FISCAL NOTE

Date Requested: January 18, 2023
Time Requested: 10:43 PM
Agency: Public Employees Insurance Agency (PEIA)
CBD Number: Version: Bill Number: Resolution Number:
2273 Introduced HB2535
CBD Subject: Insurance


FUND(S):

PEIA Basic Insurance Fund

Sources of Revenue:

Special Fund

Legislation creates:





Fiscal Note Summary


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


Requirements in the proposed bill mandate the use of an electronic portal for all PA forms, including any related communications regarding the status of the PA. The proposed bill shortens turnaround times for prior authorization review and appeal processes. Clinical notes are often requested during the PA process, and under this proposed bill, if the health care practitioner fails to submit additional information requested by PEIA within three days the PA is considered denied. PAs rejected by PEIA may be appealed through a peer review process that can only be conducted by a care practitioner licensed in West Virginia per the proposed bill, and while the PEIA Medical Director has ultimate decision authority regarding the appeal, the timeframe for determining an outcome for the appeal is reduced from 30 days to three days. Also included in the proposed bill, a health care practitioner that has performed an average of 30 procedures per year, and in a six-month period has received a 90% (reduced from 100%) approval rating, then the health insurer may wave the PA requirement for 6 months. Lastly,the bill introduces reporting requirements to the Office of the Insurance Commissioner (OIC) to oversee compliance with proposed PA laws and the gives the OIC the right to impose a civil penalty for violation. PA law requires a two-day turnaround for urgent requests and a seven-day turnaround for a non-urgent request. PEIA’s third-party administrators (TPAs) for medical and pharmacy benefits comply with current law. On average the medical TPA completes PA review in five days or less for non-urgent cases. In the proposed bill, turnaround time requirements are reduced to a day for urgent cases and to two days for non-urgent cases. PEIA’s medical TPA is accredited by the nationally recognized Utilization Review Accreditation Commission (URAC). URAC accreditation credentials are awarded to organizations that meet several key organizational management functions that are important for any healthcare organization, including turnaround time metrics for PA. For comparison, URAC’s standard turnaround time metric is within 72 hours of receipt and within 15 calendar days of receipt, for urgent and non-urgent PA requests respectively. If the proposed bill passes, PEIA’s medical TPA estimates there would be an increase of $3,360,000 administrative expense annually for up to 3 medical directors and 15 additional clinical employees to for support with initial reviews and appeals. PEIA’s pharmacy TPA estimates there would be an increase of $1,400,000 in administrative expense annually for the Plan. This estimate includes hiring a medical director, five additional full-time staff to administer reviews, and IT programming costs. The changes to the PA turnaround times are anticipated to result in greater administrative burdens for providers already facing tight timelines within their schedule and will ultimately result in increased denials for incomplete information and thus more appeals per year. PEIA would need to hire 1 additional medical claims reviewer and increase the hours of the medical director for an increase of $90,000 annually. PEIA currently offers a PA exemption program for providers who have performed an average of 30 procedures per year, and in a six-month period has received a 100% approval rating. Though this Gold Card Program has been offered based on exemplary procedure approval ratings, PEIA’s medical TPA suggests provider eligibility for the PA exemption could be amended in WV Code to be based on the provider approval rating percentage over six months regardless of the procedure type submitted. This would allow more providers to be exempt from PA and potentially reduce administrative burden. A conflict of code exists in the bill where proposed new Subsection 5-16-7f(o) currently reads: “(o) The Insurance Commissioner may assess a civil penalty for a violation of this article.” The intent of the bill is to allow the Insurance Commissioner to regulate PEIA with regard to only Section 7f, Article 16, Chapter 5 of the W. Va. Code, and PEIA is otherwise generally exempt from regulation by the Insurance Commission per W. Va. Code Section 5-16-22. Accordingly, the proposed new Subsection 5-16-7f(o) should instead read: “(o) The Insurance Commissioner may assess a civil penalty for a violation of this Section.” An error exists within the bill in Subsection 5-16-7f(k). The word “not” contained in current code is missing in the statement, “the Public Employees Insurance Agency shall [may] require the health care practitioner to submit a prior authorization for that procedure for the next six months.” Without the word “not,” the authority the code gives PEIA to exempt qualifying providers from PA for six months would be contradicted.



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 4,850,000
Personal Services 0 0 90,000
Current Expenses 0 0 4,760,000
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):






Memorandum






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