Date Requested:January 29, 2010
Time Requested:02:11 PM
Agency: Insurance Commission
CBD Number: Version: Bill Number: Resolution Number:
2010R1629 Introduced HB4243
CBD Subject: PHARMACY BENEFIT MANAGER
FUND(S)
7152
Sources of Revenue
Special Fund
Legislation creates:
A New Fund

Fiscal Note Summary

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

    HB 4243 expands the regulatory oversight of the Offices of the Insurance Commissioner to include Pharmacy Benefit Managers (PBM). The bill creates application, licensure, examination and regulation requirements for PBMs operating in WV.
    
    The regulation and financial review of PBMs is projected to require 2 additional FTEs. Projections include a professional and a support level individual to administer the regulatory requirements. The examination requirements would be performed by contract examiners.
    
    The bill creates a special revenue account to fund the new regulation. The costs of examination are billed back to the companies, however, the other defined revenue source of an annual $200 filing fee is not projected to generate sufficient revenue to cover the administrative costs of the regulation.
    
    Annual revenue is projected at $227,400 ($2,400 filing fees and $225,000 reimbursement from examination expenses).
    
    Annual expenses are projected at $385,500 ($110,500 in PS and EB (2 ftes), $50,000 in administrative expenses and $225,000 in examination expenses).
    
    Projected annual funding deficit of ($158,100).
    

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2010
Increase/Decrease
(use"-")
2011
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 7,500 385,500 385,500
Personal Services 5,000 110,500 110,500
Current Expenses 2,500 50,000 50,000
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 225,000 225,000
2. Estimated Total Revenues 0 227,400 227,400
3. Explanation of above estimates (including long-range effect):
    There is an annual projected funding deficit of ($158,100).
    
    The $7,500 expense allocation for FY 2010 includes personnel and overhead of Offices of the Insurance Commissioner staff to begin developing regulatory processes and applications specific to Pharmacy Benefit Managers.
    
    FY 2011 and “Full Year Implementation” projections provide for a staff of 2 (a senior level administrator and a support staff individual). Budgeted Personal Services and Employee Benefits = $110,500.
    
    Annual expenses of $50,000 have been projected to provide equipment and overhead expenditures.
    
    Reimbursable company examination expenses of $225,000 have been projected. Examinations are projected using contract examiners. 3 exams per year @ $75,000 = $225,000.
    
    It is projected that 12 Pharmacy Benefit Managers will apply for licensure in WV.
    
    Annual filing fees are $200. $200 X 12 = $2,400.
    
    Examinations are reimbursed by the company, so the projected examination costs are included in the revenue projections. (3 exams @ $75,000 = $225,000).
    
    Total Annual Revenue, inclusive of the reimbursement of 3 examinations is projected at $227,400.
    


Memorandum
Person submitting Fiscal Note:
Michael D Riley
Email Address:
Michael.Riley@wvinsurance.gov