FISCAL NOTE
Date Requested: January 31, 2023
Time Requested: 03:47 PM |
| Agency: |
Bureau for Medical Services |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2635 |
Introduced |
SB267 |
|
|---|
| CBD Subject: |
Insurance |
|---|
|
FUND(S):
0403 - DIV OF HUMAN SERVICES GENERAL ADMINISTRATION FUND; 8722CONS FEDERAL FUNDS DIV HUMAN SERVICES GEN ADMN FD
Sources of Revenue:
Other Fund General and Federal
Legislation creates:
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The purpose of this bill is to update the law regarding prior authorizations. Provide a new definition regarding an episode of care, require the electronic submission of prior authorizations and related communications; include timeframes to streamline the prior authorization process during the process and the appeal process, provide for oversight and enforcement.
The Department estimates the cost to implement this legislation at $107,500 ($80,625 Federal and $26,875 State) and $50,000 ($37,500 Federal and $12,500 state) on-going. There is a potential for additional administrative and claims costs to the Managed Care Organizations that would have to be included in the capitation rate; these costs cannot be estimated for the purposes of this fiscal note. It is not possible to estimate the cost impact of this policy change for claims that would have otherwise been denied as not medically necessary, effective, covered, compliant with step therapies or other policies designed for good stewardship of public resources, or within the standard of care.
Please see comments in the memorandum section.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2023
Increase/Decrease
(use"-") |
2024
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
107,500 |
50,000 |
| 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):
Total cost of implementation is $107,500 and $50,000 on-going as detailed below.
The proposed legislation requires prior authorization forms, including any related communications, to be submitted via an electronic portal and shall accept one prior authorization for an episode of care. The Bureau for Medical Services (BMS) uses a vendor to manage prior authorizations. Their estimate to implement this portal enhancement ranged from $45,000-$70,000. For purposes of this fiscal note, the average of $57,500 is used for the cost of the customizing the portal. The portal will be used for Medicaid fee-for-service claims. The Managed Care Organizations will be responsible for updating the portal for their prior authorization process. These are onetime costs in FY2024.
The proposed legislation requires the Bureau for Medical Services to respond to prior authorization requests within two days from the day on the electronic receipt of the prior authorization request, and within in one day if the request is for medical care or other service for a condition where application of the time frame for making routine or non-life-threatening care determinations is either of the following: (1) Could seriously jeopardize the life, health, or safety of the patient or others due to the patient’s psychological state; or (2) In the opinion of a health care practitioner with knowledge of the patient’s medical condition, would subject the patient to adverse health consequences without the care or treatment that is the subject of the request.
Weekend coverage for the prior authorization vendor was quoted between $40,000 and $60,000 per year; for purposes of this fiscal note the average of $50,000 was used. The legislation was understood to read as calendar days. These costs only apply to the fee-for-service population. There could be additional, ongoing, administrative costs incurred by the Managed Care Organizations that would have to be included in the capitation rate. For purposes of this fiscal note, those costs could not be estimated.
Memorandum
In regard to 9-5-31 (5)(i),"If a prior authorization is rejected by the Bureau of Medical Services and the health care practitioner who submitted the prior authorization requests an appeal by peer review of the decision to reject, the peer review shall be with a health care practitioner, licensed in West Virginia, similar in specialty, education, and background."
This section could be interpreted to mean that any medication requiring prior authorization that is rejected would need the appeal to be reviewed by a physician IN THE SAME/SIMILAR SPECIALTY. Therefore, the BMS would need to have contracts with neurosurgeons, ophthalmologists, pediatric cardiologists etc. and all the subspecialists to pay for them to be available on speed dial at a moment's notice (and at their subspecialty fee) for immediate consultations. The cost cannot be estimated for all the subspecialties that would be required. BMS is also uncertain that it will be possible to comply with this requirement as written in the introduced bill. If further clarification is provided, the BMS can have a Medical Director review these claims and reach out to their peers as they deem necessary.
Certain services require Prior Authorization and concurrent review for further services beyond certain service limits established in law and policy, if identified as prone to abuse. Generally, services that have been identified as having a high risk of abuse receive more scrutiny under the PA process. An example of hospital outpatient services that require a PA would be surgical procedures: acne surgery - criteria requires review of less invasive procedures to ensure medical necessity; reconstruction procedures (jaw, nose, brow repair) to ensure medical necessity and not cosmetic; all unlisted surgical procedures to ensure there is no appropriate CPT code and that the procedure is not experimental/research. This review will be bypassed for physicians with a gold card status. With the Gold Card Status, Medicaid could realize an increase in utilization as services are performed that otherwise would be denied under the prior authorization process due to lower quality, not medically necessary, or within the standards of care. Lower quality care can generate problems in the future, which cannot be quantified for the purposes of this fiscal note.
Due to systems architecture, plans are unable to track PA approval by individual procedure as contemplated in the legislation, but rather, by a given provider in total. Thus, the provider's PA average would include PAs for certain scans or lab work that are ordered but not performed by the provider, and all procedures that provider may render for patients. Procedures that are later identified to have been waste or abuse may be recouped from the provider, creating provider abrasion.
It is not possible to estimate the cost impact of this policy change for claims that would have otherwise been denied as not medically necessary, effective, covered, compliant with step therapies or other policies designed for good stewardship of public resources, or within the standard of care. Program costs will likely escalate with this policy change both within the managed care and fee-for-service environments.
Person submitting Fiscal Note: Jeffrey H. Coben
Email Address: dhhrsecretary@wv.gov