COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. No.:         3027-05

Bill No.:          Perfected HCS for HB 1332

Subject:           Health Care; Health Care Professionals; Pharmacy

Type:              Original

Date:               April 9, 2008

Bill Summary:            This legislation establishes guidelines for an entity auditing a pharmacy.

FISCAL SUMMARY

Numbers within parentheses: ( ) indicate costs or losses. This fiscal note contains 7 pages.

*Incomes and costs of unknown but greater than $63,190 for FY09, FY10 and FY11 would net to $0.

☐ Estimated Total Net Effect on All funds expected to exceed $100,000 savings or (cost).

☒ Estimated Net Effect on General Revenue Fund expected to exceed $100,000 (cost).

FISCAL ANALYSIS

ASSUMPTION

Officials from the Department of Health and Senior Services, Office of the State Public Defender, Office of the State Auditor and the Office of the State Courts Administrator each assume the proposal would have no fiscal impact on their respective agencies.

Officials from the Office of the Attorney General assume any potential costs arising from this proposal can be absorbed with existing resources.

In response to a similar proposal from this year (HB 2240), officials from the Office of the Secretary of State (SOS) state many bills considered by the General Assembly include provisions allowing or requiring agencies to submit rules and regulations to implement the act. The SOS is provided with core funding to handle a certain amount of normal activity resulting from each year’s legislative session. The fiscal impact for this fiscal note to the SOS for Administrative Rules is less than $2,500. The SOS recognizes that this is a small amount and does not expect that additional funding would be required to meet these costs. However, the SOS also recognizes that many such bills may be passed by the General Assembly in a given year and that collectively the costs may be in excess of what the office can sustain with the core budget. Therefore, the SOS reserves the right to request funding for the cost of supporting administrative rules requirements should the need arise based on a review of the finally approved bills signed by the governor.

Oversight assumes the SOS could absorb the costs of printing and distributing regulations related to this proposal. If multiple bills pass which require the printing and distribution of regulations at substantial costs, the SOS could request funding through the appropriation process. Any decisions to raise fees to defray costs would likely be made in subsequent fiscal years.

Officials from the Department of Mental Health (DMH) state although the DMH operates pharmacies it is not an entity that performs audits as described in this proposal. Therefore, this proposal would have no fiscal impact upon the Department.

The proposal also establishes requirements for communication by entities other than a primary health care provider to encourage patients/consumers to switch from their current medication to a different medication. It does not appear that the proposal would place any direct requirements or obligations on the DMH that would result in a direct fiscal impact.

ASSUMPTION (continued)

Officials from the Department of Social Services states the MO HealthNet Division (MHD) reviewed FN 3027-01N and stated there would be no fiscal impact to MHD. Since MHD is not a listed agency, the enumerated rights would not apply.

The Committee Substitute removes all references to a "bill of rights." This and other changes in the Committee Substitute do not change the fiscal impact to DSS, which remains zero.

Section 1 defines "switch communication" as a communication that recommends a patient's medication be switched to a different medication than originally prescribed. The definition also contemplates that the "switch communication" is a recommendation, not that the "switch" has been made.

The communication and administrative requirements would likely result in a cost to the managed care plans, which could in turn, result in a cost to the MHD because the managed care plans may pass the cost along to the state when they re-bid their contracts.

Due to time constraints it is unknown at this time whether the Medicaid, MO HealthNet Division (MHD) Fee for Service program is included or not included in this proposal. Therefore, the fiscal impact to fee-for-service is unknown.

The cost to the MHD would be unknown, but greater than $100,000.

Oversight notes that states can earn the federal medical assistance percentage (FMAP) on Medicaid program expenditures. The Social Security Act requires the Secretary of Health and Human Services to calculate and publish the actual FMAP each year. The FMAP is calculated using economic indicators from state and the nation as a whole. Missouri’s FMAP for FY09 is a 63.19% federal match. The state matching requirement is 36.81%.

Officials from the Department of Insurance, Financial Institutions & Professional Registration (DIFP) assume this proposal authorizes the Board of Pharmacy and other entities to conduct scheduled audits of licensed pharmacy records and establishes requirements of the auditor. DIFP assume there will be 171 cases requiring a scheduled audit each year with a cost of $150. The total cost to the Board of Pharmacy is $25,650 (171 X $150).

FISCAL IMPACT - Small Business

No direct fiscal impact to small businesses would be expected as a result of this proposal.

FISCAL DESCRIPTION

The proposed legislation establishes guidelines that any entity auditing a pharmacy must follow. Any entity conducting an audit must develop an appeals process under which a pharmacy can appeal an unfavorable audit report. The substitute does not apply to any investigative audits involving fraud, willful misrepresentation, or abuse.

This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.

SOURCES OF INFORMATION

Office of the Attorney General

Office of the State Courts Administrator

Department of Insurance, Financial Institutions & Professional Registration

Department of Mental Health

Department of Health and Senior Services

Department of Social Services

Office of the State Auditor

Office of the State Public Defender

Office of the Secretary of State

                                                                                                Mickey Wilson, CPA

                                                                                                Director

                                                                                                April 9, 2008