Date Requested: March 05, 2015
Time Requested: 02:51 PM
Agency: Public Employees Insurance Agency (PEIA)
CBD Number: Version: Bill Number: Resolution Number:
2204 Comm. Sub. HB2518
CBD Subject: Insurance


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 require insurers issuing group accident and sickness insurance policies to certain employers to furnish claims loss experience to policyholders upon request of a policyholder. It also identifies the claims loss experience information to be provided.
    
    WV Public Employees Insurance Agency currently uses two (2) Third Party Administrator (TPA)s for active members – HealthSmart for health claims and Express Scripts for pharmacy claims. The current TPA for PEIA retirees may not be able to comply with the proposed bill as the retiree plan is a capitated plan and the TPA has no way of attaching any member back to a specific employer group. Most requests to PEIA for data have only been for a particular employer group’s active employees, however each PEIA participating agency – both State agencies and non-States – are responsible for the PAYGO share of their retiree’s premiums.
    
     It is noted that the Bill would create a potential conflict with the de-identification guidance issued pursuant to HIPAA, by the United States Department of Health and Human Services, and additional PEIA staff time would be required to review each individual data set to ensure that the potential for “reverse identification” of employees is eliminated. HIPAA protects an employee’s health information from disclosure to their employer. Should an employer group misuse the data to potentially employ a practice of discrimination against an employee or group of employees, based on health and/or health condition(s), there could be costly litigation involved.
    
    According to EEOC.gov, the average cost(s) to defend in such cases are $130,000.00. As many agencies covered by PEIA are also insured by the WV Board of Risk and Insurance Management, these costs, in the event that an agency misuses the data, would likely have to be absorbed by BRIM and that entity.
    
     It should be noted that these requests for data are typically for use in shopping for other insurance(s) and if enabled by the Bill will likely cause adverse selection and higher premiums for any non-State employers remaining in the PEIA Plan. It is not possible to calculate the degree to which this will occur. However, according to the National Council of State Legislatures, under the Affordable Care Act(ACA), other state run health plans have already experienced premium increases ranging as high as 31% in Alaska– see http://www.ncsl.org/research/health/health-insurance-premiums.aspx.
    It is anticipated that other group plans that cover the private sector would experience the same and/or similar ACA fiscal impacts.
    
    The direct cost as per PEIA’s TPA, will be at a minimum between $500.00 and $750.00 per request, dependent on the time involved to respond to the request(s).
    



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):


    



Memorandum


    



    Person submitting Fiscal Note: Chip Myers
    Email Address: