Date Requested: February 13, 2015
Time Requested: 09:22 AM
Agency: Health Care Authority
CBD Number: Version: Bill Number: Resolution Number:
2636 Introduced SB336
CBD Subject: Boards and Commissions


FUND(S):

5375

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.


    This specific legislation will not have a direct fiscal impact to the WV Health Care Authority.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2015
Increase/Decrease
(use"-")
2016
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):


    This legislation will not have a fiscal impact on the WV Health Care Authority. Staff that work in the Rate Division will be reassigned to other job duties within the WV Health Care Authority.



Memorandum


    The first significant negative impact on the state as a result of eliminating hospital rate setting is the increase in health care costs that the citizens of West Virginia will experience. West Virginia's median gross price per inpatient discharge is 21.48% below the United States median and 22.06% below the South Region median. In absence of rate regulation, the citizens protected by rate setting (public and private insurers, persons who pay for their own hospital services, and all other third-party payers) may experience an increase in their hospital charges of approximately 20%-25%. This increase in hospital rates will also lead to an increase in health insurance rates since hospital costs are the largest expense of insurance companies.
    
    The second significant negative impact on the state is the $21,000,000 of penalties being held in abeyance. These penalties include overages which are a result of the hospitals charging patients in excess of the allowed rates. These penalties are a debt owed by the hospital to the citizens they serve. Through the rate setting process, hospitals currently repay this debt through either a reduction in the rates charged or by participating in the Abeyance Reduction Program, both of which benefit the community they serve. The Abeyance Reduction Program allows hospitals the opportunity to provide community service projects in lieu of a reduction in rates. Through this program, the citizens receive free or significantly discounted health care services through programs such as health fairs, health screenings, and educational sessions on health related topics. If rate setting ceases to exist, this $21,000,000 debt will never be repaid to the citizens.



    Person submitting Fiscal Note: Kristi Pritt, CFO, HCA
    Email Address: kpritt@hcawv.org