FISCAL NOTE

Date Requested: February 24, 2025
Time Requested: 02:44 PM

2738	Introduced	HB2861
Agency:	Public Employees Insurance Agency (PEIA)
CBD Number:	Version:	Bill Number:	Resolution Number:
CBD Subject:	Health

FUND(S):

PEIA Basic Insurance

Sources of Revenue:

Special Fund

Legislation creates:

Creates New Expense, 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. 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. To maintain current mandated turnaround time with the additional criteria, an additional .375 FTE would be required at an estimated to cost of $41,000 by the current TPA. 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 $17,100,000 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, 11,351 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 $1,700,000 annually. 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. In the event there is not a particular level of placement available for a patient, this bill requires the insurer to allow the next highest level of placement. PEIA estimates this could result in an increase of $350,000 per year.

Fiscal Note Detail

Effect of Proposal	Fiscal Year
Effect of Proposal	2025 Increase/Decrease (use"-")	2026 Increase/Decrease (use"-")	Fiscal Year (Upon Full Implementation)
1. Estmated Total Cost	0	0	19,191,000
Personal Services	0	0	0
Current Expenses	0	0	19,191,000
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):

Please explain increases and decreases in personal services, current expenses, repairs and alterations, assets, other costs and revenues, including assumptions and data sources and delineation between start-up and ongoing costs. Please also include a long-range schedule of costs and revenues if fiscal impact is expected to vary in future years.

Memorandum

Please identify any areas of vagueness, technical defects, reasons a bill would not have a fiscal impact, and/or any special issues not captured elsewhere on this form.

Person submitting Fiscal Note: Jason Haught
Email Address: jason.a.haught@wv.gov