NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

The LFC is only preparing FIRs on bills referred to the Senate Finance Committee, the Senate Ways and Means Committee, the House Appropriations and Finance Committee and the House Taxation and Revenue Committee. The chief clerks are responsible for preparing and issuing all other bill analyses.

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(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates/Conflicts with/Companion to/Relates to

SOURCES OF INFORMATION

LFC Files

Health Policy Commission

Human Services Department

SUMMARY

Synopsis of Bill

Senate Bill 401 appropriates $5,600.0 from the general fund to the Human Services Department

to increase reimbursement rates paid for the following Medicaid services: physicians, dentists, optometrists, podiatrists and psychologists. Senate Bill 401 also requires reimbursement rates include an additional two dollar per month management fee for physicians who serve as primary care providers.

Significant Issues

Physicians and other health professionals are reimbursed for services at lower rates under Salud! than are those under Medicare Part B or private insurance. It is possible that this is a deterrent for providers to participate in Salud!

FISCAL IMPLICATIONS

The Human Services Department (Department) projects Senate Bill 401 will increase expenditures beyond the amount appropriated. The Department projects the need to increase physician fees alone is $5.3 million in general fund; the need for the two dollar primary care physician fee will be $1.6 million in general fund. Thus, the Department projects its minimum need will be $6.9 million in general fund, which is $1.3 million more than SB 401 appropriates. This projection, however, does not take into consideration that the Salud! contractors can increase their reimbursement rates and reduce the need for general fund appropriations.

OTHER SUBSTANTIVE ISSUES

If the Salud! contractors increased their reimbursement rates to providers, the additional funds appropriated in this bill may not be necessary. This, however, would also require the Salud! contractors to decrease their profits.

POSSIBLE QUESTIONS

Can the Department alleviate the need for this additional funding by amending the Salud! contracts to require higher reimbursement rates?

RLB/gm