would be $399,522 to $504,605 in FY00, $498,603 to $629,747 in FY01, and $518,547 to $654,937 in FY02. DHT has assumed a range depending on whether the $25 co-payment would be accessed. DHT states that although they estimate costs for this proposal, the intended purpose is to achieve an overall cost reduction due to early detection of cancer conditions. However, DHT was not able to quantify the long range savings that may result.

Based on the American Cancer Society's recommendation that a colorectal exam be performed every five years, Oversight has assumed costs associated with that procedure would be distributed evenly over a five year period. Oversight assumes total costs to DHT's medical plan would be $256,608 to $319,658 in FY00, $320,247 to $398,934 in FY01, and $333,057 to $414,891 in FY02.

The Department of Public Safety, Missouri State Highway Patrol (MSHP) assumes no fiscal impact on the department because all fiscal impact would be on the insurance plan. However, if the Patrol and the Department of Transportation were to increase state shares to offset any increase in rates issued by the insurance plan, the fiscal impact would be approximately $219,300 per year. Based on information provided by Westport, the Patrol's insurance plan administrator, the estimated medical costs for the various services are $105 for a pelvic exam and pap smear, $148 for a prostate exam and lab test, and $110 for a colorectal cancer exam and lab tests. Assuming that 25% of eligible Patrol employees would participate, 426 women and 495 men would be affected, resulting in a total potential fiscal impact of $219,300 per year. MSHP states the fiscal impact would be split between General Revenue (8.44%), Highway Funds (81.9%), Air Pollution Control (.25%), Criminal Record System Fund (1.01%), Gaming Fund (5.04%) and Federal Fund (3.36%).

Based on the American Cancer Society's recommendation that a colorectal exam be performed every five years, Oversight has assumed costs associated with that procedure would be distributed evenly over a five year period. Oversight has ranged the costs associated with this proposal from $0 to $115,210 in FY00, $0 to $143,782 in FY01, and $0 to $149,533 in FY02, ASSUMPTION (continued)

depending on the Patrol's decision to increase state shares to offset any increases in rates.

Oversight notes that any increased costs to the Department of Transportation and Missouri Consolidated Health Care Plans could be covered by increased premiums or by increased state contributions to the affected plans. Additional costs to state funds could, in theory, be the entire estimated additional cost for both Plans. Oversight assumes the additional cost would be a combination of increased premiums and increased state contributions but can not estimate how that cost would be divided. It is also possible that the proposal would create costs which would not be substantial enough to result in additional premiums or contributions.

Oversight reviewed information that estimates approximately one percent of individuals examined would indicate a prevalence of possible cancer. A study by the Office of Technology Assessment, Congress of the United States, indicates that this type of cancer may not be confirmed in its early stages for about two years. The study indicated that early stage detection has a cost of $10,000 per incident versus a cost of $40,000 to $50,000 per late stage detection. Using information in the study, Oversight projects 44 cases of early detection would incur in the first year with savings projected in the third fiscal year of $30,000 per case (difference between early stage detection and late state detection). Oversight estimates potential savings up to $1,320,000 in FY02 and that long-term savings resulting from early detection could be substantial. These projected savings could result in premium reductions of up to the amount

projected. Oversight has shown potential increases in state costs due to rising premiums for testing and potential state savings due to decreased premiums in the third fiscal year. Both costs

and savings are ranged.

Oversight does not have available information concerning health plans for local governments and has not estimated a fiscal impact for them.

FISCAL IMPACT - State Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
ALL FUNDS
Savings - All Funds
Decreased health care costs	$0	$0	$0 to
			$1,320,000
Cost - All Funds
Increased premiums/state contributions	$0 to	$0 to	$0 to
	($482,092)	($602,785)	($628,097)
ESTIMATED NET EFFECT	$0 to	$0 to	$0
ON ALL FUNDS	($482,092)	($602,785)	to $1,320,000
INSURANCE DEDICATED FUND
Revenue - Department of Insurance
Filings fees	$14,450
	to $21,900	$0	$0
ESTIMATED NET EFFECT ON	$14,450
INSURANCE DEDICATED FUND	to $21,900	$0	$0
FISCAL IMPACT - Local Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
LOCAL GOVERNMENT
Increased Costs to Local Health Plans	(Unknown)	(Unknown)	(Unknown)
ESTIMATED NET EFFECT
ON LOCAL GOVERNMENT	(Unknown)	(Unknown)	(Unknown)
FISCAL IMPACT - Small Business
Small businesses would be expected to be fiscally impacted to the extent that they would incur additional health insurance costs due to the requirements of this proposal.

DESCRIPTION

This proposal deals with insurance coverage for early cancer detection. It requires certain individual and group health insurance policies to provide coverage to members for certain services by December 31, 1999. These services include a pelvic examination and pap smear for nonsymptomatic women, a prostate examination and laboratory tests for cancer for nonsymptomatic men, and a colorectal cancer examination and laboratory tests for

nonsymptomatic persons. All services must be performed in accordance with the American Cancer Society guidelines. This section does not apply to accident-only, hospital indemnity, Medicare supplement, long-term care, or other limited benefit health insurance policies.

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 Transportation

Department of Conservation

Department of Corrections

Department of Social Services

Department of Public Safety

Missouri State Highway Patrol

Missouri State Water Patrol

Division of Fire Safety

Jeanne Jarrett, CPA

Director

February 5, 1999