COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. No.:         4805-01

Bill No.:          HB 2354

Subject:           Health Care; Insurance-Medical; Department of Social Services

Type:              Original

Date:               April 7, 2008

Bill Summary:            This legislation creates a medical assistance program for certain low-income workers.

The provisions regarding medical assistance for low-income workers will expire six years from August 28, 2008.

FISCAL SUMMARY

Numbers within parentheses: ( ) indicate costs or losses. This fiscal note contains 13 pages.

*Incomes and costs of Unknown but Greater than $ 1,848,691 in FY09, Unknown but Greater than $335,958,659 in FY10 and Unknown but Greater than $380,331,670 in 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 Insurance, Financial Institutions & Professional Registration assume the proposal would have no fiscal impact on their agency.

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) assume the proposal would provide a medical assistance program for certain uninsured persons. It is not known how many individuals would be affected or what services they might receive through the medical assistance program.

The DMH assumes a potential likelihood to serve more consumers through the expanded eligibility created through this proposal. There are approximately 140,000 new MO HealthNet eligibles (per the Department of Social Services) created from this legislation. If DMH serves only a portion of this number the costs would be significant. Therefore, DMH assumes the cost associated with this legislation to be unknown greater than $100,000 to both general revenue and federal funds.

Officials from the Department of Health and Senior Services (DHSS) assumes the Department of Social Services (DSS) will calculate the fiscal impact associated with determining eligibility under the new requirements, the cost of services for the new group of eligible recipients, and the cost of any administrative hearings regarding denial of eligibility.

ASSUMPTION (continued)

Division of Senior and Disability Services (DSDS) has utilized estimates from the DSS, Family Support Division (FSD) to determine the following impact.

FSD has estimated that 129,580 parents of children receiving MO HealthNet (MHN) services would be eligible under this program. DSDS assumes that these individuals would be eligible for medically necessary services included in the MO HealthNet State Plan, which includes personal care. Based on the utilization rate of personal care services for non-disabled MO HealthNet eligible adults, DSDS assumes approximately .90 percent, or 1,166 of the eligible individuals will utilize personal care services and therefore require assessment, authorization of services, and quality oversight by DSDS.

In addition, FSD has estimated that approximately 9,444 individuals whose applications for permanent and total disability were rejected would find employment and be found eligible for this program. Based on the utilization rate for individuals who are eligible as permanent and totally disabled (PTD) under the MO HealthNet program, DSDS assumes approximately 12.79 percent, or 1,208 individuals would utilize personal care services and thus require assessment, authorization of services, and quality oversight by DSDS.

As of June 30, 2007, caseloads for DSDS' Workers averaged approximately 156 per FTE ((41,504 In-Home + 10,068 Consumer-Directed)/329.60). Pursuant to Section 660.021, RSMo, the Caseload Standards Advisory Committee recommended that caseloads should be no more than 80 per worker. DSDS would request additional staff in an effort to reduce average caseloads to at least 100 per Social Service Worker. The Division will require 24 Social Service Worker FTE to case manage the new eligibles as a result of this legislation (1,166 + 1,208 clients/100 = 23.74). Social Service Worker duties include the responsibility for investigation of hotlines, eligibility determination, authorization of state-funded in-home services, and quality oversight of care plans for the protection and well being of the clients.

Currently, the ratio of Home and Community Area Supervisors (HCSAS) is one supervisor for every ten Social Service Worker (SSW) FTE. Therefore, since this legislation will require 24 SSW FTE, DSDS will also need two additional supervisors and two additional clerical staff. HCSASs provide oversight and accountability for the performance of SSWs including case review, evaluation, and guidance. Senior Office Support Assistants-Keyboarding (SOSA-K) provide clerical support services for SSWs and HCSASs including scheduling, correspondence, filing, and other routine clerical duties.

The blended Federal participation rate of 54 percent General Revenue and 46 percent Federal was applied to this cost estimate for Personal Services and Expense and Equipment.

ASSUMPTION (continued)

Oversight has, for fiscal note purposes only, changed the average caseload for the DHSS Social Service Workers to the 156 eligibles per worker, which they are currently working. Therefore, Oversight assumes the DHSS would require 15 Social Service Worker FTE’s, 1 Home and Community Service Area Supervisor FTE and 1 Senior Office Support Assistant FTE for this proposal.

Oversight has, for fiscal note purposes only, changed the starting salary for the DHSS positions to correspond to the first step above minimum for comparable positions in the state’s merit system pay grid. This decision reflects a study of actual starting salaries for new state employees for a six month period and the policy of the Oversight Subcommittee of the Joint Committee on Legislative Research.

Officials from the Department of Social Services - Information Technology Services Division (DSS-ITSD) assume the level of effort for this proposal is similar to the level of effort for the Ticket to Work program. Ticket to Work required almost 350 contractor hours at $75 per hour and about 1000 hours of state FTE time. This new program will be incorporated into FAMIS with the Adult MO HealthNet programs. It will add on to the work effort already in progress. FAMIS estimate is 1500 hours at a blended rate of $89 per hour.

Legacy Costs: Contractors: 350 hours * $75 per hours = $26,250

                         State Staff: 1000 Hours

FAMIS Costs: Contractors: 1500 hours * $89 per hours = $133,500

Officials from the Department of Social Services - Division of Legal Services (DSS-DLS) estimates 1% of the affected recipient population requests hearings on an annual basis. Assuming the legislation results in an increase of 139,024 population (129,580 parents and 9,444 temporarily disabled individuals), the hearings unit anticipates that it will have to handle an additional 1,390 hearings on an annual basis. Each hearing officer can handle approximately 900 hearings per year. The Hearings Section, therefore, anticipates that the legislation will require an additional 1.5 hearing officers, to handle the hearings (139,024 x 1% = 1,390/900 = 1.5 hearing officers).

Officials from the Department of Social Services - Family Support Division (DSS-FSD) anticipates 139,024 new applicants added as a result of this new legislation. FSD arrived at this number in the following manner.

ASSUMPTION (continued)

There are 180,277 parents with kids receiving MO HealthNet (MHN) for Kids. 113,194 have earned income. FSD believes 112,809 would be found eligible for this new program (0.34% found ineligible due to resources: 113,194 x 0.34% = 385; 113,194 - 385 = 112,809). 67,083 have unearned income. FSD anticipates 25% of these parents would go to work and be found eligible for this program. (67,083 x 25% = 16,771).

112,809 + 16,771 = 129,580 parents

These parents are known to FSD on current MHN for Kids cases. The FSD does not anticipate any new staff would be needed.

In January, 2008, there were 1,574 applications rejected for permanent, totally disabled (PTD) MHN benefits. FSD anticipates 50% of those rejected would go to work and be found eligible as a temporarily disabled adult and be eligible for this program. 1,574 x 50% = 787. 787 x 12 months = 9,444 new eligibles

Total eligibles: 129,580 + 9,444 = 139,024

Based on 9,444 additional cases, and a 243 caseload standard, FSD would need 39 new Eligibility Specialists (9,444/243 = 38.86 rounded up to 39).

On a 10-1 ratio, Eligibility Specialist to Eligibility Supervisor, FSD would need 4 new Eligibility Supervisors (39/10 = 3.9, rounded up to 4).

On a ratio of 6-1 Eligibility Specialist/Eligibility Supervisor to Clerical Staff, we would need an additional 7 clerical staff, with 5 OSA and 2 SOSA. (39+ 4 = 43 ÷ 6 = 7.16, rounded down to 7. 7 x 75% = 5 OSA; 7 - 5 = 2 SOSA.

Total new FTE: 39 + 4 + 7 = 50

To manage the new caseload, FSD will use a variety of methods, such as a call center or other automated services. To project a cost to implement these methods FSD is using the cost of staff to mange the caseload. However, the funding will be used to implement new methods to manage the increase in caseload.

ASSUMPTION (continued)

Officials from the Department of Social Services - MO HealthNet Division (DSS-MHD) states the proposal establishes a medical assistance program for low-income workers if they meet certain criteria. Since a waiver would be needed for this program, the MO HealthNet Division assumes that there will be no cost for FY09 to allow time for the waiver to be submitted and approved by CMS.

The Family Support Division has determined there will be a total of 139,024 new eligibles. Of the new eligibles, 129,580 are parents with kids receiving MO HealthNet for Kids. The MO HealthNet Division assumes since FSD is aware of these individuals, they would be eligible for the program as soon as it is implemented. It is estimated that 11,122 of these individuals will be eligible for the Health Insurance Premium Payment program and MO HealthNet will pay their health insurance premium, therefore there will only be MO HealthNet costs for 118,458 of these individuals. Based on historical data, the average cost per participant per month will be $339.19. The cost after applying a 4.5% medical inflation factor is $354.45. The total cost for FY10 for this group is $503,849,257 (118,458 X $354.45 X 12 months). The total cost for FY11 for this group is $526,522,118 (118,458 X $370.40 X 12 months).

The remaining 9,444 eligibles are individuals that FSD has determined to qualify because they are temporary disabled. Since these individuals are not known, it estimated that 787 individuals per month will apply and be eligible. Based on historical data, the average cost per participant per month will be $881.07. The cost after applying a 4.5% medical inflation factor is $920.71. The total phase-in cost for FY10 for this group is $56,518,704. The total cost for FY11 for this group is $109,037,402 (9,444 X $962.14 X 12 months).

If a new participant under this program has access to employer-sponsored health insurance, the DSS is required to determine if it would be more cost effective for them to participate in the employer's plan. If it is more cost effective the Department is required to pay for their premium and any cost-sharing. Since this mirrors the Health Insurance Premium Payment Program under the MO HealthNet Division, it is assumed that the addition of these eligibles would expand this current program.

It is estimated that 11,122 of the 139,024 new eligibles will have cost effective employer-sponsored health insurance available. The current average HIPP premium is $204 per month. The cost after applying a 4.5% medical inflation factor is $213.18. The cost for FY10 would be $28,451,856 (11,122 X $213.18 X12). The cost for FY11 would be $29,731,775 (11,122 X $222.77 X 12). The cost sharing portion would be $12,540 for FY10 and $13,104 for FY11.

ASSUMPTION (continued)

Since there will be an increase in HIPP participants, additional FTE's will be needed. It is estimated that 1 Medicaid Specialist and 4 Medicaid Technicians will be needed to handle the additional applications and participants. The cost of these FTE's is estimated at $301,163 for FY10 and $277,201 for FY11. This includes salaries, fringe benefits, equipment and supplies.

Section 208.512 allows physicians who are providers to participants in this program to receive an enhanced reimbursement for certain services if they meet certain criteria. Based on historical data the estimated annual cost to increase codes for new patients to 120% of Medicare will be $1,178,924. The estimated annual cost to increase codes for established patients will be $7,356,406. The total cost for FY10 after applying a 4.5% medical inflation factor will be $8,919,419 and for FY11 it will be $9,320,793.

Since it is unknown how many physicians will meet these requirements, the annual fiscal impact will be a range from $0 to $8,535,329. The fiscal impact for FY010 will be $0 to $8,919,419 and for FY11 it will be $0 to $9,320,793

Section 208.510.4 requires individuals in this program whose gross income exceeds one hundred percent of the federal poverty level to pay a premium. A 3 person household was used for the calculations of premiums collected. Percentages provided by FSD were used to determine how many eligibles would fall in each income range.

It was determined that 60,903 of the 129,580 parents would be below 100% of the Federal Poverty Level, therefore they are not required to pay a premium. The remaining 68,677 will be required to pay a premium. It is estimated that $66,784,020 will be collected annually from this group.

It was determined that 4,439 of the 9,444 temporary disabled workers would be below 100% of the Federal Poverty Level, therefore they are not required to pay a premium. This group will be phased-in the first year and it is estimated that $2,636,715 will be collected in premiums on 5,005 participants for FY10. For FY11 it is estimated that $9,357,696 will be collected in premiums.

This legislation is subject to appropriation therefore the total net fiscal impact of this legislation (including costs and savings) for FY10 is $0 to $528,632,204. For FY11 the total net fiscal impact is $0 to $598,760,677.