FISCAL NOTE
Date Requested: February 15, 2023
Time Requested: 10:18 AM |
| Agency: |
Public Employees Insurance Agency (PEIA) |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3567 |
Introduced |
HB3507 |
|
|---|
| CBD Subject: |
Health |
|---|
|
FUND(S):
PEIA Basic Insurance Fund
Sources of Revenue:
Special Fund
Legislation creates:
Increases Existing Expenses
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The purpose of this bill is to create the Mental Health and Substance Use Disorders Insurance Coverage Protection Act. This bill requires every insurance policy to provide coverage for medically necessary treatment of all mental health and substance use disorders. PEIA provides coverage for treatment of mental health and substance use disorders defined by this bill, except for personality disorders and any surgical procedure to treat gender dysphoria.
The bill prohibits insurers from limiting the benefits or coverage for chronic or pervasive mental health and substance use disorders to short-term or acute treatment at any level of care placement. Residential treatment for substance abuse is covered by PEIA up to a maximum of 28 days per plan year in a facility within the state of WV. On average, PEIA pays $80,575 annually for substance abuse care, costing approximately $4,070 per patient or $145.35 per patient per day of residential stay. Medical necessity would still need to be established for patients with chronic or pervasive disorders to have extended stays in residential care PEIA estimates it could cost between $9,000 to 50,000 more per patient annually to provide care for greater than 28 days up to a full year of residential stay. PEIA’s estimation assumes 30% more patients per year could be deemed as needing residential care for substance abuse under a nonprofit professional association standard and assigns a blended mix of stays for patients ranging between 28 days to a full year. Using these assumptions, PEIA estimates an annual increase for residential care claims expense of $315,000.
The bill prohibits insurers from limiting benefits for medically necessary services on the basis that those services should be or could be covered by a public entitlement program. PEIA views this as shifting costs of services, often provided in a school for example, to the insurer but does not believe this will have material effects on the Plan if the bill passes.
For utilization review this bill requires the use of a nonprofit professional association for the relevant clinical specialty. PEIA’s medical TPA uses InterQual for utilization review. The TPA reports PEIA has a 1% denial rate for services applicable in this bill, except for personality disorders and gender reassignment surgeries. This is much lower than the 5-6% denial rate across the TPA’s national book of business. InterQual’s reviews rely on evidence-based clinical criteria to establish medical necessity. Nonprofit professional associations do include services in their standards of care that would not be deemed medically necessary by clinical standards
PEIA does not cover gender reassignment surgery. PEIA interprets this bill to require coverage for treatment of gender dysphoria including gender reassignment surgery. Currently, the World Professional Association for Transgender Health (WPATH) includes in its standards of care additional “cosmetic” surgeries to treat gender dysphoria that InterQual would not deem clinically necessary. PEIA’s TPA reports, under WPATH guidelines, the entire treatment averages $250,000 for gender reassignment. A study conducted by the Williams Institute using data from the CDC’s Behavior Risk Factor Surveillance System estimates that 0.5% (1.64M) of all US adults identify themselves as transgender. Applying this to PEIA’s population and using the estimate for WPATH’s average cost per treatment, PEIA’s exposure is an increase in claims expense of $17,800,000 annually.
PEIA does not cover personality disorders. PEIA interprets this bill to require coverage for personality disorders. The American Psychiatric Association (APA) estimates that 9% of US adults have at least one personality disorder. A publication in the National Library of Medicine estimates the average cost for personality disorder treatment is $2,987.82 per patient per year. Using 9% of PEIA’s adult population, 11,805 individuals could have at least one personality disorder. APA reports not all individuals are aware they have a personality disorder. If 5% of the individuals who may have a personality disorder in PEIA’s population seeks treatment, PEIA estimates it could cost PEIA approximately $1,750,000 annually.
Insurers are required by this bill to sponsor a formal education program by the nonprofit clinical specialty associations to educate the insurer’s staff and make the education program available to other stakeholders, including providers and patients. PEIA’s TPA estimates the cost for the education program will be a one-time administrative fee of $150,000.
The bill requires insurers to arrange coverage to ensure the delivery of medically necessary out-of-network services or follow up services to the maximum extent possible if the services are not available within the geographic and timeliness access standards. PEIA uses the guidance 50 miles or 50 minutes as a geographic and timeliness access standard to determine appeal outcomes. Out of network care for these services is not covered unless there is not an in-network option for care. Using a nationally recognized geographic and timeliness access standard could require PEIA to approve coverage for out of network care. There is not sufficient data available to estimate the full additional costs PEIA and its members would incur because of these effects.
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 |
20,015,000 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
20,015,000 |
| 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):
The estimate is comprised of the following individual costs:
315,000 SUD Residential
17,800,000 Tgr Surgeries
1,750,000 Personality Disorders
150,000 NP Assoc Educational Material
-----------
20,015,000
These estimates were derived by applying reported medical statistics for all adults in the US population against PEIA's adult population. Actual results could vary.
Out of network care for these services is not covered unless there is not an in-network option for care. Using a nationally recognized geographic and timeliness access standard could require PEIA to approve coverage for out of network care. There is not sufficient data available to estimate the full additional costs PEIA and its members would incur because of these effects.
Memorandum
These estimates were derived by applying reported medical statistics for all adults in the US population against PEIA's adult population. Actual results could vary.
Out of network care for these services is not covered unless there is not an in-network option for care. Using a nationally recognized geographic and timeliness access standard could require PEIA to approve coverage for out of network care. There is not sufficient data available to estimate the full additional costs PEIA and its members would incur because of these effects.
Person submitting Fiscal Note: April Taylor
Email Address: april.a.taylor@wv.gov