LEGISLATIVE FISCAL OFFICE
Fiscal Note
Fiscal Note On: HB 152 HLS 20RS 603
Bill Text Version: ENGROSSED
Opp. Chamb. Action:
Proposed Amd.:
Sub. Bill For.:
Date: May 15, 2020 5:25 PM Author: BROWN, CHAD
Dept./Agy.: LA Dept. of Insurance/Office of Group Benefits
Subject: Health Insurance Coverage for Acupuncture Analyst: Zachary Rau
INSURANCE/HEALTH EG INCREASE SG EX See Note Page 1 of 2
Provides for insurance coverage for acupuncture
Proposed law requires large group health coverage plans delivered or issued in Louisiana to provide coverage for
acupuncture performed by licensed acupuncturists when medically necessary. Proposed law prohibits discriminatory
terminology in policies or contracts, including but not limited to the manner of payment or reimbursement under the policy.
Proposed law limits annual acupuncture visits to 12. Proposed law provides that acupuncture coverage may be subject to
annual deductibles, coinsurance, and copayment provisions consistent with those established under a health coverage plan.
Proposed law provides that all policies must comply with proposed law no later than January 1, 2021.
EXPENDITURES 2020-21 2021-22 2022-23 2023-24 2024-25 5 -YEAR TOTAL
State Gen. Fd. $0 $0 $0 $0 $0 $0
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 2020-21 2021-22 2022-23 2023-24 2024-25 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 increase Self-Generated Revenue expenditures for the Office of Group Benefits (OGB) by an indeterminable amount
beginning in FY 21 and subsequent fiscal years (see narrative below). Furthermore, proposed law will increase claims expenditures for the
health insurance industry by an estimated $1 M - $2 M and premiums by an estimated $1.1 M - $2.3 M in FY 21 (see narrative on Page 2).
Note: because proposed law is limited to large group health insurance plans, it would not present an additional benefit to plans issued on
the insurance exchange and would not affect SGF expenditures as a result.
Office of Group Benefits Impact (Self-Generated Revenue Impact)
Proposed law will increase SGR expenditures for claims by an indeterminable amount for the Office of Group Benefits (OGB) in FY 21 and
in subsequent fiscal years. To determine the impact of proposed law, OGB utilized data from a 2012 survey performed by the Centers for
Disease Control indicating a 6.6% all-time acupuncture utilization rate among 34,525 persons surveyed (2,278 persons). Of the 2,278
persons, 93.72% (2,135 persons) responded they saw a practitioner for the procedure, with 26.72% (562 persons) saying they had seen
a practitioner in the 12 prior months. Using data from this survey as a basis, OGB projected a high-bound utilization as follows utilizing the
maximum 12 visits allowed in the proposed legislation:
217,605 OGB enrollees*6.6% all-time utilization*93.72% seeing practitioners*26.79% visiting within last 12 months*12 = 43,272 visits
OGB further reports that information obtained through industry websites (Wang Acupuncture Center, Acupuncture Center of Fernandina)
yielded visit durations of 30-60 minutes each. Furthermore, OGB’s discussions with Blue Cross Blue Shield of LA, OGB’s third-party
administrator yielded reimbursement rates for acupuncture services as follows: with one or more needles, without electrical stimulation,
initial 15 minutes - $18.45 non-office/$21.70 in-office; with one or more needles, without electrical stimulation, each subsequent 15
minutes - $15.54 non-office/$16.71 in-office; with one or more needles, with electrical stimulation, initial 15 minutes - $19.99 non-office/
$24.09 in-office; and with one or more needles, with electrical stimulation, each subsequent 15 minutes - $17.17 non-office/$19.96 in-
office.
Using the duration/reimbursement rates, OGB projected a lower bound using the 30-minute visit duration for non-office visits excluding
electrical stimulation ($18.45 + $15.54 = $33.99 per visit) and an upper bound using the 60-minute visit duration for office visits
including electrical stimulation ($24.09 + 3 * $19.96 =$83.97 per visit). (Expenditure Explanation cont. on Pg. 2)
REVENUE EXPLANATION
The Office of Group Benefits does not anticipate that additional costs associated with proposed law will require premium increases, and
therefore will not affect SGR premium collections. Furthermore, the OGB reports that projected costs for the proposed legislation would be
covered by its fund balance of approximately $258.9 M. However, while proposed law may not necessitate premium increases for the
Office of Group Benefits, to the extent numerous pieces of legislation are enacted that increase the overall costs of the OGB program, the
OGB may be required to increase premiums to fund ongoing program costs and maintain an actuarially sound fund balance of $200 M.
Senate Dual Referral Rules House
x 13.5.1 >= $100,000 Annual Fiscal Cost {S & H} 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} Staff Director
LEGISLATIVE FISCAL OFFICE
Fiscal Note
Fiscal Note On: HB 152 HLS 20RS 603
Bill Text Version: ENGROSSED
Opp. Chamb. Action:
Proposed Amd.:
Sub. Bill For.:
Date: May 15, 2020 5:25 PM Author: BROWN, CHAD
Dept./Agy.: LA Dept. of Insurance/Office of Group Benefits
Subject: Health Insurance Coverage for Acupuncture Analyst: Zachary Rau
CONTINUED EXPLANATION from page one: Page 2 of 2
(Expenditure Explanation cont. from Pg. 1) Based on the aforementioned methodology, the assumption that coverage will only be in
place for half of FY 21 due to the January 1 effective date, and a medical inflation (MI) factor of 1.9% compounding annually, OGB’s cost
estimates are as follows (numbers have been rounded for clarity):
FY 21 - $0.75 M (43,272 visits * $33.99 *1.9% MI * .5 year) - $1.85 M (43,272 visits * $83.97 * 1.9% MI * .5 year)
FY 22 - $1.5 M - $3.7 M
FY 23 - $1.5 M - $3.8 M
FY 24 - $1.6 M - $3.9 M
FY 25 - $1.6 M - $4.0 M
Furthermore, OGB does not anticipate expenditures associated with proposed law to necessitate premium increases for members, and any
additional expenditures will be funded by its fund balance (see Revenue Explanation). However, the cost increase for OGB is ultimately
indeterminable and dependent upon utilization rates, the nature of the visits (office/non-office), the services rendered (with or without
electrical stimulation), and the duration of the services. Furthermore, a determination of medical necessity being required for service
reimbursement may further serve to mitigate OGB’s potential cost exposure Because of the aforementioned factors are unknown, the
extent of the cost increase is indeterminable.
Private Insurance Impact
Pursuant to LA R.S. 24:603.1, the following is the projected private insurance impact of the proposed legislation. Based upon an actuarial
analysis prepared by LDI, proposed law is anticipated to increase expenditures associated with claims ($0.5 M- $0.7 M) and premium
increases ($0.6 M - $0.8 M) for private insurers and the insured in FY 21 with a phase-up to an estimated $1.2 M - $1.7 M for claims and
an estimated $1.4 M - $2.0 M for premiums by FY 25. LDI bases this analysis on the following assumptions: the calculations apply on a
fiscal year basis; a total insured population of 650,000; 50% of the insured population being large group; a stationary insured population;
a PMPM totaling $0.25-$0.35; coverage being in effect for only half of FY 21; medical cost inflation of 5% annually; an 85% loss ratio
(LR); Based upon the aforementioned assumptions, the estimated annual cost increases for insurance providers associated with claims are
as follows:
FY 21 - $0.5M (650K members * .5 * $0.25 PMPM * 6 months) - $0.7 M (650K members * .5 * $0.35 PMPM * 6 months)
FY 22 - $1 M (650K members * .5 * $0.25 PMPM * 12 * 1.05 inflation) - $1.4 M (650K members * .5 * $0.35 PMPM * 12 * 1.05 inflation)
FY 23 - $1.1 M - $1.5 M
FY 24 - $1.1 M - $1.6 M
FY 25 - $1.2 M - $1.7 M
Based upon the aforementioned assumptions, the estimated annual cost increases for the insured associated with premiums are as
follows:
FY 21 - $0.6 M (650K members *.5* $0.25 PMPM * 6 months / .85 LR) - $0.8 M (650K members*.5 * $0.35 PMPM * 6 months / .85 LR)
FY 22 - $1.2 M (650K members *.5* $0.25 PMPM * 12 / .85 LR) - $1.7 M (650K members *.5* $0.35 PMPM * 12 / .85 LR)
FY 23 - $1.3 M - $1.8 M
FY 24 - $1.3 M - $1.9 M
FY 25 - $1.4 M - $2.0 M
Senate Dual Referral Rules House
x 13.5.1 >= $100,000 Annual Fiscal Cost {S & H} 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} Staff Director