FISCAL NOTE
FUND(S):
Sources of Revenue:
Special Fund
Legislation creates:
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 permit the Director of the Public Employees Insurance Agency to operate any of the agency’s health benefits plans on a calendar year if it is financially advantageous to the state. The bill provides that financial plans shall continue to be on a fiscal year basis.
A perfect example that would allow the Director of the Public Employees Insurance Agency (PEIA) to advantageously change the health benefits plan from a fiscal year to a calendar year is the Medicare Advantage Prescription Drug (MAPD) plan administered by the Retiree Health Benefit Trust (RHBT) plan.
Changing from a fiscal year to calendar year would qualify the MAPD plan to meet the Center for Medicare and Medicaid Services (CMS) prescription drug reinsurance reimbursement guidelines. Chapter 12 of the CMS guidelines stipulate that non-calendar year Employer Group Waiver Plans (EGWP) are not eligible to receive reinsurance payments. Since the MAPD benefit is on a non-calendar basis substantial dollars are essentially excluded from being paid.
Prescription drug reinsurance reimbursements would be made to the MAPD carrier who in turn would apply those payments back into the benefit program. This would allow monthly premium capitations paid by RHBTto be reduced thus presenting RHBT with cost savings. By moving to a calendar year basis for 2013 PEIA could begin seeing prescription drug reinsurance reimbursements as soon as July 1, 2013. By moving to a calendar year plan and taking advantage of this benefit the PEIA would reduce cost approximately $9-10 million dollars annually.
The PEIA currently has 39,450 retirees enrolled in the MAPD program. CMS reimburses approximately twenty-one dollars a month per member for reinsurance. Potential savings to the RHBT amount to $9.9 million dollars. Evaluations by Humana, MAPD administrator, resulted in the estimated saving potential in excess of $9 million.
Passage of this bill would significantly reduce costs for the PEIA. In anticipation of passage, the Finance Board has included the cost savings into their five year financial forecast on a fiscal year basis.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2013
Increase/Decrease
(use"-") |
2014
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| 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: Chip Myers
Email Address: