Date Requested: February 19, 2015
Time Requested: 03:25 PM
Agency: Health and Human Resources, Department of
CBD Number: Version: Bill Number: Resolution Number:
3001 Introduced HB2825
CBD Subject: Human Services


0403 and 8722, etc.

Sources of Revenue:

General Fund,Other Fund Federal

Legislation creates:

Neither Program nor Fund

Fiscal Note Summary

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

    The purpose of this bill is to require the Department of Health and Human Resources to review rates it pays to health care providers and to increase direct care rates to compensate for an increase in the state's minimum wage.
    The Department estimates this bill would cost millions of dollars, but is unable to develop a fiscal analysis (by the fiscal note submission schedule) because of the diverse scope and complexity of the rate review procedures. There are many programs within the Department that involve rates paid to medical providers for direct care services. The Department has existing periodic rate review procedures. These many programs also have differing rules and regulations, some of which federal law dictates the rate methodology (i.e. some that include the requirement to use Medicare rates which are updated each December). Other rate formulas are derived from federal regulations (i.e. Critical Access Hospitals, Diagnosis Related Groups, Case Mix Indexes, Resource Based Relative Value System). The proposed bill would create additional reporting and analysis of established methodologies. The Department would need to perform a comprehensive analysis of provider rates (out of the ordinary review cycle process) to provide reliable estimates for the fiscal note (at significant costs) . There are hundreds of providers with employees that were affected by the change in minimum wage. Analyzing that specific data would be very time consuming and costly.
    The direct impact for lower compensation employees, and the "multiplier effect" of the minimum wage increase upon the pay scales of higher compensation employees will exponentially increase provider costs.
    Additionally, the Department cannot participate with Managed Care Organizations in the rate negotiation process with contracted providers. The rate negotiations between MCOs and providers must be “at arm’s length” without Department intervention.
    Costs to increase rates were not included in the budget; therefore if additional funding is not received, there will be reduction in services to accomplish any rate increases.

Fiscal Note Detail

Effect of Proposal Fiscal Year
Fiscal Year
(Upon Full
1. Estmated Total Cost 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
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 Department cannot meet the timing indicated in the bill to review the rates and implement an adjustment of rates by July 1, 2015.
    The Department has concerns regarding publicly posting rate work papers. There is information in some of the rate workpapers that could provide the opportunity for providers to influence future rate calculations.
    Rates are not all necessarily set for a July-June period, therefore those rates either would not be set by July 1st or it would create an additional rate setting to occur.

    Person submitting Fiscal Note: Karen L. Bowling
    Email Address: