OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http://www.cga.ct.gov/ofa

SB-1085

AN ACT CONCERNING HEALTH INSURANCE COVERAGE FOR MENTAL OR NERVOUS CONDITIONS.


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 16 $

FY 17 $

State Comptroller - Fringe Benefits (State Employee Active and Retiree Health Accounts)

GF, TF - Cost

See Below

See Below

The State

Cost

See Below

See Below

Note: GF=General Fund and TF = Transportation Fund

Municipal Impact:

Municipalities

Effect

FY 16 $

FY 17 $

Various Municipalities

STATE MANDATE - Cost

See Below

See Below

Explanation

The bill will result in a cost to the state employee and retiree health plan1, municipalities, and the state, related to expanding the scope of mental health services required to be covered. The state plan provides coverage for many of the services specified in the bill and requires prior authorization for all covered services except for psychological and neuropsychological testing, trauma, depression, and substance use screenings. In general, the state plan does not provide coverage for the following services: treatment in a group-home, emergency mobile psychiatric services, or case management. Secondly, the bill requires coverage for inpatient hospitalization and medically necessary acute treatment and clinical stabilization services for up to 14 days without prior authorization. The state plan currently provides coverage for inpatient hospitalization and clinical stabilization, but requires prior authorization for coverage. The bill also requires coverage for multiple screening services as part of a single visit to a provider or multicare institution. Lastly, the bill requires coverage of services for mental and nervous conditions provided by an APRN, which is not anticipated to result in a fiscal impact.

The cost to the state to expand coverage to include those services not currently covered will result in the following:

● Treatment in group homes will cost approximately $550,000 in FY 16 and $1.1 million in FY 172;

● Emergency Mobile Psychiatric Services will depend on the rate negotiated for the private plan and the utilization of services;

● Case management will depend on the rate negotiated for the private plan and the utilization of services. The average rate for the state's public programs is approximately $10.50 per 15 minute interval;

Up to 14 day inpatient hospitalization, medically necessary acute treatment services, and medically necessary clinical stabilization services without prior authorization will depend on the extent to which care is provided that otherwise would not have been provided under the current prior authorization requirements. For reference the state health plan spent approximately $13.8 million in FY 14 on inpatient mental health and substance use services. Inpatient hospitalization represented $9 million. Each 2% increase in inpatient hospitalization is approximately $180,000; and

To the extent that multiple screenings, for a single visit, are billed separately, as opposed to being bundled into a single payment for the episode, there will be an additional cost to the state plan of approximately $25,000 in FY 16 and $50,000 in FY 17.3

Lastly, the cost to the state pursuant to the federal Affordable Care Act (ACA) (See Background) will depend on which services are determined to be expanded services. Current law requires health plans to cover the diagnosis of and treatment for mental and nervous conditions on the same basis as for medical, surgical, or other physical conditions, but does not specify the services in the same manner as the bill.

Municipal Impact

As previously stated, the bill may increase costs to certain fully insured municipal plans which do not provide coverage for the services enumerated in the bill or not to the extent required by the bill. The coverage requirements may result in increased premium costs when municipalities enter into new health insurance contracts after January 1, 2016. In addition, many municipal health plans are recognized as “grandfathered” health plans under the ACA.4 It is unclear what effect the adoption of certain health mandates will have on the grandfathered status of certain municipal plans under ACA. Pursuant to federal law, self-insured health plans are exempt from state health mandates.

Background: The State and the federal ACA

Lastly, the ACA requires that, the state's health exchange's qualified health plans (QHPs)5, include a federally defined essential health benefits package (EHB). The federal government is allowing states to choose a benchmark plan6 to serve as the EHB until 2016 when the federal government is anticipated to revisit the EHB.

While states are allowed to mandate benefits in excess of the EHB, the federal law requires the state to defray the cost of any such additional mandated benefits for all plans sold in the exchange, by reimbursing the carrier or the insured for the excess coverage. State mandated benefits enacted after December 31, 2011 cannot be considered part of the EHB for 2014-2015 unless they are already part of the benchmark plan.7 However, neither the agency nor the mechanism for the state to pay these costs has been established.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to (1) medical inflation, (2) the number of members in the state and municipal health plans, and exchange health plans, and (3) the utilization of services.

Sources:

State of Connecticut Benefit Plan Document as of January 1, 2015

 

Office of the State Comptroller

 

Dept. of Social Services Website (Public Program Reimbursement Rates)

1 The state employee and retiree health plan is a self-insured health plan. Pursuant to federal law, self-insured health plans are exempt from state health mandates. However, the state has traditionally adopted all state health mandates.

2 Estimate is based on FY 14 paid claims experience for coverage provided for the state health plan by Oxford and assumes a per member per month (PMPM) of $0.51 for the portion of the state plan population covered by Anthem.

3 The estimated cost is based on the PMPM impact of $0.02. The cost estimate for the state employee plan is based on the plan membership as of January 2015.

4 Grandfathered plans include most group insurance plans and some individual health plans created or purchased on or before March 23, 2010.

5 The state's health exchange, Access Health CT, opened its marketplace for Connecticut residents to purchase QHPs from carriers, with coverage starting January 1, 2014.

6 The state's benchmark plan is the Connecticare HMO plan with supplemental coverage for pediatric dental and vision care as required by the ACA.

7 Source: Dept. of Health and Human Services. Frequently Asked Questions on Essential Health Benefits Bulletin (February 21, 2012).