Fiscal Note & Local Impact Statement

124 th General Assembly of Ohio

Ohio Legislative Service Commission

77 South High Street, 9th Floor, Columbus, OH 43266-0342 ˛ Phone: (614) 466-3615

˛ Internet Web Site: http://www.lsc.state.oh.us/

BILL:

Sub. H.B. 150 (LSC 124 0571-6)

DATE:

March 18, 2002

STATUS:

In Senate Health, Human Services, and Aging

SPONSOR:

Rep. Schuring

LOCAL IMPACT STATEMENT REQUIRED:

No —

No local cost

 


CONTENTS:

Require a hearing screening for each newborn born in a hospital

 

State Fiscal Highlights

 

STATE FUND

FY 2002

FY 2003

FUTURE YEARS

General Revenue Fund

     Revenues

- 0 -

- 0 -

- 0 -

     Expenditures

- 0 -

Estimated increase of $75,000 to $675,000 plus potential increase ranging between $100,000 and $250,000

Estimated annual increase of $75,000 to $675,000 plus potential increase ranging between $100,000 and $250,000

Medically Handicapped Children – County Assessments (SSR Fund 666)

     Revenues

- 0 -

- 0 -

- 0 -

     Expenditures

- 0 -

Minimal increase

Minimal increase

Note: The state fiscal year is July 1 through June 30. For example, FY 2002 is July 1, 2001 – June 30, 2002.

 

·        According to the Ohio Department of Job and Family Services (JFS), about 35 – 40 percent of all births in Ohio are eligible for Medicaid reimbursement. JFS stated that the additional cost associated with a hearing screening defined in the bill in section 3701.503 of the Revised Code should be covered in the existing hearing screening Diagnostic Related Group (DRG) reimbursement rates in the Medicaid program. For this reason, fiscal impact to the Medicaid program should be minimal.

·        The bill requires the Department of Health (DOH) to reimburse any hospital or freestanding birthing center that provides a hearing screening under the provisions of the bill if the screening occurs prior to the discharge of the newborn and if the parent or guardian of the newborn is financially unable to pay for the hearing screening and there is no third party payer that will reimburse the facility. The costs of an audiological screening range from $30 - $70 per screening. Since the cost of the existing paper screening is about $25, the net increase as a result of the bill would be $5 - $45 per screening.

·        According to the Children’s Defense Fund’s 2001 Children in the States, for the period covering 1997-1999, 10 percent of Ohioans under age 19 did not have health insurance. If one assumes that this 10 percent is evenly spread among age cohorts, there would be about 15,000 births per year in which a third party payer did not cover the hearing screening. However, LSC is unable to precisely determine the portion of newborns that would have no third party coverage of the screening and whose family is financially unable to afford the screening.

·        LSC estimates that the Department of Health would be required to cover the cost of the hearing screening for up to 15,000 births per year. The total increase in cost would range from $75,000 to $675,000.

·        Other DOH costs under the bill involve the preparation and distribution of materials to hospitals, freestanding birthing centers, and each local board of health on the importance of hearing screening and evaluation. Under current law, the Department is required to provide information to hospitals and freestanding birthing centers describing factors or conditions of hearing loss. Since the Department would only need to modify its existing publications, the added costs would be minimal. These costs would be borne in the Department’s Medically Handicapped Children program, which is funded with both GRF and State Special Revenue Fund 666.

·        Other potential DOH costs include a provision allowing the Department to make mass purchases of hearing screening equipment or establishing a grant program, if funds are available.

·        The bill requires rules to be adopted no later than six months after the effective date of the bill and states that hospitals and freestanding birthing centers must follow the provisions of the bill covering hearing screenings, with certain exemptions, no later than June 30, 2004. Therefore, the fiscal effect of this bill will not begin until fiscal year 2003 at the earliest and potentially not until fiscal year 2004.

·        Under the rules to be adopted, hospitals and freestanding birthing centers will be required to submit hearing screening information to the Department of Health. In addition, the Department will be required to conduct timely reviews of these submissions.

·        The bill could lead to an increase in rates charged by health insuring corporations (HICs) as a result of the provision limiting the maximum benefit for a hearing screening to $75. Any potential increase in HIC rates could be recovered from state employees in whole or in part through higher employee share payments or through smaller wage increases.

Local Fiscal Highlights

 

LOCAL GOVERNMENT

FY 2002

FY 2003

FUTURE YEARS

Boards of Health

     Revenues

- 0 -

- 0 -

- 0 -

     Expenditures

- 0 -

Minimal increase

Minimal increase

Counties, Municipalities, Townships, and School Districts

     Revenues

- 0 -

- 0 -

- 0 -

     Expenditures

- 0 -

Potential increase ranging from $350,000 to $800,000

Potential increase ranging from $350,000 to $800,000

Note: For most local governments, the fiscal year is the calendar year. The school district fiscal year is July 1 through June 30.

·        Under the bill, local boards of health are required to provide the information produced by the Department of Health regarding the importance of hearing screenings to the parents of children born in the area served by the board of health who were not born in a hospital or freestanding birthing center. For the years 1995 through 1999, the average number of annual births occurring outside of a hospital or freestanding birthing center was 1,231, or 0.81 percent of total average annual births for this period. Therefore, local boards of health should incur a minimal increase in expenditures to comply with this provision.

·        The bill could lead to an increase in rates charged by health insuring corporations and by sickness and accident insurers as a result of the provision limiting the maximum benefit for a hearing screening to $75. Any potential increase in HIC rates could be recovered from local government employees in whole or in part through higher employee share payments or through smaller wage increases.

 


 

 

Detailed Fiscal Analysis

 

The bill requires a hearing screening for all newborns born in a hospital or freestanding birthing center. According to the Ohio Department of Health (DOH) Data Warehouse, in 1999 there were 151,596 births in Ohio. For the past few years, the number of hospital births in Ohio has been around 150,000. The following table lists the number of births in Ohio from 1990 through 1998.

 

 

Location of Birth

 

 

Hospital

Home

Non-Hospital Clinic

Other

Total

Year

#

%

#

%

#

%

#

%

#

1999

148,838

98.2

625

0.4

649

0.4

1,484

1.0

151,596

1998

150,843

98.9

963

0.6

641

0.4

10

0.0

152,457

1997

149,847

99.0

956

0.6

567

0.4

19

0.0

151,389

1996

149,917

98.9

996

0.7

605

0.4

27

0.0

151,545

1995

152,131

98.9

1,034

0.7

542

0.4

40

0.0

153,747

1994

154,192

99.0

955

0.6

546

0.4

41

0.0

155,734

1993

157,321

99.1

909

0.6

510

0.3

33

0.0

158,773

1992

160,530

99.1

902

0.6

526

0.3

32

0.0

161,990

1991

164,087

99.2

862

0.5

402

0.2

38

0.0

165,389

1990

165,423

99.2

869

0.5

373

0.2

21

0.0

166,686

Source: Ohio Department of Health Data Warehouse

 

For the period covering 1995 through 1999, the average annual number of births that occurred in Ohio was 152,147. Of this total, 150,916 occurred in a hospital or non-hospital clinic (99.19 percent) and 1,231 occurred at home or a location other than a hospital or non-hospital clinic (0.81 percent).

Impact on Medicaid

According to the Ohio Department of Job and Family Services (JFS), the impact of this bill on the Medicaid program should be minimal. Current law in Ohio requires each hospital to screen for hearing impairments through the use of a high-risk questionnaire. According to JFS, this paper test costs approximately $25 per screening.

 

Under the bill, a hearing screening involves the use of automated or diagnostic auditory brainstem response, otoacoustic emissions, or an equivalent physiologic technology. JFS stated that these tests cost between $35 and $70 per screening. According to JFS, the existing Medicaid reimbursement rates for the hearing screening Diagnostic Related Group (DRG) are adequate to cover the additional costs associated with the technological screenings required in the bill.

 

Approximately 35 – 40 percent of all births in Ohio are eligible for Medicaid reimbursement. This covers about 60,000 births per year. Additionally, hospitals providing hearing screening that are not reimbursed via a third party payer can bill through the hospital care assurance program (HCAP) for coverage.

Impact on Department of Health

The bill requires the Department of Health to reimburse any hospital or freestanding birthing center that provides a hearing screening to a newborn if the parents or guardians of the newborn are financially unable to pay for the hearing screening and if no third party payer reimburses the facility for the hearing screening.

 

According to information obtained from the Children’s Defense Fund’s 2001 Children in the States, 10 percent of Ohioans under the age of 19 in the period covering 1997-1999 have no health insurance. If one assumes that this 10 percent is spread evenly among age cohorts, there would be about 15,000 births per year in which a third party payer did not cover the hearing screening. However, LSC is unable to precisely determine the portion of newborns that would have no third party coverage of the screening and whose family is financially unable to afford the screening.

 

Under current law, newborn hearing screenings consist of a paper questionnaire. The paper test costs about $25 per newborn. The hearing screenings required under this bill are estimated to cost between $30 and $70 per screening. This means that the estimated net increase to the Department of Health is between $5 and $45 per screening. If all 15,000 uninsured children also come from families who are unable to afford the screening, the added cost to DOH would be between $75,000 and $675,000. This figure was obtained by multiplying $5 and $45 by 15,000 (estimated number of uninsured children). However, as noted above, LSC is unable to quantify the specific number of screenings that would be reimbursed by DOH for uninsured children.

 

The bill also requires the Department to prepare and distribute materials to hospitals, freestanding birthing centers, and local boards of health on the importance of hearing screening and evaluation. Under current law, the Department is required to provide information to hospitals and freestanding birthing center describing factors or conditions of hearing loss. Since the Department would only need to modify its existing publications, the added costs would be minimal. These costs would be borne in the Department’s Medically Handicapped Children program, which is funded with both GRF and State Special Revenue Fund 666.

 

Other potential DOH costs include a provision allowing the Department to make mass purchases of hearing screening equipment or establishing a grant program, if funds are available.

 

The bill requires rules to be adopted no later than six months after the effective date of the bill and states that hospitals and freestanding birthing centers must follow the provisions of the bill covering hearing screenings no later than June 30, 2004, with certain exceptions. In these situations, the Department may grant a one-year extension for the hospital or freestanding birthing center to comply with the provisions of this bill. Therefore, the fiscal effect of this bill will not begin until fiscal year 2003 at the earliest and potentially not until fiscal year 2004. When including the 90-day delay in the effective date of the bill, six months after the effective date of the bill would mean that rules would not need to take effect until FY 2003. Therefore, all facilities would not be required to give the hearing screening required in the bill until FY 2004 at the latest. This does not mean, however, that no facility will provide the screenings during FY 2003. But, LSC is unable to determine what percent of facilities would provide the screenings beginning in FY 2003 and what percent would begin in FY 2004.

In addition, hospitals and freestanding birthing centers will be required to submit hearing screening information to the Department of Health. In addition, the Department will be required to conduct timely reviews of these submissions.

Impact on Local Boards of Health

Under the bill, local boards of health are required to provide the information produced by the Department of Health regarding the importance of hearing screenings to the parents of children born in the area served by the board of health who were not born in a hospital or freestanding birthing center. For the years 1995 through 1999, the average number of annual births occurring outside of a hospital or freestanding birthing center was 1,231, or 0.81 percent of total average annual births for this period. Therefore, local boards of health should incur a minimal increase in expenditures to comply with this provision.

Impact on Health Insurance

The bill limits the benefits for the hearing screening required under this bill to a maximum of $75. The bill could lead to an increase in the rates charged by health insuring corporations (HICs) as a result of the provision limiting the maximum benefit for a hearing screening to $75. To find the possible increase in HIC costs, the total number of children screened (150,916) is multiplied by the cost per test (range between $30 and $70 per test). LSC is estimating that 11.2 percent will be covered by a government employer health insurance plan. The potential increase was determined by taking the percentage of government employer health plans that are covering both state employees and local employees (excluded federal employees). According to June 2001 Bureau of Labor Statistics data, of the 783,800 public employees in Ohio, 21.0 percent are state workers and 68.4 percent are local government employees.

 

Total No. of Newborns

Total Cost Statewide

Cost for Public Employees (11.2 % of total cost)

Cost to Employer

State Employees (@$30 per screening)

150,916

$4,527,480

$507,078

$106,486

Local Employees (@$30 per screening)

150,916

$4,527,480

$507,078

$346,841

State Employees (@$70 per screening)

150,916

$10,564,120

$1,183,181

$248,468

Local Employees (@$70 per screening)

150,916

$10,564,120

$1,183,181

$809,296

 

Any potential increase in HIC rates could be recovered from local government employees in whole or in part through higher employee share payments or through smaller wage increases.

 

LSC fiscal staff:  Jeffrey M. Rosa, Senior Budget Analyst

                         Ross Miller, Economist

 

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