FISCAL NOTE
Date Requested: February 23, 2022
Time Requested: 01:05 PM |
| Agency: |
Public Employees Insurance Agency (PEIA) |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2902 |
Introduced |
SB706 |
|
|---|
| CBD Subject: |
Insurance |
|---|
|
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 require the PEIA plan to reimburse hospitals that provide inpatient care to a participant beneficiary at a rate below the Medicare reimbursement rate to supplement this reimbursement rate with funds within the reserve fund created by WV Code §5-16-25. PEIA would incur a minimum of $30,705,534 in additional annual claims expense increases if it were to reimburse Medicare at 100% for inpatient services. Additionally, due to the negotiation language included, the expense could be much higher, depending on the final negotiated rate. The allowance of inpatient rate negotiation would also expose PEIA members to the possibility of the removal of WV hospitals from the network in the unfortunate situation where negotiations fail.
Current premium increases for plan year 2024 would have to be increased substantially, or benefits reduced, to absorb the increase in claims expense and reserve requirements. Additionally, WV Code §5-16-25 requires the PEIA Finance Board to maintain a reserve of 10% of the projected plan expenses for the purpose of offsetting unanticipated claims losses in any fiscal year and to provide future stability. PEIA has firmly committed to maintaining a reserve at the actuarially recommended level of 14% to ensure fiscal solvency for the plan. Any increase of plan costs will result in an incremental increase in the reserve requirement as the reserve amount is based on plan expenses.
In the event the increases are funded with a premium increase, the State Fund increase will be borne eighty percent by employers and twenty percent by employees. Otherwise, the increase could be offset with benefit reductions for both the State and Non-State Funds.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2022
Increase/Decrease
(use"-") |
2023
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
30,705,534 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
30,705,534 |
| 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 consulted on a model to project increased claims expenses for the reimbursement level change.
Memorandum
The preparation of any estimate of future health costs requires consideration of a broad array of complex social and economic events. The estimate of insurance program costs continues to contain considerable uncertainty and variability to actual experience.
In the event the increases are funded with a premium increase, the State Fund increase will be borne eighty percent by employers and twenty percent by employees.
Person submitting Fiscal Note: April Taylor
Email Address: April.A.Taylor@wv.gov