FISCAL NOTE
Date Requested: January 11, 2023
Time Requested: 03:55 PM |
| Agency: |
Public Employees Insurance Agency (PEIA) |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2591 |
Introduced |
SB127 |
|
|---|
| 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 and emergency medical services providers at a rate of 110% of the Medicare reimbursement rate for services provided to a participating beneficiary of the plan. These changes would be implemented July 1, 2024.
PEIA State Insurance Plan would incur a minimum of $34,000,000 and the PEIA Non-State Insurance Plan would incur a minimum of $8,000,000 for a combined additional annual claims expense of $42,000,000 if it were to reimburse Medicare at 110% for inpatient services. Any increase of plan costs will result in an incremental increase in the reserve requirement as the reserve amount is based on plan expenses.
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. The proposed bill also changes the purpose of the 10% required reserve in WV Code §5-16-25 to include using the reserve to supplement any reimbursements made to hospitals and emergency medical services in accordance with the newly created WV Code §5-16-30, Hospital Inpatient Rates.
Without premium increases, direct transfers or benefit changes, if this bill is passed, the State Employee Insurance Plan Reserve will be 8% and the Non-State Employee Insurance Plan Reserve will be 6%, both below the statutory minimum of 10%. To fulfill statutory requirements, PEIA State Insurance Plan would need additional revenue of $6,000,000 and the Non State Insurance Plan would need $3,200,000. Any Plan increases will be borne eighty percent by employers and twenty percent by employees if performed by premium increases.
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.
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 |
40,000,000 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
40,000,000 |
| 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):
$40M represents the State Insurance Plan's anticipated claims increase of 34M for the greater reimbursement level and the funding needed ($6M) for the pool to be at the statutorily required reserve 10% minimum.
Memorandum
PEIA recommends that this bill should be in effect July 1, 2023, to align with an existing budget increase of $40M for Plan Year 2024.
Person submitting Fiscal Note: April Taylor
Email Address: april.a.taylor@wv.gov