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February 20, 2024 SB 24-124
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 24-0481
Sen. Michaelson Jenet; Rich
Rep. Hartsook
Date:
Bill Status:
Fiscal Analyst:
February 20, 2024
Senate Health & Human Services
Kristine McLaughlin | 303-866-4776
kristine.mclaughlin@coleg.gov
Bill Topic: HEALTH-CARE COVERAGE FOR BIOMARKER TESTING
Summary of
Fiscal Impact:
☐ State Revenue
☒ State Expenditure
☐ State Transfer
☐ TABOR Refund
☐ Local Government
☐ Statutory Public Entity
The bill requires Medicaid and state-regulated health plans to cover certain biomarker
tests. The bill increases state expenditures on an ongoing basis.
Appropriation
Summary:
No appropriation is required.
Fiscal Note
Status:
The fiscal note reflects the introduced bill.
Table 1
State Fiscal Impacts Under SB 24-124
Budget Year
FY 2024-25
Out Year
FY 2025-26
Revenue - -
Expenditures
1
General Fund - $2,257,595
Cash Funds - $555,903
Federal Funds - $7,046,499
Centrally Appropriated - $10,194
Total Expenditures - $9,870,191
Total FTE - 0.5 FTE
Transfers - -
Other Budget Impacts General Fund Reserve - $338,639
1
Total costs may range between $5.5 million and $9.9 million, depending on the exact increase in utilization of
biomarker testing. Table 1 reflects the upper cost range.
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February 20, 2024 SB 24-124
Summary of Legislation
The bill requires Medicaid and state-regulated health insurance plans to cover certain biomarker
tests outlined in the bill. Under the bill, all tests supported by medical and scientific evidence
must be covered for the purpose of guiding treatment decisions.
The new requirement applies to Medicaid starting July 1, 2025 and to private insurance plans
starting January 1, 2026. HCPF is allowed to conduct prior authorizations for these tests. The bill
requires HCPF to provide notice of the authorization review results and to provide a readily
accessible online appeals process for denied claims.
Background and Assumptions
Current Medicaid coverage. The Department of Health Care Policy and Financing (HCPF)
currently covers 216 tests assumed to fall under the bill’s definition of biomarker tests. They are
used for a wide range of purposes and rates range from $37 per test to $3,873 per test. Program
costs for current allowable biomarker tests total around $19 million per year.
Tests covered under the federal Medicare program. Medicare, which frequently expands its
biomarker testing, currently covers a wider variety of biomarker tests, with around 600 tests
assumed to fall under the bill’s definition of biomarker tests. Covered tests under Medicare are
used for a wide range of purposes and rates range from $8 per test to $12,000 per test.
According to a 2019 report, 85 percent of Medicare expenditure on genetic testing (a
subcategory of biomarker testing) was generated by 25 covered tests.
Assumptions. The fiscal note assumes that federal approval for biomarker testing will be
granted. Based on the experience of the federal Medicare program in recent years, the fiscal
note assumes that costs for Medicaid biomarker testing will increase by up to 50 percent.
However, increased costs will depend on a variety of factors, including which tests become
newly covered under the bill, their costs, and how often Medicaid members utilize these tests.
Given the limited information on specific tests that will be covered and their potential costs and
utilization, as well as the fact that recent increases in federal Medicare testing may have been
affected by several other factors, the fiscal note includes cost estimates for increased biomarker
testing between 25 percent and 50 percent compared to FY 2023-24 levels.
State Expenditures
The bill increases state expenditures in HCPF by $10 million in FY 2025-26 and each year
thereafter, paid from the General Fund, Healthcare Affordability and Sustainability Cash Fund,
and federal funds. Expenditures for a 50 percent increase in biomarker testing costs (the upper
range, as discussed in the Assumptions section above) are shown in Table 2. In addition, the bill
will increase workload in the Department of Regulatory Agencies related to the review of private
insurance plans, and costs may increase for state employee insurance. These costs and impacts
are outlined in more detail below. Page 3
February 20, 2024 SB 24-124
Table 2
Expenditures Under SB 24-124
FY 2024-25 FY 2025-26
Department of Health Care Policy and Financing
Personal Services - $47,404
Operating Expenses - $640
Capital Outlay Costs - $6,670
Biomarker Testing Costs
1
- $9,539,948
Prior Authorization Review - $265,335
Centrally Appropriated Costs
2
- $10,194
Total Cost - $9,870,191
Total FTE - 0.5 FTE
1
Biomarker testing costs are estimated to range between $4.8 million and $9.5 million per year. The fiscal note
reflects the upper cost range.
2
Centrally appropriated costs are not included in the bill's appropriation.
Department of Health Care Policy and Financing
Staffing. Starting in FY 2025-26, the department requires 0.5 FTE to ensure that Medicaid
members are accessing the appropriate level of treatment related to biomarker testing. This staff
will monitor biomarker and genetic testing claims and conduct data analysis to prevent
overpayments, ensure compliance, and make policy recommendations. Standard operating and
capital outlay costs are included.
Biomarker testing costs. Assuming that costs for biomarker testing increase by between
25 percent and 50 percent above current levels, costs to the Medicaid program will increase by
between $4.8 million and $9.5 million per year starting in FY 2025-26. These costs may vary
depending on which tests become newly authorized, their costs, and Medicaid member
utilizations. It is assumed that costs for Medical Service Premiums will be adjusted through the
annual budget process based on actual costs. Biomarker testing is eligible for a 72 percent
federal match.
Prior authorization review. Based on the projected increase in the number of biomarker
testing covered by Medicaid, the number of prior authorizations conducted is expected to
increase by up to 3,500 in FY 2026-27. To perform this work, it is assumed that HCPF will use a
utilization management contractor at an annual rate of $150,000 per year plus a cost of $33 per
authorization, resulting in total costs of $265,000 per year.
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February 20, 2024 SB 24-124
Medicaid savings. Increased access to biomarker testing may generate savings in the long term
resulting from earlier interventions. This fiscal note only looks at the direct costs to implement
the bill, as potential savings will depend on numerous factors and data/information are not
available to provide such an estimate. It is assumed that any savings realized will be reflected in
future budget requests for the Medicaid program based on actual program costs and utilization.
Centrally appropriated costs. Pursuant to a Joint Budget Committee policy, certain costs
associated with this bill are addressed through the annual budget process and centrally
appropriated in the Long Bill or supplemental appropriations bills, rather than in this bill. These
costs, which include employee insurance and supplemental employee retirement payments, are
shown in Table 2.
Department of Regulatory Agencies
The Division of Insurance in the Department of Regulatory Agencies will have increased
workload to review rates and coverage to ensure that state-regulated health plans are providing
the required coverage. It is assumed that this work will occur as part of the regular annual rate
filing. On an ongoing basis, the division will have additional workload to address consumer
complaints and inquiries regarding the required coverage. It is assumed that this workload can
be accomplished within existing resources.
State Employee Insurance
By requiring coverage for certain biomarker testing, the bill may result in increased costs for
state employees’ health care, which may result in higher insurance premiums. State employee
health premiums are shared by state agencies and employees. Given that insurance premiums
are affected by a large number of factors and that future cost sharing between the state and
employees is unknown, it is assumed that any cost increase in the state share of employee
health insurance premiums will be addressed through the annual budget process.
Effective Date
The bill takes effect upon signature of the Governor, or upon becoming law without his
signature.
State and Local Government Contacts
Health Care Policy and Financing Information Technology Law
Personnel Regulatory Agencies
The revenue and expenditure impacts in this fiscal note represent changes from current law under the bill for each
fiscal year. For additional information about fiscal notes, please visit the General Assembly website.