FISCAL NOTE

Date Requested: February 14, 2017
Time Requested: 01:32 PM
Agency: Health and Human Resources, WV Department of
CBD Number: Version: Bill Number: Resolution Number:
1527 Introduced HB2428
CBD Subject: Health


FUND(S):

0525 - CONSOLIDATED MEDICAL SERVICES FUND, 0403 - DIV OF HUMAN SERVICES GENERAL ADMINISTRATION FUND, 8722 - CONS FEDERAL FUNDS DIV HUMAN SERVICES GEN ADMN FD

Sources of Revenue:

General Fund,Special Fund,Other Fund Federal

Legislation creates:

A New Fund,Neither Program nor Fund



Fiscal Note Summary


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


The purpose of this bill is to establish additional substance abuse treatment facilities; offer legislative findings; establish additional substance abuse treatment services in Wood County, West Virginia; require the secretary of DHHR to determine how best to effectuate the purposes of the article; create a Substance Abuse Treatment Fund to support the facilities established pursuant to this article. To allow for Medicaid funding of treatment, assumptions were made that the facilities would contain no more than 16 beds. The potential fiscal impact to the Department's Bureau for Medical Services could range from $0 to approximately $50M per year (or more) depending on the manner in which the additional substance abuse treatment facilities are established as well as service utilization. The potential fiscal impact to the Department's Bureau for Behavioral Health and Health Facilities could require initial costs of up to $42.5M and ongoing costs of up to $28M. The estimated cost of this legislation to the Department's Office of Inspector General (OIG), Office of Health Facility Licensure and Certification (OHFLAC) is approximately $242,376 in FY2018, and $235,796 in subsequent years.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2017
Increase/Decrease
(use"-")
2018
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 42,750,000 77,750,976
Personal Services 0 0 170,820
Current Expenses 0 42,750,000 77,580,156
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 55,480


Explanation of above estimates (including long-range effect):


Please see Memorandum section below regarding current federal regulations related to IMD's. In the event that the 600 new beds were established in facilities that were not classified as IMD's, Medicaid could pay for the treatment services (but not room and board). At this time Medicaid does not pay for adult residential substance abuse services in this type of setting so there is not historical utilization data to use in estimating potential costs. Assumptions were made for the specific services that could make up the configuration of services for this population to develop a per member cost estimate of approximately $27,062 per member per stay (assuming an average length of stay of 90 days). The 600 new beds would provide 219,000 bed days; assuming an average length of stay of 90 days per member would allow treatment for approximately 2,433 persons (total for all payer groups) in the new beds; below are assumptions of Medicaid utilization of that total. A significant variable in the estimate is the penetration rate of Medicaid members utilizing these additional beds. If 25% of the persons served were Medicaid members (2433*.25=608) the estimated impact would be approximately $16.5M ($27,062*608)-$12M Federal and $4.5M State (at current 73.24% FMAP). If 50% of the persons served were Medicaid members (2433*.5=1,216) the estimated impact would be approximately $33M ($27,062*1,216)-$24.1M Federal and $8.9M State. If 75% of the persons served were Medicaid members (2433*.75=1,825) the estimated impact would be approximately $49.4M ($27,062*1,825)-$36.1M Federal and $13.3M State. Variations in the assumed treatment service configuration actually implemented or Medicaid penetration rate could significantly impact these estimates. In addition there would likely be evaluation and management codes utilized by physicians serving members in this setting that are not included in the above estimates (these vary significantly from patient to patient and it is not possible to estimate with information currently available). The estimated total cost to the Bureau for Behavioral Health and Health Facilities (BBHHF) is based upon current funding for treatment facilities plus estimated costs for construction. In order to establish 600 beds within the directives of the legislation the BBHHF would need approximately 38 new 16 bed treatment facilities. The BBHHF currently funds sixteen bed long term treatment facilities at $739,700 per location and if it is determined that BBHHF would fund the 38 new facilities the total projected operational costs upon full implementation of all facilities would be $28,108,600. The one time construction costs of $42,750,000.00 are based off of prior costs for construction of similar 16 bed facilities at a costs of $1,125,000 per location. Ongoing operational funding would not be required until completion of construction. Beginning after construction of facilities, it is anticipated that OHFLAC will need an additional 4 Surveyor FTEs at $170,820 (average salary and benefits is $42,705 X 4 FTEs). Current expense to accommodate OHFLAC travel, training, and office supplies is estimated at $55,972 ($13,993 X 4 FTEs). Rent and utilities for the new OHFLAC staff is estimated at $9,004 ($2,251 X 4 FTEs). There is a one-time cost of $6,580 for the purchase of computer equipment ($1,645 X 4 FTEs). Depending on the types of treatment these new facilities will offer, they will likely need Behavioral Health licenses ($10 biennial fee) and possibly Office Based Medication Assisted Treatment (OBMAT) licenses (initial licensure fee: $250; annual fees are based on the following sliding scale: 1-50 patients is $250, 51-100 patients is $300, 101-200 patients is $400, and 201 patients or more is $500). Without knowing the number of facilities to be established, the estimated revenue from licensure fees is difficult to determine. However, based upon the Medicaid reimbursement policy, the estimated revenue for the initial year is $9,880 and $9,500 upon full implementation. Additionally, there is a one-time inspection fee estimated at $1,200 per facility ($45,600 total for 38 facilities).



Memorandum


"WV Medicaid can pay for adult (over 21 years of age) substance abuse treatment therapy services provided in inpatient facilities with a bed capacity of 16 beds or less. Medicaid does not pay for the room and board costs for adult treatment in any inpatient facility. Medicaid cannot pay for any substance abuse treatment costs rendered in an Institution for Mental Disease (IMD). IMD’s are Inpatient Facilities greater than 16 beds primarily engaged in providing diagnosis, treatment, or care of persons with mental diseases, including medical attention, nursing care, and related services. Social Security Act – Section 1905(a)(29) and Section 1905(i) " If the 600 beds were in facilities with 16 beds or less each, that were not classified as IMD's, Medicaid could pay for the services and the estimates in item 3 above are based on the current service limits and rates for the estimated service configuration for treatment (excluding room and board) services.



    Person submitting Fiscal Note: Bill J. Crouch
    Email Address: dhhrbudgetoffice@wv.gov