FISCAL NOTE

Date Requested: February 10, 2023
Time Requested: 03:48 PM
Agency: Public Employees Insurance Agency (PEIA)
CBD Number: Version: Bill Number: Resolution Number:
2633 Comm. Sub. SB268
CBD Subject: State Personnel


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.


This bill amends sections of the WV Code pertaining to Public Employees Insurance Agency to insert various solvency measures for the Plan. The bill sets the minimum reimbursement rate for PEIA to 110% of Medicare’s reimbursement rates. The bill sets Group Life and Accidental Death insurance coverage at $10,000 with no reductions in coverage as employees age. Language has been inserted to §5-16-13(b)(2) exempting applicable employers from paying any portion of premium for employee spouses that have health insurance available through an employer not defined by §5-16-2. The bill sets cost-sharing at 20% for instate benefits and 30% for out of state benefits. The bill requires PEIA to return to 80/20 cost sharing between employers and employees by July 1, 2023 and allows PEIA to assess an administrative fee on employers to offset direct transfer of State dollars. Lastly, the bill requires an actuarial study on PEIA solvency to be presented to the Joint Committee on Government and Finance before July 1, 2024. PEIA’s State Plan would incur $49,535,000 in additional claims expense annually to adjust reimbursement rates to 110% of Medicare for all services, $21,000,000 in savings for the changes to employee spouse eligibility, a cost of $252,000 annually to remove Group Life coverage reductions as employees age, and $1,100,000 in savings for adjusting all out of state benefit cost sharing to 30%. The net fiscal impact to the State Plan if the bill passes is $27,687,000 in additional expense annually. Returning to the 80/20 in FY 2024, assuming receipt of $74 million in non-premium revenue through the administrative fee or rainy-day funds, results in a premium increase of $16,846,563 or 14% for employees and $61,153,437 or 12% for employers. Without the $74 million in non-premium revenue received, there would be a premium increase of $31,646,563 or 26% for employees and a premium increase of $120,353,437 or 25% for employers. Moving the out of state benefit to 30% will increase member costs $1 million when utilizing border county providers. This bill repeals §5-16-5a, which pertains to including the subsidy funds for the Retiree Health Benefit Trust (RHBT) fund, for retirees hired prior to July 1, 2010, in Financial Plans. The RHBT administers the OPEB Plan for the State of WV. Removing the subsidy funding for the OPEB Plan from Financial Planning would negatively impact the State’s $1.6 billion OPEB Plan. Repealing this section could affect the subsidy eligibility for our current pre July 1, 2010 hired eligible retirees in the Plan, and could open the Plan to post July 1, 2010 hired retirees to be eligible for the OPEB plan, both of which would have devastating financial effects on the OPEB Plan. With the proposed bill a conflict of code exists as PEIA is required by §5-16-8a(a) to pay air ambulance Service Providers at the Medicare Rural Rate, which fluctuates annually. As written, PEIA would be required by this bill to reimburse not only emergency medical service providers providing ground ambulatory care at 110% of Medicare but also air ambulance service providers. The fiscal impact of paying air ambulance at 110% of the current Medicare Rural Rate would be approximately $135,000 in additional expenses annually.



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 27,687,000
Personal Services 0 0 0
Current Expenses 0 0 27,687,000
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):


PEIA’s State Plan would incur $49,535,000 in additional claims expense annually to adjust reimbursement rates to 110% of Medicare for all services, $21,000,000 in savings for the changes to employee spouse eligibility, a cost of $252,000 annually to remove Group Life coverage reductions as employees age, and $1,100,000 in savings for adjusting all out of state benefit cost sharing to 30%. The net fiscal impact to the State Plan if the bill passes is $27,687,000 in additional expense annually. Returning to the 80/20 in FY 2024, assuming receipt of $74 million in non-premium revenue through the administrative fee or rainy-day funds, results in a premium increase of $16,846,563 or 14% for employees and $61,153,437 or 12% for employers. Without the $74 million in non-premium revenue received, there would be a premium increase of $31,646,563 or 26% for employees and a premium increase of $120,353,437 or 25% for employers. Moving the out of state benefit to 30% will increase member costs $1 million when utilizing border county providers. This bill repeals §5-16-5a, which pertains to including the subsidy funds for the Retiree Health Benefit Trust (RHBT) fund, for retirees hired prior to July 1, 2010, in Financial Plans. The RHBT administers the OPEB Plan for the State of WV. Removing the subsidy funding for the OPEB Plan from Financial Planning would negatively impact the State’s $1.6 billion OPEB Plan. Repealing this section could affect the subsidy eligibility for our current pre July 1, 2010 hired eligible retirees in the Plan, and could open the Plan to post July 1, 2010 hired retirees to be eligible for the OPEB plan, both of which would have devastating financial effects on the OPEB Plan. With the proposed bill a conflict of code exists as PEIA is required by §5-16-8a(a) to pay air ambulance Service Providers at the Medicare Rural Rate, which fluctuates annually. As written, PEIA would be required by this bill to reimburse not only emergency medical service providers providing ground ambulatory care at 110% of Medicare but also air ambulance service providers. The fiscal impact of paying air ambulance at 110% of the current Medicare Rural Rate would be approximately $135,000 in additional expenses annually. (This is included in the claims estimate)



Memorandum


With the proposed bill a conflict of code exists as PEIA is required by §5-16-8a(a) to pay air ambulance Service Providers at the Medicare Rural Rate, which fluctuates annually. As written, PEIA would be required by this bill to reimburse not only emergency medical service providers providing ground ambulatory care at 110% of Medicare but also air ambulance service providers. The fiscal impact of paying air ambulance at 110% of the current Medicare Rural Rate would be approximately $135,000 in additional expenses annually. (This is included in the claims estimate)



    Person submitting Fiscal Note: April Taylor
    Email Address: april.a.taylor@wv.gov