Fiscal Note
BILL # HB 2035 TITLE: insurance; claims; appeals; provider credentialing
SPONSOR: Cook STATUS: House Engrossed
PREPARED BY: Destin Moss
REVISED
Explanation of Revision
We have revised our estimate of the fiscal impact of House Engrossed HB 2035 in response to new information regarding
the number of health care provider claims which could be appealed to the Office of Administrative Hearings (OAH).
Description
The bill would establish a process by which health care providers could appeal unresolved grievances against private
health care insurers to OAH.
Estimated Impact
We estimate that the bill would have an annual General Fund impact of $981,000 to $2.9 million beginning in FY 2025 for
OAH costs. The exact cost would be dependent upon the actual number of OAH cases generated under the bill. In
comparison, the Executive estimates the OAH cost at $200,000, but we lack details on their projection.
DIFI further estimates the bill would increase their workload, requiring 3 additional FTE Positions at an annual cost of
$255,100. The agency also estimates $6,000 in one-time expenses. Given that the bill would appear to place the workload
on OAH and not DIFI, we have asked for an explanation as to the nature of the DIFI's workload increase. We have not yet
received a response.
Analysis
Currently, statute requires that all health care insurers establish an internal process by which health care providers can
attempt to resolve payment disputes and other contractual grievances. This bill would allow a health care provider to
request an administrative hearing with OAH if the internal process established by the health care insurer doesn't lead to a
satisfactory resolution.
To determine OAH's potential workload under the bill, we asked DIFI for information regarding unresolved grievances of
health care providers. All insurers within the state are required to submit semi-annual reports to DIFI detailing the
number of provider grievances received and resolved using the internal appeals process. DIFI provided us with a summary
of these reports, which show that nearly 18,000 grievances remained unresolved after the completion of the internal
process in 2023.
We cannot determine with certainty how many of the 18,000 unresolved grievances would be appealed to OAH. As a
result, we used a range of 25% to 75% of these cases to develop our cost estimate. Using this range, we estimate that
4,500 to 13,500 cases would be appealed to OAH.
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OAH estimates a cost of approximately $218/case, which is based on the average hours per case spent on Arizona Health
Care Cost Containment System appeals (which we expect to be analogous to this new case type), the billable hourly rate
for administrative law judge expenses, and their fixed filing fee.
Multiplying the estimated number of appeals by OAH's per-case cost estimate would result in a total annual General Fund
impact of $981,000 to $2.9 million beginning in FY 2025.
In addition to the costs incurred by OAH, the Executive anticipates the bill would generate an additional $255,100 in
ongoing costs and $6,000 in one-time costs to DIFI. The agency attributes these costs to the hiring of 3 new FTEs: an
Investigator, a Project Specialist, and a Senior Insurance Analyst. The bill requires that health care providers submit
hearing requests to DIFI, and that DIFI then request the hearing from OAH on the provider's behalf. We have questions as
to how this pass-through function warrants an additional 3 FTEs. We have reached out to DIFI for further explanation but
have not yet received a response.
Local Government Impact
None
2/28/24