LEGISLATIVE FISCAL OFFICE
Fiscal Note
Fiscal Note On: HB 651 HLS 22RS 932
Bill Text Version: ENROLLED
Opp. Chamb. Action:
Proposed Amd.:
Sub. Bill For.:
Date: June 7, 2022 8:46 AM Author: HILFERTY
Dept./Agy.: Insurance, Office of Group Benefits, Medicaid
Subject: Mandates Prescribed Human Milk Analyst: Patrice Thomas
INSURANCE/HEALTH EN INCREASE SG EX See Note Page 1 of 2
Provides relative to insurance coverage for prescription breast milk
Proposed law requires health plans to provide inpatient and outpatient coverage for medically necessary pasteurized donor
human milk when prescribed by a pediatrician. Proposed law limits coverage to 2 months. Proposed law provides the
prescription from the pediatrician state the infant is medically or physically unable to receive maternal human milk or
participate in breastfeeding, or the mother is medically or physically unable to produce maternal human milk in sufficient
quantities. Proposed law allows the health plan to limit coverage to human milk obtained from a member bank of the
Human Milk Banking Association of North America. Proposed law effective January 1, 2023 (new health coverage plans) and
January 1, 2024 (existing health coverage plans).
EXPENDITURES 2022-23 2023-24 2024-25 2025-26 2026-27 5 -YEAR TOTAL
State Gen. Fd. INCREASE INCREASE INCREASE INCREASE INCREASE
Agy. Self-Gen. INCREASE INCREASE INCREASE INCREASE INCREASE
Ded./Other $0 $0 $0 $0 $0 $0
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds $0 $0 $0 $0 $0 $0
Annual Total
REVENUES 2022-23 2023-24 2024-25 2025-26 2026-27 5 -YEAR TOTAL
State Gen. Fd. $0 $0 $0 $0 $0 $0
Agy. Self-Gen. $0 $0 $0 $0 $0 $0
Ded./Other $0 $0 $0 $0 $0 $0
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds $0 $0 $0 $0 $0 $0
Annual Total $0 $0 $0 $0 $0 $0
EXPENDITURE EXPLANATION
Proposed law will significantly increase Self-Generated Revenue expenditures within the Office of Group Benefits (OGB) in FY 24 and may
increase State General Fund expenditures associated with a mandate to health insurance policies issued under the insurance exchanges
beginning in FY 23 and subsequent fiscal years (see narrative below). Furthermore, proposed law will increase claims expenditures for the
health insurance industry by an estimated $468,000 - $858,000 and premium increases by $551,000 - $1 M in FY 23 (see Expenditure
Explanation on Page 2). The fiscal note assumes an unlimited supply of human donor milk. To the extent that human donor milk would
not be available to meet the demand at any point in time, the expenditures reflected in this fiscal note may be reduced proportionally.
Office of Group Benefits Impact (Self-Generated Revenue Impact)
Proposed law significantly increases expenditures within the Office of Group Benefits (OGB). Proposed law requires OGB to cover
pasteurized donor breast milk when determined to be medically necessary and prescribed by an infant’s pediatrician. The prescription
must state that the infant is medically or physically unable to receive their mother’s breast milk or participate in breastfeeding. Also, the
prescription can state the infant’s mother is medically or physically unable to produce breast milk in sufficient quantities. Currently, there
are no health plans that cover pasteurized donor breast milk. Based upon the assumptions listed below, the expenditures to cover this
benefit range are as follows:
FY 22-23 FY 23-24* FY 24-25 FY 25-26 FY 26-27 Total
Low $0 $ 62,871 $128,131 $130,565 $133,046 $454,613
High $0 $104,785 $213,552 $217,609 $221,744 $757,690
*FY 23-24 represent 6 months of estimated claims expenditures
Unless OGB Fund Balance is utilized, SGF appropriation will be required to cover the state portion of the increase in premium costs, which
is approximately 40%. As of April 2022, the OGB Fund Balance was $424 M.
The expenditure estimate is based upon the following assumptions: (1) As of 5/01/2022, the current OGB member population in the five
self-funded health plans is 168,189 excluding Medicare primary plan members. No change in OGB self-funded health plan membership in
future fiscal years from current levels. (2) The coverage will become effective on 1/01/2024. (3) the per member per month (PMPM) cost
estimate provided by BCBSLA ranges from low of $0.06 PMPM to high of $0.10 PMPM. (4) In future fiscal years, a medical inflation factor
of 1.9%. (5) Utilization estimated to be between 1.25% to 1.75% of births and estimated cost between $6,667 - $8,333 per eligible infant
for two months. EXPENDITURE EXPLANATION Continues on Page 2
REVENUE EXPLANATION
The Office of Group Benefits (OGB) does not anticipate the proposed law to require premium increases, therefore there is no impact on
self-generated revenues collected from premiums. OGB has indicated the estimated costs associated with coverage of prescription donor
human milk may be absorbed by the existing fund balance reserve. However, to the extent other legislative instruments that are enacted
expand covered medical and pharmacy benefits, the cumulative impact may be significantly material and require OGB to increase
premiums in order to maintain an actuarially sound fund balance of $250 M.
Senate Dual Referral Rules House
x 13.5.1 >= $100,000 Annual Fiscal Cost {S & H} x 6.8(F)(1) >= $100,000 SGF Fiscal Cost {H & S}
13.5.2 >= $500,000 Annual Tax or Fee Evan Brasseaux
6.8(G) >= $500,000 Tax or Fee Increase
Change {S & H} or a Net Fee Decrease {S} Interim Deputy Fiscal Officer
 LEGISLATIVE FISCAL OFFICE
Fiscal Note
Fiscal Note On: HB 651 HLS 22RS 932
Bill Text Version: ENROLLED
Opp. Chamb. Action:
Proposed Amd.:
Sub. Bill For.:
Date: June 7, 2022 8:46 AM Author: HILFERTY
Dept./Agy.: Insurance, Office of Group Benefits, Medicaid
Subject: Mandates Prescribed Human Milk Analyst: Patrice Thomas
CONTINUED EXPLANATION from page one: Page 2 of 2
EXPENDITURE EXPLANATION Continued from Page 1
Based on the aforementioned methodology, the assumption that coverage will only be in place for 6 months in FY 24 due to the January 1,
2024 effective date, and a medical inflation (MI) factor of 1.9% compounding annually, below are expenditure calculations utilized to
project the cost within OGB as a result of the proposed law utilizing the assumptions listed on page one.
Expenditure Calculations
Base Cost (Low) = $123,397 = 168,189 members x $0.06 PMPM x 12 months x 1.9% MI ($49,359 SGF)
Base Cost (High) = $205,662 = 168,189 members x $0.10 PMPM x 12 months x 1.9% MI ($82,265 SGF)
FY 24 (Low) = $125,742 = $123,397 x 1.9% MI ($50,297 SGF)
FY 24 (High) = $209,570 = $205,662 x 1.9% MI ($83,828 SGF)
FY 25 (Low) = $128,131 = $125,742 x 1.9% MI ($51,252 SGF)
FY 25 (High) = $213,552 = $209,570 x 1.9% MI ($85,421 SGF)
FY 26 (Low) = $130,565 = $128,131 x 1.9% MI ($52,226 SGF)
FY 26 (High) = $217,609 = $213,552 x 1.9% MI ($87,044 SGF)
FY 27 (Low) = $133,046 = $130,565 x 1.9% MI ($53,218 SGF)
FY 27 (High) = $221,744 = $217,609 x 1.9% MI ($88,698 SGF)
Total (Low) = $517,484 ($206,994 SGF)
Total (High) = $862,475 ($344,990 SGF)
Insurance Exchanges Impact (State General Fund Impact)
Proposed law may increase SGF expenditures beginning in FY 23 and in subsequent fiscal years according to an analysis provided by the
health actuary LDI. The state would be required to fund health claims expenditures associated with breast reduction coverage in proposed
law for policies issued by qualified health plans through the health insurance exchange beginning in FY 23 with estimated costs totaling
$72,000 to $132,000 SGF and a potential phase-up to over $87,500 to $160,500 SGF by FY 27. Claims expenses associated with proposed
law would be paid out by the State Treasury Department. LDI bases this analysis on the following assumptions: the calculations are on a
fiscal year basis; the exchange population is approximately 100,000 and the insured population is assumed to be stationary; medical cost
inflation is 5%; the premium loss ratio is 85%; and the estimated cost is between $0.06 PMPM and $0.11 PMPM over the entire insured
population. Based upon the aforementioned assumptions, the estimated annual cost increases for insurance providers associated with
claims are as follows:
Aggregate Cost Determination
Aggregate cost of breast reduction = exchange population x PMPM cost x 12 months
FY 23 (Low) - 100,000 x $0.06 PMPM x 12 months = $ 72,000
FY 23 (High) - 100,000 x $0.11 PMPM x 12 months = $132,000
FY 24 (Low) - $ 72,000 x 5% MI = $ 75,600
FY 24 (High) - $132,000 x 5% MI = $138,600
FY 25 (Low) - $ 75,600 x 5% MI = $ 79,380
FY 25 (High) - $138,600 x 5% MI = $145,530
FY 26 (Low) - $ 79,380 x 5% MI = $ 83,349
FY 26 (High) - $145,530 x 5% MI = $152,807
FY 27 (Low) - $ 83,349 x 5% MI = $ 87,516
FY 27 (High) - $152,807 x 5% MI = $160,447
PRIVATE INSURANCE IMPACT
Pursuant to R.S. 24:603.1, the information below is the projected private insurance impact of proposed law. Based upon an actuarial
analysis prepared by LDI, the proposed law is anticipated to increase expenditures associated with claims by $468,000 - $858,000 and
premium increases by $551,000 - $1 M for private insurers and the insured in FY 23 with phase-up costs of an estimated $542,000 -
$995,000 claims and $670,000 - $1.2 M premiums by FY 27. LDI bases this analysis on the following assumptions: the calculations are on
a fiscal year basis; the exchange population is approximately 650,000 and the insured population is assumed to be stationary; medical
cost inflation is 5%; the premium loss ratio is 85%; and the estimated cost is between $0.10 PMPM and $0.20 PMPM over the entire
insured population. Based upon the aforementioned assumptions, the estimated annual cost increases for insurance providers associated
with claims are as follows:
Aggregate Cost Determination Aggregate Extra Premium Determination
(exchange population x PMPM cost x 12 months) (PMPM cost x 12 months)/medical loss ratio
FY 23 (Low) - 650,000 x $0.06 PMPM x 12 months = $468,000 FY 23 (Low) - ($0.06 PMPM x 12 months)/85% = $0.85
FY 23 (High) - 650,000 x $0.11 PMPM x 12 months = $858,000 FY 23 (High) - ($0.11 PMPM x 12 months)/85% = $1.55
FY 24 (Low) - $468,000 x 5% MI = $491,400 FY 24 (Low) - $0.85 x 5% MI = $0.89
FY 24 (High) - $858,000 x 5% MI = $900,900 FY 24 (High) - $1.55 x 5% MI = $1.63
FY 25 (Low) - $491,400 x 5% MI = $515,970 FY 25 (Low) - $0.89 x 5% MI = $0.93
FY 25 (High) - $900,900 x 5% MI = $945,945 FY 25 (High) - $1.63 x 5% MI = $1.71
FY 26 (Low) - $515,970 x 5% MI = $541,769 FY 26 (Low) - $0.93 x 5% MI = $0.98
FY 26 (High) - $945,945 x 5% MI = $993,242 FY 26 (High) - $1.71 x 5% MI = $1.80
FY 27 (Low) - $541,769 x 5% MI = $568,857 FY 27 (Low) - $0.98 x 5% MI = $1.03
FY 27 (High) - $993,242 x 5% MI = $1,042,904 FY 27 (High) - $1.80 x 5% MI = $1.89
Senate Dual Referral Rules House
x 13.5.1 >= $100,000 Annual Fiscal Cost {S & H} x 6.8(F)(1) >= $100,000 SGF Fiscal Cost {H & S}
13.5.2 >= $500,000 Annual Tax or Fee Evan Brasseaux
6.8(G) >= $500,000 Tax or Fee Increase
Change {S & H} or a Net Fee Decrease {S} Interim Deputy Fiscal Officer