FISCAL NOTE

Date Requested: February 12, 2016
Time Requested: 04:00 PM
Agency: Health Care Authority
CBD Number: Version: Bill Number: Resolution Number:
2607 Introduced SB597
CBD Subject: Boards and Commissions, Health


FUND(S):



Sources of Revenue:

Special Fund 5375

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    The reorganization reflected in SB 597 (revised 2/17/16) would impact the Health Care Authority in the following way, at a very minimum:
    
    1. Personal Services and Benefits would increase due to realigning the board as well as needing 7 new FTE’s in order to meet the strict 30 day decision deadline as required in §16-29B-12(e).
    2. Per §16-29B-19a, directs the agency to conduct a study of certificate need program, as well as recommendations, which is due by December 1, 2016. This study will need to be contracted and is estimated to cost $300,000. Due to the current staffing levels and expertise with the Authority and pending certificate of need legislative deadline changes, the current staff will not be able to be redirected to complete this project.
    3. Other miscellaneous costs such as travel, etc. will also increase as it relates the board.
    4. Pending HB 4365 related to the certificate of need program restructure, will result in a decrease of about $300,000 of $600,000 annual collections. Currently, 50% of the FTE’s for the legal division and the board are paid from Fund 5376, however, if this legislation passes upon passage, these positions will need to be fully funded from Fund 5375. In addition to the added costs above, Fund 5375 will need an increased spending authority to maintain salaries and benefits.
    5. With increased costs, future hospital assessments cannot be cut in order to have adequate cash flow.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2016
Increase/Decrease
(use"-")
2017
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 205,109 1,120,437 820,437
Personal Services 198,859 795,437 795,437
Current Expenses 6,250 325,000 25,000
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


     FY 2016 FY 2017 Full
    Salaries
    Board Members (5*70k est) $87,500 $350,000 $350,000
    Social Security Matching $6,694 $26,775 $26,775
    
    Executive Director (est) $23,750 $95,000 $95,000
    Benefits @ 40% $9,500 $38,000 $38,000
    
    Board Attorneys (3 New @$100k) $75,000 $300,000 $300,000
    Benefits @ 40% $30,000 $120,000 $120,000
    
    HCFA II for CON (3 New @$55k) $41,250 $165,000 $165,000
    Benefits @ 40% $16,500 $66,000 $66,000
    
    Secretary for Attorneys $11,250 $45,000 $45,000
    Benefits @ 40% $4,500 $18,000 $18,000
    
    Total New Salaries and Benefits $305,944 $1,223,775 $1,223,775
    Minus Current Funding -$107,085 -$428,338 -$428,338
    Net Salaries and Benefit $198,859 $795,437 $795,437
    
    Travel Expenses (5*5k) $6,250 $25,000 $25,000
    Study §16-29B-19a for CON $300,000
    
    Total Cost $205,109 $1,120,437 $820,437
    



Memorandum


    There are multiple concerns with this pending legislation. They are as follows:
    1. §16-29B-5 reassigns the WV Health Care Authority to the Department of Health and Human Resources as a division and is no longer an autonomous agency. This has created the following concerns:
    a. The WV Health Care Authority was originally established to be autonomous from DHHR so that DHHR policy would not have influence with the board decisions related to certificate of need and other board issues. If this pending legislation would go into effect, the board would no longer be independent in their decision making and DHHR would have a conflict of interest in all opinions and decisions.
    b. Administratively and fiscally, the Health Care Authority would have to work flow all budget, purchasing, travel, grants, and human resource work through the department for completion which will result in a major delay in completion and productivity. As autonomous, the Health Care Authority is able to follow state guidelines and timely procure court reporters and award grants, etc. Falling under DHHR requirements would hinder the effectiveness of the board. This would result in increased man power hours which currently cannot be estimated.
    2. The proposed changes to CON (§16-29B-12(e)) which requires certificate of need to meet the 30 day deadline for decisions may not be possible due to inadequate level of staff. We conservatively estimated increasing FTE’s by 7 (both legal and HCFAs) in order to meet this strict deadline, however, until all changes and rules have been drafted for HB 4365, and how it relates to the board restructure, the true increased cost cannot be estimated.
    



    Person submitting Fiscal Note: Kristi Pritt, CFO
    Email Address: kpritt@hcawv.org